TIDMSIXH
RNS Number : 3737B
600 Group PLC
30 September 2022
30 September 2022
The 600 Group PLC
("600 Group" or the "Group")
Results for the year ended 31 March 2022
Transformative year with streamlined operations refocused on the
high-growth Industrial Laser Systems market
The 600 Group PLC (AIM: SIXH), the Industrial Laser Systems
Business, today announces its results for the year ended 31 March
2022.
Financial Highlights
-- Revenue from continuing operations up 50% to $32.0m (2021: $21.3m)
-- Underlying operating profit from continuing operations of $1.8m (2021: loss $0.2m)
-- Operating profit after adjusting items from continuing operations $1.2m (2021: loss $1.0m)
-- Laser Division underlying operating margin increased to 12.9% (2021: 8.6%)
-- Underlying profit before tax on continuing operations of $0.8m (2021: loss $1.3m)
-- Profit before tax after adjusting items on continuing
operations of $0.2m (2021: loss $2.8m)
-- Group net debt at 31 March 2022 excluding lease liabilities
was $17.0m (31 March 2021: $12.7m); all long-term borrowings
redeemed post year end following sale of Machine Tool Division
-- Year-end order book increased by 24% to record levels at 31
March 2022, with further 10% growth to the end of September 2022 as
the Group sees heightened demand in FY23
Underlying profits are before adjusting items which are
unrelated to the normal trading activity of the group - see note
4.
Strategic & Operational Highlights
-- Completed the Group's strategic refocus towards Industrial
Laser Systems - a higher-margin, growth market - following the
disposal of the Machine Tool Solutions division (completed in April
2022)
-- Strong recovery post-pandemic with particularly high activity
levels across the Industrial Laser Systems businesses and a record
order book
o 50% revenue increase from Industrial Lasers division driven by
strong organic growth in order intake
o CMS led the order book growth, including a $4.3m order from
Goe Goe for four pill driller machines
-- Strengthened operations across Industrial Laser Systems businesses:
o Integrated Group processes with CMS and TYKMA Electrox now
being served by a combined sales operations and distribution
network
o Completed proprietary software upgrade for TYKMA Electrox,
providing upgrade opportunities to customers as well as adding new
functionality and compatibility with other systems and
operations
-- Redeemed all long-term debt following disposal of the Machine
Tool Division for cash consideration of US$21m; significant credit
facilities to support increased activity levels and finance growth.
Current borrowings of $2.8m are supporting increased receivables,
including the balance of the Goe Goe contract, which are due to be
received over the next few months.
-- Strong pipeline of opportunities and record order book with
the Group well positioned to take advantage of operational gearing
as volumes continue to increase
Paul Dupee, Executive Chairman of the Group, commented:
"The 600 Group has been transformed into a streamlined business
with the financial flexibility and operational platform to capture
the growth potential of the industrial laser systems market.
"The global market for industrial lasers is valued in the region
of $15-20 billion, with further growth projected as lasers are
adopted in material processing across multiple industries, ranging
from aerospace and transport to medical and pharmaceutical.
"We are proud to own two leading brands within this high-growth,
future-facing market. The strength of our offering is reflected in
the way we have rebounded strongly from the impact of the pandemic.
Our businesses have seen a significant increase in activity levels
across our operations, achieving record order books during the year
and seeing growth since the year end, which underpins the Group's
growth projections.
"As we enter the new financial year with all long-term debt
repaid and 100% focused on the Laser Division, the Group is in a
strong position to deliver further growth. We are focused on
expanding our share of this highly fragmented industry, both
through organic growth and consolidation opportunities. The Board
looks to the future with confidence and will provide a trading
update on H1 FY2023 performance in due course."
Enquiries:
The 600 Group PLC Tel: +1-407-818-1123
Paul Dupee, Executive Chairman
Instinctif Partners (Financial PR) Tel: +44 207 457 2020
Tim McCall / Joe Quinlan 600Group@instinctif.com
Cenkos Securities plc (Nominated Adviser Tel: +44 20 7397 8900
and Broker)
Ben Jeynes / Max Gould (Corporate Finance)
Alex Pollen/ Henry Nicol (Sales)
Chairman's Statement
Fiscal 2022 was a truly transformative year for The 600 Group
PLC. After more than 100 years of owning and operating various,
often unrelated, businesses in a number of industries in various
countries around the world, the group has simplified itself and is
now engaged in only one line of business with current manufacturing
and executive facilities in only one country, the United States.
The group has transitioned from being a leveraged manufacturer of
legacy products in mature industries to a business that was debt
free at the date of the machine tool disposal and is now focused,
flexible and embracing 21st century technology with inherent
attractive growth rates and ample opportunities, both internal and
external, to expand its existing capabilities.
The sale of our machine tool business, concluded in April,
allowed us to redeem all long-term debt while we remain with
significant credit facilities. This enables us to support the
increased level of activity in our remaining division, Industrial
Lasers, where revenues increased by 50% and year-end order book has
grown by 24%.
During the pandemic, our divisional management has done an
excellent job of balancing the challenges faced including adjusting
to supply chain issues, managing personnel absentees and shortages,
and taking advantage of government programs including PPP in the US
and the furlough and loan schemes in the UK. This could not have
been accomplished without the hard work and dedication of our
superb work force whom the Board congratulate on a job well done
under very trying circumstances.
Having fundamentally changed the business, we must now leverage
our strengths including our enviable position in laser systems
manufacturing, our strong distribution network, our proprietary
intellectual property, our diversified, blue chip customer base,
our strong financial position, our buoyant order book and our
committed and talented employees. We must also take advantage of
the large addressable market available to us and look for synergies
within our technology base.
The last few years-- simplification of the business, the
pandemic, the supply chain disruptions, the relocation of the head
office--have created an opportunity for The 600 Group to thrive and
prosper. It is now up to the board, the management and our
employees to take advantage of that opportunity.
Paul Dupee
Chairman
30 September 2022
Strategic Report
Our business
The 600 Group PLC ("the Group") is a leading engineering group
focused on the global industrial laser technology industry. Our
market leading businesses have a diversified, blue-chip customer
base to whom we design and supply industrial laser systems for
applications in end-markets ranging from industrial and aerospace
to medical and pharmaceuticals. The Group operates from locations
in North America and sells 21% of its products and services
worldwide. The Group has important relationships directly with
customers and also with a number of distributors Worldwide.
Given the large number of customers and established distributors
in many countries there are no major sales concentrations of
customers or products. Sales are split evenly between direct
customers and distributors and in the year ended 31 March 2022, the
top 20 customers, of which 9 (2021: 10) were distributors,
contributed 43% (2021: 23%) of revenues.
Revenues (Continuing activities)
Revenues are generated across many diverse geographical
territories:
Percentage of worldwide revenues 2022 2021
(by destination) % %
United States of America 79.0 84.3
United Kingdom 0.4 0.6
Far East 12.5 1.8
Europe (excluding UK) 5.2 6.9
Rest of the World 2.9 6.4
Total 100 100
Macroeconomic and industry trends
Industrial laser systems
The use of industrial lasers for material processing continues
to expand worldwide with laser systems now becoming a mainstream
manufacturing process. Applications include laser machining,
including cutting and drilling, marking, ablation and a host of
other niche processes. One of the main drivers of this industry has
been legislation and the continual increase in the requirement for
traceability of products in all industries from aerospace and
transport to medical and pharmaceutical.
The global industrial laser market is estimated to be in the
region of $5.6bn but given this number relates just to the laser
sources, the actual market for systems incorporating these lasers
and associated equipment and software is estimated to be much
larger in the region of $15-$20bn. The industry had seen mid-single
digit increases until 2019 when a fall was recorded. Metal cutting
is by far the largest application by value and the market is
dominated by China which is the largest producer and consumer of
industrial lasers. The fall in the overall market in 2019 was
estimated to be in the region of 12% and largely driven by Chinese
decline in cutting systems which mirrored the decline in machine
tools, both of which are heavily influenced by Chinese demand. The
effects of the COVID-19 pandemic led to significant reductions in
volumes in the early part of 2020 but as China, in particular,
opened up, volumes recovered and the overall market was estimated
to be similar to that of 2019 as a result. The European and
American markets however were slower to recover and took until Q1
of 2021 to show significant signs of a return to more normal levels
of activity. Whilst there continues to be post pandemic global
issues with increased inflation and the Ukraine war leading to
energy price increases the laser processing markets have shown
resilience in recent years to Global market changes.
The laser marking and micro-materials processing subset of the
market (in which the Group competes) is smaller than the
macro-materials processing subset and has seen low single digit
growth in recent years. Growth is underpinned by enhanced
performance in the speed, cost and quality of the systems being
implemented compared to other techniques as well as by legislative
changes driving a requirement for greater traceability of products
and components. The industry subset occupied by the Group has
however seen a proliferation of vendors and selling price pressure
at the lower commodity end of the market thus whilst unit volumes
have continued to increase, revenue has been held back. It is for
this reason the Group took the decision to focus on the higher end
custom products where its strengths in design and proprietary
software provide greater opportunities to grow and enhance margin
and where the acquisition of CMS in June 2019 significantly
enhanced these capabilities.
Industry predictions for the laser industry expect the volumes
to continue to increase at high single digit percentage levels
going forward.
Our main markets
The main market we operate in is the USA. As with all Global
markets demand reduced as a result of the COVID-19 global pandemic
but saw a rapid increase as lockdowns ended. Supply chain issues
have created delays in deliveries and inflationary pressures have
resulted in cost increases. The Group has bought forward inventory
and passed on cost increases where possible to mitigate these
factors.
The possibility of disruption remains due to the ongoing effects
of COVID-19 and possible new outbreaks and variants. Increased
inflationary pressures from fuel costs and the risk of recession
have more recently arisen and may create further demand issues in
the Global markets.
Activity in the year
Industrial laser systems
Following a fall in activity of 10% during the pandemic both CMS
and TYKMA Electrox experienced significant increased order activity
leading to record levels of order book.
The existing TYKMA Electrox business continued to move more into
the custom higher specification market as increased competition and
price deflation continued in the lower end standard products sector
and the higher end large projects undertaken by the CMS business
returned. Both businesses continued to take advantage of the USA
Paycheck Protection Program (PPP) scheme at the start of the year
to keep teams and key skills together which allowed them to respond
quickly to the significant increase in activity. This was the
second round of benefits coming from this program. Both businesses
have continued to recruit additional personnel throughout the year
as activity continued to increase.
The completion of the upgraded proprietary software for TYKMA
Electrox will provide upgrade opportunities to customers going
forward as well as adding new functionality and compatibility with
other systems and operations.
Results for Continuing activities of the Laser Division for the
financial year were as follows:
2022 2021
$ 000 $ 000
Revenues 31,960 21,331
Underlying operating
profit 4,109 1,836
Underlying operating
margin 12.9% 8.6%
Underlying operating profit is before adjusting items, which are
explained in note 12 Alternative Performance Measures and set out
in note 4.
Discontinued Activity - Machine tools division
Following the agreed sale of the Division in March 2022, this
activity is treated as discontinued with the assets and liabilities
shown as held for sale in current assets and current liabilities in
the Consolidated Statement of Financial Position.
The revenue generated by this in the year ended 31 March 2022
was $37.0m and a profit of $0.8m after tax and adjusting items. The
total of assets and liabilities held for sale, detailed in note 13,
are $32m and $13.8m.
Group Results
Revenue from continuing operations represents the Laser Division
and as a result of record order books increased by 50% to $32.0m
(2021: $21.3m). Group profit before tax and adjusting items
including the continuing central costs was $0.8m (2021: loss
$1.3m). The profit before tax after adjusting items was $0.2m
(2021: loss $2.8m).
Adjusting items
The directors have highlighted transactions which are material
and unrelated to the normal trading activity of the Group.
In the opinion of the directors, the disclosure of these entries
should be reported separately for a better understanding of the
underlying trading performance of the Group. These underlying
figures are used by the Board to monitor business performance, form
the basis of bonus incentives and are used for the purposes of the
bank covenants.
These non-GAAP measures are explained in note 12 alternative
performance measures and set out in note 4. All adjusting items are
taken into account in the GAAP figures in the Income Statement.
Costs incurred on the disposal of the Machine Tool Division up
to 31 March 2022 were $0.4m.
Amortisation of the intangible assets acquired through the CMS
deal of $0.3m (2021: $0.3m) are also included in adjusting
items.
As a result of the extension of the repayment date of the loan
notes in August 2021 the amortisation of the loan note discount and
costs were required to be recalculated to take account of the
additional period which resulted in a net credit of $0.03m (2021:
$0.6m charge) and this is also included in adjusting items. The
loan notes were repaid from the proceeds of the Machine Tool
division sale in April 2022.
Taxation
The current year tax recorded in the P&L was a credit of
$0.3m (2021: charge of $1.4m). The majority of this amount relates
to deferred taxation movements with only $0.08m actually paid in
State taxes. There was no Federal tax expense in the USA. There is
no USA deferred tax recognised as management has made the
determination that it is more likely than not that the net deferred
tax assets will not be realized in the short to medium term and
therefore have placed a valuation allowance against those deferred
tax assets. There were no significant penalties or interest
recognized during the year or accrued at year-end.
The UK holding company continues to benefit from previous tax
losses with $1.6m of deferred tax asset not recorded on the balance
sheet. No taxation is payable in the UK. There are substantial
deferred tax assets in the USA of $2.5m that are not recorded on
the balance sheet. The US businesses are subject to Federal
taxation on their profits at the rate of 21% but also suffer State
taxes which increases their overall composite rate to 25%.
Net profit and earnings per share
The total continuing amount attributable to equity holders of
the parent for the current financial year amounted to $0.5m (2021:
loss of $4.2m) with pre-adjusting items profit of $1.1m (2021: loss
$3.0m).
Underlying basic earnings from continuing operations before
adjusting items were 0.93 cents (equivalent to 0.68p) per share
(2021: loss 2.53 cents, equivalent to 1.93p loss) and basic
earnings per share from continuing operations were 0.41 cents
(equivalent to 0.30p) (2021: 3.58 cents loss, equivalent to 2.73p
loss) - see note 7 for details.
Financial position and utilisation of resources
Cash flow
Cash generated from operations before working capital movements
was $3.4m (2021: $1.6m).
Working capital increased during the year in response to the
increased revenues and supply chain constraints in particular
inventories increasing by $3.8m. Receivables also increased $3.9m
due to the sales growth in the year.
Interest paid on borrowings was in line with the previous year
at $1.1m with the largest component of this being the fixed
interest on the GBP8.5m ($10.7m) 8% loan notes which were repaid in
April 2022.
Capital expenditure was $0.8m, higher than prior year (2021:
$0.5m) to support the strong sales growth across the
organization.
Net borrowings
Group net debt at 31 March 2022 excluding lease liabilities was
$17.0m (of which $0.7m was in discontinued entities held for sale)
against $12.7m in the prior year.
In order to provide headroom through the COVID-19 pandemic, on
21 August 2020, the 600 UK Limited machine tools subsidiary drew
down a GBP1.2m ($1.7m) 3-year term loan with a bullet repayment on
15 September 2023 and interest at 1.92% under the Government backed
Coronavirus Large Business Interruption Loan Scheme (CLBILS). There
are no covenants on the loan. The loan was repaid on completion of
the Machine Tools Division sale in April 2022.
Net bank indebtedness of $6.3m at 31 March 2022 (2021: $4.8m)
was all cleared in April 2022 following the receipt of the proceeds
on the Machine Tool Division sale. The USA working capital credit
line was increased to $10m to facilitate additional requirements to
support the substantial order increases during the year and was
reduced in April 2022 to $7.5m following the sale of Machine
tools.
The extension of the repayment date of the loan notes to 14
August 2023 was agreed in August 2021 but the notes were repaid in
April 2022 following completion of the Machine Tool Division sale.
The associated warrants to subscribe for new ordinary shares at 20p
were similarly extended to the same date and remain outstanding.
The loan notes are shown net of unamortised discounting and costs
and also amounts disclosed in equity reserve which amount to $0.2m
in the current financial year (2021: $0.2m).
Working capital facilities totaling $13.9m were renewed with
HSBC UK, Bank of America and Westpac Australia during the year and
would have been due to be reviewed in the normal course in early
2023 however all but the $7.5m working capital line from Bank of
America were repaid and extinguished in April 2022. All financial
covenants in place were met during the year.
Retirement benefits
The US retiree health scheme and pension fund deficits decreased
to $0.8m (2021: $1.0m) during the current year. These liabilities
are included in liabilities held for sale as part of the Machine
Tool Division disposal which was completed in April 2022 and the
liabilities transferred as part of that process.
Key performance indicators (KPIs)
The Group monitors performance against key financial objectives
that the Directors judge to be effective in measuring the delivery
of strategic aims and managing and controlling the business. These
focus at Group level on revenue and underlying operating
profit.
At individual business unit level, KPIs also include working
capital control, and customer related performance measures such as
on-time delivery and minimisation of warranty concerns.
These key performance indicators are measured and reviewed
against budget projections and prior year on a regular basis and
this enables the business to set and communicate its performance
targets and monitor its performance against these targets. Given
the Global effects of the COVID-19 pandemic, comparison against
prior periods has been difficult and relatively meaningless, and
market estimates have been very volatile and unpredictable. Revenue
targets are to outperform the market forecasts by 1% (5% is
considered a normal ongoing level of growth) and to achieve over a
10% underlying operating margin target.
The Group's recent performance on these financial KPIs on
continuing operations is set out as follows:
KPI 2022 2021
Revenue (annual
growth rate) 50% (10%)
Underlying operating
margin (% of revenue) 5.8% (0.8%)
All figures are pre adjusting items on continuing operations
These KPIs are used to assess performance and manage the
business and have been discussed in the strategic report and
divisional commentary.
Principal risks
The Board of Directors has identified the main categories of
business risk in relation to the implementation of the Group's
strategic aims and objectives, and has considered reasonable steps
to prevent, mitigate or manage these risks.
Macro-economic - the Group's businesses are active in markets
which can be cyclical in nature as the overall level of market
demand is dependent upon capital investment intentions. Economic or
financial market conditions determine global demand and could
adversely affect our customers, distributors, operations,
suppliers, and other parties with whom we transact. The Directors
seek to ensure that overall risk is mitigated by avoiding excessive
concentration of exposure to any given industry segment or to any
individual customer. Market conditions, lead indicators and
industry forecasts are monitored for any early warning signs of
changes in overall market demand, and measures to exploit
opportunities or manage elevated risks are taken as appropriate.
Key business risks are set out in the strategic review.
Production and supply chain - the continuity of the Group's
business activities is dependent upon the cost-effective supply of
products for sale from our own facilities, and those of our key
vendors. Supply can be disrupted by a variety of factors including
raw material shortages, labour disputes and unplanned machine down
time. Delays in the shipment of goods can affect lead times and
create some disruption.
Laws and regulations - Group businesses may unknowingly fail to
comply with all relevant laws and regulations in the countries in
which they operate and contract business. There is a risk of breach
of legal, safety, environmental or ethical standards which can be
more difficult to identify, comprehend, or monitor in certain
territories than others. The Directors believe that they have taken
all reasonable steps to ensure that operations are conducted to
high ethical, environmental and health and safety standards.
Controls are in place to keep regulatory and other requirements
under careful review and scrutinise any identified instances of
elevated risk.
Information Technology ("IT") - Group IT systems and the
information they contain are subject to security risks including
the unexpected loss of continuity from virus or other issues, and
the deliberate breach of security controls for commercial gain or
mischief. Any such occurrences could have a significant detrimental
effect on the Group's business activities. These risks are
mitigated by the utilisation of physical and embedded security
systems, regular back-ups and comprehensive disaster recovery
plans.
Market risks
The Group's main exposure to market risk arises from increases
in input costs in so far as it is unable to pass them on to
customers through price increases. The Group seeks to mitigate
increases in input costs through a combination of continuous
improvement activities to minimise increases in input costs and
passing cost increases on to customers, where this is commercially
viable.
The Group is also aware of market risk in relation to the
dependence upon key vendors in its supply chain. This risk could
manifest in the event of a commercial or natural event leading to
reduced or curtailed supply. The Group seeks to mitigate these
risks by maintaining transparent and constructive relationships
with key vendors, sharing long term plans and forecasts, and
encouraging effective disaster recovery planning. Alternative
sources of supply with different vendors and in different
geographic regions have also been put in place.
Other risks and uncertainties
The remaining main risks faced by the Group are to its
reputation as a consequence of a significant failure to comply with
accepted standards of ethical and environmental behaviour and
Global recessionary risk.
The Directors have taken steps to ensure that all of the Group's
operations are conducted to the highest ethical and environmental
standards. Regulatory requirements are kept under review, and key
suppliers are vetted in order to minimise the risk of the Group
being associated with a company that commits a significant breach
of applicable regulations.
The Board of Directors has identified the main categories of
business risk in relation to the implementation of the Group's
strategic aims and objectives, and has considered reasonable steps
to prevent, mitigate or manage these risks.
Paul Dupee
Chairman
30 September 2022
Chief Financial Officer Statement
The year ended 31 March 2022 was pivotal on the positioning of
The 600 Group. The sale of the Machine Tool Division, signed in
early March 2022 and closed on 11 April 2022, repositioned the
Group as a pure laser machine manufacturer. It moreover allowed the
Group considerably strengthening the Group's balance sheet. 2022
also marked a year of recovery from the impact of the COVID-19
restrictions which is reflected in the revenue growth (+29%) and
order intake increase (+29%), including discontinued
operations.
Current year review
The Laser Division delivered the strongest performance. Revenue
increased 49.8% driven by strong organic order intake growth of
35.9%. While both companies (Tykma and CMS) grew its order intake,
CMS led the group with an increase of 68.3% which was highly
impacted by the order received from Goe Goe for four pill driller
machines that totalled $4.3m. Profit in the Laser Division grew
123.1% which was the result of a strong customer demand, including
the large contract mentioned before and its operational agility in
spite of supply chain disruptions. However, there was a reduction
in gross margin (-2.5%) as a result of product mix and increased
costs of supplies.
The discontinued Machine Tool Division also saw some growth,
with revenue increase of 14.9%. Growth was observed in the European
affiliates (+25.5%) and Clausing (+8.3%) but not in Australia
(-3.7%). Order intake was the main reason for this revenue increase
with a total growth of 23.3%. Similarly, to the revenue, the order
intake pattens were substantially increased in Europe (+48.1%) and
Clausing (+14.7%), however the Australian affiliate saw its orders
reduced by -11.1%. Despite the growth in revenue, profitability in
the division declined -47.1% to $1.9m (2021: $2.8m). This profit
decline was influenced by the decrease in margins (-1.1%), which
reflects the general increase in raw materials, and increase
overheads as a consequence of the ease on the pandemic.
The operating profit margin for the overall Group was 5.4%
(2021: 4.9%). The Laser Division generated an operating profit of
12.9% that represents an increase of 4.2% vs previous year while
the Machine Tool Division delivered an operating profit of 5.2%
which is a decline of -2.2% vs prior year.
Statement of financial position
With the considerable growth of the Group's top line and the
increased challenges with supply chain across the world, our
working capital was increased $3.8m on inventories plus $3.9m on
trade receivables. This increase was partially funded by the
increase in trade creditors of $2.9m. The remaining part of it was
financed by the increase in the short-term loans.
The sale of the Machine Tool Division, $21.0m price on a cash
and debt free basis, closed on 11 April 2022 with the collection of
funds. This amount (minus the escrow accounts of $0.4m, brokerage
and legal fees) was used to pay the loan notes (GBP8.5m), HSBC
CLBILS Covid loan in the UK (GBP1.2m), the Bank of America CMS
remaining acquisition loan of $1.6m and the revolving line of
credit with Bank of America of $4.2m.
Because the Machine Tool Division sale closed immediately after
year end, the balance sheet included in the annual report does not
reflect the above movements.
Next year outlook
Entering the new year with all long term paid off and the
business focused 100% on the Laser Division, the Group is now in
the unique position of being able to look for options to expand its
portfolio within this line of business. The 2023 financial year has
started strongly, with a record order book in place and the Group
currently reviewing several potential business propositions.
Conclusion
The 600 Group delivered a solid financial performance, despite
global challenges and international economic and political
uncertainty including the COVID pandemic and, more recently, the
conflict in Ukraine. Despite this, trading has remained encouraging
thus far in the FY23 year.
Rui Lopes
Chief Financial Officer
30 September 2022
Consolidated income statement
For the Year ended 31 March 2022
RESTATED
--------- --------- ---------------
Before After Before After
Adjusting Adjusting Adjusting Adjusting Adjusting Adjusting
Items Items Items Items Items Items
year year year year year year
ended ended ended ended ended ended
31 March 31 March 31 March 31 March 31 March 31 March
2022 2022 2022 2021 2021 2021
Notes $000 $000 $000 $000 $000 $000
---------------------------------- ----- --------- --------- --------- --------- --------- ---------------
Continuing
Revenue 2 31,960 - 31,960 21,331 - 21,331
Cost of sales (18,490) 76 (18,414) (12,117) (79) (12,196)
---------------------------------- ----- --------- --------- --------- --------- --------- ---------------
Gross profit 13,470 76 13,546 9,214 (79) 9,135
Net operating expenses 3 (11,622) (707) (12,329) (9,395) (765) (10,160)
Operating profit/(loss) 1,848 (631) 1,217 (181) (844) (1,025)
Financial expense 5 (1,081) 26 (1,055) (1,153) (642) (1,795)
Profit/(loss) before tax 767 (605) 162 (1,334) (1,486) (2,820)
Income tax credit/(charge) 6 322 - 322 (1,639) 257 (1,382)
---------------------------------- ----- --------- --------- --------- --------- --------- ---------------
Profit/(loss) for the period
on continuing activities 1,089 (605) 484 (2,973) (1,229) (4,202)
Profit on discontinued operations 13 1,027 (242) 785 1,177 452 1,629
---------------------------------- ----- --------- --------- --------- --------- --------- ---------------
P rofit/(loss) for the period
attributable to the equity
holders of the parent 2,116 (847) 1,269 (1,796) (777) (2,573)
Basic earnings per share -
continuing activities 7 0.93c 0.41c (2.53c) (3.58c)
Diluted earnings per share
- continuing activities 7 0.91c 0.40c (2.53c) (3.58c)
Basic earnings per share 7 1.80c 1.08c (1.53c) (2.19c)
Diluted earnings per share 7 1.76c 1.06c (1.53c) (2.19c)
As explained in note 4, the directors have highlighted adjusting
items which are material or unrelated to the normal trading
activity of the group. The "before adjusting items" column in the
consolidated income statement shows non-GAAP measures. The "after
adjusting items" column shows the GAAP measures.
The prior year figures have been restated for the effects of the
discontinued operations- see note 13.
Consolidated statement of comprehensive income
For the period ended 31 March 2022
year year
ended ended
31 March 31 March
2022 2021
$000 $000
----------------------------------------------------- -------------- -------------
Pr ofit/(loss) for the period 1,269 (2,573)
Other comprehensive income/(expense)
Items that will not be reclassified to the
Income Statement:
Re-measurement of defined benefit asset/(liability) (349) 210
Deferred taxation credit/(charge) 1 06 ( 51)
------------------------------------------------------ -------------- -----------
Total items that will not be reclassified
to the Income Statement: (243) 159
------------------------------------------------------ -------------- -----------
Items that are or may in the future be reclassified
to the Income Statement:
Foreign exchange translation differences 9 03 5 14
Total items that are or may in the future
be reclassified to the Income Statement: 903 5 14
------------------------------------------------------ -------------- -----------
Other comprehensive income for the period,
net of income tax 660 673
Total comprehensive i ncome/(expense ) for
the period 1,929 (1,900)
------------------------------------------------------ -------------- -----------
Attributable to:
Equity holders of the Parent Company 1,929 ( 1,900)
------------------------------------------------------ -------------- -----------
Attributable to continuing activities 2,416 (5,433)
Attributable to discontinued activities (487) 3,533
Equity holders of the Parent Company 1,929 ( 1,900)
-------------------------------------- ----- --------
Consolidated statement of financial position
As at 31 March 2022
As at 3 1 March As at 31
2022 March 2021
note $000 $000
------------------------------ ---- --------------- -----------
Non-current assets
Property, plant and equipment 1,842 2,808
Goodwill 13,174 13,174
Other intangible assets 3,189 3,726
Right of use assets 1,473 8,988
Deferred tax assets 236 2,765
19,9 14 31,461
------------------------------ ---- --------------- -----------
Current assets
Inventories 8,041 17,941
Trade and other receivables 8 6,587 8,570
Deferred tax assets 99 809
Taxation 291 -
Cash and cash equivalents 207 4,997
Assets held for sale 13 31,954 -
47,179 32,317
------------------------------ ---- --------------- -----------
Total assets 67,093 63,778
------------------------------ ---- --------------- -----------
Non-current liabilities
Employee benefits - (968)
Loans and other borrowings (11,639) (1,590)
Government loans - (1,656)
Lease liabilities (1,081) (7,801)
Provisions (174) (248)
(12,894) (12,263)
------------------------------ ---- --------------- -----------
Current liabilities
Trade and other payables 9 (6,227) (8,162)
Lease liabilities (486) (1,505)
Taxation - (546)
Provisions (17 8) (188)
Government loans - (2,234)
Loans and other borrowings (4,871) (12,202)
Liabilities held for sale 1 3 (13,777) -
(25,539) (24,837)
------------------------------ ---- --------------- -----------
Total liabilities (38,433) (37,100)
------------------------------ ---- --------------- -----------
Net assets 28,660 26,678
------------------------------ ---- --------------- -----------
Shareholders' equity
Called-up share capital 1,803 1,803
Share premium account 3,828 3,828
Equity reserve 2 01 2 01
(6, 616
Translation reserve (5,713) )
Retained earnings 28,541 2 7,462
------------------------------ ---- --------------- -----------
Total equity 28,660 26 ,678
------------------------------ ---- --------------- -----------
Consolidated statement of changes in equity
As at 31 March 2022
Ordinary Share
share premium Revaluation Translation Equity Retained
capital account reserve reserve reserve Earnings Total
$000 $000 $000 $000 $000 $000 $000
------------------------------------- -------- --------- ------------- ----------- --------- -------- -------
At 28 March 2020 1,803 3,828 1,3 48 (7,130) 201 28,508 28,558
------------------------------------- -------- --------- ------------- ----------- --------- -------- -------
Loss for the period - - - - - (2 ,573) (2,573)
Foreign currency translation - - - 514 - - 514
Property disposal - - (1,348) - - 1,348 -
Net defined benefit pension movement - - - - - 210 210
Deferred tax - - - - - (51) (51)
------------------------------------- -------- --------- ------------- ----------- --------- -------- -------
Total comprehensive Income/(expense) - - (1,348) 514 - (1,066) (1,900)
Credit for share-based payments - - - - - 20 20
------------------------------------- -------- --------- ------------- ----------- --------- -------- -------
Total transactions with owners - - - - - 20 20
At 31 March 2021 1,803 3,828 - (6,616) 201 27,462 26,678
------------------------------------- -------- --------- ------------- ----------- --------- -------- -------
Profit for the period - - - - - 1,269 1,269
Foreign currency translation - - - 9 03 - - 903
Net defined benefit pension movement - - - - - (349) (349)
Deferred tax - - - - - 106 106
Total comprehensive income - - - 903 - 1,026 1,929
------------------------------------- -------- --------- ------------- ----------- --------- -------- -------
Transactions with owners:
Credit for share-based payments - - - - - 53 53
------------------------------------- -------- --------- ------------- ----------- --------- -------- -------
At 31 March 2022 1,803 3,828 - (5,7 13 ) 201 28,541 28,660
------------------------------------- -------- --------- ------------- ----------- --------- -------- -------
Consolidated cash flow statement
For the period ended 31 March 2022
period ended period ended
31 March 2022 31 March
202 1
$000 $000
---------------------------------------------------- ------------- ------------
Cash flows from operating activities
P rofit/(l oss) for the period 1 ,269 (2,573)
Adjustments for:
Amortisation 2 51 417
Depreciation 78 3 760
Depreciation of right of use assets 1,312 1,217
Net financial expense 1 ,371 2,138
PPP funding forgiven (2 ,297) (2,234)
Non-cash adjusting items 40 6 (357)
(Profit) on disposal of property, plant and
equipment - (489)
Equity share option expense 53 20
Income tax charge 243 2,663
----------------------------------------------------- ------------- ------------
Operating cash flow before changes in working
capital and provisions 3,391 1,562
Increase in trade and other receivables (3,944) (56)
(Increase)/decrease in inventories (3,801) 1,887
Increase/(decrease) in trade and other payables 2,915 ( 6 31 )
Employee benefit contributions (6 0) (11 8)
Cash (u sed in)/ generated from operations (1 ,499 ) 2,644
Interest paid (1,069) (1,1 26 )
Lease interest (311) (373)
Net cash flows ( used in)/generated from
operating activities (2,879 ) 1, 145
----------------------------------------------------- ------------- ------------
Cash flows (used in)/ g enerated from investing
activities
Interest received 24 3
Proceeds from sale of property, plant and
equipment 225 1,745
Purchase of property, plant and equipment (780) (494)
Development and IT software expenditure capitalised (5 4 ) (228)
Net cash flows (used in)/ g enerated from
investing activities (5 85 ) 1 ,026
----------------------------------------------------- ------------- ------------
Cash flows used in financing activities
P PP funding - 4 ,468
Proceeds from/(repayment of) external borrowing 1 ,037 (5,063)
UK Government loan - 1 ,656
Lease payments (1 ,460) ( 1,383)
Net cash flows used in financing activities (423) (322)
----------------------------------------------------- ------------- ------------
Net (decrease)/increase in cash and cash
equivalents (3,887) 1,849
Cash and cash equivalents at the beginning
of the period 4,997 2 ,878
Effect of exchange rate fluctuations on cash
held 1 81 270
----------------------------------------------------- ------------- ------------
Cash and cash equivalents at the end of the
period 1,291 4,997
----------------------------------------------------- ------------- ------------
Consolidated cash flow statement includes all activity relating
to continuing and discontinuing activity.
Cash in discontinued entities (Assets held for sale) 1,084
Cash in continuing entities 207
Cash and cash equivalents at the end of the period 1,291
Notes relating to the financial information
1. Basis of preparatioN
The consolidated financial statements of the Group have been
prepared in accordance with UK adopted international accounting
standards in conformity with the requirements of the Companies Act
2006.
The Financial information set out in this preliminary
announcement does not constitute the company's Consolidated
Financial Statements for the financial years ended 31 March 2022 or
31 March 2021 but is derived from those Financial Statements.
Statutory Financial Statements for 2021 have been delivered to the
Registrar of Companies and those for 2022 will be delivered
following the company's adjourned AGM.
The Auditors, BDO LLP, have reported on those financial
statements. Their reports were unqualified, did not draw attention
to any matters by way of emphasis without qualifying their reports
and did not contain statements under Section 498(2) or (3) of the
Companies Act 2006.
The Statutory accounts are available on the Company's website
and will be posted to shareholders who have requested a copy and
thereafter by request to the company's registered office.
2 Segment information
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 Board of Directors. The Board review the Group's
internal reporting in order to assess performance and allocate
resources.
The Board consider there to be one operating segment, being
Industrial Laser Systems, with the Machine Tools and Precision
Engineered Components Division being discontinued following the
sale agreed in March 2022.
The Board assesses the performance of the operating segments
based on a measure of underlying operating profit. This measurement
basis excludes the effects of adjusting items from the operating
segments. Head Office and unallocated represent central functions
and costs.
The following is an analysis of the Group's revenue, results and
net assets by reportable segment:
Continuing Discontinued
Machine
Year ended 31 March 2022 tools
& precision
Industrial Head Office engineered Group
laser systems & unallocated Total components Total
Segmental analysis of
revenue $000 $000 $000 $000 $000
-------------------------------- -------------- -------------- ---------- ------------ --------
Total revenue 31,960 - 31,960 37,024 68,984
-------------------------------- -------------- -------------- ---------- ------------ --------
Segmental analysis of
operating profit/(loss)
before Adjusting Items 4,109 (2,261) 1,848 1.908 3,756
-------------------------------- -------------- -------------- ---------- ------------ --------
Adjusting Items 76 (707) (631) (242) (873)
-------------------------------- -------------- -------------- ---------- ------------ --------
Group operating profit/(loss) 4,185 (2,968) 1,217 1,666 2,883
-------------------------------- -------------- -------------- ---------- ------------ --------
Other segmental information:
Reportable segment assets 20,466 14,673 35,139 31,954 67,093
Reportable segment liabilities (9,040) (15,616) (24,656) (13,777) (38,433)
Fixed asset additions 577 33 610 170 780
Depreciation and amortisation 924 446 1,370 976 2,346
2.Segment information (CONTINUED)
Continuing Discontinued
Machine
Year ended 31 March 2021 tools
& precision
Industrial Head Office engineered Group
laser systems & unallocated Total components Total
Segmental analysis of
revenue $000 $000 $000 $000 $000
-------------------------------- -------------- -------------- ---------- ------------ --------
Total revenue 21,331 - 21,331 32,219 53,550
-------------------------------- -------------- -------------- ---------- ------------ --------
Segmental analysis of
operating profit/(loss)
before Adjusting Items 1,836 (2,017) (181) 2,801 2,620
-------------------------------- -------------- -------------- ---------- ------------ --------
Adjusting Items (79) (765) (844) 452 (392)
-------------------------------- -------------- -------------- ---------- ------------ --------
Group operating profit/(loss) 1,757 (2,782) (1,025) 3,253 2,228
-------------------------------- -------------- -------------- ---------- ------------ --------
Other segmental information:
Reportable segment assets 13,424 16,998 30,422 33,469 63,891
Reportable segment liabilities (5,586) (20,187) (25,773) (10,781) (36,554)
Fixed asset additions 432 114 546 176 722
Depreciation and amortisation 1,016 371 1,387 1,007 2,394
Inter-segment pricing is determined on an arm's length basis.
Segment results, assets and liabilities include items directly
attributable to a segment as well as those that can be allocated on
a reasonable basis.
Segment capital expenditure is the total cost incurred during
the period to acquire segment assets that are expected to be used
for more than one period.
Disaggregation of revenue is shown by origin, destination and
product group in the following two tables:
Disaggregation of revenue by origin 2022 2021
for continuing operations
------------- -------------
$000% $000%
------------------------------------ ------ ---- ------ ----
North America 31,960 100.0 21,331 100.0
------------------------------------ ------ ----- ------ -----
Disaggregation of revenue by origin 2022 2021
for discontinued operations
------------------------ -------------
$000 % $000%
------------------------------------ ------ ---------------- ------ ----
UK 12,913 34.8 10,131 31.4
Other European 504 1.4 - -
North America 21,069 56.9 19,453 60.4
Australasia 2,538 6.9 2,635 8.2
------------------------------------ ------ ---------------- ------ -----
Total 37,024 100.0 32,219 100.0
------------------------------------ ------ ---------------- ------ -----
2. Segment information (CONTINUED)
Disaggregation of revenue by destination for continuing
operations:
2022 2021 (RESTATED)
------------- -----------------
$000% $000%
Revenue:
-------------------- ------ ----- --------- ------
UK 126 0.4 127 0.6
Other European 1,666 5.2 1,466 6.9
North America (USA) 25,257 79.0 17,982 84.3
Africa 5 0.0 10 0.0
Australasia 7 0.0 39 0.2
Central America 264 0.8 1,044 4.9
Middle East 657 2.1 280 1.3
Far East 3,978 12.5 383 1.8
-------------------- ------ ----- --------- ------
31,960 100.0 21,331 100.0
-------------------- ------ ----- --------- ------
Disaggregation of revenue by origin for 2022 2021 (RESTATED)
discontinued operations
------------- -----------------
$000% $000%
Revenue:
---------------------------------------- ------ ----- --------- ------
UK 8,005 21.6 7,315 22.7
Other European 4,848 13.1 2,372 7.4
North America (USA) 21,078 56.9 19,488 60.5
Africa 245 0.7 230 0.7
Australasia 2,546 6.9 2,390 7.4
Central America 10 0.0 74 0.2
Middle East 58 0.2 18 0.1
Far East 234 0.6 333 1.0
---------------------------------------- ------ ----- --------- ------
37,024 100.0 32,220 100.0
---------------------------------------- ------ ----- --------- ------
Disaggregation of revenue by product group for continuing
operations:
2022 2021 (RESTATED)
------------- -----------------
$000% $000%
--------------------------------------- ------ ---- -------- ------
Sector
Lasers 29,462 92.2 19,544 91.6
Laser spares and service 2,498 7.8 1,787 8.4
--------------------------------------- ------ ----- -------- -------
Total 31,960 100.0 21,331 100.0
--------------------------------------- ------ ----- -------- -------
Timing of revenue recognition
Products and services transferred at a
point in time 16,679 52.2 11,936 56 .0
Products and services transferred over
time 15,281 47.8 9,395 44 .0
--------------------------------------- ------ ----- -------- -------
Total 31,960 100.0 21,331 1 00.0
--------------------------------------- ------ ----- -------- -------
There are no customers that represent 10% or more of the Group's
revenues.
Assets and liabilities related to contracts with customers:
2. Segment information (CONTINUED)
The group has recognised the following assets and liabilities
related to contracts with customers on continuing operations.
2 022 2 021
------ -----
$000 $000
------ -----
Current contract liabilities relating to
deposits from customers 2, 668 62 4
------ -----
2 022 2 021
------ -----
$000 $000
------ -----
Current contract assets relating to amounts
due from customers 2 ,104 344
------ -----
Remaining performance obligations
The vast majority of the group's contracts are for the delivery
of goods within the next 12 months for which the practical
expedient in paragraph 121(a) of IFRS 15 applies.
The following table shows how much of the revenue recognised in
the current reporting year relates to brought forward contract
liabilities:
2022 2021
----- -----
$'000 $'000
----- -----
Revenue recognised that was included in the contract
liability balance at the beginning of the year 444 385
----- -----
3. NET operating expenses
.
Restated
------ ---------------
2022 2021
Notes $000 $000
------ ---------------
- government assistance forgiven 1,451 1,456
Total other operating income 1,451 1,456
--------------------------------- ------ ---------------
2022 2021
$000 $000
--------------------------------- ------ ---------------
- administration expenses 13,073 10,851
- adjusting Items 3 707 765
Total operating expenses 13,780 11,616
--------------------------------- ------ ---------------
Total net operating expenses 12,329 10,160
--------------------------------- ------ ---------------
4. adjusting ITEMS
RESTATED
------------------------------------------------------- --------- ----------
2022 2021
$000 $000
------------------------------------------------------------ --------- --------
Items included in c ost of sales:
US Tariffs & Duty charges relating to prior years (d) 7 6 (79 )
76 (79)
------------------------------------------------------------ --------- --------
Items included in operating e xpenses :
Restructuring cost - (928)
Unavoidable lease cost - 350
Right of use asset impairment - 227
Acquisitions cost - (71)
Cost related to sale of the Machine Tool Division (a) (364) -
Amortisation of intangible assets acquired (b) (343) (343)
------------------------------------------------------------ --------- --------
(707) (765)
( 631) ( 844)
Items included in financial (income)/expense:
Amortisation of Loan notes and costs (c) (530) (642)
Loan Note credit on extension of repayment date (c) 556 -
26 (642)
------------------------------------------------------------ --------- ----------
Total adjusting items before tax ( 6 05 ) (1,486)
Income tax on adjusting items - 2 57
Total adjusting items after tax (6 05 ) (1,229)
------------------------------------------------------------ --------- --------
The directors have highlighted transactions which are material
or unrelated to the normal trading activity of the Group.
In the opinion of the directors the disclosure of these
transactions should be reported separately for a better
understanding of the underlying trading performance of the Group.
These underlying figures are used by the Board to monitor business
performance, form the basis of bonus incentives and are used for
the purposes of the bank covenants.
These non-GAAP measures are explained in note12 alternative
performance measures and set out below. All adjusting items are
taken into account in the GAAP figures in the Income Statement.
The items below correspond to the table below:
a) Cost related to the sale of the Machine Tool Division incurred before 31 March 2022.
b) A charge of $0.3m (2021: $0.3m) arose as a result of
amortisation of intangible assets acquired through the CMS Inc
deal.
c) A credit of $0.03m resulted from the recalculation of the
amortization of the loan notes and associated costs on the
extension of the repayment date to 14 August 2023 in July 2021.
Costs of amortization of $0.6m were incurred in the prior year
d) A credit resulted on the settlement of the prior year duty of $0.07m in the year.
5. Financial expense
RESTATED
2022 2021
$000 $000
------------------------------------------------ --------- ---------
Bank overdraft and loan interest (77) (147)
Loan note interest ( 914) (8 97)
Finance charges (1 )- (1 1)
Lease interest ( 89) (9 8)
--------- ---------
Financial expense before adjusting items (1,081) (1,153)
Amortisation of Loan notes and costs ( 530) ( 642)
Loan Note credit on extension of repayment date 556 -
(1 ,795
Financial expense (1 ,055 ) )
------------------------------------------------ --------- ---------
6. Taxation
RESTATED
2022 2021
$000 $000
---------------------------------------------------- ------- ---------
UK Corporation tax at 19% (2021: 19%):
- Prior Year: 283 -
Overseas taxation:
- current period 8 (419)
---------------------------------------------------- ------- ---------
Total tax credit/ (charge) 291 (419)
---------------------------------------------------- ------- ---------
Deferred taxation:
- current period 31 (1,054)
- prior period - 91
---------------------------------------------------- ------- ---------
Total deferred taxation credit/ (charge) 31 (963)
---------------------------------------------------- ------- ---------
Taxation credited/(charged) to the income statement 322 (1,382)
---------------------------------------------------- ------- ---------
The rate for Federal tax in the USA is 21% and in addition
businesses suffer State taxes estimated at 4%.
Tax reconciliation
The tax credit/charge assessed for the period is higher than
(2021: higher than) the standard rate of corporation tax in the UK
of 19 % (2021: 19%). The differences are explained below:
RESTATED
2 022 2 02 1
-----
$000 $000
----------------------------------------------------- ----- --------
Profit/(loss) before tax 162 (2,820)
----------------------------------------------------- ----- --------
Profit/(loss) before tax multiplied by the standard
rate of corporation tax
in the UK of 1 9 % (2021: 19%) 31 (536)
Effects of:
- income not taxable and/or expenses not deductible - 75
- overseas tax rates - 97
- US state taxes 8 10
- amount in respect of prior periods (283) -
- tax losses utilised not previously recognised (78) -
- deferred tax de-recognised on losses in the period - 1,736
Taxation credited/(charged) to the income statement (322) 1,382
----------------------------------------------------- ----- --------
7. Earnings per share
The calculation of the basic earnings per share for continuing
operations of 0.41c (2021: loss 3.58c) is based on the earnings for
the financial period attributable to the Parent Company's
shareholders of a profit of $484,000 (2021: loss $4,202,000) and on
the weighted average number of shares in issue during the period of
117,473,341 (2021: 117,473,341). At 31 March 2022, there were
3,790,000 (2021: 2,040,000) potentially dilutive shares (share
options or warrants with an exercise price below the average share
price for the year) with a weighted average effect of 2,496,578
(2021: 2,040,000) shares giving diluted earnings per share for
continuing operations of 0.40c (2021: loss 3.58c). In accordance
with IAS 33 - Earnings per Share, the Group shows no dilutive
impact in respect of its share options and Deferred Share Plan for
the year ended 31 March 2021 as their conversion to ordinary shares
would decrease the loss per share from continuing operations.
RESTATED
----------------------------------------------------------- ------------ -----------
2022 2021
----------------------------------------------------------- ------------ -----------
Weighted average number of shares
Issued shares at start of period 117,473,341 117,473,341
Effect of shares issued in the year - -
----------------------------------------------------------- ------------ -----------
Weighted average number of shares at end of period 117,473,341 117,473,341
----------------------------------------------------------- ------------ -----------
Weighted average number of the 3,790,000 (2021: 2,040,000)
potentially dilutive shares 2,496, 578 2,040,000
----------------------------------------------------------- ------------ -----------
Total weighted average diluted shares 119, 969,919 119,513,341
----------------------------------------------------------- ------------ -----------
$000 $000
------- ---------
(4 ,202
Total post tax profit/(loss) - continuing operations 4 84 )
Total post tax profit/ (loss) including discontinued (2,5 73
operations 1 ,269 )
------------------------------------------------------------- ------- ---------
Basic EPS - continuing operations 0 .41 c (3 .58 c)
(3 . 58
Diluted EPS - continuing operations 0 .40 c c)
Total including discontinued operations
Basic EPS 1 .08 c (2 .19 c)
Diluted EPS 1 .06 c (2 .19 c)
------------------------------------------------------------- ------- ---------
Underlying earnings $000 $000
------------------------------------------------------------- ------- ---------
(4 , 202
Total post tax profit/( loss) - continuing operations 4 84 )
Adjusting items - per note 4 605 1,229
Underlying earnings after tax and adjusting items-continuing
operations 1, 089 (2,973)
------------------------------------------------------------- ------- ---------
Underlying basic EPS 0. 93 c (2.53c)
Underlying diluted EPS 0. 91c (2.53c)
8. Trade and other receivables
2022 2021
$000 $000
------------------------ ----- -----
Trade receivables 3,424 5,149
Other debtors 411 1,361
Other prepayments 648 1,716
Contract assets 2,104 344
------------------------ ----- -----
Total 6,587 8,570
2022 2021
$000 $000
------------------------ ----- -----
Taxation 291 -
------------------------ ----- -----
9. Trade and other payables
2022 2021
$000 $000
-------------------------------- ----- -----
Current liabilities:
Trade payables 2,962 3,792
Social security and other taxes 16 344
Other creditors 35 1,254
Accruals 546 2,148
Contract liabilities 2,668 624
Total 6,227 8,162
-------------------------------- ----- -----
2022 2021
$000 $000
-------------------------------- ----- -----
Taxation - 546
10. RECONCILIATION OF NET CASH FLOW TO NET DEBT
2022 2021
$000 $000
------------------------------------------------- -------- --------
(Decrease)/increase in cash and cash equivalents (3,887) 1,849
Decrease in debt and lease liabilities 734 6,820
------------------------------------------------- -------- --------
(Increase)/decrease in net debt from cash flows (3,153) 8,669
Net debt at beginning of period (21,991) (24,142)
Government assistance loans USA - (2,234)
Government assistance loans UK - (1,656)
Loan note amortisation (530) (675)
Lease liabilities increase (118) (502)
Shareholder loan adjustment 511 -
Exchange effects on net funds 419 (1,451)
------------------------------------------------- -------- --------
Net debt at end of period (24,862) (21,991)
------------------------------------------------- -------- --------
11. Analysis of net DEBT
Group Transfer Continuing
Total to held activities
for sale
At Exchange Transfer Other Cash flows At At
31 March movement 31 March 31 March
202 1 2022 2022
$000 $000 $000 $000 $000 $000 $000 $000
---------------------- --------- --------- -------- ----- ---------- --------- --------- -----------
Cash at bank and
in hand 4,287 175 - - (3,302) 1,160 (1,084) 76
Term Deposits 710 6 - - (585) 131 - 131
---------------------- --------- --------- -------- ----- ---------- --------- --------- -----------
4,997 181 - - (3,887) 1,291 (1,084) 207
Debt due within
one year (977) - - - (4,089) (5,066) 196 (4,870)
Debt due after one
year (1,590) (1) - - 664 (927) 6 (921)
Loan notes due within
one year (11,225) 526 10,718 (19) - - - -
Loan notes due after
one year - - (10,718) - - (10,718) - (10,718)
Government Assistance
loans (3,890) (78) - 2,388 - (1,580) 1,580 -
Lease liabilities (9,306) (209) - (118) 1,771 (7,862) 6,294 (1,568)
---------------------- --------- --------- -------- ----- ---------- --------- --------- -----------
Total (21,991) 419 - 2,251 (5,541) (24,862) 6,992 (17,870)
---------------------- --------- --------- -------- ----- ---------- --------- --------- -----------
12. Alternative performance measures
The Directors assess the performance of the Group by a number of
measures and frequently present results on an 'underlying' basis,
which excludes adjusting items. The Directors believe the use of
these 'non-GAAP measures' provide a better understanding of the
underlying performance of the Group. In addition, discontinued
operations are excluded from underlying figures.
In the review of performance reference is made to 'underlying
profit' or 'profit before adjusting items', and in the Consolidated
Income Statement the Group's results are analysed between Before
adjusting items and after adjusting items.
The directors have highlighted transactions which are material
or unrelated to the normal trading activity of the Group.
Adjusting items are detailed in note 4 and are disclosed
separately on the basis that this presentation gives a clearer
picture of the underlying performance of the group.
These measures are used by the Board to assess performance, form
the basis of bonus incentives and are used in the Group's banking
covenants. In addition, the Board makes reference to orders and
order book or backlog. This represents orders received from
customers for goods and services and the amount of such orders not
yet fulfilled.
Underlying operating profit/(loss)
RESTATED
2022 2021
$000 $000
--------------------------------------------------------------- -------- --------
Operating profit/(loss) 1,217 (1,025)
Adjusting items included in net operating expenses (see
note 4) 631 844
--------------------------------------------------------------- -------- --------
Underlying operating profit 1,848 (181)
--------------------------------------------------------------- -------- --------
Underlying profit/(loss) for the period from continuing
activities
Profit/(Loss) for the period 1,269 (2,573)
Adjusting items included in cost of sales and net operating
expenses (see note 4) 631 844
Discontinued activities (785) (1,629)
Adjusting items included in Financial expense (26) 642
Tax on adjusting items - (257)
Underlying profit/(loss) for the period on continuing
activities 1,089 (2,973)
--------------------------------------------------------------- -------- --------
Underlying EPS
A reconciliation of underlying EPS is included in note
7.
12. Alternative performance
measures (continued)
Net debt excluding IFRS 16
leases liabilities
Net debt (see note 11) (24,862) (21,991)
Lease Liabilities 7,862 9,306
--------------------------------------------------------------- -------- -----------------------
Net Debt excluding leases (17,000) (12,685)
Discontinued activities net 698 -
debt
Net debt excluding IFRS 16 lease
liabilities- continuing activities (16,302) (12,685)
--------------------------------------------------------------- -------- -----------------------
13. DISCONTINUED OPERATIONS
The Consolidated Income statement reflects the profit after
taxation of the Machine Tool Division as "discontinued operations".
The consolidated Statement of Financial Position reflects the
entities to be sold as "Assets held for sale" and "liabilities held
for sale".
Assets and liabilities held for sale detail :
Held for
sale as
at 31 March
2022
$000
------------------------------ ------------
Non-current assets
Property, plant and equipment 1,150
Other intangible assets 27
Right of use assets 6,722
7,899
------------------------------ ------------
Current assets
Inventories 13,929
Trade and other receivables 6,025
Deferred tax assets 3,017
Cash and cash equivalents 1,084
---------------------------------
24,055
------------------------------ ------------
Total assets 31,954
--------------------------------- ------------
Non-current liabilities
Employee benefits (837)
Loans and other borrowings (1,585)
Lease liabilities (6,294)
(8,716)
------------------------------ ------------
Current liabilities
Trade and other payables (4,845)
Taxation 1
Provisions (21)
Loans and other borrowings (196)
(5,061)
------------------------------ ------------
Total liabilities (13,777)
--------------------------------- ------------
Net assets 18,177
--------------------------------- ------------
Discontinued Operations Income Before After Before After
Statement
Adjusting Adjusting Adjusting Adjusting Adjusting Adjusting
Items Items Items Items Items Items
year year year year year year
ended ended Ended ended ended ended
31 March 31 March 31 March 31 March 31 March 31 March
2022 2022 2022 2021 2021 2021
$000 $000 $000 $000 $000 $000
------------------------------- --------- --------- --------- --------- --------- ---------------
Discontinued operations
Revenue 37,024 - 37,024 32,219 - 32,219
Cost of sales (26,677) - (26,677) (22,436) - (22,436)
-------------------------------- --------- --------- --------- --------- --------- ---------------
Gross profit 10,347 - 10,347 9,783 - 9,783
Net operating expenses (8,439) (242) (8,681) (6,982) 452 (6,530)
Operating profit/(loss) 1,908 (242) 1,666 2,801 452 3,253
Financial expense (316) - (316) (344) - (344)
Profit before tax 1,592 (242) 1,350 2,457 452 2,909
Income tax (charge) (565) - (565) (1,280) - (1,280)
-------------------------------- --------- --------- --------- --------- --------- ---------------
Profit/(loss) for the period
on discontinued activities 1,027 (242) 785 1,177 452 1,629
-------------------------------- --------- --------- --------- --------- --------- ---------------
Basic earnings per share -
discontinued activities 0.87c 0.67c 1.00c 1.39c
Diluted earnings per share
- discontinued activities 0.86c 0.65c 0.98c 1.36c
Total comprehensive (expense)/ i ncome for the period
Attributable to discontinued activities (487) 3,533
Cashflows of discontinued operations
Net cashflows from operations 116
Cashflows from investing activities (610)
Cashflows from financing activities (2,411 )
14. Post balance sheet events
On 5 March 2022, the 600 Group signed a contract with Timesavers
Acquisitions LLC to sell its Machine Tool Division. This sale
included the following legal entities: (a) Colchester GmbH, a
private company with limited liability organized under the Legal
Requirements of Federal Republic of Germany, (b) 600 UK Limited
(registered number 144979), a private limited company organized
under the Legal Requirements of England and Wales, (c) 600 Machine
Tools Pty Ltd. (ACN 000161106), a proprietary company organized
under the Legal Requirements of Australia, and (d) Clausing
Industrial, Inc., a Delaware corporation. The price agreed for the
transaction was $21m. While the contract was signed in early March
2022, the completion date and collection of funds happened on 8 and
11 April 2022. The agreement included two escrow accounts: a Net
Working Capital (NWC) escrow with the amount of $0.25m and a
Retention escrow with the amount of $0.15m. We are currently in
negotiations to finalize the final working capital.
With the contract signed before 31 March 2022 and the deal
closing after this date, the accounts reflect the profitability of
the Machine Tool Division as "discontinued operations". The 600
Group consolidated balance sheet reflects the entities to be sold
as "Assets held for sale" and "liabilities held for sale". The sale
of this division will be recognized in FY23 accounts for the price
agreed plus the cash collected, plus NWC amount, once agreed, minus
all the expenses and write offs related with the sold entities.
There was no adjustment for impairment to the value of the
assets transferred to held for sale in the year ended 31 March
2022.
As mentioned previously in this report, with the proceeds of the
sale, all debt of the 600 Group was repaid on 11 April 2022. After
paying the loan notes, the HSBC loans in the UK and all remaining
loans with Bank of America in the US, we are now left with a
revolving credit line of $7.5m with Bank of America.
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END
FR SDMFSSEESEIU
(END) Dow Jones Newswires
September 30, 2022 07:00 ET (11:00 GMT)
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