Divestment activity and update on trading

RNS Number : 7871G

600 Group PLC

03 July 2012

 



600 Group Plc

("the Group" or "the Company")

Divestment activity and update on trading

The Board of 600 Group Plc (AIM:SIXH), the diversified engineering Company, today provides the following update on divestment activity and current trading.

Divestment activity

Sale of surplus freehold property - Property at Shepshed, Leicestershire, has been sold to a privately owned company for net cash proceeds of approximately £1.20m.  At the time of sale the property was generating rental income of approximately £0.02m per annum.

Sale of South African operations - the wholly owned Group subsidiary located in South Africa was determined to be non-core to the main activities of the Group, and difficulties were being experienced in repatriating net operating income to the parent company.  A Conditional Contract has been signed for the sale of the entire share capital of 600 SA (Proprietary) Limited ("600SA") to Eqstra Holdings Limited for net cash consideration of ZAR 24.3m(£1.86m), of which ZAR 1.8m(£0.14m) is deferred for up to six months and subject to certain further undertakings.  The Conditional Contract requires the approval of the Competitions Board of South Africa under the South African Competitions Act.  Application for such approval has been filed and a decision is expected shortly.  The Group anticipates cash proceeds on completion, net of transaction costs, of approximately £1.54m.  The most recent reported results of the Group for the year ended 31 March 2011 included net profits after taxation in respect of 600SA of ZAR6.5m (£0.50m), and the book value of the net assets of 600SA were ZAR34.7m (£2.66m).  All sterling equivalents have been translated at the current rate of exchange.

The net proceeds from these divestments will be applied to reduce the net indebtedness of the Group, and provide additional working capital.

Results for the year ended 31 March 2012

Group results for the year ended 31 March 2012 will be reported on the basis that the operations of 600SA represent a discontinued activity.  The board anticipate that Group trading results for the year ended 31 March 2012, when reported on this basis, will be slightly ahead of the corresponding results for the year ended 31 March 2011 but profitability of both continuing and discontinued operations will  be materially below market expectations.

A further announcement on the status of the Competition Board approval and expected date of release of results will be made in due course.

Current trading

The divestment of 600SA and progress in realising the value of surplus property represent an important signal in the intention of management of the Group to devote attention to the development of its core businesses in machine tools and precision components, and laser marking equipment.

These businesses continue to demonstrate high levels of customer loyalty and significant growth potential.  Trading in the first quarter of the current financial year has, however, been impeded by constraints on working capital and operational focus.  These constraints are partially mitigated by the successful outcome of divestments, and this should enable progress to be made in the remainder of the financial year.

In view of the dilutive effect of the sale of 600SA, and the extent to which the constraints referred to above have held back revenue and operational cash flow during the first quarter, the Board considers it unlikely that the Group results for the year ending 31 March 2013 will meet current market expectations.

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

Enquiries:
The 600 Group PLC	Tel: [phone]
Nigel Rogers Chief Executive
Neil Carrick, Finance Director
Cadogan PR Limited	Tel: [phone]
Alex Walters / Lavinia Fiamma	Tel: [phone]
FinnCap	Tel: [phone]
Sarah Wharry / Ben Thompson Tony Quirke (Broking)

 

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