TIDMSIXH
RNS Number : 0235R
600 Group PLC
06 December 2016
The 600 Group PLC
Unaudited Interim Results for the six months ended 1 October
2016
The 600 Group PLC ("the Group"), the AIM listed distributor,
designer and manufacturer of industrial products (AIM: SIXH), today
announces its unaudited interim results for the six months ended 1
October 2016.
Highlights:
-- Revenues were GBP23.16m (FY16 H1: GBP23.35m) despite difficult trading environment
-- Underlying* operating profit up 6% to GBP1.24m (FY16 H1: GBP1.17m)
-- Underlying* profit before tax was GBP0.76m (FY16 H1: GBP0.75m)
-- Margin improvement at Industrial laser systems continues
-- Industrial laser systems operating profit increased 41% to GBP0.89m (FY16 H1: GBP0.63m)
-- Australian machine tools business moves back into profit
*from continuing operations, before special items.
Commenting today, Paul Dupee, Executive Chairman of The Group
said:
"Although both of our Divisions have been operating in uncertain
and challenging market conditions they have still been able to
deliver acceptable financial results for the six month period ended
1 October 2016.
The overall Group order book continues to improve and has risen
from 20% above the prior year's level at the end of September 2016
to currently 30% above prior year and new quotation activity
remains high.
The anticipated infrastructure spending programmes outlined in
both the UK and the USA should improve the market for capital
goods, and the products we supply in particular, and the medium
term market outlook therefore appears to be brighter.
The actions taken to reduce overheads and become more efficient
have yielded better margins and the Board remains of the view that
the process of leveraging our industry recognised brands such as
Colchester, Harrison, Clausing, TYKMA and Electrox through an
increased worldwide distribution network will lead to revenue
growth in the future."
Reconciliation of underlying profit before taxation:
26 Weeks ended 26 Weeks ended
1 October 26 September
2016 2015
GBPm GBPm
--------------- ---------------
Revenues 23.16 23.35
Cost of sales (15.07) (15.42)
--------------- ---------------
Gross profit 8.09 7.93
Net operating costs (6.85) (6.76)
--------------- ---------------
Underlying operating profit 1.24 1.17
Bank and loan note interest expense
(net) (0.48) (0.42)
--------------- ---------------
Underlying profit before tax 0.76 0.75
Other items:
--------------- ---------------
Pensions credit - 0.93
Interest on pension surplus 0.75 0.58
Other Special items (0.05) (0.58)
Amortisation of shareholder loan costs (0.08) (0.07)
--------------- ---------------
0.62 0.86
--------------- ---------------
Reported profit before tax 1.38 1.61
=============== ===============
More Information on the group can be viewed at:
www.600group.com
Enquiries:
The 600 Group PLC Tel: 01924 415000
-------------------
Paul Dupee, Executive Chairman
-------------------
Neil Carrick, Finance Director
-------------------
Cadogan PR Limited Tel: 020 7930 7006
-------------------
Alex Walters Tel: 07771 713608
-------------------
FinnCap Tel: 020 7600 1658
-------------------
Tony Quirke/Mia Gardiner (Sales/Broking)
-------------------
SPARK Advisory Partners Limited
(NOMAD)
-------------------
Sean Wyndham-Quin/ Miriam Greenwood Tel: 020 3368 3553
-------------------
The 600 Group Plc
Executive Chairman's Statement for the six months ended 1
October 2016
Overview
Although both of our Divisions have been operating in uncertain
and challenging market conditions they have still been able to
deliver acceptable financial results for the six month period ended
1 October 2016. Revenue was GBP23.16m against GBP23.35m in the
previous half year but the improved operating margins in TYKMA
Electrox helped improve Group underlying operating profit by 6% to
GBP1.24m (FY16 H1: GBP1.17m).
Whilst the Group has seen some benefit from the retranslation of
foreign earnings into Sterling following the weakness of the Pound
after Brexit this has also increased input costs for the UK which
are predominately Dollar based.
We have continued to invest in facilities and new product
developments to maintain our strategic goal of leveraging the
strength of the Group's brands into niche markets worldwide.
Results and dividend
Revenue was GBP23.16m (FY16 H1: GBP23.35m) generating a net
underlying operating profit (excluding the effects of special
items) up 6% at GBP1.24m (FY16 H1: GBP1.17m).
After taking account of interest on bank borrowings and loan
notes, the underlying Group pre-tax profit before special items was
GBP0.76m (FY16 H1: GBP0.75m) and GBP1.38m (FY16 H1: GBP1.61m
including GBP0.93m of pensions credit) after special items.
Special items have been noted separately so that the underlying
trading performance can be better understood. In the current period
share option costs, the amortisation of intangible assets acquired,
amortisation of loan note expenses and the pensions credit interest
on the scheme surplus, which are non-cash items, are included in
special items. The prior period included in addition to these
regular items a large credit of GBP0.93m as a result of liability
reduction exercises by the pension scheme trustees, reorganisation
and redundancy costs as a result of the integration of the TYKMA
and Electrox businesses, and the cost of the Board change in April
2015.
The total profit attributable to shareholders of the Group for
the financial period was GBP1.09m (FY16 H1: GBP1.12m including
GBP0.93m of pensions credit), providing earnings of 1.05 pence per
share (FY16 H1: 1.21 pence). The underlying earnings per share
(excluding the large pensions credit last year, pension interest
and
other special items) were 0.71p (FY16 H1: 0.85p).
The Board continues to believe the retention of earnings to grow
the businesses is the most appropriate use of available finance and
accordingly do not recommend the payment of an interim
dividend.
Operating activities
Machine tools and precision engineered components
FY17 H1 FY16 H1
GBPm GBPm
Revenues 16.42 16.81
Operating profit 0.93 1.05
Operating margin 5.7% 6.2%
Revenues in our North American business were down 5% (19% at
constant currency rates) against a backdrop of a declining market
of around 17%. Gross margins improved by 1% and overheads were
reduced by 11% to contain the fall in operating margin.
The Group believes the uncertainty of US exporters following
Brexit and the effects of the US Presidential elections on domestic
confidence were key factors in a difficult trading period. Actual
quotation activity has been high, some 15 - 20% up on the prior
year but the commitment of customers to place orders has, we
believe, been affected by the uncertainty created by these two
major events.
There has been a pick up in order activity since the election
and the current order book is 37% higher in local currency (63% in
Sterling terms) than at this time last year. The anticipated
government infrastructure spending should also be positive for
capital goods in general and our sector in particular in the medium
term.
Product development has continued during the period with US
built mills and saws being added to the range and work concluded on
a CNC control for mills sold into the European market.
The machine tools business of Kondia, formerly Spain's largest
manufacturer of milling machines, was acquired in early October
2016 for Euro 50,000. The Clausing operation had previously sold
these products for over twenty years in the USA and has a good
spares and service operation to support the existing population of
machines. The popular FV milling machines will now be produced by
the Group to complement the existing US built products and the
worldwide spares supply will now be taken over by the Group.
Trading in the European market also proved to be difficult with
revenue falling short of the corresponding prior period by 4%.
Since Brexit, enquiries have improved by approximately 40% led by
the UK, Middle East and Northern Europe, but conversion to orders
remains weak and patchy.
The introduction of the Clausing product range of saws, drills,
mills and grinders into the UK, and European markets has proved
successful and is a growing part of the product portfolio. These
products are very often found alongside our Colchester and Harrison
lathes in the many facilities we sell into and are a natural
extension to our existing product range in these markets. These
types of product represent about 50% of the total machine tools
sold by our North American operation against only about 4%
currently for UK and Europe.
The first machines from our new Indian partners are due in the
next few weeks and several quality and marketing visits have been
made during this period by both parties.
The weakness of Sterling following Brexit has increased input
costs which are predominately US Dollar based and in line with most
of our competition a price increase has had to be implemented from
1 November on all products.
The Australian operation in contrast enjoyed a significant
turnaround in both volumes and profitability during the period with
both domestic Australian business and South East Asia improving.
Volumes improved 73% over the same period last year and the
business moved from a small loss into profit.
The development of new sales channels for our branded products
in South East Asia including new distributorships in Thailand,
Vietnam and Singapore has continued throughout this period.
Industrial Laser systems
FY17 H1 FY16 H1
GBPm GBPm
Revenues 6.74 6.57
Operating profit 0.89 0.63
Operating margin 13.2% 9.6%
The consolidation of manufacturing onto one site in Ohio USA and
revision of the supply chain was completed during this period and
the improved margins seen towards the end of the last financial
year have continued.
Top line progress has however, we believe, been affected by the
uncertainty caused by Brexit in the UK and other issues within
Europe and the presidential campaign in the USA. Although quotation
activity in this Division has been strong recently, up over 30%
from the levels in April and May this year, the conversion into
orders has been held back by uncertainty.
Also unit volumes have improved by 11% against the same period
last year, but the market has seen a degree of price deflation with
unit prices falling particularly at the lower specification end of
the market.
The combined TYKMA Electrox business now has worldwide
credibility and in addition to securing initial sales to a number
of new multi-national corporations in the period the business has
recently been awarded a multiple unit repeat order for delivery in
the second half of the year to a global operator with potential
follow on business for sites in other countries.
A number of new products were launched in September at the IMTS
trade show in Chicago providing an expanded range of products to
support existing export areas and facilitate growth in these
countries and Asia Pacific through a new international sales
manager.
The divisional operating profit and margin have shown an
increase over previous periods demonstrating the benefits of the
businesses' integration and reflect an increase in overall
manufacturing efficiencies.
Facilities
The industrial laser systems manufacturing operation was
consolidated in Chillicothe, Ohio during the period and the reduced
UK operation moved to smaller leasehold premises enabling the
Letchworth long leasehold building to be sold for its book value of
GBP2m in early July 2016.
Financial position
Net assets decreased in the six month period by GBP2.7m to
GBP38.1m largely as a result of the pension asset decrease. Net
assets excluding the effect of pension schemes (and associated
taxation) increased by GBP2m to GBP16.2m as a result of net profit
generation, the increase of GBP0.6m in the value of the ProPhotonix
investment and the currency movements on the retranslation into
Sterling of our overseas assets.
Cash used in operations was negative at GBP1.35m with GBP1.46m
of funds from operating activity absorbed in restructuring costs,
paydown of creditors and working capital increases in the UK, as a
result of the seasonal sales to educational establishments, and in
the USA to support the move of laser manufacture from the UK to the
USA. The net proceeds of GBP2m from the sale of the Letchworth site
were received in July 2016 and used to reduce UK borrowings. The
exchange effect of the retranslation of our US borrowings at 1
October 2016 compared to the rates ruling at 2 April 2016 has
increased the stated borrowings by GBP0.4m.
Net debt as a consequence of these movements increased by
GBP0.45m to GBP14.34m resulting in gearing of 37.6% (March 2016:
34.8%).
New increased UK bank facilities were put in place in August
2016 with HSBC to support the UK machine tool business and Bank of
America renewed and increased their working capital facilities for
Clausing and TYKMA in the USA in September 2016.
UK pension scheme
The accounting surplus on the UK pension scheme decreased during
the period from GBP42m at 2 April 2016 to GBP35m as a result of
changes in underlying assumptions, most notably the yield on
corporate bonds upon which the valuation is based.
The funding position of the scheme using the much more prudent
technical provisions basis for valuation in the latest draft
tri-ennial valuation at 31 March 2016 was a surplus of GBP2.2m
compared to the tri-ennial valuation deficit at 31 March 2013 of
GBP25.4m. Consequently it is expected that an agreement will be
reached to ensure that there will continue to be no requirement for
any cash funding from the Company.
The scheme continues to benefit from active management of the
investment portfolio with the overall aim of securing members'
benefits without reliance on future contributions from the Group.
The Directors and Trustees continue to work in close co-operation,
and liability reduction exercises are ongoing.
Outlook
Market conditions generally remain unpredicatable and although
current enquiry levels are at a relatively high level, customer
confidence to commit to purchase is, we believe, still affected by
the uncertainties of Europe and policies which have been suggested
will be implemented by the new US President. Underlying order
activity is currently giving us less than two month's visibility
and therefore trading results are subject to uncertainty and
potential monthly volatility.
Despite these factors the overall Group order book continues to
improve and has risen from 20% above the prior year's level at the
end of September 2016 to currently 30% above prior year and new
quotation activity remains high.
The anticipated infrastructure spending programmes outlined in
both the UK and the USA should improve the market for capital goods
and the products we supply in particular and the medium term market
outlook therefore appears to be brighter.
Resource continues to be directed into sales and marketing
across all businesses and new products and new markets are being
developed.
The actions taken to reduce overheads and become more efficient
have yielded better margins and the Board remains of the view that
the process of leveraging our industry recognized brands such as
Colchester, Harrison, Clausing, TYKMA and Electrox through an
increased worldwide distribution network will lead to revenue
growth in the future.
Paul Dupee
Executive Chairman
6 December 2016
Condensed Consolidated income
statement (unaudited)
For the 26 week period ended
1 October 2016
26 weeks 26 weeks 53 weeks
Ended ended Ended
1 October 26 September 2 April
2016 2015 2016
GBP'000 GBP'000 GBP'000
---------------------------------- ---------- ------------- ---------
Continuing
Revenue 23,163 23,346 45,269
Cost of sales (15,074) (15,409) (29,899)
Gross profit 8,089 7,937 15,370
Net operating expenses (6,855) (6,789) (13,014)
Pensions credit - 934 940
Other special items (49) (582) (4,460)
---------- ------------- ---------
Total Net operating expenses (6,904) (6,437) (16,534)
Operating profit 1,185 1,520 (1,164)
Bank and other interest 1 9 10
Contingent consideration
settlement - - 2,032
Interest on pension surplus 750 580 1,171
---------- ------------- ---------
Financial income 751 589 3,213
Bank and other interest (479) (426) (890)
Amortisation of shareholder
loan costs (82) (70) (150)
---------- ------------- ---------
Financial expense (561) (496) (1,040)
Profit before tax 1,375 1,613 1,009
Income tax (charge)/credit (284) (497) 137
Profit for the period from
continuing operations 1,091 1,116 1,146
Attributable to equity holders
of the parent 1,091 1,101 1,157
Attributable to non controlling
interests - 15 (11)
---------------------------------- ---------- ------------- ---------
1,091 1,116 1,146
---------------------------------- ---------- ------------- ---------
Basic earnings per share 1.05p 1.21p 1.26p
Diluted earnings per share 1.05p 1.20p 1.25p
Condensed Consolidated statement
of comprehensive income (unaudited)
For the 26 week period ended 1 October
2016
26 weeks 26 weeks 53 weeks
Ended Ended Ended
1 October 26 September 2 April
2016 2015 2016
GBP000 GBP000 GBP000
--------------------------------------------- ---------- ------------- ---------
Profit for the period 1,091 1,116 1,146
Other comprehensive (expense)/income:
Items that will not be reclassified
to the Income Statement:
Remeasurement of the net defined
benefit asset (7,816) (342) 4,436
Deferred taxation 2,736 120 (515)
--------------------------------------------- ---------- ------------- ---------
Total items that will not be reclassified
to the Income Statement: (5,080) (222) 3,921
Items that are or may in the future
be reclassified to the Income Statement:
Fair value adjustment of ProPhotonix
investment 606 (167) (29)
Fair valuation of assets held for
sale - - (450)
Foreign exchange translation differences 629 6 286
--------------------------------------------- ---------- ------------- ---------
Total items that are or may be reclassified
subsequently to the Income Statement: 1,235 6 (193)
--------------------------------------------- ---------- ------------- ---------
Other comprehensive (expense)/income
for the period, net of income tax (3,845) (383) 3,728
Total comprehensive (expense)/income
for the period (2,754) 733 4,874
--------------------------------------------- ---------- ------------- ---------
Attributable to:
--------------------------------------------- ---------- ------------- ---------
Equity holders of the Parent (2,754) 718 4,885
--------------------------------------------- ---------- ------------- ---------
Non controlling interests - 15 (11)
--------------------------------------------- ---------- ------------- ---------
Total recognised (expense)/income (2,754) 733 4,874
--------------------------------------------- ---------- ------------- ---------
Condensed Consolidated statement
of financial position (unaudited)
As at 1 October 2016
As at As at As at
1 October 26 September 2 April
2016 2015 2016
GBP000 GBP000 GBP000
------------------------------------ ---------- ------------- ---------
Non-current assets
Property, plant and equipment 3,430 5,499 3,235
Goodwill 7,144 7,144 7,144
Other Intangible assets 325 2,379 322
Investments 1,102 358 496
Employee benefits 33,743 35,441 40,937
Deferred tax assets 4,008 2,997 3,832
------------------------------------ ---------- ------------- ---------
49,752 53,818 55,966
------------------------------------ ---------- ------------- ---------
Current assets
Inventories 12,471 11,293 11,271
Trade and other receivables 8,014 7,203 6,771
Assets held for sale - - 1,999
Cash and cash equivalents 945 1,383 765
------------------------------------ ---------- ------------- ---------
21,430 19,879 20,806
------------------------------------ ---------- ------------- ---------
Total assets 71,182 73,697 76,772
------------------------------------ ---------- ------------- ---------
Non-current liabilities
Loans and other borrowings (9,430) (10,203) (11,376)
Trade and other payables - (4,092) -
Deferred tax liability (12,074) (13,546) (14,538)
------------------------------------ ---------- ------------- ---------
(21,504) (27,841) (25,914)
------------------------------------ ---------- ------------- ---------
Current liabilities
Trade and other payables (5,221) (6,252) (6,318)
Income tax payable (61) (244) -
Provisions (428) (531) (425)
Loans and other borrowings (5,853) (3,323) (3,275)
(11,563) (10,350) (10,018)
------------------------------------ ---------- ------------- ---------
Total liabilities (33,067) (38,191) (35,932)
------------------------------------ ---------- ------------- ---------
Net assets 38,115 35,506 40,840
------------------------------------ ---------- ------------- ---------
Shareholders' equity
Called-up share capital 1,044 924 1,044
Share premium account 1,013 248 1,013
Revaluation reserve 1,273 1,494 1,273
Available for sale reserve (45) - (651)
Equity reserve 139 139 139
Translation reserve 2,343 1,152 1,714
Retained earnings 32,348 31,404 36,308
------------------------------------ ---------- ------------- ---------
38,115 35,361 40,840
------------------------------------ ---------- ------------- ---------
Non- controlling interests - 145 -
------------------------------------ ---------- ------------- ---------
Total equity 38,115 35,506 40,840
------------------------------------ ---------- ------------- ---------
Condensed
Consolidated
statement
of changes in
equity
(unaudited)
As at 1 October
2016
called share Available Non
up premium Revaluation for Translation Equity Retained controlling
share sale
capital account reserve reserve reserve reserve earnings interest Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
--------------- ------- -------- ------------ --------- ------------ -------- --------- ----------- -------
At 28 March
2015 896 - 1,494 (622) 1,428 124 31,270 136 34,726
--------------- ------- -------- ------------ --------- ------------ -------- --------- ----------- -------
Profit for the
period - - - - - - 1,101 15 1,116
Other
comprehensive
income:
Foreign
currency
translation - - - - (179) - 6 - (173)
Re-measurement
of net defined
benefit assets - - - - - - (342) - (342)
Fair value
adjustment of
investments - - - (97) - - (167) - (264)
Deferred tax - - - - - - 120 - 120
--------------- ------- -------- ------------ --------- ------------ -------- --------- ----------- -------
Total
comprehensive
income - - - (97) (179) - 718 15 457
--------------- ------- -------- ------------ --------- ------------ -------- --------- ----------- -------
Transactions
with owners:
Share capital
subscribed
for 28 248 - - - - - - 276
Equity element
of shareholder
loan issued - - - - - 15 - - 15
Credit for
share-based
payments - - - - - - 38 - 38
--------------- ------- -------- ------------ --------- ------------ -------- --------- ----------- -------
Total
transactions
with
owners 28 248 - - - 15 38 - 329
--------------- ------- -------- ------------ --------- ------------ -------- --------- ----------- -------
Non controlling
interest - - - - - - - (6) (6)
--------------- ------- -------- ------------ --------- ------------ -------- --------- ----------- -------
At 26 September
2015 924 248 1,494 (719) 1,249 139 32,026 145 35,506
--------------- ------- -------- ------------ --------- ------------ -------- --------- ----------- -------
Profit for the
period - - - - - - 56 (26) 30
Other
comprehensive
income:
Foreign
currency
translation - - - - 465 - (6) - 459
Re-measurement
of net defined
benefit assets - - - - - - 4,778 - 4,778
Fair value
adjustment of
investments - - - 68 - - 167 - 235
Transfer on
revalued
properties - - (221) - - - (229) - (450)
Deferred tax - - - - - - (635) - (635)
--------------- ------- -------- ------------ --------- ------------ -------- --------- ----------- -------
Total
comprehensive
income - - (221) 68 465 - 4,131 (26) 4,417
--------------- ------- -------- ------------ --------- ------------ -------- --------- ----------- -------
Transactions
with owners:
Share capital
subscribed
for 120 765 - - - - - - 885
Acquisition of
NCI - - - - - - 125 (125) -
Credit for
share-based
payments - - - - - - 26 - 26
--------------- ------- -------- ------------ --------- ------------ -------- --------- ----------- -------
Total
transactions
with
owners 120 765 - - - - 151 (125) 911
--------------- ------- -------- ------------ --------- ------------ -------- --------- ----------- -------
Non controlling
interest - - - - - - - 6 6
--------------- ------- -------- ------------ --------- ------------ -------- --------- ----------- -------
At 2 April 2016 1,044 1,013 1,273 (651) 1,714 139 36,308 - 40,840
--------------- ------- -------- ------------ --------- ------------ -------- --------- ----------- -------
Profit for the
period - - - - - - 1,091 - 1,091
Other
comprehensive
income:
Foreign
currency
translation - - - - 629 - - - 629
Re-measurement
of net defined
benefit assets - - - - - - (7,816) - (7,816)
Fair value
adjustment of
investments - - - 606 - - - - 606
Deferred tax - - - - - - 2,736 - 2,736
--------------- ------- -------- ------------ --------- ------------ -------- --------- ----------- -------
Total
comprehensive
income - - - 606 629 - (3,989) - (2,754)
--------------- ------- -------- ------------ --------- ------------ -------- --------- ----------- -------
Transactions
with owners:
Credit for
share-based
payments - - - - - - 29 - 29
--------------- ------- -------- ------------ --------- ------------ -------- --------- ----------- -------
Total
transactions
with
owners - - - - - - 29 - 29
--------------- ------- -------- ------------ --------- ------------ -------- --------- ----------- -------
At 1 October
2016 1,044 1,013 1,273 (45) 2,343 139 32,348 - 38,115
--------------- ------- -------- ------------ --------- ------------ -------- --------- ----------- -------
Condensed Consolidated cash flow statement
(unaudited)
For the 26 week period ended 1 October
2016
26 weeks 26 weeks 53 weeks
ended ended To
1 October 26 September 2 April
2016 2015 2016
GBP000 GBP000 GBP000
-------------------------------------------- ---------- ------------- ---------
Cash flows from operating activities
Profit for the period 1,091 1,116 1,146
Adjustments for:
Amortisation 28 118 122
Depreciation 220 253 548
Pension credit - (934) (940)
Net financial income (190) (94) (141)
Other special items - 487 2,363
Equity share option expense 29 38 64
Income tax expense 284 497 (137)
-------------------------------------------- ---------- ------------- ---------
Operating cash flow before changes in
working capital and provisions 1,462 1,481 3,025
(Increase) /decrease in trade and other
receivables (884) (209) 463
(Increase)/decrease in inventories (516) (470) 106
(Decrease) in trade and other payables (1,209) (643) (1,682)
Employee benefit contributions (206) - (130)
Restructuring and redundancy expenditure - (310) (807)
-------------------------------------------- ---------- ------------- ---------
Cash (used in)/generated from operations (1,353) (151) 975
Interest paid (479) (424) (964)
Income tax paid - (89) (3)
-------------------------------------------- ---------- ------------- ---------
Net cash flows from operating activities (1,832) (664) 8
-------------------------------------------- ---------- ------------- ---------
Cash flows from investing activities
Interest received 1 9 10
Purchase of Tykma - (118) (1,378)
Proceeds from sale of property, plant 2,100 - -
and equipment
Purchase of property, plant and equipment (298) (688) (1,522)
Development expenditure capitalized (4) (158) (297)
Refinancing expenditure - (24) -
-------------------------------------------- ---------- ------------- ---------
Net cash from investing activities 1,799 (979) (3,187)
-------------------------------------------- ---------- ------------- ---------
Cash flows from financing activities
Net proceeds from issue of ordinary shares - 275 275
Proceeds from Loan Note issue - 806 806
Proceeds from/(Net repayment of) external
borrowing 184 942 1,883
Net finance lease expenditure (43) 120 67
Net cash flows from financing activities 141 2,143 3,031
-------------------------------------------- ---------- ------------- ---------
Net increase/(decrease) in cash and cash
equivalents 108 500 (148)
Cash and cash equivalents at the beginning
of the period 765 902 902
Effect of exchange rate fluctuations
on cash held 72 (19) 11
-------------------------------------------- ---------- ------------- ---------
Cash and cash equivalents at the end
of the period 945 1,383 765
-------------------------------------------- ---------- ------------- ---------
Notes relating to the condensed consolidated financial
statements
For the 26-week period ended 1 October 2016
1. BASIS OF PREPARATION
The 600 Group PLC (the "Company") is a public limited company
incorporated and domiciled in England and Wales. The Company's
ordinary shares are traded on the AIM Market of the London Stock
Exchange. The Consolidated Interim Financial Statements of the
Company for the 26 week period ended 1 October 2016 comprise the
Company and its subsidiaries (together referred to as the
"Group").
This half yearly financial report is the condensed consolidated
financial information of the Group for the 26 week period ended 1
October 2016. The Condensed Consolidated Half-yearly Financial
Statements do not constitute statutory financial statements and do
not include all the information and disclosures required for full
annual financial statements. The Condensed Consolidated Half-yearly
Financial Statements were approved by the Board on 5 December
2016.
The comparative figures for the financial year ended 2 April
2016 are not the Group's statutory accounts for that financial
year. Those accounts have been reported on by the Group's auditors
and delivered to the Registrar of Companies. The report of the
auditors was (i) unqualified; (ii) did not include a reference to
any matters to which the auditors drew attention by way of emphasis
without qualifying their report, and (iii) did not contain a
statement under Section 498 (2) or (3) of the Companies Act
2006.
The half yearly results for the current and comparative period
are neither audited nor reviewed by the Company's auditors.
As noted in the Basis of preparation accounting policy in the
Group's Financial Statements for 2 April 2016 the Group refinanced
in August 2016 with HSBC PLC who provided a Term Loan facility of
GBP350k with scheduled repayments through to November 2020 and a
mixture of working capital facilities up to GBP4.6m. Overseas bank
finance in place is a mixture of term and revolving facilities with
the earliest review in August 2017. The Group has issued GBP8.5m of
8% loan notes with maturity in February 2020.
The Group's forecasts and projections, taking account of
reasonably possible changes in trading performance, show that the
Group should be able to operate within the level of these
facilities.
The Directors have a reasonable expectation that the Company and
the Group have adequate resources to continue in operational
existence for the foreseeable future. Accordingly, they have
continued to adopt the going concern basis in the preparation of
this half yearly financial report.
2. SIGNIFICANT ACCOUNTING POLICIES
The Condensed Consolidated Financial Statements in this half
yearly financial report for the 26 week period ended 1 October 2016
have been prepared using accounting policies and methods of
computation consistent with those set out in The 600 Group PLC's
Annual Report and Financial Statements for the 53 week period ended
2 April 2016.
In preparing the condensed financial statements, management is
required to make accounting assumptions and estimates. The
assumptions and estimation methods were consistent with those
applied to the Annual Report and Financial Statements for the 53
week period ended 2 April 2016.
3. SEGMENT ANALYSIS
IFRS 8 - "Operating Segments" requires operating segments to be
identified on the basis of internal reporting about components of
the Group that are regularly reviewed by the chief operating
decision maker to allocate resources to the segments and to assess
their performance. The chief operating decision maker has been
identified as the Executive Directors. The Executive Directors
review the Group's internal reporting in order to assess
performance and allocate resources.
The Executive Directors consider there to be two continuing
operating segments being machine tools and precision engineered
Components and industrial laser systems.
The Executive Directors assess the performance of the operating
segments based on a measure of operating profit/(loss). This
measurement basis excludes the effects of Special Items from the
operating segments. Head Office and unallocated represent central
functions and costs.
The following is an analysis of the Group's revenue and results
by reportable segment:
Continuing
26 Weeks ended 1 October Machine
2016 Tools
& Precision Industrial
Engineered Laser Head Office
Components Systems & unallocated Total
Segmental analysis of
revenue GBP000 GBP000 GBP000 GBP000
------------------------------- ------------ ---------- -------------- --------
Revenue from external
customers 16,423 6,740 - 23,163
Inter-segment revenue - - - -
------------------------------- ------------ ---------- -------------- --------
Total segment revenue 16,423 6,740 - 23,163
Less: inter-segment revenue - - - -
------------------------------- ------------ ---------- -------------- --------
Total revenue 16,423 6,740 - 23,163
------------------------------- ------------ ---------- -------------- --------
Operating Profit/(loss)
pre special items 923 893 (582) 1,234
special items - - (49) (49)
------------------------------- ------------ ---------- -------------- --------
Operation Profit/(loss) 923 893 (631) 1,185
------------------------------- ------------ ---------- -------------- --------
Other segmental information:
Reportable segment assets 62,290 8,403 489 71,182
Reportable segment liabilities (20,494) (4,129) (8,444) (33,067)
Intangible & Property,
plant and equipment additions 34 267 - 301
Depreciation and amortisation 155 93 - 248
------------------------------- ------------ ---------- -------------- --------
3. SEGMENT ANALYSIS (continued)
Continuing
26 Weeks ended 26 September Machine
2015 Tools
& Precision Industrial
Engineered Laser Head Office
Components Systems & unallocated Total
Segmental analysis of
revenue GBP000 GBP000 GBP000 GBP000
------------------------------- ------------ ------------ -------------- --------
Revenue from external
customers 16,809 6,537 - 23,346
Inter-segment revenue - 37 - 37
------------------------------- ------------ ------------ -------------- --------
Total segment revenue 16,809 6,574 - 23,383
Less: inter-segment revenue - (37) - (37)
------------------------------- ------------ ------------ -------------- --------
Total revenue 16,809 6,537 - 23,346
------------------------------- ------------ ------------ -------------- --------
Operating Profit/(loss)
pre-pensions credit and
special items 1,049 629 (510) 1,168
Pensions credit 934 - - 934
------------------------------- ------------ ------------ -------------- --------
Other special items - (176) (406) (582)
Operation Profit/(loss) 1,983 453 (916) 1,520
Other segmental information:
Reportable segment assets 64,142 8,150 1,405 73,697
Reportable segment liabilities (22,712) (5,647) (9,832) (38,191)
Intangible & Property,
plant and equipment additions 389 497 - 886
------------------------------- ------------ ------------ -------------- --------
Depreciation and amortisation 147 140 84 371
------------------------------- ------------ ------------ -------------- --------
3. SEGMENT ANALYSIS (continued)
Continuing
53-weeks ended 2 April Machine
2016 Tools
& Precision Industrial
Engineered Laser Head Office
Components Systems & unallocated Total
Segmental analysis of
revenue GBP000 GBP000 GBP000 GBP000
Revenue from external
customers 32,127 13,142 - 45,269
Inter-segment revenue - - - -
------------------------------- ---------------- ------------ -------------- ----------------------
Total segment revenue 32,127 13,142 - 45,269
Less: inter-segment revenue - - -
------------------------------- ---------------- ------------ -------------- ----------------------
Total revenue per statutory
accounts 32,127 13,142 - 45,269
------------------------------- ---------------- ------------ -------------- ----------------------
Operating Profit/(loss)
before special Items 2,073 1,179 (896) 2,356
------------------------------- ---------------- ------------ -------------- ----------------------
Special Items 282 (3,217) (590) (3,520)
Group profit/(loss) from
operations 2,355 (2,033) (1,486) (1,164)
------------------------------- ---------------- ------------ -------------- ----------------------
Other segmental information:
Reportable segment assets 26,630 5,970 44,172 76,772
Reportable segment liabilities (22,078) (3,048) (10,806) (35,932)
Intangible & Property,
plant and equipment additions 605 1,214 - 1,819
Depreciation and amortisation 293 457 - 750
4. SPECIAL ITEMS
In order for users of the financial statements to better
understand the underlying performance of the Group the Board have
separately disclosed transactions which by virtue of their size or
incidence, are considered to be one off in nature. In addition the
charge for share based payments, amortisation of intangible assets
acquired and non cash pension transactions have also been
separately identified.
Special items include acquisition costs, gains and losses on the
sale of properties and assets, exceptional costs relating to
reorganisation, redundancy and restructuring, legal disputes and
inventory, asset and intangibles.
1 October 26 September 2 April
2016 2015 2016
GBP000 GBP000 GBP000
--------------------------------------------------- --------- ------------ -------
Items included in operating profit:
Pension credit - (934) (940)
Reorganisation ,restructuring and redundancy costs - 487 1,729
Impairment of intangible assets - - 2,390
Acquisition costs - - 197
Share option costs 29 38 64
Amortisation of intangible assets acquired 20 57 80
--------------------------------------------------- --------- ------------ -------
49 (352) 1,389
--------------------------------------------------- --------- ------------ -------
Items included in financial income/(expense):
--------------------------------------------------- --------- ------------ -------
Pensions interest on surplus (750) (580) (1,171)
--------------------------------------------------- --------- ------------ -------
Amortisation of loan note expenses 82 70 150
--------------------------------------------------- --------- ------------ -------
(668) (510) (1,021)
--------------------------------------------------- --------- ------------ -------
Included in contingent consideration settlement:
--------------------------------------------------- --------- ------------ -------
TYKMA deferred consideration settlement - - (2,032)
--------------------------------------------------- --------- ------------ -------
5. Financial income and expensE
1 October 26 September 2 April
2016 2015 2016
GBP000 GBP000 GBP000
---------------------------------- --------- ------------ -------
Interest income 1 9 10
Interest on Pension surplus 750 580 1,171
---------------------------------- --------- ------------ -------
Financial income 751 589 1,181
---------------------------------- --------- ------------ -------
Bank overdraft and loan interest (133) (98) (155)
Loan note interest (340) (322) (721)
Finance charges on finance leases (6) (6) (14)
Amortisation of loan note costs (82) (70) (150)
Financial expense (561) (496) (1,040)
---------------------------------- --------- ------------ -------
6. Taxation
1 October 26 September 2 April
2016 2015 2016
GBP000 GBP000 GBP000
----------------------------------------- --------- ------------ -------
Current tax:
Corporation tax at 19% (2015: 20%): - - -
Overseas taxation:
- current period (20) (13) 53
----------------------------------------- --------- ------------ -------
Total current tax charge (20) (13) 53
----------------------------------------- --------- ------------ -------
Deferred taxation:
- current period (264) (484) 79
- prior period - - 5
----------------------------------------- --------- ------------ -------
Total deferred taxation charge (264) (484) 84
----------------------------------------- --------- ------------ -------
Taxation charged to the income statement (284) (497) 137
----------------------------------------- --------- ------------ -------
7. Earnings per share
The calculation of the basic earnings per share of 1.05p (2014:
2.49p) is based on the earnings for the financial period
attributable to the Parent Company's shareholders of a profit of
GBP1,091,000 (2014 GBP1,101,000) and on the weighted average number
of shares in issue during the period of 104,357,957 (2015:
90,801,638). At 1 October 2016, there were 6,650,000 (2015:
6,150,000) potentially dilutive shares on option and 43,950,000
(2015: 43,950,000) share warrants exercisable at 20p. The weighted
average effect of these as at 1 October 2016 was nil (2015:
791,000) giving a diluted earnings per share of 1.05p (2015:
1.20p).
.
1 October 26 September 2 April
2016 2015 2016
--------------------------------------------------- ------------ ------------ ----------
Weighted average number of shares Shares Shares Shares
Issued shares at start of period 104, 357,957 89,607,957 89,607,957
Effect of shares issued in the period - 1,193,681 2,076,146
--------------------------------------------------- ------------ ------------ ----------
Weighted average number of shares at end of period 104,357,957 90,801,638 91,684,103
--------------------------------------------------- ------------ ------------ ----------
1 October 26 September 2 April
2016 2015 2016
GBP000 GBP000 GBP000
------------------------------------------- --------- ------------ -------
Underlying earnings
Total post tax earnings 1,091 1,116 1,146
Share option costs 29 38 64
Pensions Interest (750) (580) (1,171)
Amortisation of Shareholder loan expenses 82 70 150
Pensions credit (934) (940)
Credit on settling deferred consideration (2,032)
Impairment of intangible assets 2,390
Amortisation of intangible assets acquired 20 57 80
Other special items 487 1,729
Acquisition costs 197
Associated Taxation on special items 264 530 (72)
------------------------------------------- --------- ------------ -------
Underlying Earnings before tax 756 751 1,476
------------------------------------------- --------- ------------ -------
Underlying earnings after tax 736 784 1,541
------------------------------------------- --------- ------------ -------
Underlying Earnings Per Share 0.71p 0.85p 1.69p
8. RECONCILIATION OF NET CASH FLOW TO NET DEBT
1 October 26 September 2 April
2016 2015 2016
GBP000 GBP000 GBP000
------------------------------------------------- --------- ------------ --------
Increase/(decrease) in cash and cash equivalents 108 500 (148)
Increase in debt and finance leases (184) (1,835) (2,757)
------------------------------------------------- --------- ------------ --------
Increase in net debt from cash flows (76) (1,335) (2,905)
Net debt at beginning of period (13,886) (10,798) (10,798)
Loan costs amortisation and adjustments (82) (33) (110)
Exchange effects on net funds (294) 23 (73)
------------------------------------------------- --------- ------------ --------
Net debt at end of period (14,338) (12,143) (13,886)
------------------------------------------------- --------- ------------ --------
9. Analysis of net DEBT
At Exchange/ At
2 April Reserve 1 October
2016 movement Other Cash flows 2016
GBP000 GBP000 GBP000 GBP000 GBP000
---------------------------------- -------- --------- ------ ---------- ---------
Cash at bank and in hand 665 72 108 845
Short term deposits (included
within cash and cash equivalents
on the balance sheet) 100 - - - 100
765 72 - 108 945
Debt due within one year (3,114) (219) - (2,388) (5,721)
Debt due after one year (3,596) (133) - 2,161 (1,568)
Loan Notes due after one year (7,699) - (82) - (7,781)
Finance leases (242) (14) - 43 (213)
Total (13,886) (294) (82) (76) (14,338)
---------------------------------- -------- --------- ------ ---------- ---------
10. Employee benefits
The Group has defined benefit pension schemes in the UK and USA.
The assets of these schemes are held in separate
trustee-administered funds. The principal scheme is the UK defined
benefit plan.
The UK scheme was closed to future accrual of benefits at 31
March 2013. Any deficit contributions required are determined by
independent qualified actuaries based upon triennial actuarial
valuations in the UK and on annual valuations in the US. There have
been no deficit contributions made to the schemes during the
reported periods and the latest draft actuarial valuation of the UK
scheme to 31 March 2016 shows the scheme to be in a surplus of
GBP2.2m based on the Technical Provisions basis of valuation.
Consequently it is expected that agreement will be reached that
there will continue to be no requirement for any cash funding from
the Company.
Value of UK and USA scheme assets and liabilities 1 October 26 September 2 April
for the purposes of IAS 19 2016 2015 2016
GBP000 GBP000 GBP000
-------------------------------------------------- --------- ------------ --------
Opening Fair value of schemes assets 220,208 230,046 230,046
Experience adjustments in the period 30,900 (17,600) (9,838)
Closing Fair value of schemes assets 251,108 212,446 220,208
-------------------------------------------------- --------- ------------ --------
Opening present value of schemes liabilities 179,271 195,754 195,754
Experience adjustments in the period 38,094 (18,749) (16,483)
-------------------------------------------------- --------- ------------ --------
Closing present value of schemes liabilities 217,365 177,005 179,271
-------------------------------------------------- --------- ------------ --------
Surplus recognised under IAS 19 33,743 35,441 40,937
-------------------------------------------------- --------- ------------ --------
10. EMPLOYEE BENEFITS (continued)
The principal assumptions used for the purpose of the IAS 19
valuation for the UK scheme compared to the 2016 year end were as
follows:
1 October 2 April
2016 2016
UK scheme UK scheme
% p.a. % p.a.
---------------------------------------------------------- --------- ---------
Inflation under RPI 3.05 2.85
Inflation under CPI 2.05 1.85
Rate of increase to pensions in payment - LPI 5% 2.95 2.80
Discount rate for scheme liabilities and return on assets 2.25 3.60
---------------------------------------------------------- --------- ---------
11. FAIR VALUE
The group considers that the carrying amount of the following
financial assets and financial liabilities are
a reasonable approximation of their fair value:
Trade and other receivables
Cash and cash equivalents
Trade and other payables
Loans and other borrowings
The investment in ProPhotonix Limited has been fair value
adjusted as detailed below:
Investments 1 October 26 September 2 April
2016 2015 2016
GBP000 GBP000 GBP000
-------------------------------------------------- --------- ------------ -------
Opening cost of investment in ProPhotonix Limited 496 525 525
Fair value adjustment 606 (167) (29)
-------------------------------------------------- --------- ------------ -------
Fair value of investment in ProPhotonix Limited 1,102 358 496
-------------------------------------------------- --------- ------------ -------
Fair value is based on the quoted market price at 1 October
2016.
12. Principal Risks and Uncertainties
The principal risks and uncertainties affecting the Group remain
those set out in the 2016 Annual Report. Those which are most
likely to impact the performance of the Group in the remaining
period of the current financial year are the exposure to increased
input costs, the dependence on a relatively small number of key
vendors in the supply chain and a downturn in its customers' end
markets particularly in North America and Europe.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR EAEASELNKFAF
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