TIDMSIXH
RNS Number : 8689W
600 Group PLC
20 November 2017
The 600 Group PLC
Unaudited Interim Results for the six months ended 30 September
2017
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 30
September 2017.
Highlights:
-- Revenues were up 7% to GBP24.8m (FY 17 H1: GBP23.2m)
-- Underlying* operating profit up to GBP1.3m (FY17 H1: GBP1.2m)
-- Profit before tax up to GBP2.1m (FY 17: GBP1.4m)
-- Order books up 36% on the same time last year
-- Industrial laser division contribution increased to 59% of profits* from operations
-- ProPhotonix sale realised GBP1.5m and GBP1m profit
-- Equity raise of GBP1.12m before costs to eliminate working capital bank debt in the UK
-- Pension scheme in GBP12.2m technical provisions surplus
*from continuing operations, before special items.
Commenting today, Paul Dupee, Executive Chairman of the Group
said:
"Market conditions have improved generally over the previous
year and both our divisions have been able to increase revenues and
have much improved order books. These factors give us greater
confidence going into the second half of our financial year and
will be complemented by new product launches and an increasing
focus on new sales activity in other geographical areas.
Whilst there remain a number of uncertain world events beyond
our control which could affect our markets, the Board continues to
believe that the process of leveraging our industry recognised
brands such as Colchester, Harrison, Clausing, TYKMA and Electrox
through new product developments and an increased worldwide
distribution network will lead to continued revenue growth in the
future."
Reconciliation of underlying profit before taxation:
26 Weeks ended 26 Weeks ended
30 September 1 October
2017 2016
GBPm GBPm
--------------- ---------------
Revenues 24.84 23.16
Cost of sales (16.28) (15.07)
--------------- ---------------
Gross profit 8.56 8.09
Net operating costs (7.29) (6.86)
--------------- ---------------
Underlying operating profit 1.27 1.23
Bank and loan note interest expense
(net) (0.44) (0.48)
--------------- ---------------
Underlying profit before tax 0.83 0.75
Other items:
--------------- ---------------
Interest on pension surplus 0.66 0.75
ProPhotonix sale 0.97 -
Other Special items (0.31) (0.05)
Amortisation of shareholder loan costs (0.09) (0.08)
--------------- ---------------
1.23 0.62
--------------- ---------------
Reported profit before tax 2.06 1.37
=============== ===============
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
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Alex Walters Tel: 07771 713608
----------------------------------------- -------------------
FinnCap Tel: 020 7600 1658
----------------------------------------- -------------------
Tony Quirke/Mia Gardiner (Sales/Broking)
----------------------------------------- -------------------
SPARK Advisory Partners Limited
(NOMAD)
----------------------------------------- -------------------
Matt Davis / Miriam Greenwood Tel: 020 3368 3553
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The 600 Group Plc
Executive Chairman's Statement for the six months ended 30
September 2017
Overview
I am pleased to report that both of our Divisions have made
progress in increasing revenues during the six month period ended
30 September 2017. Enquiry levels remain good and order books are
up 36% overall on this time last year.
Revenue was up 7% at GBP24.8m against GBP23.2m in the previous
half year and Group underlying operating profit increased to
GBP1.3m (FY17 H1: GBP1.2m).
We have continued to invest in new people and new product
developments to maintain our strategic goal of leveraging the
strength of the Group's brands into niche markets worldwide and
several new products are being launched for the second half of the
financial year.
Results and dividend
Revenue was GBP24.8m (FY 17 H1: GBP23.2m) with net underlying
operating profit (excluding special items) of GBP1.3m (FY17 H1:
GBP1.2m).
After taking account of interest on bank borrowings and loan
notes, the underlying Group pre-tax profit before special items was
GBP0.8m (FY17 H1: GBP0.8m) and GBP2.1m (FY 17 H1: GBP1.4m ) 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 costs, are included in
special items.
In addition to these items a credit of GBP0.97m is included as a
result of the sale of the Group's holding in ProPhotonix Ltd at the
end of August. Reorganisation and redundancy costs as a result of
the finalisation of the integration of the TYKMA and Electrox
businesses and costs incurred in restructuring the UK machine tools
business are also included.
The total profit attributable to shareholders of the Group for
the financial period was GBP1.8m (FY17 H1: GBP1.1m), providing
earnings of 1.75 pence per share (FY17 H1: 1.05 pence). The
underlying earnings per share
(excluding the pension interest and other special items) were 0.79p (FY17 H1: 0.71p).
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
FY18 H1 FY17 H1
GBPm GBPm
Revenues 16.96 16.42
Operating profit* 0.76 0.93
Operating margin* 4.5% 5.7%
*from continuing operations, before special items.
Revenues in our North American business grew strongly by 6% as
did those in Australia, up 11%. The UK business, however, failed to
make headway against the previous year's first six months revenue
but was up 7% on the second half trading in the year to March 2017,
which bore the brunt of the uncertainty following the Brexit vote.
The combination of weaker sales, particularly in the higher margin
spares and service activities and higher import prices held the UK
operation to break even trading during the period. A number of
operational cost reduction initiatives are taking place led by the
new UK managing director, Terry Allison, to improve net margins in
the second half of the financial year together with the launch of
new products to further stimulate sales growth. This weak
performance held back the divisional operating profit despite the
improvement in the US business during the period.
Quotation activity has remained good and all businesses are
reporting stronger order books, with the division as a whole 70% up
on the order books at this time last year. This continued improved
activity gives us confidence going into the second half of the
financial year and is in contrast to the previous year where the
uncertainty following the Brexit vote and the effects of the US
Presidential elections on US domestic confidence were key factors
in a difficult trading period.
Product development has continued during the period with work on
a US built lathe and the launch at the EMO trade show in Hannover
in September of the Clausing CNC Millpwr. Work is also underway on
the construction of the US built Kondia milling machine following
the acquisition last year of the machine tools business of Kondia,
formerly Spain's largest manufacturer of milling machines. The
Group also acquired the worldwide supply of Kondia spares.
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 to and are a natural
extension to our existing product range in these markets. These
products represent about 40% of the total machine tools sold by our
North American operation against only about 5% currently for UK and
Europe.
Supply of machines from our new Indian partners has begun and
additional product ranges are being developed together with their
technical engineers.
The Australian operation has continued its recovery in both
volumes and profitability and in addition has met with some success
with sales to Thailand through our new distribution partner during
the period.
Industrial Laser systems
FY18 H1 FY17 H1
GBPm GBPm
Revenues 7.88 6.74
Operating profit* 1.11 0.89
Operating margin* 14.1% 13.2%
*from continuing operations, before special items.
Top line progress has been good during the period, up 17% on the
same period last year and the consolidation of manufacturing onto
one site in Ohio USA and revision of the supply chain during the
previous year has ensured margins remain acceptable. This division
now accounts for almost 60% of the trading profits generated by our
businesses.
Quotation activity in this Division has also been strong and the
order book at the end of September was up 18% on the same time last
year.
We have invested in strengthening the management team during the
period to provide greater depth and a strong base to support the
future growth in the business.
The combined TYKMA Electrox business now has worldwide
credibility and has secured repeat orders from a number of
multi-national corporations in the period.
New products launched last year have become significant
contributors to this businesses success and further new product
developments are being launched over the coming months. Progress is
also being made in export areas in Asia Pacific through a new
international sales manager.
ProPhotonix
The Group disposed of its entire holding in ProPhotonix Ltd, the
AIM listed laser diode and LED systems manufacturer and
distributor, for GBP1.5m at the end of August 2017 realising a
profit of GBP1m which is shown in special items. The proceeds were
used to pay down UK senior debt with HSBC.
Equity issue
8.6m shares were issued to a number of institutional investors,
which raised GBP1.12m before costs on 20 September 2017. The
proceeds were used to pay down the remaining UK working capital
borrowings. Our facilities have been maintained with HSBC to
provide headroom for future growth.
Financial position
Net assets decreased in the six month period by GBP3.3m to
GBP47.0m largely as a result of the pension asset decrease. Net
assets excluding the effect of pension schemes (and associated
taxation) increased by GBP1.1m to GBP17.9m as a result of net
profit generation and the equity issue less the reduction of 7% in
the value of our foreign net assets on their re-translation into
Sterling due to exchange rate movements.
Stock levels have increased due to the increased activity
levels. In addition in order to provide customers with shorter lead
times and to support the new product launches additional
stockholding has been required which has increased working capital
levels.
Despite this, net debt decreased significantly to GBP12.1m
(March 2017 GBP13.7m) resulting in gearing of 26% (March 2017: 27%)
as result of profitable trading, the sale of the ProPhotonix
holding and the issue of equity.
UK annual working capital facilities were renewed in September
2017 with HSBC to support the UK machine tool business and Bank of
America renewed their annual working capital facilities for
Clausing and TYKMA in the USA in November.
UK pension scheme
The accounting surplus on the UK pension scheme decreased during
the period from GBP52.5m at 1 April 2017 to GBP45.7m as a result of
changes in underlying assumptions and, most notably, the value of
the schemes assets. Scheme assets are invested to largely match the
scheme liabilities which are valued on gilt yields, as opposed to
the yield on corporate bonds upon which the accounts valuation is
based.
The funding position of the scheme using the much more prudent
technical provisions basis for valuation in the latest triennial
valuation at 31 March 2016 was a surplus of GBP2.2m. The actuarial
valuation was formally signed off in October 2017 when the surplus
had increased to GBP12.2m on a technical provisions basis. There
continues to be no requirement for any cash funding from the
Company and various options for the scheme are being
investigated.
Outlook
Market conditions have improved generally over the previous year
and both our divisions have been able to increase revenues and have
much improved order books. These factors give us greater confidence
going into the second half of our financial year and will be
complemented by new product launches and an increasing focus on new
sales activity in other geographical areas.
Whilst there remain a number of uncertain world events beyond
our control which could affect our markets, the Board continues to
believe that the process of leveraging our industry recognised
brands such as Colchester, Harrison, Clausing, TYKMA and Electrox
through new product developments and an increased worldwide
distribution network will lead to continued revenue growth in the
future.
Paul Dupee
Executive Chairman
20 November 2017
Condensed consolidated income statement (unaudited)
For the 26 week period ended
30 September 2017 Before After Before After After
Special Special Special Special Special Special Special
Items Items Items Items Items Items Items
26 weeks 26 weeks 26 weeks 26 weeks 26 26 weeks 52 weeks
weeks
ended ended ended ended ended ended ended
30 30 30
September September September 1 1 1 1 April
October October October
2017 2017 2017 2016 2016 2016 2017
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
-------------- --------- --------- --------- -------- ------- -------- --------
Continuing
Revenue 24,837 - 24,837 23,163 - 23,163 47,032
Cost of sales (16,277) - (16,277) (15,074) - (15,074) (30,602)
Special Items
in cost
of sales - - - - - - (118)
-------------- --------- --------- --------- -------- ------- -------- --------
Gross profit 8,560 - 8,560 8,089 - 8,089 16,312
Net operating
expenses (7,290) - (7,290) (6,855) - (6,855) (13,365)
Special Items
in operating
expenses - (307) (307) - (49) (49) (53)
Operating
profit/(loss) 1,270 (307) 963 1,234 (49) 1,185 2,894
Profit on
ProPhotonix
disposal - 970 970 - - - -
Bank and other
interest - - - 1 - 1 3
Interest on
pension
surplus - 665 665 - 750 750 1,445
--------- --------- --------- -------- ------- -------- --------
Financial
income - 665 665 1 750 751 1,448
--------- --------- --------- -------- ------- -------- --------
Bank and other
interest (442) - (442) (479) - (479) (946)
Special Items - (91) (91) - (82) (82) (168)
--------- --------- --------- -------- ------- -------- --------
Financial
expense (442) (91) (533) (479) (82) (561) (1,114)
Profit before
tax 828 1,237 2,065 756 619 1,375 3,228
Income tax
charge - (233) (233) (20) (264) (284) (1,169)
-------------- --------- --------- --------- -------- ------- -------- --------
Profit for the
period
attributable
to equity
holders of
the parent 828 1,004 1,832 736 355 1,091 2,059
Basic earnings
per share 0.79p 0.96p 1.75p 0.71p 0.34p 1.05p 1.97p
Diluted
earnings per
share 0.79p 0.95p 1.74p 0.71p 0.34p 1.05p 1.96p
Condensed consolidated statement
of comprehensive income (unaudited)
For the 26 week period ended 30
September 2017
26 weeks 26 weeks 52 weeks
Ended Ended Ended
30 September 1 October 1 April
2017 2016 2017
GBP000 GBP000 GBP000
--------------------------------------------- ------------- ---------- ---------
Profit for the period 1,832 1,091 2,059
Other comprehensive (expense)/income:
Items that will not be reclassified
to the Income Statement:
Re-measurement of the net defined
benefit asset (7,528) (7,816) 8,367
Deferred taxation 2,635 2,736 (2,928)
--------------------------------------------- ------------- ---------- ---------
Total items that will not be reclassified
to the Income Statement: (4,893) (5,080) 5.439
Items that are or may in the future
be reclassified to the Income Statement:
Fair value adjustment of ProPhotonix
investment - 606 1,157
Release of available for sale reserve (1,128) - -
on ProPhotonix disposal
Revaluation of property 154 - -
Foreign exchange translation differences (356) 629 705
--------------------------------------------- ------------- ---------- ---------
Total items that are or may be reclassified
subsequently to the Income Statement: (1,330) 1,235 1,862
--------------------------------------------- ------------- ---------- ---------
Other comprehensive (expense)/income
for the period, net of income tax (6,223) (3,845) 7,301
Total comprehensive (expense)/income
for the period (4,391) (2,754) 9,360
--------------------------------------------- ------------- ---------- ---------
Condensed consolidated statement
of financial position (unaudited)
As at 30 September 2017
As at As at As at
30 September 1 October 1 April
2017 2016 2017
GBP000 GBP000 GBP000
------------------------------------- ------------- ------------ -------------
Non-current assets
Property, plant and equipment 3,283 3,430 3,732
Goodwill 7,144 7,144 7,144
Other Intangible assets 271 325 305
Investments - 1,102 1,653
Employee benefits 44,665 33,743 51,469
Deferred tax assets 3,789 4,008 3,486
------------------------------------- ------------- ------------ -------------
59,152 49,752 67,789
------------------------------------- ------------- ------------ -------------
Current assets
Inventories 13,604 12,471 12,737
Trade and other receivables 7,206 8,014 7,444
Cash and cash equivalents 495 945 1,081
------------------------------------- ------------- ------------ -------------
21,305 21,430 21,262
------------------------------------- ------------- ------------ -------------
Total assets 80,457 71,182 89,051
------------------------------------- ------------- ------------ -------------
Non-current liabilities
Loans and other borrowings (8,972) (9,430) (9,234)
Deferred tax liability (15,901) (12,074) (18,216)
------------------------------------- ------------- ------------ -------------
(24,873) (21,504) (27,450)
------------------------------------- ------------- ------------ -------------
Current liabilities
Trade and other payables (4,795) (5,221) (5,436)
Income tax payable - (61) -
Provisions (201) (428) (389)
Loans and other borrowings (3,633) (5,853) (5,508)
(8,629) (11,563) (11,333)
------------------------------------- ------------- ------------ -------------
Total liabilities (33,502) (33,067) (38,783)
------------------------------------- ------------- ------------ -------------
Net assets 46,955 38,115 50,268
------------------------------------- ------------- ------------ -------------
Shareholders' equity
Called-up share capital 1,130 1,044 1,044
Share premium account 1,990 1,013 1,013
Revaluation reserve 791 1,273 637
Available for sale reserve - (45) 506
Equity reserve 139 139 139
Translation reserve 2,099 2,343 2,466
Retained earnings 40,806 32,348 44,463
------------------------------------- ------------- ------------ -------------
Total equity 46,955 38,115 50,268
------------------------------------- ------------- ------------ -------------
Condensed consolidated
statement of changes
in equity (unaudited)
As at 30 September Called Share Available
2017 up premium Revaluation for Translation Equity Retained
share sale
capital account reserve reserve reserve reserve earnings Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------------- ------- -------- ------------- --------- ------------- -------- ---------- ---------
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
the 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
------------------------- ------- -------- ------------- --------- ------------- -------- ---------- ---------
Profit for the period - - - - - - 968 968
Other comprehensive
income:
Foreign currency
translation - - 75 - 123 - (122) 76
Re-measurement of
the net defined benefit
assets - - - - - - 16,183 16,183
Fair value adjustment
of investments - - - 551 - - - 551
Transfer on revalued
properties - - (711) - - - 711 -
Deferred tax - - - - - - (5,664) (5,664)
------------------------- ------- -------- ------------- --------- ------------- -------- ---------- ---------
Total comprehensive
income - - (636) 551 123 - 12,076 12,114
------------------------- ------- -------- ------------- --------- ------------- -------- ---------- ---------
Transactions with
owners:
Credit for share-based
payments - - - - - - 39 39
------------------------- ------- -------- ------------- --------- ------------- -------- ---------- ---------
Total transactions
with owners - - - - - - 39 39
------------------------- ------- -------- ------------- --------- ------------- -------- ---------- ---------
At 1 April 2017 1,044 1,013 637 506 2,466 139 44,463 50,268
------------------------- ------- -------- ------------- --------- ------------- -------- ---------- ---------
Profit for the period - - - - - - 1,832 1,832
Other comprehensive
income:
Foreign currency
translation - - - - (367) - 11 (356)
Re-measurement of
the net defined benefit
assets - - - - - - (7,528) (7,528)
Revaluation of property - - 154 - - - - 154
ProPhotonix adjustment - - - 622 - - (622) -
ProPhotonix disposal - - - (1,128) - - - (1,128)
Deferred tax - - - - - - 2,635 2,635
------------------------- ------- -------- ------------- --------- ------------- -------- ---------- ---------
Total comprehensive
income - - 154 (506) (367) - (3,672) (4,391)
------------------------- ------- -------- ------------- --------- ------------- -------- ---------- ---------
Transactions with
owners:
Share capital subscribed
for 86 977 - - - - - 1,063
Credit for share-based
payments - - - - - - 15 15
------------------------- ------- -------- ------------- --------- ------------- -------- ---------- ---------
Total transactions
with owners 86 997 - - - - 15 1,078
------------------------- ------- -------- ------------- --------- ------------- -------- ---------- ---------
At 30 September 2017 1,130 1,990 791 - 2,099 139 40,806 46,955
------------------------- ------- -------- ------------- --------- ------------- -------- ---------- ---------
Condensed consolidated cash flow statement
(unaudited)
For the 26 week period ended 30 September
2017
26 weeks 26 weeks 52 weeks
ended ended ended
30 September 1 October 1 April
2017 2016 2017
GBP000 GBP000 GBP000
-------------------------------------------- ------------- ---------- ---------
Cash flows from operating activities
Profit for the period 1,832 1,091 2,059
Adjustments for:
Amortisation 26 28 58
Depreciation 226 220 452
Pension credit - - (647)
Net financial income (132) (190) (334)
Other special items 292 - 750
ProPhotonix profit (970) - -
Equity share option expense 15 29 68
Income tax expense 233 284 1,169
-------------------------------------------- ------------- ---------- ---------
Operating cash flow before changes in
working capital and provisions 1,522 1,462 3,575
(Increase) /decrease in trade and other
receivables (93) (884) (150)
(increase)/decrease in inventories (1,454) (516) (1,404)
(Decrease) in trade and other payables (426) (1,681) (1,260)
Employee benefit contributions (60) - (120)
Restructuring and redundancy expenditure (50) - (541)
-------------------------------------------- ------------- ---------- ---------
Cash generated from/(used in) operations (561) (1,619) 100
Interest paid (442) (479) (946)
Income tax paid - - 88
-------------------------------------------- ------------- ---------- ---------
Net cash flows from operating activities (1,003) (2,098) (758)
-------------------------------------------- ------------- ---------- ---------
Cash flows from investing activities
Interest received - 1 3
Proceeds from sale of property, plant
and equipment - 2,100 2,090
Proceeds from sale of ProPhotonix 1,518 - -
Purchase of property, plant and equipment (198) (298) (490)
Development expenditure capitalised (6) (4) (22)
Net cash from investing activities 1,314 1,799 1,581
-------------------------------------------- ------------- ---------- ---------
Cash flows from financing activities
Net proceeds from issue of ordinary 1,064 - -
shares
Proceeds from/(Net repayment of) external
borrowing (1,882) 184 (439)
Net finance lease expenditure (29) (43) (93)
Net cash flows from financing activities (847) 141 (532)
-------------------------------------------- ------------- ---------- ---------
Net increase/(decrease) in cash and
cash equivalents (536) 108 291
Cash and cash equivalents at the beginning
of the period 1,081 765 765
Effect of exchange rate fluctuations
on cash held (50) 72 25
-------------------------------------------- ------------- ---------- ---------
Cash and cash equivalents at the end
of the period 495 945 1,081
-------------------------------------------- ------------- ---------- ---------
Notes relating to the condensed consolidated financial
statements
For the 26-week period ended 30 September 2017
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 30 September 2017 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 30
September 2017. 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 20 November
2017.
The comparative figures for the financial year ended 1 April
2017 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 1 April 2017 the Group refinanced
in August 2016 with HSBC PLC who provided a package of facilities
to support the working capital of the UK machine tools division and
a term loan secured on the remaining UK freehold site totaling
GBP4.95m. These facilities have been maintained although as a
result of the sale of the ProPhotonix holding and the equity raise
during the period are largely undrawn. Overseas bank finance in
place is a mixture of term and revolving facilities with the
earliest review in August 2018. 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 30 September
2017 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 52 week period ended
1 April 2017.
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 52
week period ended 1 April 2017.
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 30 September Machine
2017 Tools
& Precision Industrial
Engineered Laser Head Office
Components Systems & unallocated Total
Segmental analysis of
revenue GBP000 GBP000 GBP000 GBP000
------------------------------- ------------ ---------- -------------- --------
Total revenue 16,961 7,876 - 24,837
------------------------------- ------------ ---------- -------------- --------
Operating profit/(loss)
pre special items 760 1,110 (600) 1,270
Special items (111) (162) (34) (307)
------------------------------- ------------ ---------- -------------- --------
Operating profit/(loss) 649 948 (634) 963
------------------------------- ------------ ---------- -------------- --------
Other segmental information:
Reportable segment assets 26,474 7,501 46,482 80,457
Reportable segment liabilities (21,576) (3,619) (8,307) (33,502)
Intangible & Property,
plant and equipment additions 39 165 - 204
Depreciation and amortisation 136 97 19 252
------------------------------- ------------ ---------- -------------- --------
3. SEGMENT ANALYSIS (continued)
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
------------------------------- ------------ ---------- -------------- --------
Total revenue 16,423 6,740 - 23,163
------------------------------- ------------ ---------- -------------- --------
Operating profit/(loss)
pre- special items 923 893 (582) 1,234
Special items - - (49) (49)
Operating profit/(loss) 923 893 (631) 1,185
Other segmental information:
Reportable segment assets 28,547 8,403 34,232 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
------------------------------- ------------ ---------- -------------- --------
Continuing
52-weeks ended 1 April Machine
2017 Tools
& Precision Industrial
Engineered Laser Head Office
Components Systems & unallocated Total
Segmental analysis of
revenue GBP000 GBP000 GBP000 GBP000
Total revenue per statutory
accounts 32,424 14,608 - 47,032
------------------------------- ------------ ---------- -------------- --------------------
Operating Profit/(loss)
before special Items 2,059 1,993 (987) 3,065
------------------------------- ------------ ---------- -------------- --------------------
Special Items 691 (671) (191) (171)
Group profit/(loss) from
operations 2,750 1,322 (1,178) 2,894
------------------------------- ------------ ---------- -------------- --------------------
Other segmental information:
Reportable segment assets 29,120 7,638 52,293 89,051
Reportable segment liabilities (26,538) (3,772) (8,473) (38,783)
Intangible & Property,
plant and equipment additions 115 397 - 512
Depreciation and amortisation 295 215 - 510
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, investments and assets, exceptional costs
relating to reorganisation, redundancy and restructuring, legal
disputes and inventory, asset and intangibles.
30 September 1 October 1 April
2017 2016 2017
GBP000 GBP000 GBP000
--------------------------------------------------- ------------ --------- -------
Items included in operating profit:
Stock write-offs - - (118)
Pension credit - - 647
Refinancing costs - - (54)
Reorganisation ,restructuring and redundancy costs (273) - (622)
Profit on sale of property - - 114
Acquisition costs - - (29)
Share option costs (15) (29) (68)
Amortisation of intangible assets acquired (19) (20) (41)
--------------------------------------------------- ------------ --------- -------
(307) (49) (171)
--------------------------------------------------- ------------ --------- -------
Items included in financial (income)/expense:
--------------------------------------------------- ------------ --------- -------
Pensions interest on surplus 665 750 1,445
--------------------------------------------------- ------------ --------- -------
Amortisation of loan note expenses (91) (82) (168)
--------------------------------------------------- ------------ --------- -------
574 668 1,277
--------------------------------------------------- ------------ --------- -------
Profit on ProPhotonix sale 970 - -
--------------------------------------------------- ------------ --------- -------
5. Financial income and expensE
30 September 1 October 1 April
2017 2016 2017
GBP000 GBP000 GBP000
---------------------------------- ------------ --------- -------
Interest income - 1 3
Interest on Pension surplus 665 750 1,445
---------------------------------- ------------ --------- -------
Financial income 665 751 1,448
---------------------------------- ------------ --------- -------
Bank overdraft and loan interest (98) (133) (173)
Loan note interest (340) (340) (761)
Finance charges on finance leases (4) (6) (12)
Amortisation of loan note costs (91) (82) (168)
Financial expense (533) (561) (1,114)
---------------------------------- ------------ --------- -------
6. Taxation
30 September 1 October 1 April
2017 2016 2016
GBP000 GBP000 GBP000
----------------------------------------- ------------ --------- -------
Current tax:
Corporation tax at 19% (2016: 20%): - - -
Overseas taxation:
- current period - (20) -
----------------------------------------- ------------ --------- -------
Total current tax charge - (20) -
----------------------------------------- ------------ --------- -------
Deferred taxation:
- current period (233) (264) (695)
- prior period - - (474)
----------------------------------------- ------------ --------- -------
Total deferred taxation charge (233) (264) (1,169)
----------------------------------------- ------------ --------- -------
Taxation charged to the income statement (233) (284) (1,169)
----------------------------------------- ------------ --------- -------
7. Earnings per share
The calculation of the basic earnings per share of 1.75p (2016:
1.05p) is based on the earnings for the financial period
attributable to the Parent Company's shareholders of a profit of
GBP1,832,000 (2016 GBP1,091,000) and on the weighted average number
of shares in issue during the period of 104,831,330 (2016:
104,357,957). At 30 September 2017, there were 6,650,000 (2016:
6,650,000) potentially dilutive shares on option and 43,950,000
(2016: 43,950,000) share warrants exercisable at 20p. The weighted
average effect of these as at 30 September 2017 was 716,915 shares
(2016: nil) giving a diluted earnings per share of 1.74p (2016:
1.05p).
.
30 September 1 October 1 April
2017 2016 2017
--------------------------------------------------- ------------ ------------ ------------
Weighted average number of shares Shares Shares Shares
Issued shares at start of period 104, 357,957 104, 357,957 104, 357,957
Effect of shares issued in the period 473,373 - -
--------------------------------------------------- ------------ ------------ ------------
Weighted average number of shares at end of period 104,831,330 104,357,957 104,357,957
--------------------------------------------------- ------------ ------------ ------------
30 September 1 October 1 April
2017 2016 2017
GBP000 GBP000 GBP000
------------------------------------------- ------------ --------- -------
Underlying earnings
Total post tax earnings 1,832 1,091 2,059
Share option costs 15 29 68
Pensions Interest (665) (750) (1,445)
Amortisation of Shareholder loan expenses 91 82 168
Pensions credit - - (647)
Amortisation of intangible assets acquired 19 20 41
Other special items 273 - 709
Profit on sale of ProPhotonix (970) - -
Associated taxation on special items 233 264 1,287
------------------------------------------- ------------ --------- -------
Underlying earnings before tax 828 756 2,240
------------------------------------------- ------------ --------- -------
Underlying earnings after tax 828 736 2,122
------------------------------------------- ------------ --------- -------
Underlying Earnings Per Share 0.79p 0.71p 2.15p
8. RECONCILIATION OF NET CASH FLOW TO NET DEBT
30 September 1 October 1 April
2017 2016 2017
GBP000 GBP000 GBP000
------------------------------------------------- ------------ --------- --------
Increase/(decrease) in cash and cash equivalents (536) 233 291
(decrease)/Increase in debt and finance leases 1,911 168 532
------------------------------------------------- ------------ --------- --------
(decrease)/Increase in net debt from cash flows 1,375 401 823
Net debt at beginning of period (13,661) (13,886) (13,886)
Loan costs amortisation and adjustments (91) (82) (168)
Exchange effects on net funds 267 (771) (430)
------------------------------------------------- ------------ --------- --------
Net debt at end of period (12,110) (14,338) (13,661)
------------------------------------------------- ------------ --------- --------
9. Analysis of net DEBT
At Exchange/ At
1 April Reserve 30 September
2017 movement Other Cash flows 2017
GBP000 GBP000 GBP000 GBP000 GBP000
---------------------------------- -------- --------- ------ ---------- ------------
Cash at bank and in hand 981 (50) - (536) 395
Short term deposits (included
within cash and cash equivalents
on the balance sheet) 100 - - - 100
1,081 (50) - (536) 495
Debt due within one year (5,427) 243 - 1,603 (3,581)
Debt due after one year (1,277) 67 - 279 (931)
Loan Notes due after one year (7,867) - (91) - (7,958)
Finance leases (171) 7 - 29 (135)
Total (13,661) 267 (91) 1,375 (12,110)
---------------------------------- -------- --------- ------ ---------- ------------
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. In addition, the Group operates a
retirement healthcare benefit scheme for certain of its retired
employees in the USA, which is also treated as a defined benefit
scheme. The principal scheme is the UK defined benefit pension
plan.
The UK scheme was closed to future accrual of benefits at 31
March 2013. The latest actuarial valuation of the UK scheme to 31
March 2016 was signed in October 2017 at which time there was an
estimated surplus of GBP12.2m based on the prudent Technical
Provisions basis of valuation. Consequently there continues to be
no requirement for any cash funding from the Company and various
options for the scheme are being investigated.
Value of UK and USA scheme assets and liabilities 30 September 1 October 1 April
for the purposes of IAS 19 2017 2016 2017
GBP000 GBP000 GBP000
-------------------------------------------------- ------------ --------- -------
Opening Fair value of schemes assets 245,367 220,208 220,208
Experience adjustments in the period (12,991) 30,900 25,159
Closing Fair value of schemes assets 232,376 251,108 245,367
-------------------------------------------------- ------------ --------- -------
Opening present value of schemes liabilities 193,898 179,271 179,271
Experience adjustments in the period (6,187) 37,906 14,627
-------------------------------------------------- ------------ --------- -------
Closing present value of schemes liabilities 187,711 217,177 193,898
-------------------------------------------------- ------------ --------- -------
Surplus recognised under IAS 19 44,665 33,931 51,469
-------------------------------------------------- ------------ --------- -------
The principal assumptions used for the purpose of the IAS 19
valuation for the UK scheme compared to the 2017 year end were as
follows:
30 September 1 April
2017 2017
UK scheme UK scheme
% p.a. % p.a.
---------------------------------------------------------- ------------ ---------
Inflation under RPI 3.25 3.25
Inflation under CPI 2.15 2.15
Rate of increase to pensions in payment - LPI 5% 3.15 3.15
Discount rate for scheme liabilities and return on assets 2.65 2.55
---------------------------------------------------------- ------------ ---------
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
12. Disposal of ProPhotonix
The Group disposed of its entire holding in ProPhotonix Limited
on 31 August 2017. The shareholding was originally acquired in a
share swap with institutional investors in August 2014 when 4.925m
shares were issued in exchange for 26.3% of ProPhotonix. Proceeds
of GBP1.5m gross were received which was used to reduce the UK
senior debt with HSBC.
On disposal management identified that a write down of the
carrying amount of the investment that occurred in 2015 should have
been recognised in the consolidated income statement rather than
the available for sale reserve. As a result an amount of GBP622,000
has been transferred from retained earnings to the available for
sale reserve. The revised available for sale carrying amount has
then been recycled as part of the profit on disposal of
GBP970,000.
13. Principal Risks and Uncertainties
The principal risks and uncertainties affecting the Group remain
those set out in the 2017 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 EALFXFFLXFFF
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