Half Yearly Report

RNS Number : 9738X
600 Group PLC
26 November 2014
 



The 600 Group PLC

 

Unaudited Interim Results for the six months ended 27 September 2014

 

 

 

The 600 Group PLC ("600" or "the Group"), the machine tools and laser marking company, today announces its unaudited interim results for the six months ended 27 September 2014.

 

Highlights:

 

•   Revenues increased by 0.5% to £21.05m (FY14 H1: £20.94m)

•   Profit before taxation of £3.16m (FY14 H1: £0.94m)

•   Pension credit of £2.19m arising from liability mitigation exercise

•   Adjusted* net profit before tax of £0.67m (FY14 H1: £0.61m)

•   Total profit attributable to shareholders of £2.14m (FY14 H1: £0.80m)

•   Earnings per share increased to 2.49 pence (FY14 H1: 0.95 pence)

•   Underlying earnings up 1.6% to 0.65 pence (FY14 H1: 0.64 pence)

•   Growth momentum maintained at Electrox Laser

 

 

*from continuing operations, before pension credit, pension interest, amortisation of shareholder loan and share option costs.

 

 

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

"Our businesses have delivered satisfactory financial results for the six month period ended 27 September 2014. Revenue growth was above the industry average and profit margins showed continued resilience despite facing sluggish overall market demand.

The Board is optimistic that continued investment in product development, facilities and people offers the opportunity for stronger organic growth than the market average, based on further increases in market share.  Meanwhile, we continue to explore acquisition opportunities and anticipate progress from this activity in the second half of the year."

 

Reconciliation of underlying profit before taxation:

 

26 Weeks ended

26 Weeks ended

 

27 September

28 September

 

2014

2013

 

£m

£m

 

 

 

Revenues

21.05

20.94

Cost of sales

(14.14)

(14.02)

Gross profit

6.91

6.92

Net operating costs

(6.05)

(6.12)

Underlying operating profit

0.86

0.80

Bank interest expense (net)

(0.19)

(0.19)

Underlying profit before tax

0.67

0.61

 

 

 

Other items:

 

 

Pensions credit

2.19

-

Share option costs

(0.07)

(0.03)

Interest on pension surplus

0.44

0.42

Amortisation of shareholder loan costs

(0.07)

(0.06)

 

2.49

0.33

 

 

 

 

 

 

Reported profit before tax

3.16

0.94

 

 

 

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

 

Enquiries:


The 600 Group PLC

Tel: 01924 415000

Nigel Rogers, Chief Executive


Neil Carrick, Finance Director


Cadogan PR Limited

Tel: 020 7930 7006

Alex Walters

Tel: 07771 713608

FinnCap

Tel: 020 7600 1658

Tony Quirke/Mia Gardiner (Sales/Broking)


Spark Advisory Partners Limited (NOMAD)


Miriam Greenwood/Sean Wyndham-Quin

Tel: 020 3368 3553

 

The 600 Group Plc

Chairman's Statement for the six months ended 27 September 2014

 

Overview

 

Our businesses have delivered satisfactory financial results for the six month period ended 27 September 2014. Revenue growth was above the industry average and profit margins showed continued resilience despite facing sluggish overall market demand.  We have continued to invest in facilities, people and product development, and to implement our strategic goal of developing the Group's exposure to high growth industry sectors led by technical leadership in niche markets.

 

 

 

Results and dividend 

 

Revenue increased by 0.5% to £21.05m (FY14 H1: £20.94m) generating a net operating profit (excluding the effects of pension credit of £2.19m) of £0.80m (FY14 H1: £0.77m).

 

Revenues were adversely affected by the relative strength of Sterling against the US Dollar during the period.  At constant rates of exchange, revenues would have been approximately £1.00m (5.0%) higher than those reported at actual rates prevailing during the first half.  Profits were virtually unaffected overall, as the adverse translation of results from operations in North America was mitigated by cost savings on imports into Europe.  Foreign currency effects will be softened in the second half of the financial year assuming that current rates of exchange prevail.

 

After taking account of interest on bank borrowings, the underlying Group pre-tax profit before pension credit interest and amortisation of shareholder loan and share option costs was £0.67m (FY14 H1: £0.61m).

 

The total profit attributable to shareholders of the Group for the financial period was £2.14m (FY14 H1: £0.80m), providing earnings of 2.49 pence per share (FY14 H1: 0.95 pence).

 

The process of gaining court approval for the restoration of distributable reserves approval at the Annual General meeting is underway, however the Board does not recommend that any dividend payment be made for the current period.

 

 

Operating activities

Machine tools and precision engineered components


FY15 H1

£m

FY14 H1

£m

Revenues

17.17

17.65

Operating profit

1.37

1.21

Operating margin

8.0%

6.9%



Like for like revenues (at constant rates of exchange) increased by approximately 1.7%, but reported a reduction of 3.4% as a consequence of the relative strength of Sterling during the period. 

Overall market consumption in North America reduced by 1.5% in the period (Source: Oxford Economics) whilst Group revenues (at constant rates of exchange) increased by 4.0%. European market conditions showed a modest 2.7% improvement, and revenues also increased by approximately 4.0% led by the UK and Germany. 

Deliveries began in respect of several orders in the period for large swing lathes used primarily in the oil and gas supply chain in North America.  Further deliveries will be made in the current quarter, and revenues from this activity are expected to contribute to stronger revenue growth in the second half of the year.

Gross margins were maintained and overhead costs continued to be well managed, facilitating an increase in operating margin for the segment from 6.9% to 8.0% of revenues. 

Both the Tornado EL range of CNC machines and the Pratt Burnerd Gripfast chuck were successfully launched in the period.  Continuing product developments are well advanced, focused in particular on further expansion of both conventional and CNC ranges of turning machines, and on safety related workholding products.  A range of Gamet taper roller bearings targeted specifically outside the machine tool market is scheduled for launch in the second half of the year.

The US build programme has also continued, with several additional accessory options for the drill line, and development of a range of US built saws for launch in the second half of the year.

 

Laser marking

 


FY15 H1

£m

FY14 H1

£m

 

Revenues

4.00

3.46

Operating profit

0.07

0.14

Operating margin

1.8%

4.2%

 

 

 

Electrox Laser continued to generate strong growth momentum, with revenues increasing by more than 15% to £4.00m across a broad geographical base.    More than 44% of revenues were generated in North America, where margins were squeezed by the strength of Sterling relative to the US dollar and additional sales resource was added to increase market penetration.

 

Further investment was made in new product development, including additions to the EMS range of enclosures and completion of the Scriba control software for imminent launch.

 

The effect of currency, combined with discretionary product development and higher selling costs, combined to hold back the segmental profit to just above break even.

 

The investment made in new products over the last two years has returned Electrox to a leading  position amongst its peers from a technology and user interface viewpoint.  There are now clear signs of increased traction in the market, and we continue to progress opportunities to build our market presence through acquisition. 

 

 

Investment in ProPhotonix Limited  ("ProPhotonix")

 

On 3 August 2014 we announced the acquisition of 26.3% of the ordinary share capital of ProPhotonix through the issue of ordinary shares in the Group representing 5.5% of the enlarged share capital of 600 Group Plc.  The share exchange was carried out following presentations with three London-based institutional investors, each of whom indicated support for the transaction.

 

ProPhotonix is AIM listed, although registered in Delaware and designs and manufactures LED arrays and laser diode modules in the UK and Ireland. It has a strong base of technology and applications knowledge, applicable to high growth sectors including niche industrial, security and medical markets. We continue to engage with the board of Prophotonix in constructive dialogue to promote closer co-operation.

 

 

Facilities

 

On 30 June 2014, the freehold site at Colchester, previously occupied under lease by Gamet Bearings, was acquired for £0.77m, saving annual rental payments of £0.09m.

 

The board has subsequently approved the relocation of Clausing to new leasehold premises in Kalamazoo, Michigan in the second half of the financial year.  The new site has the benefits of a better location, improved road links, enhanced operating efficiency, and significantly improved facilities.  The existing freehold premises will be sold at its approximate current book value of £0.10m.  The new leasehold facility will be rented at an approximate annual rental of £0.14m, with the additional rental cost fully mitigated by savings in utilities and other overheads.

 

An offer has also been accepted, subject to contract, for the sale of the former Head Office building in Leeds at close to its current book value of £0.39m.

 

 

 

Financial position

 

Net assets increased by £0.34m to £22.88m with net assets excluding the effect of pension schemes (and associated taxation) increasing by £1.37m to £11.55m.

 

Cash used in operations was slightly negative at £0.06m with £1.15m of funds from operations absorbed by increased stock to support new product launches and a reduction in trade payables including the final installments on an onerous lease exited back in 2012. Capital expenditure including the purchase of the Gamet premises amounted to £1.04m during the period with a further £0.23m expended on interest and tax payments.

 

Net debt as a consequence increased by £1.44m to £6.75m resulting in gearing of 29.5% (March 2014: 23.5%). 

 

 

 

UK pension scheme

 

The surplus on the UK pension scheme decreased during the period from £19.90m to £18.46m as a result of changes in underlying assumptions, most notably the yield on corporate bonds upon which the valuation is based.

 

The estimated funding deficit at the end of September 2014 using the technical provisions basis agreed at the last tri-ennial valuation remained largely unchanged at £15m.This compared to the tri-ennial valuation deficit at 31 March 2013 of £25.40m.

 

The scheme continues to benefit from active management of the investment portfolio with the overall aim of reaching full buy-out funding without reliance on future contributions from the Group.  The Directors and Trustee continue to work in close co-operation, and during the period an exercise was completed to enable pensioners to exchange non-statutory increases to their pension for an elevated level of fixed benefits. This offer was widely appreciated by scheme members, and the resulting level of take up reduced fixed rate pension increase and inflation risk to the scheme.  It also provided an overall funding benefit of more than £2.18m, which is reflected in the consolidated profit and loss account of the Group under IAS 19.

 

 

 

Outlook

 

Most recent industry forecasts indicate a return to growth in machine tool consumption in North America of 6.2% for 2015, and a further modest improvement in Europe of 3.7% (source: Oxford Economics).  Order intake in the United States during the period, and since the period end, provide substance to these forecasts, with the order book currently at a two year high.

 

Market conditions in Europe are patchy.  The UK market has been particularly buoyant for almost eighteen months, and is now showing signs of leveling off, whilst Germany and many other territories are slightly more encouraging after a sustained period of negative sentiment.

 

The Board is optimistic that continued investment in product development, facilities and people offers the opportunity for stronger organic growth than the market average, based on further increases in market share.  Meanwhile, we continue to explore acquisition opportunities and anticipate progress from this activity in the second half of the year.

 

  

Paul Dupee

Chairman

26 November 2014

 


Condensed consolidated income statement (unaudited)

for the 26 week period ended 27 September 2014

 








26 weeks

 Ended

 26 weeks

      ended

52 weeks

Ended

  

27 September

28 September

      29 March      

 

 Continuing






 Financial expense

 (270)


 (247)


(522)













  Basic earnings per share                                           

2.49p


0.95p


2.19p







  Diluted earnings per share

2.38p


0.94p


      2.15p

 


Condensed consolidated statement of comprehensive income and expense (unaudited)

for the 26 week period ended 27 September 2014

 





26 weeks

26 weeks

52 weeks


 Ended

 ended

Ended


27 September

28 September

29 March


2014

2013

2014


£000

£000

£000

Profit for the period

2,143

801

1,852

Other comprehensive (expense)/income:

Items that will not be reclassified to the Income Statement:




Remeasurement of the net defined benefit assets

(4,069)

(68)

(229)

Fair value adjustment of ProPhotonix investment

(358)

-

-

Deferred taxation

1,424

24

139

Total items that will not be reclassified to the Income Statement:

(3,003)

(44)

(90)

Items that are or may in the future be reclassified to the Income Statement:




Foreign exchange translation differences

18

65

2

Revaluation movement in respect of assets held for sale

-

-

-

Total items that are or may be reclassified subsequently to the Income Statement:

18

65

2

Other comprehensive income/(expense) for the period, net of income tax

(2,985)

21

(88)

Total comprehensive income/(expense) for the period

(842)

822

1,764


Condensed Consolidated statement of financial position (unaudited)

As at 27 September 2014

 









As at

As at

As at


27 September

28 September

29 March


2014

2013

2014


£000

£000

£000

Non-current assets




Property, plant and equipment

4,965

4,299

4,348

Intangible assets

1,892

1,530

1,780

Investments

744

-

-

Employee benefits

17,427

18,554

19,019

Deferred tax assets

1,218

3,089

2,723


26,246

27,472

27,870

Current assets




Inventories

9,159

9,194

8,505

Trade and other receivables

6,279

5,794

6,209

Cash and cash equivalents

1,220

1,253

1,149


16,658

16,241

15,863

Total assets

42,904

43,713

43,733

Non-current liabilities




Loans and other borrowings

(3,487)

(5,006)

(2,475)

Deferred tax liability

(5,702)

(7,582)

(7,737)


(9,189)

(12,588)

(10,212)

Current liabilities




Trade and other payables

(6,083)

(6,142)

(6,425)

Income tax payable

(109)

(293)

(140)

Provisions

(158)

(943)

(429)

Loans and other borrowings

(4,485)

(1,899)

(3,982)


(10,835)

(9,277)

(10,976)

Total liabilities

(20,024)

(21,865)

(21,188)

Net assets

22,880

21,848

22,545

Shareholders' equity




Called-up share capital

14,632

14,581

14,581

Share premium account

17,945

16,885

16,885

Revaluation reserve

851

835

862

Capital redemption reserve

2,500

2,500

2,500

Equity reserve

183

176

180

Translation reserve

968

1,271

938

Retained earnings

(14,199)

(14,400)

(13,401)

Total equity

22,880

21,848

22,545


Condensed Consolidated statement of changes in equity (unaudited)

As at 27 September 2014

 























called up

share

share

premium

 

Revaluation

capital

redemption

 

Translation

 

Equity


 

Retained




capital

account

reserve

reserve

reserve

reserve


earnings

Total



£000

£000

£000

£000

£000

£000


£000

£000


At 30 March 2013

14,579

16,858

909

2,500

1,860

173


(15,222)

21,657


Loss for the period

-

-

-

-

-

-


801

801


Other comprehensive income:











Foreign currency translation

-

-

(74)

-

(589)

-


37

(626)


Remeasurement of the net defined benefit assets

-

-

-

-

-

-


(68)

(68)


Deferred tax

-

-

-

-

-

-


24

24


Total comprehensive income

-

-

(74)

-

(589)

-


794

131


Transactions with owners:











Share capital subscribed for

2

27

-

-

-

-


-

29


Shareholder loan issue with convertible warrants

-

-

-

-

-

3


-

3


Credit for share-based payments

-

-

-

-

-

-


28

28


Total transactions with owners

2

27

-

-

-

3


28

60


At 28 September 2013

14,581

16,885

835

2,500

1,271

176


(14,400)

21,848


Profit for the period

-

-

-

-

-

-


1,051

1,051


Other comprehensive income:











Foreign currency translation

-

-

(16)

-

(333)

-


(35)

(384)


Remeasurement of the net defined benefit assets

-

-

-

-

-

-


(161)

(161)


Revaluation of properties

-

-

43

-

-

-


-

43


Deferred tax

-

-

-

-

-

-


115

115


Total comprehensive income

-

-

27

-

(333)

-


970

664


Transactions with owners:











Shareholder loan issue with convertible warrants

-

-

-

-

-

4


-

4


Credit for share-based payments

-

-

-

-

-

-


29

29


Total transactions with owners

-

-

-

-

-

4


29

33


At 29 March 2014

14,581

16,885

862

2,500

938

180


(13,401)

22,545


Profit for the period

-

-

-

-

-

-


2,143

2,143


Other comprehensive income:











Foreign currency translation

-

-

(11)

-

30

-


(1)

18


Remeasurement of the net defined benefit assets

-

-

-

-

-

-


(4,069)

(4,069)


Fair value adjustment of investments

-

-

-

-

-

-


(358)

(358)


Deferred tax

-

-

-

-

-

-


1,424

1,424


Total comprehensive income

-

-

(11)

-

30

-


(861)

(842)


Transactions with owners:











Share capital subscribed for

51

1,060

-

-

-

-


-

1,111


Shareholder loan issue with convertible warrants

-

-

-

-

-

3


-

3


Credit for share-based payments

-

-

-

-

-

-


63

63


Total transactions with owners

51

1,060

-

-

-

3


63

1,177


At 27 September 2014

14,632

17,945

851

2,500

968

183


(14,199)

22,880


 


Condensed consolidated cash flow statement (unaudited)

for the 26 week period ended 27 September 2014

 









26 weeks

26 weeks

52 weeks


ended

ended

To


27 September

28 September

29 March


2014

2013

2014


£000

£000

£000

Cash flows from operating activities




Profit/(loss) for the period

2,143

801

1,852

Adjustments for:




Amortisation of development expenditure

52

37

28

Depreciation

222

249

467

Past service pension credit

(2,186)

-

-

Net financial income

(174)

(176)

(312)

Loss on disposal of property, plant and machinery

13

21

-

Equity share option expense

63

28

57

Income tax expense

1,021

142

623

Operating cash flow before changes in working capital and provisions

1,154

1,102

2,715

Decrease in trade and other receivables

(19)

231

(255)

Decrease/(increase) in inventories

(564)

638

1,143

Decrease in trade and other payables

(635)

(1,110)

(1,243)

Restructuring and redundancy expenditure

-

-

(371)

Cash generated from/(used in) operations

(64)

861

1,989

Interest paid

(198)

(118)

(290)

Income tax paid

(30)

(359)

(496)

Net cash flows from operating activities

(292)

384

1,203

Cash flows from investing activities




Interest received

1

2

7

Purchase of ProPhotonix shares

(1,102)

-

-

Proceeds from sale of property, plant and equipment

-

-

42

Purchase of property, plant and equipment

(870)

(239)

(545)

Development expenditure capitalised

(165)

(269)

(511)

Net cash from investing activities

(2,136)

(506)

(1,007)

Cash flows from financing activities




Net proceeds from issue of ordinary shares

1,068

29

29

Net repayment of external borrowing

1,477

425

(72)

Net finance lease expenditure

(39)

(30)

58

Net cash flows from financing activities

2,506

424

15

Net increase/(decrease) in cash and cash equivalents

78

302

211

Cash and cash equivalents at the beginning of the period

1,149

1,025

1,025

Effect of exchange rate fluctuations on cash held

(7)

(74)

(87)

Cash and cash equivalents at the end of the period

1,220

1,253

1,149


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 27 September 2014 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 27 September 2014. 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 26 November 2014.

 

The comparative figures for the financial year ended 29 March 2014 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 29 March 2014 the Group refinanced in May 2014 with Santander PLC who provided a Term Loan facility of £2.00m with scheduled repayments through to November 2017 and a Revolving Credit facility of £1.30m until May 2017. In addition a further Term Loan was provided in June 2014 of £0.72m with repayments through to November 2017 to finance the acquisition of the Gamet premises. The overseas bank overdrafts in place around the Group are all due for review in June 2015.

The Group's forecasts and projections, taking account of reasonably possible changes in trading performance, show that the Group should be able to operate within the level of these facilities.

The Haddeo loan of £2.5m is due for repayment in August 2015. The Group has held discussions with Santander PLC, Haddeo and its overseas banks and no matters have been drawn to its attention to suggest the renewal of, or provision of, similar working capital or loan facilities would not be forthcoming on acceptable terms at the expiry of the current facility terms. The Group also considers that alternative sources of finance would be available should the need arise.

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 27 September 2014 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 29 March 2014.

 

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 29 March 2014.

 

 

3. SEGMENT ANALYSIS

IFRS 8 - "Operating Segments" requires operating segments to be identified on the basis of internal reporting about components of the Group that are regularly reviewed by the chief operating decision maker to allocate resources to the segments and to assess their performance.  The chief operating decision maker has been identified as the Executive Directors.  The Executive Directors review the Group's internal reporting in order to assess performance and allocate resources.

 

The Executive Directors consider there to be two continuing operating segments being Machine Tools and Precision Engineered Components and Laser Marking.

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 and the charge for share based payments.

 

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

 

 


Continuing

26 Weeks ended 27 September 2014

Machine

Tools

& Precision

Engineered

Components

Laser

Marking

Head Office

& unallocated

Total

Segmental analysis of revenue

£000

£000

£000

£000

Revenue from external customers

17,174

3,877

-

21,051

Inter-segment revenue

-

124

-

124

Total segment revenue

17,174

4,001

-

21,175

Less: inter-segment revenue

-

(124)

-

(124)

Total revenue

17,174

3,877

-

21,051






Operating Profit/(loss) pre-pensions credit

1,369

73

(638)

804

Pensions credit

-

-

2,186

2,186

Operation Profit/(loss)

1,369

73

1,548

2,990

 

 





Other segmental information:





Reportable segment assets

18,521

6,402

17,981

42,904

Reportable segment liabilities

(6,569)

(1,291)

(12,164)

(20,024)

Intangible & Property, plant and equipment  additions

832

203

-

1,035

Depreciation and amortisation

156

118

-

274















3. SEGMENT ANALYSIS (continued)

 


Continuing

26 Weeks ended 28 September 2013

Machine

Tools

& Precision

Engineered

Components

Laser

Marking

Head Office

& unallocated

Total

Segmental analysis of revenue

£000

£000

£000

£000

Revenue from external customers

17,648

3,289

-

20,937

Inter-segment revenue

-

166

-

166

Total segment revenue

17,648

3,455

-

21,103

Less: inter-segment revenue

-

(166)

-

(166)

Total revenue

17,648

3,289

-

20,937






Operation Profit/(loss)

1,213

144

(590)

767

 

 





Other segmental information:





Reportable segment assets

16,399

4,622

22,692

43,713

Reportable segment liabilities

(6,236)

(1,119)

(14,510)

(21,865)

Intangible & Property, plant and equipment additions

120

388

-

508

Depreciation and amortisation

162

109

15

286






 

 


Continuing

52-weeks ended 29 March 2014

Machine Tools

& Precision

Engineered

Components

Laser

Marking

Head Office

& unallocated

Total

Segmental analysis of revenue

£000

£000

£000

£000

Revenue from external customers

34,431

7,276

-

41,707

Inter-segment revenue


296

-

296

Total segment revenue

34,431

7,572

-

42,003

Less: inter-segment revenue


(296)

-

(296)

 

Total revenue per statutory accounts

34,431

7,276

-

41,707






Segmental analysis of operating Profit/(loss) before special Items

3,005

421

(1,078)

2,348






Special Items

-

-

(185)

(185)

Group (Loss)/profit from operations

3,005

421

(1,263)

                2,163

Other segmental information:





Reportable segment assets

17,557

6,153

20,023

43,733

Reportable segment liabilities

(6,043)

(1,522)

(13,623)

(21,188)

Intangible & Property, plant and equipment additions

412

644

-

1,056

Depreciation and amortisation

308

159

28

495






 

4. SPECIAL ITEMS and share based payment cost

In order for users of the financial statements to better understand the underlying performance of the Group the Board have separately disclosed transactions which by virtue of their size or incidence, are considered to be one off in nature. In addition the charge for share based payments has also been separately identified.

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

 


27 September

2014

28 September

2013

29 March

2014


£000

£000

£000

Operating costs




Abortive acquisition costs

-

-

(128)

Pension credit

2,186

-

--

Total Special Items

2,186

-

(128)

 

Share based payment costs

(63)

(28)

(57)

 

 

5. Financial income and expensE


27 September

2014

28 September

2013

29 March

2014


£000

£000

£000

Interest income

1

2

7

Interest on Pension surplus

443

421

827

Financial income

444

423

834

Bank overdraft and loan interest

(92)

(78)

(170)

Shareholder loan interest

(100)

(100)

(200)

Finance charges on finance leases

(6)

(6)

(18)

Amortisation of shareholder loan costs

(72)

(63)

(134)

Financial expense

(270)

(247)

(522)

 



 

6. Taxation


27 September

2014

28 September

2013

29 March

2014


£000

£000

£000

Current tax:




Corporation tax at 21% (2013: 23%):

-

-

-

Overseas taxation:




- current period

(98)

(117)

(62)

Total current tax charge

(98)

(117)

(62)

Deferred taxation:




- current period

(884)

(134)

(400)

- prior period

(39)

109

(161)

Total deferred taxation charge

(923)

(25)

(561)

Taxation (charged)/ credited to the income statement

(1,021)

(142)

(623)

Following the enactment of legislation in the UK to reduce the corporation tax rate from 23% to 20% from 1 April 2015, the effective tax rate in this period includes the impact on the income statement of calculating the UK deferred tax balances at the lower UK corporation tax rate.

 

7. Earnings per share

The calculation of the basic earnings per share of  2.49p (2013:  0.95p) is based on the earnings for the financial period attributable to the Parent Company's shareholders of a profit of £2,143,000 (2012 £801,000) and on the weighted average number of shares in issue during the period of 85,935,071 (2013: 84,368,806). At 27 September 2014, there were 9,900,000 (2013: 4,500,000) potentially dilutive shares on option and 11,595,000 share warrants exercisable at 20p. The weighted average effect of these as at 27 September 2014 was 4,147,271 (2013: 1,276,504) giving a diluted earnings per share of 2.38p (2013: 0.94p).

 

.


27 September

2014

28 September

2013

29 March

2014

Weighted average number of shares

£000

£000

£000

Issued shares at start of period

84,430,346

84,256,091

84,256,091

Effect of shares issued in the period

1,504,725

112,715

174,255

Weighted average number of shares at end of period

85,935,071

84,368,806

84,430,346

 

 

Underlying earnings

Total post tax earnings

2,143

801

1,852

Special items and share based payment costs

(2,123)

28

185

Pensions Interest

(443)

(421)

(827)

Amortisation of Shareholder loan expenses

72

63

134

Associated Taxation

906

71

258

Underlying Earnings

555

542

1,602

 

Underlying Earnings Per Share

0.65p

0.64p

1.90p





 

 

8. INVESTMENTS


27 September

2014

28 September

2013

29 March

2014


£000

£000

£000





Investment in ProPhotonix Limited ordinary shares

744

-

-

Total Investments

744

-

-

 

On 3 August 2014 the Company acquired 26.3% of the ordinary share capital of ProPhotonix Limited through the issue of ordinary shares in the Company representing 5.5% of the enlarged share capital of 600 Group Plc.  The share exchange was carried out following presentations with three London-based institutional investors, each of whom indicated support for the exchange.

 

ProPhotonix Limited is AIM listed, although registered in Delaware, and designs and manufactures LED arrays and laser diode modules in the UK and Ireland. It has a strong base of technology and applications knowledge, applicable to high growth sectors including niche industrial, security and medical markets. We continue to engage with the board of Prophotonix in constructive dialogue to promote closer co-operation.

 

The initial investment of £1.10m was adjusted down to a fair value of £0.74m at 27 September 2014. The £0.36m write down was taken to the Statement of comprehensive income and expense.

 

 

9. RECONCILIATION OF NET CASH FLOW TO NET DEBT


27 September

2014

28 September

2013

29 March

2014


£000

£000

£000

Increase in cash and cash equivalents

78

302

211

Increase in debt and finance leases

(1,438)

(426)

14

Decrease /(Increase) in net debt from cash flows

(1,360)

(124)

225

Net debt at beginning of period

(5,308)

(5,407)

(5,407)

Shareholder loan amortisation

(69)

(60)

(126)

Exchange effects on net funds

(15)

(10)

-

Net debt at end of period

(6,752)

(5,601)

(5,308)

 

 

 

 

 

10. Analysis of net DEBT


At

Exchange/




At


29 March

Reserve




27 September


2014

movement


Other

Cash flows

2014


£000

£000


£000

£000

£000

Cash at bank and in hand

1.049

(7)



78

1,120

Short term deposits (included within cash and cash equivalents on the balance sheet)

100

-


-

-

100


1,149

(7)


-

78

1,220

Debt due within one year

(3,881)

(11)


-

1,855

(2,037)

Debt due after one year

-

-


-

(3,332)

(3,332)

Shareholder loan

(2,289)

-


(69)

-

(2,358)

Finance leases

(287)

3


-

39

(245)

Total

(5,308)

(15)


(69)

(1,360)

(6,752)

 

 

11. Employee benefits

The Group has defined benefit pension schemes in the UK and USA. The assets of these schemes are held in separate trustee-administered funds. The principal scheme is the UK defined benefit plan.

The UK scheme was closed to future accrual of benefits at 31 March 2013. Any deficit contributions required are determined by independent qualified actuaries based upon triennial actuarial valuations in the UK and on annual valuations in the US. There have been no deficit contributions made to the schemes during the reported periods and the latest actuarial valuation of the UK scheme to 31 March 2013 was agreed with the Trustees in October 2013. The Technical Provisions deficit of the UK scheme at 31 March 2013 represented a funding level of 88.9% and the recovery plan agreed with the Trustees based upon the updated deficit at 30 September 2013 of £19.5m assumes this deficit will be eliminated by a 1% outperformance of the scheme assets against the 3% gilt yield discount rate assumed in the valuation over a 14 year period, with the Company again not required to make any deficit contributions.

 

Value of UK and USA scheme assets and liabilities for the purposes of IAS 19

 

 

27 September

2014

28 September

2013

29 March

2014


£000

£000

£000

Opening Fair value of schemes assets

196,419

204,214

204,214

Experience adjustments in the period

7,100

(10,400)

(7,723)

Closing Fair value of schemes assets

203,519

193,814

196,491





Opening present value of schemes liabilities

177,509

186,109

186,109

Experience adjustments in the period

8,583

(10,849)

(8,600)

Closing present value of schemes liabilities

186,092

175,260

177,509





Surplus recognised under IAS 19

17,427

18,554

18,982

 

 

The principal assumptions used for the purpose of the IAS 19 valuation for the UK scheme compared to the 2014 year end were as follows:


27 September

2014

29 March

2014


UK scheme

UK scheme


% p.a.

% p.a.

Inflation under RPI

3.25

3.20

Inflation under CPI

2.05

2.00

Rate of increase to pensions in payment - LPI 5%

3.15

3.10

Discount rate for scheme liabilities and return on assets

4.00

4.50

 

 

12. FAIR VALUE

 

The group considers that the carrying amount of the following financial assets and financial liabilities are

a reasonable approximation of their fair value:

 

Trade and other receivables

Cash and cash equivalents

Trade and other payables

Loans and other borrowings

 

The investment in ProPhotonix Limited has been fair value adjusted as detailed below:

 

Investments

27 September

2014

28 September

2013

29 March

2014


£000

£000

£000





Original cost of investment in ProPhotonix Limited

1,102

-

-

Fair value adjustment

(358)

-

-

Fair value of investment in ProPhotonix Limited

744

-

--

 

Further information on this investment and the fair value adjustment can be found in the Investments note and within the Chairman's statement.

 

13. Principal Risks and Uncertainties

 

The principal risks and uncertainties affecting the Group remain those set out in the 2014 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.

 


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