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600 Group PLC SIXH Half Yearly Report


Attachment:

  600 Group PLC (SIXH) - Half Yearly Report

RNS Number : 0373R
600 Group PLC
14 November 2012
 

                              The 600 Group PLC

                                       

                                       

      Unaudited Interim Results for the 26 weeks ended 29 September 2012

                                       

The 600  Group  PLC,  the  machine tools  and  laser  marking  company,  today 
announces its interim results for the 26 weeks ended 29 September 2012.

 

Highlights:

 

·     Revenues increased by 9.5% to £19.91m (2011: £18.19m)

·     Net profit  before taxation  from continuing  operations* £1.34m  (2011: 
£0.19m)

·     Net profit attributable to equity holders £0.19m (2011: loss of £6.46m)

·     Strategic review and refinancing implemented

·     Divestment activity progressing well

·     Net debt reduced to £6.89m (31 March 2012: £7.99m)

·     Current trading showing improvements

 

 

*Before taxation, discontinued activities and special items

 

Commenting today, Paul Dupee, Chairman of The 600 Group PLC said:

 

"I am pleased  to report satisfactory  progress during the  first half of  the 
financial year, in which the new management team has implemented  considerable 
structural changes to Group activities.  We  aim to develop our key  strengths 
in metal turning machine tools and precision engineered components, and  laser 
marking equipment.  In each  of these activities,  our businesses have  strong 
products and brands,  significant market share,  diverse geographical  spread, 
robust manufacturing and supply chains, and reliable distribution partners.

 

Current trading since the period end is encouraging, with good revenue  growth 
reflecting the improved supply  chain and working  capital position, and  cost 
savings starting to take effect.  Whilst these positive signs are no cause for
complacency, the Board is confident  that an improved second half  performance 
is to be expected, and further progress can be made in coming months."

 

More Information on the group can be viewed at: www.600group.com

 

Enquiries:
The 600 Group PLC                                Tel: 01924 415 000
  Nigel Rogers, Chief Executive
Neil Carrick, Finance Director
Cadogan PR Limited                               Tel: 0207 930 7006
Alex Walters                                     Tel: 07771713608
  FinnCap                                        Tel: 020 7220 0500
Ed Frisby / Ben Thompson(Corporate Finance)

Tony Quirke / Victoria Bates (Corporate Broking)
SPARK Advisory Partners
Miriam Greenwood/Sean Wyndham-Quin               Tel: 020 3368 3553

 

 

The 600 Group Plc

Chairman's Statement for the 26 weeks ended 29 September 2012

 

Overview

 

I am pleased  to report  satisfactory progress during  the first  half of  the 
financial year, in which the new management team has implemented  considerable 
structural changes  to the  Group's activities.   The results  for period  are 
ahead of the  corresponding period last  year, and progress  has been made  on 
divestments and  the  provision of  financial  resources.  Management  is  now 
focused on  the  delivery of  improving  operational results  and  sustainable 
earnings growth.

 

 

Strategy

 

Our goal is  to develop  the Group's key  strengths in  metal turning  machine 
tools and precision  engineered components, and  laser marking equipment.   In 
each of these activities,  Group businesses have  strong products and  brands, 
significant market share,  diverse geographical  spread, robust  manufacturing 
and supply chains, and reliable distribution partners.

 

Non-core businesses in South Africa and Poland were sold in July and September
respectively, and their results are dealt with as discontinued activities.

 

 

Results and dividend

 

The trading performance of the Group was adversely affected by working capital
constraints in Europe throughout the  first half.  Whilst this was  alleviated 
by the proceeds from divestments, a significant proportion of the funds raised
were utilised  to  reduce net  bank  indebtedness, and  the  normalisation  of 
working capital was only fully resolved by the share placing in September.

 

Despite these conditions, revenue from  continuing operations grew by 9.5%  to 
£19.91m (2011:  £18.19m)  generating  a net  operating  loss  from  continuing 
activities but before special items of £0.07m (2011: net loss of £0.36m). 

 

After taking account of bank and net pension interest, the Group profit before
taxation, discontinued activities and special items was £1.34m (2011: £0.19m).

 

The total profit  before taxation of  the Group for  the financial period  was 
£0.75m (2011: loss of £6.57m).

 

The Board does not recommend that any dividend payment be made (2011: Nil).

 

Operations

Note: Revenues and net operating profit in respect of Laser Marking spares and
services in North America have been reclassified in the Laser Marking segment,
and comparative amounts have been restated accordingly.

Machine tools and precision engineered components

Group companies design and develop metal cutting machine tools sold under  the 
brand names  Colchester,  Harrison and  Clausing  and design  and  manufacture 
precision engineering  components  under the  brand  names Pratt  Burnerd  and 
Gamet.  The results of these activities were as follows:

 

 

                   26 weeks ended
           29 September 1 October
                   2012      2011

                  £ 000     £ 000

                         Restated

                                 
Revenues         16,199    14,131
Operating profit    409     (125)
Operating margin   2.5%     -0.9%

 

Worldwide revenues increased by 14.6%  to £16.20m (2011: £14.13m). Trading  in 
Europe was held back by the poor performance of the plant in Poland, which was
sold in  September 2012.   By contrast,  North American  operations  performed 
especially well, recording revenue growth of  27% compared to the same  period 
last year, sourced from well-established global supply chain partners.

Delivery lead times in Europe are now much improved, restoring the  confidence 
of our end  user customers  and distribution  partners.  The  business is  now 
beginning to  realise  the  benefits  of a  settled  supply  chain,  including 
shortened working capital cycle,  cost reduction opportunities and  normalised 
trading terms.

Attention is  also  focused  on  increased throughput  in  the  production  of 
workholding equipment,  bearings and  other precision  engineered  components, 
where reduced lead times will also provide opportunities for revenue growth in
future.

 

Laser marking

Electrox designs,  develops  and  manufactures  equipment  for  the  permanent 
marking of a  wide variety of  materials using lasers  from its operations  in 
Letchworth Garden City.  Results for the financial period were as follows:

                  26 weeks ended
          29 September 1 October
                  2012      2011

                 £ 000     £ 000

                        Restated

                                
Revenues         3,790     4,180
Operating profit   155       483
Operating margin  4.1%     11.6%

 

 

Revenues for Electrox  laser marking  equipment fell  by 9.3%  to £3.79m  when 
compared with  the corresponding  period last  year (2011:  £4.18m),  although 
increased by 17.0% when compared with the second half of the prior year  (2011 
H2:  £3.24m).  This  was  attributable  to  reduced  production  output  as  a 
consequence of working capital constraints, which severely affected the  final 
quarter of last year and prevailed for much of the current year to date.

Production and customer lead times  returned to normalised levels towards  the 
end of the period, leading to growth in underlying revenues which is  expected 
to continue into the second half of the year.

Significant progress has  also been made  in new product  development, and  in 
particular on  a major  project to  upgrade the  proprietary software  control 
system across the full  product range.  This will  be available for launch  in 
the next financial year, and will provide substantial new opportunities.

 

Discontinued activities and divestments

On 17 July 2012, the  sale of the Group's subsidiary  in South Africa, 600  SA 
Pty Ltd ("600SA") was completed for net cash proceeds of £1.81m. 

On 11 September 2012, the Group also  completed the sale of its subsidiary  in 
Poland, FMT Colchester Sp. Zo.o ("FMT") for a nominal sum.  This followed  the 
closure of  FMT  announced on  10  August  2012 following  the  withdrawal  of 
financial support from FMT by 600 Group. 

During the period these businesses suffered a combined trading loss of  £0.5m. 
Significant impairments had  already been  taken against their  values in  the 
year to  31  March  2012.   These  amounts  are  dealt  with  as  discontinued 
activities in the current financial period.  No further costs are expected  to 
arise in future periods.

The Group also  sold surplus  freehold property  at Shepshed,  Leicestershire, 
during the period, receiving net cash  proceeds of £1.2m against a book  value 
of £1.1m.  At the time  of sale the property  was generating rental income  of 
approximately £0.02m per annum. 

On 13 November  2012, the sale  of the  former sports ground  at Batley,  West 
Yorkshire, was completed for cash consideration of £0.39m, against book  value 
of £0.03m.  The  gain arising  will be  dealt with as  a special  item in  the 
results for the second half of the year.  Further freehold property  disposals 
are anticipated during the current financial year.

 

Financial resources

 

On 3 September 2012 the Company entered  into an agreement for the placing  of 
an aggregate of 19.66m ordinary  shares of 1p each at  a placing price of  7.5 
pence per share, raising an aggregate of £1.47m.

 

The Company also entered into  revised facility agreements with its  principal 
banker in the UK covering existing  term loan and revolving credit  facilities 
amounting to £3.64m and a new working capital facility of £0.30m.

 

The proceeds from the divestment of South Africa and the freehold property  in 
the period were used to  repay the UK overdraft  and term loan facilities  and 
provide  much  needed  additional  working  capital  for  the  UK  businesses. 
Additional banking facilities were  made available locally in  the US to  help 
fund the increased working  capital as a result  of the significant growth  in 
turnover being achieved.

 

At 29 September 2012 the Group had headroom on its banking facilities of  over 
£2m with net debt (including the shareholder loan) at £6.9m compared to £8m at
31 March 2012.

 

 

Principal Risks and Uncertainties

 

The principal risks and uncertainties affecting the Group remain those set out
in the  2012  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.

 

 

Outlook

 

Current trading since the period end is encouraging, with good revenue  growth 
reflecting the improved supply  chain and working  capital position, and  cost 
savings starting to take effect.  Whilst these positive signs are no cause for
complacency, the Board is confident  that an improved second half  performance 
is to be expected, and further progress can be made in coming months.

 

 

Paul Dupee

Chairman

14 November 2012

                                                                                As restated *                 
                                  Before       special     After     Before  special    After After         
                                                                               items
                                 special         items   special    special           special        special  

                                   items                   items      items             items          items
                                                                                                              
                                26 weeks      26 weeks  26 weeks   26 weeks 26 weeks       26       52 weeks
                                                                                        weeks
                                   ended         ended     ended      ended    ended                   ended  
                                                                                             
                                                                                        ended
                            29 September  29 September        29          1    1            1             31
                                                       September    October October   October    March        

                                                                                               
                                    2012          2012      2012       2011     2011     2011           2012  
                                                                                                              
                                   £'000         £'000     £'000      £'000    £'000    £'000          £'000  
 Continuing                                                                                                   
 Revenue                          19,911                  19,911     18,187            18,187         37,565  
 Cost of sales                  (13,540)         (165)  (13,705)   (12,675)  (4,092) (16,767)     (32,941)    
                                                                                                              
 Gross profit                      6,371         (165)     6,206      5,512  (4,092)    1,420          4,624  
 Other operating income              38                       38         78                78            126  
 Net operating expenses          (6,480)         (168)   (6,648)    (5,950)  (2,663)  (8,613)     (14,356)    
                                                                                                              
 Loss from operations               (71)         (333)     (404)      (360)  (6,755)  (7,115)        (9,606)  
                                                                                                              
 Bank and other interest            11               -        11         11        -       11             24  
 Expected return on pension      5,713               -    5,713       5,405        -    5,405         10,834  
assets
 Financial income                  5,724                   5,724      5,416             5,416         10,858  
                                                                                                              
 Bank and other interest           (322)         (253)     (575)      (306)        -    (306)          (669)  
 Interest on pension             (3,990)             -   (3,990)    (4,565)        -  (4,565)        (9,268)  
obligations
 Financial expense               (4,312)         (253)   (4,565)    (4,871)        -  (4,871)        (9,937)  
                                                                                                              
 Profit/(Loss) before tax          1,341         (586)       755        185  (6,755)  (6,570)        (8,685)  
                                                                                                              
 Income tax charge                  (65)             -      (65)       (45)        -     (45)          (907)  
                                                                                                              
 Profit/(Loss) for the             1,276         (586)       690       140   (6,755)  (6,615)        (9,592)
period from                                                                                                   
     continuing operations
                                                                                                              
 Post tax (loss)/ profit of        (501)             -     (501)        153        -      153        (5,257)  
discontinued operations
                                                                                                              
 Total profit/(loss) for             775         (586)       189        293  (6,755)  (6,462)     (14,849)
the financial
                    period                                                                                    
attributable to equity
holders of the parent
                                                                                                              
Special items comprise exceptional costs relating to reorganisation, redundancy, inventory and intangibles
impairments, property disposals and share based payments. 

*Comparative figures have been restated as a result of the South African and Polish businesses being treated  
as discontinued.

 
  Basic EPS       - continuing           1.94p   (0.89)p   1.05p      0.22p (10.62)p  (1040)p     (15.05)p
                             -         (0.76)p           (0.76)p      0.24p             0.24p          (8.25)p
discontinued 
                                         1.18p   (0.89)p   0.29p      0.46p  (11.0)p (10.16)p     (23.30)p
-Total 
                                                                                                              
  Diluted EPS    - continuing            1.93p   (0.89)p   1.04p      0.21p (10.62)p  (1040)p     (15.05)p
                            -          (0.76)p           (0.76)p      0.24p             0.24p          (8.25)p
discontinued 
                            -            1.17p   (0.89)p   0.28p      0.45p (10.62)p (10.16)p     (23.30)p
Total 

                                                   26 weeks  26 weeks 52 weeks
                                                         To        To       To
                                               29 September 1 October 31 March
                                                       2012      2011     2012
                                                       £000      £000     £000
Profit/(Loss) for the period                            189   (6,462) (14,849)
Other comprehensive (expense)/income:
Foreign exchange translation differences                  -         -     (95)
Net actuarial loss on employee benefit schemes      (7,500)     (760)  (1,785)
Recognition of pension surplus                       12,940         -        -
Impact of transfer to assets held for sale                -         -      349
Deferred taxation                                   (2,499)         -      386
Other comprehensive income/(expense) for the          2,941     (760)  (1,145)
period, net of income tax
Total comprehensive income/(expense) for the          3,130   (7,222) (15,994)
period

                                     As at     As at    As at
                              29 September 1 October 31 March
                                      2012      2011     2012
                                      £000      £000     £000
Non-current assets
Property, plant and equipment        4,363    10,379    5,085
Intangible assets                    1,018       868      852
Employee benefits                    7,140         -        -
Deferred tax assets                  1,473     2,594    1,473
                                    13,994    13,841    7,410
Current assets
Inventories                         10,967    15,873   10,811
Trade and other receivables          6,190     8,088    6,528
Assets held for sale                 2,103         -    9,093
Cash and cash equivalents              892       859      409
                                    20,153    24,820   26,841
Total assets                        34,147    38,661   34,251
Non-current liabilities
Employee benefits                  (2,139)   (1,960)  (2,012)
Loans and other borrowings         (5,912)   (6,184)  (5,824)
Deferred tax liability             (3,864)   (1,806)  (1,365)
                                  (11,915)   (9,950)  (9,201)
Current liabilities
Trade and other payables           (7,574)  (11,485)  (9,556)
Income tax payable                   (197)     (157)    (199)
Provisions                         (1,149)      (96)  (1,241)
Loans and other borrowings         (1,867)   (1,750)  (2,579)
Liabilities held for sale                -         -  (4,488)
                                  (10,787)  (13,488) (18,063)
Total liabilities                 (22,702)  (23,438) (27,264)
Net assets                          11,445    15,223    6,987
Shareholders' equity
Called-up share capital             14,580    14,375   14,375
Share premium account               16,861    15,646   15,645
Revaluation reserve                  1,077     1,404    1,080
Capital redemption reserve           2,500     2,500    2,500
Equity reserve                         170        14      167
Translation reserve                  1,342       869    1,487
Retained earnings                 (25,085)  (19,585) (28,267)
Total equity                        11,445    15,223    6,987

                 called   share                capital                              
                     up
                        premium Revaluation redemption Translation  Equity  Retained
                  share
                capital account     reserve    reserve     reserve reserve  earnings   Total
                   £000    £000        £000       £000        £000    £000      £000    £000
At 2 April 2011  14,315  13,899       1,475      2,500       1,697     160  (12,363)  21,683
Loss for the          -       -           -          -           -       -   (6,462) (6,462)
period
Other
comprehensive
income:
Foreign
currency              -       -        (70)          -       (829)       -         -   (899)
translation
Net actuarial
losses on             -       -           -          -           -       -        80      80
employee
benefit schemes
Impact of
changes to            -       -           -          -           -       -     (840)   (840)
defined benefit
asset limit
Deferred tax          -       -           -          -           -       -         -       -
Total
comprehensive         -       -        (70)          -       (829)       -   (7,222) (8,121)
income
Transactions
with owners:
Share capital        60   1,746           -          -           -       -         -   1,806
subscribed for
Shareholder
loan issue with       -       -           -          -           -       4         -       4
convertible
warrants
Non-controlling
interest              -       -           -          -           -       -         -       -
reversal
Credit for
share-based           -       -           -          -           -       -         -       -
payments
Total
transactions         60   1,746           -          -           -       -         -   1,810
with owners
At 1 October     14,375  15,645       1,405      2,500         868     164  (19,585)  15,372
2011
Loss for the          -       -           -          -           -       -   (8,387) (8,387)
period
Other
comprehensive
income:
Foreign
currency              -       -          24          -         619       -      (95)     548
translation
Net actuarial
losses on             -       -           -          -           -       -     6,945   6,945
employee
benefit schemes
Impact of write
down of assets        -       -       (349)          -           -       -       349       -
held for sale
Impact of
changes to            -       -           -          -           -       -   (7,970) (7,970)
defined benefit
asset limit
Deferred tax          -       -           -          -           -       -       386     386
Total
comprehensive         -       -       (325)          -         619       -   (8,772) (8,478)
income
Transactions
with owners:
Share capital         -       -           -          -           -       -         -       -
subscribed for
Shareholder
loan issue with       -       -           -          -           -       3         -       3
convertible
warrants
Non-controlling
interest              -       -           -          -           -       -         -       -
reversal
Credit for
share-based           -       -           -          -           -       -        90      90
payments
Total
transactions          -       -           -          -           -       3        90      93
with owners
At 31 March      14,375  15,645       1,080      2,500       1,487     167  (28,267)   6,987
2012
Profit for the        -       -           -          -           -       -       189     189
period
Other
comprehensive
income:
Foreign
currency              -       -         (3)          -       (145)       -         -   (148)
translation
Net actuarial
losses on             -       -           -          -           -       -   (6,150) (6,150)
employee
benefit schemes
Impact of
changes in            -       -           -          -           -       -   (1,350) (1,350)
actuarial
assumptions
Recognition of        -       -           -          -           -       -    12,940  12,940
pension surplus
Deferred tax          -       -           -          -           -       -   (2,499) (2,499)
Total
comprehensive         -       -         (3)          -       (145)       -     3,130   2,982
income
Transactions
with owners:
Share capital       205   1,216           -          -           -       -         -   1,421
subscribed for
Shareholder
loan issue with       -       -           -          -           -       3         -       3
convertible
warrants
Credit for
share-based           -       -           -          -           -       -        52      52
payments
Total
transactions        205   1,216           -          -           -       3        52   1,476
with owners
At 29 September  14,580  16,861       1,077      2,500       1,342     170  (25,085)  11,445
2012

^ 

                                                   26 weeks  26 weeks 52 weeks
                                                         To        To       To
                                               29 September 1 October 31 March
                                                       2012      2011     2012
                                                       £000      £000     £000
Cash flows from operating activities
Profit/(loss) for the period                            189   (6,462) (14,849)
Adjustments for:
Amortisation of development expenditure                  49       109      116
Depreciation                                            318       478    1,033
Impairment of goodwill                                                     931
Impairment of tangible fixed assets                                      1,158
Special items                                                   5,888  (2,570)
Net financial (expense)/income                      (1,412)     (529)    (921)
Net pension credit                                                     (1,224)
Equity share option expense                              52         -       90
Income tax expense/ (income)                             65        45      907
Operating cash flow before changes in working         (739)     (471) (12,759)
capital and provisions
Decrease/(increase) in trade and other                  307       268  (1,240)
receivables
(Increase)/ decrease in inventories                   (210)     (693)    5,896
(Decrease)/increase in trade and other              (1,903)   (2,008)    3,358
payables
Increase/(decrease) in employee benefits                  -         -    1,767
Cash (used in)/generated from operations            (2,545)   (2,904)  (2,978)
Interest paid                                         (323)     (322)    (757)
Income tax (paid)                                      (66)        32    (132)
Net cash flows from operating activities            (2,934)   (3,194)  (3,867)
Cash flows from investing activities
Interest received                                         4        11       68
Proceeds from sale of property, plant and                 -         -      380
equipment
Net proceeds from sale of assets held for sale        1,179         -        -
Net proceeds from sale of subsidiary                  1,810         -        -
Purchase of property, plant and equipment              (54)     (454)    (963)
Development expenditure capitalized                   (216)     (319)    (549)
Net cash from investing activities                    2,723     (762)  (1,064)
Cash flows from financing activities
Proceeds from issue of ordinary shares                1,414     1,807    1,806
Net proceeds from external borrowings                 (191)     4,745    4,986
Net cash flows from financing activities              1,223     6,552    6,792
Net increase/(decrease) in cash and cash              1,012     2,596    1,861
equivalents
Cash and cash equivalents at the beginning of         (117)   (1,905)  (1,905)
the period
Effect of exchange rate fluctuations on cash            (3)      (92)     (73)
held
Cash and cash equivalents at the end of the             892       599    (117)
period

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 29  September 
2012 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 29 September 2012.  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 14
November 2012.

 

The comparative figures for the financial year ended 31 March 2012 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 31 March 2012  the Group agreed amendments to its  UK 
banking arrangements and undertook a placing of shares with institutions on  5 
September 2012.

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  revised facilities. This includes consideration  of 
working capital requirements and the impact of funding further  reorganisation 
costs and the  possible delay in  the divestment of  further property  assets. 
Additional property asset  disposals have  been factored  into future  banking 
covenants and the disposal of these properties and allocation of the  proceeds 
will require the agreement of all  debenture holders including Haddeo and  the 
Pension Trustees.

 The overseas  bank overdrafts  in place  around  the Group  are all  due  for 
renewal within the  next 6  months. The Group  has held  discussions with  its 
overseas bankers about  its future borrowing  needs and no  matters have  been 
drawn to its  attention to  suggest that renewals  may not  be forthcoming  on 
acceptable terms. The Group also considers that alternative sources of finance
would be available should the need arise.

After making enquiries, 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 29 September 2012 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 31 March 2012.

 

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 31 March 2012.

 

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.

 

Following the restructuring  undertaken the  two business  streams of  Machine 
Tools and Precision  Engineered Components  have been aggregated  as they  are 
operationally managed and report  internally to the  Executive Directors as  a 
single Division.  The Group's  significant  manufacturing facility  in  Poland 
which was  sold  in September  2012  has  been classified  as  a  discontinued 
activity as has the South African  business sold in July 2012 which  consisted 
of the  Mechanical  Handling  and  Waste  activity   The  Executive  Directors 
consider there to be two continuing operating segments being Machine Tools and
Precision Engineered  Components and  Laser  Marking. The  sale of  parts  and 
service of lasers in the USA in connection with the Laser Marking business had
previously been reported within  the USA operations of  the Machine Tools  and 
Precision Components business but  are now included  within the Laser  Marking 
figures. The comparative figures have been adjusted to reflect this change. 

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 and include the effects  of 
the Group Final Salary Scheme in the UK.

 

The following is an analysis of the Group's revenue and results by reportable
segment:

 

 

                              Continuing
26 Weeks ended    Machine
29 September
2012                Tools

                        &
                Precision
                                  Head Office
               Engineered   Laser
                                            &      Total
               Components Marking unallocated continuing Discontinued    Total
Segmental                                                        £000     £000
analysis of
revenue              £000    £000        £000       £000
Revenue from                                                    3,658   23,569
external
customers          16,199   3,712                 19,911
Inter-segment                                                     323      401
revenue                        78                     78
Total segment                                                   3,981   23,970
revenue            16,199   3,790                 19,989
Less:                                                           (323)    (401)
inter-segment
revenue                      (78)                   (78)
Total revenue      16,199   3,712                 19,911        3,658   23,569
Segmental
analysis of
operating
Profit/(loss)
before Special
Items                 409     155       (635)       (71)        (476)    (547)
Special Items                                      (333)                 (333)

                                                        
Group Loss                                                      (476)    (880)
from
operations                                         (404)
Other
segmental
information:
Reportable                                                          -
segment assets     23,004   4,926       6,217     34,147                34,147
Reportable                                                          -
segment
liabilities      (13,363) (1,793)     (7,547)   (22,702)              (22,702)
Fixed asset                                                         -
additions              54     216           -        270                   270
Depreciation                                                        -
and
amortisation          296      57          14        367                   367

 

 

                              Continuing
26 Weeks ended    Machine
1 October 2011
                    Tools

                        &
                Precision
                                  Head Office
               Engineered   Laser
                                            &      Total
               Components Marking unallocated continuing Discontinued    Total
                     £000    £000        £000       £000         £000     £000
Segmental
analysis of
revenue
Revenue from                                                    6,520   24,707
external
customers          14,131   4,056                 18,187
Inter-segment                                                     966    1,090
revenue                       124                    124
Total segment                                                   7,486   25,797
revenue            14,131   4,180                 18,311
Less:                                                           (966)  (1,090)
inter-segment
revenue                     (124)                  (124)
Total revenue      14,131   4,056                 18,187        6,520   24,707
Segmental
analysis of
operating
Profit/(loss)
before Special
Items               (125)     483       (718)      (360)          360        -
Special Items     (3,789) (1,267)     (1,699)    (6,755)        (191)  (6,946)

                                                        
Group Loss                                                        169  (6,946)
from
operations        (3,914)   (784)     (2,417)    (7,115)
Other
segmental
information:
Reportable                                                      8,648
segment assets     18,205   5,320       6,488     30,013                38,661
Reportable                                                    (4,449)
segment
liabilities       (9,189) (1,915)     (7,885)   (18,989)              (23,438)
Fixed asset                                                       248
additions              45     160           1        206                   454
Depreciation                                                       84
and
amortisation          371     117          15        503                   587

 

3. Segment analysis (continued)

 

                                Continuing
52-weeks         Machine
ended 31           Tools
March 2012
                       &
               Precision
                                 Head Office
              Engineered   Laser
                                           &
              Components Marking unallocated           Total Discontinued    Total
Segmental                                                            £000     £000
analysis of
revenue             £000    £000        £000            £000
Revenue from                                                       15,600
external
customers         30,345   7,220           -          37,565                53,165
Inter-segment                                                       1,903
revenue                      200           -             200                 2,103
Total segment                                                      17,503
revenue           30,345   7,420           -          37,765                55,268
Less:                                                             (1,903)
inter-segment
revenue                    (200)           -           (200)               (2,103)
 

Total revenue
per statutory
accounts          30,345   7,220           -          37,565       15,600   53,165
Segmental
analysis of
operating
Profit/(loss)
before
special Items      1,213     571     (1,559)             225      (1,097)    (872)
Special Items    (6,435) (1,372)     (2,024)         (9,831)      (3,048) (12,879)
Group
(Loss)/profit
from                                                        
operations       (5,222)   (801)     (3,583)         (9,606)      (4,145) (13,751)
Other
segmental
information:
Reportable                                                          7,776
segment
assets            21,034   4,056       1,385          26,475                34,251
Reportable                                                        (5,943)
segment
liabilities     (15,441) (3,977)     (1,903)        (21,321)              (27,264)
Non-current                                                             -
assets             3,063   2,310       2,037           7,410                 7,410
Fixed asset                                                           582
additions            229     151           1             381                   963
Depreciation                                                          283
and
amortisation         613     225          28             866                 1,149
Impairment of                                                       1,158
fixed assets           -       -           -               -                 1,158
Impairment of                                                           -
development
costs                  -     931           -             931                   931

 

 

 

4. Discontinued operations

600SA the Group's South African  business was sold on  16 July 2012 to  Eqstra 
Holdings Limited for a total consideration  of ZAR (South African Rand)  24.3m 
which resulted in net proceeds after costs received in the UK of £1.81m.  This
represented the full activities of the Mechanical Handling and Waste  business 
segment.

FMT the Group's Polish manufacturing business was sold for a nominal sum on 11
September 2012.

The results and loss  on sale for  both these activities  are included in  the 
post tax loss on discontinued activities in the Group's Condensed consolidated
income statement. 

 

 The results of these discontinued operations are as follows:

 

 

 

                    26 weeks ended 29 26 weeks ended 1 October   52 weeks ended 31 March  
                            September
                                 2012                     2011                      2012  
                 £000    £000    £000    £000             £000     £000    £000     £000  
                                              £000
                South                   South                     South                   
               Africa  Poland   Total  Africa   Poland   Total   Africa  Poland    Total
Results of
the                                                                                       
discontinued
operations
Revenue         3,042     616   3,658   5,807      713   6,520   13,772   1,828   15,600  
Expenses      (3,003) (1,156) (4,159) (5,942)    (425) (6,367) (13,437) (6,308) (19,745)  
Profit             39   (540)   (501)   (135)      288     153      335 (4,480)  (4,145)
/(loss)
before tax                                                                                
from
discontinued
operations
Taxation            -       -       -       -        -       -      151       -      151  
Profit/Loss        39   (540)   (501)   (135)      288     153      486 (4,480)  (3,994)
from
operating                                                                                 
activities
after tax
Loss from           -       -       -       -        -       -  (1,263)       -  (1,263)
sale of                                                                                   
discontinued
activities
Profit/(Loss)      39   (540)   (501)   (135)      288     153    (777) (4,480)  (5,257)
for the                                                                                   
period

 

Disposal of subsidiary undertakings:
                            South Africa Poland   
                               £'000      £'000
Fixed Assets                    981         -     
Inventory                      2,732      1,198
Trade and Other Receivables    3,357       276    
Cash                            (31)        5
Trade and Other Payables      (4,101)    (1,479)  
Provisions                      (63)        -
Impairment at the year-end    (1,063)       -     
Net Assets at disposal         1,812        -
Proceeds                       1,812        -     
Profit/(loss) on disposal        -          -
                                                  

                                                  

                                                  

                                                  

                                                  

                                                  

                                                  

                                                  

                                                  

                                                  

                                                  

 

 

 

 

 

 

5. 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,  they  include the  charge for  share  based 
payments.

Such items include  gains and  losses on the  sale of  properties and  assets, 
impairments  of  assets  re  FMT   closure,  exceptional  costs  relating   to 
reorganisation, redundancy and restructuring, legal disputes and inventory and
intangibles impairments.

 

                                       29 September 1 October 31 March

                                               2012      2011     2012
                                               £000      £000     £000
Cost of sales
Inventory impairments                             -     3,227    5,171
Plant and equipment impairments                   -         -    1,158
Development expenditure impairments               -       692      931
Redundancies                                    165       173      252
Operating costs
Redundancies                                    100       242    1,159
Reorganisation and restructuring costs          170     2,341    3,667
Profit on sale of freehold property           (155)         -        -
Share-based payments                             53        80       90
Financial expense
Refinancing                                     253         -      451
Restructuring costs                             586     6,755   12,879

 

Period to 29 September 2012

Redundancies and reorganisation and restructuring costs relate to UK staff and
production capacity.

Refinancing costs  relate  to the  costs  of the  re-financing  undertaken  in 
September 2012.

Prior periods

Reorganisation and restructuring  costs relate  to legal  disputes and   costs 
incurred both in  the UK and  Poland with regard  to the move  of the  machine 
tools manufacturing to Poland.  As  a result of these manufacturing  transfers 
and trading losses in Poland, inventory levels were reviewed for  obsolescence 
and age and  impairments were made  to inventories and  plant and  machinery.  
Subsequent to the year  end the decision was  taken to cease manufacturing  in 
Poland and the business was sold in September 2012.

Within the laser  marking business there  has been a  sales trend towards  the 
most recent technological ranges  with the result that  the carrying value  of 
the development expenditure and related stock of older generation products has
been impaired.

Redundancies relate to the reduction in UK production capacity on the transfer
of machine tool manufacturing to Poland  and the termination costs related  to 
Head Office and Board changes.

Refinancing costs relate to the costs of  the share placing in the early  part 
of the year and the re-banking completed in August 2011

 

6. Financial income and expense

                                               29 September 1 October 31 March

                                                       2012      2011     2012
                                                       £000      £000     £000
Interest income                                           4        11       24
Expected return on defined benefit pension            5,720     5,405   10,834
scheme assets
Financial income                                      5,724     5,416   10,858
Bank overdraft and loan interest                      (202)     (179)    (385)
Shareholder loan interest                             (100)     (100)    (200)
Other loan interest                                       -         -     (23)
Finance charges on finance leases                      (20)      (27)     (61)
Interest on defined benefit pension scheme          (3,990)   (4,565)  (9,268)
obligations
Financial expense                                   (4,312)   (4,871)  (9,937)

 

7. Taxation

                                          29 September 1 October 31 March

                                                  2012      2011     2012
                                                  £000      £000     £000
Current tax:
Corporation tax at 26% (2011: 28%):
- current period relating to prior period            -         -        -
Overseas taxation:
- current period                                  (57)      (74)     (60)
Total current tax charge                          (57)      (74)     (60)
Deferred taxation:
- current period                                            (50)    (213)
- prior period                                     (8)     (783)    (175)
Total deferred taxation charge (Note 13)           (8)     (833)    (388)
Taxation charged to the income statement          (65)     (907)    (448)

 

8. Earnings per share

The calculation of the basic profit  per share of 0.29p (2011:loss 10.16p)  is 
based on the  earnings for  the financial  period attributable  to the  Parent 
Company's shareholders of a profit of £690,000 (2011: loss £6,615,000) and  on 
the weighted average number of shares in issue during the period of 65,799,553
(2011: 63,570,946). At 29 September 2012, there were 308,247 (2011: 2,272,102)
potentially dilutive shares on option (as a loss cannot be diluted the figures
for 2011 remain the same as the basic loss per share).

 

.

                                            29 September  1 October   31 March

                                                    2012       2011       2012
Weighted average number of shares                   £000       £000       £000
Issued shares at start of period              63,926,253 57,933,679 57,933,679
Effect of shares issued in the year            1,873,300  5,637,267  5,783,545
Weighted average number of shares at end of   65,799,553 63,570,946 63,717,224
period

 

9. RECONCILIATION OF NET CASH FLOW TO NET DEBT

 

                                               29 September 1 October 31 March

                                                       2012      2011     2012
                                                       £000      £000     £000
Increase in cash and cash equivalents                 1,012     1,466    1,861
Increase in debt and finance leases                     191   (1,933)  (4,988)
Decrease /(Increase) in net debt from cash            1,203     (467)  (3,127)
flows
Net debt at beginning of period                     (7,994)   (4,328)  (4,795)
Exchange effects on net funds                          (96)         -     (72)
Net debt at end of period                           (6,887)   (4,795)  (7,994)

 

 

10. Analysis of net DEBT

                                          At Exchange/                      At
                                    31 March   Reserve            29 September
                                        2012  movement Cash flows         2012
                                        £000      £000       £000         £000
Cash at bank and in hand                 309       (3)        486          792
Term deposits (included within cash      100         -          -          100
and cash equivalents on the balance
sheet)
Overdrafts                             (526)         -        526            -
                                       (117)       (3)      1,012          892
Debt due within one year             (1,761)      (21)        115      (1,667)
Debt due after one year              (3,638)      (20)         21      (3,637)
Shareholder loan                     (2,052)      (52)                 (2,104)
Finance leases                         (426)         -         55        (371)
Total                                (7,994)      (96)      1,203      (6,887)

 

11. Employee benefits

The Group operates a number of defined benefit pension schemes throughout  the 
world. The assets of these  schemes are held in separate  trustee-administered 
funds. The principal scheme is the UK defined benefit plan.

The benefits from these  schemes are based upon  years of pensionable  service 
and pensionable remuneration of the  employee as defined under the  respective 
scheme provisions. The schemes are  funded by contributions from the  employee 
and from the  employing company  over the  period of  the employees'  service. 
Contributions are  determined by  independent qualified  actuaries based  upon 
triennial actuarial valuations in the UK and on annual valuations in the US.

The principal assumptions used for the purpose of the IAS 19 valuation for the
UK scheme compared to the 2012 year end were as follows:

                                                        29 September  31 March

                                                                2012      2012
                                                           UK scheme UK scheme
                                                              % p.a.    % p.a.
Inflation under RPI                                              2.6       3.2
Inflation under CPI                                              1.6       2.2
Rate of general long-term increase in salaries                   4.1       4.7
Rate of increase for CARE benefit while an active                2.5       3.1
member
Rate of increase to pensions in payment - LPI 5%                 2.5       3.1
Rate of increase to pensions in payment - LPI 2.5%               1.8       2.1
Discount rate for scheme liabilities                             4.2       4.7

Retirement  benefit  obligations  increased  by  £7.5m  in  the  period.  This 
principally comprised actuarial  losses being  £3.77m due to  losses on  asset 
values largely due to  the fall in bond  markets, experience losses of  £2.38m 
due to  actual  pension increases  as  at April  2012  being higher  than  the 
actuarial expectations  and  £1.35m  due  to the  increases  value  placed  on 
liabilities as a result  of changes in assumptions,  particularly the fall  in 
the yield on corporate bonds.

As a result of a minor change to the Scheme Rules it has now been possible  to 
recognise the  scheme  accounting surplus  on  the  balance sheet  at  the  29 
September 2012  period end  in  accordance with  IFRIC  14. This  surplus  was 
£12.94m at 31 March 2012 and consequently following the actuarial  adjustments 
in the period  of £7.5m and  the net credit  in the income  statement for  the 
period a surplus of £7.14m before  deferred taxation has been recorded in  the 
balance sheet.

 

A copy of this report is available on the Company's website and has been
posted to those shareholders who requested to continue to receive printed
material.

                     This information is provided by RNS
           The company news service from the London Stock Exchange
 
END
 
 
IR UOANRUVAAAAA -0- Nov/14/2012 07:00 GMT
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