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600 Group PLC (SIXH)

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Tuesday 25 November, 2008

600 Group PLC

Interim Results

RNS Number : 8373I
600 Group PLC
25 November 2008
 



25 November 2008  


THE 600 GROUP PLC 
("600 Group", the "Company" or the "Group")


INTERIM RESULTS FOR THE 26 WEEKS TO 27 SEPTEMBER 2008



CHAIRMAN'S STATEMENT



Market Conditions


In the first half of the current financial year, our Continental European and South African markets experienced reasonable growth. However, the UK and North American markets are showing continued weakness, reflecting the current economic and financial difficulties in those markets. Order intake activity in the first half of the year continued at a similar overall level to last year although our outstanding order book is lower than at this point last year and we expect a further contraction in global markets


Results


Overall sales for the half year increased by 10% to £45m (2007: £41m). After adjustment for the benefit of a major aerospace contract undertaken during the first half, underlying sales were marginally lower year on year. Gross profit margins over the period reduced to 29% (2007: 31%) although these were impacted by the effect of the aerospace contract. Excluding this contract, the gross profit margin would have been at the same level as the prior half year. Other operating income included the benefit of £0.3m in respect of the sale and leaseback of our Colchester and Halifax properties. Net operating expenses increased by £0.6m, as compared to the first half of 2007, as a result of our investment in product design and development at that time. Operating profit for the period, before exceptional costs of £1.2m, was £0.1m (2007: £0.6m). 


The exceptional costs related to the Group's previously announced programme of 70 redundancies (£0.9m) and the closure of our sales operations in the Czech RepublicSingapore and Malaysia (£0.3m). Sales activity in these areas has been transferred to other 600 Group facilities.  


The Group's operating loss after exceptional items but before net financial income and tax was £1.1m (2007: operating profit of £0.6m). It was anticipated in the 2008 Annual Report that net financial income would reduce significantly due to the UK Pension Scheme moving to de-risk its assets. As a consequence net financial income in the half year reduced to £0.1m (2007: £1.1m). 



This has resulted in a loss before tax of £1.0m (2007: profit before tax of £1.6m). Costs of £0.4m relating to the closure of the Canadian operation were incurred in the period. The basic and diluted earnings per share for continuing operations was (1.7)p (2007: 1.9p) and (0.8)p (2007: (0.3)p) for discontinued operations.


As anticipated in our 2008 AGM Statement, net cash balances reduced during the year to date, in part due to supply chain issues that resulted in an increased inventory of machines and components sourced from the Far East. This issue has subsequently been addressed and controls in this area have been tightened. As at 27 September 2008, the net cash balance was £1.1m.


Strategy Update


Our strategy remains to develop a customer-focused business concentrating on the North American, UK and Continental European markets and based on our two strategic growth platforms of machine tools and laser marking, supported by our technologies business. We recognise that the demand for our products is being impacted by the current global financial and economic conditions. As a consequence, we are increasing our focus on short term operational and working capital improvements.


Following the appointment of David Norman as Group Chief Executive, a detailed review of the Group's operations has been performed and actions arising from the initial findings of this review are being implemented. A further redundancy programme in our UK and North American operations has commenced that will reduce the Group's workforce by approximately 45 employees at a cost of £1.1m. In the UK we have closed our head office in Leeds and transferred the function to our main manufacturing plant in West Yorkshire. In North America we have closed four sales offices at a cost of £0.2m and consolidated our sales and marketing activities for that market in our distribution facility in Michigan


An update on the progress of the implementation of further actions arising from this review will be provided at the beginning of next year.


Dividend


We have previously stated that future dividend payments will be directly related to our results. The Board does not consider it is appropriate to pay a dividend at the present time. 

People


On 7 August 2008, the Company announced the appointment of David Norman as Group Chief Executive. David has extensive experience of managing international manufacturing operations and the Board believes that his appointment will greatly assist in the implementation of the Company's strategy and in the maximisation of shareholder value. 


Principal Risks and Uncertainties

The principal risks and uncertainties remain as outlined in our 2008 Annual Report.

Related Party Transactions

No related party transactions took place in the first half that would materially affect the financial position of the Group. Related party transactions for the year ended 29 March 2008 are as described in our 2008 Annual Report.

Outlook  


Whilst the Company is not dependent upon any particular territory or market, it is not fully insulated from the global economic uncertainties that are impacting demand within the whole of the engineering industry. Subsequent to the half year-end the Group has experienced a reduction in the volume of orders for its machine tools although, as commented above, we entered the period with a similar level of orders to last year. We will continue to implement the Company's strategy in all its major markets whilst at the same time undertaking the actions identified to improve our operational efficiencies, supply chain and customer service.


Enquiries:


The 600 Group PLC

Telephone: 01924 415000

David Norman, Group Chief Executive


Martyn Wakeman, Group Finance Director




Altium Capital Limited

Telephone: 020 7484 4040

Ben Thorne


Tim Richardson




Hudson Sandler

Telephone: 020 7796 4133

Nick Lyon


Wendy Baker




Notes to Editors:


The 600 Group PLC is an international group, manufacturing and marketing machine tools, machine tool accessories, lasers and other engineering products.


The Group operates from some 20 locations worldwide and sells its products around the world. Its international marketing and distribution network handles both Group products and those of other manufacturers.



Website:    www.600group.com  

Consolidated income statement (unaudited)



26 weeks

to 27.09.08

£000


26 weeks 

to 29.09.07

£'000


52 weeks 
to 29.03.08

£000

Revenue

44,565

40,507

78,878

Cost of sales

(31,663)

(27,921)

(55,196)





Gross profit

12,902

12,586

23,682

Other operating income

433

637

884

Net operating expenses

(13,266)

(12,668)

(23,218)

 




Operating profit before exceptional items 

69

555

1,348

Exceptional items (note 3)

(1,200)

-

-





Operating (loss)/profit

(1,131)

555

1,348





Financial income

5,343

5,589

11,306

Financial expense

(5,195)

(4,518)

(9,042)





(Loss)/profit before tax 

(983)

1,626

3,612





Income tax charge (note 4)

(9)

(480)

(1,034)

(Loss)/profit for the period from continuing operations

(992)

1,146

2,578





Post tax loss of discontinued business

(364)

(181)

(2,332)





Total (loss)/profit for the financial period

(1,356)

965

246





Attributable to:




Equity holders of the parent

(1,429)

930

129

Minority interest 

73

35

117

(Loss)/profit for the period

(1,356)

965

246





Earnings per share - basic and diluted (note 5)




- continuing operations

(1.7p)

1.9p

4.3p

- total

(2.5p)

1.6p

0.2p



Consolidated statement of recognised income and expense (unaudited)






26 weeks to 27.09.08

£000


26 weeks 

to 29.09.07

£'000


52 weeks 
to 29.03.08

£000

Foreign exchange translation differences

285

377

307

Net actuarial (losses)/gains on employee benefit schemes

(390)

(620)

8,841

Impact of changes to defined benefit asset limit

(280)

(610)

(11,430)

Deferred tax on above items

-

449

780





Net expense recognised directly in equity

(385)

(404)

(1,502)





(Loss)/profit for the period

(1,356)

965

246





Total recognised income and expense for the period

(1,741)

561

(1,256)





Attributable to:




Equity holders of the parent

(1,847)

522

(1,330)

Minority interest 

106

39

74

Total recognised (expense)/income for the period

(1,741)

561

(1,256)


  

Summarised consolidated balance sheet (unaudited)



At 27.09.08

£000


At 29.03.08

  £000


At 29.09.07

£000

Non-current assets




Property, plant and equipment

11,041

12,603

12,784

Intangible assets

3,067

3,018

2,704

Deferred tax assets

1,605

1,605

316


15,713

17,226

15,804

Current assets




Inventory 

26,137

24,421

25,557

Trade and other receivables

18,972

19,015

18,873

Cash and cash equivalents

2,370

3,297

5,989


47,479

46,733

50,419





Total assets

63,192

63,959

66,223





Non-current liabilities




Employee benefits

(3,256)

(2,965)

(2,844)

Deferred tax liability

(1,479)

(1,479)

(851)


(4,735)

(4,444)

(3,695)

Current liabilities




Trade and other payables

(19,839)

(20,561)

(18,199)

Income tax payable

(92)

(100)

(93)

Provisions

(285)

(370)

(490)

Loans and other borrowings

(1,296)

(131)

(3,606)


(21,512)

(21,162)

(22,388)





Total liabilities

(26,247)

(25,606)

(26,083)





Net assets

36,945

38,353

40,140





Shareholders' equity




Called-up share capital

14,308

14,308

14,307

Share premium account

13,766

13,766

13,765

Revaluation reserve

2,045

2,765

3,166

Capital redemption reserve

2,500

2,500

2,500

Translation reserve

356

113

141

Retained earnings

3,443

4,480

5,875

Total equity attributable to equity holders of the parent 

36,418

37,932

39,754





Minority interest 

527

421

386





Total equity

36,945

38,353

40,140





  

Summarised consolidated cash flow statement (unaudited)



26 weeks 

to 27.09.08

£000


26 weeks 

to 29.09.07

£000


52 weeks 

to 29.03.08

£000

Cash flows from operating activities




(Loss)/profit for the period

(1,356)

965

246

Adjustments for:




Amortisation of development expenditure

250

87

286

Depreciation

505

532

1,033

Net financial income

(148)

(1,071)

(2,264)

Profit on disposal of plant and equipment

(329)

(391)

(173)

Equity share option expense

55

43

70

Income tax expense

9

480

81

Operating (loss)/profit before changes in working capital and provisions


(1,014)


645


(721)

Decrease in trade and other receivables

396

781

699

Increase in inventories

(1,180)

(3,188)

(2,506)

(Decrease)/increase in trade and other payables

(1,341)

(91)

1,885

(Increase)/decrease in employee benefits

(327)

41

151

Cash generated from the operations

(3,466)

(1,812)

(492)

Interest paid

(245)

(165)

(491)

Income tax (paid)/received

(15)

11

92

Net cash from operating activities

(3,726)

(1,966)

(891)





Cash flows from investing activities




Interest received

393

41

106

Proceeds from sale of plant and equipment

2,032

704

810

Purchase of plant and equipment

(579)

(486)

(1,715)

Development expenditure capitalised

(274)

(371)

(876)

Disposal of discontinued operation

-

-

1,175

Net cash from investing activities

1,572

(112)

(500)





Cash flows from financing activities




Proceeds from the issue of ordinary shares

-

38

40

Proceeds/(repayment) of external borrowing

2

871

(833)

Net cash from financing activities

2

909

(793)





Net decrease in cash and cash equivalents

(2,152)

(1,169)

(2,184)

Cash and cash equivalents at beginning of period

3,297

5,331

5,331

Effect of exchange rate fluctuations on cash held

58

35

150





Cash and cash equivalents at end of the period

1,203

4,197

3,297












  

Notes to the financial information


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 London Stock Exchange. The Consolidated Interim Financial Statements of the Company for the 26-week period ended 27 September 2008 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 weeks ended 27 September 2008. It has been prepared in accordance with the Disclosure and Transparency Rules of the UK Financial Services Authority and the requirements of IAS 34 Interim Financial Reporting as adopted by the European Union.


The half-yearly financial report 2008/09 was approved by the Board of Directors on 12 November 2008.


The half-yearly financial report 2008/09 does not constitute financial statements as defined in section 240 of the Companies Act 1985 and does not include all of the information and disclosures required for full annual financial statements. It should be read in conjunction with the Annual report and financial statements for the 52-week period ended 29 March 2008, copies of which can be obtained from the Company's registered office or website.


The financial information contained in this half-yearly report in respect of the 52 weeks ended 29 March 2008 has been extracted from the Annual report and financial statements 2008 which have been filed with the Registrar of Companies. The auditors report on these financial statements was unqualified and did not contain a statement under Section 237(2) or (3) of the Companies Act 1985.


The half-yearly results for the current and comparative period are neither audited nor reviewed by the Company's auditors. 



2. Significant accounting policies


The condensed consolidated financial statements in this half-yearly financial report for the 26 weeks ended 27 September 2008 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 2008.


In preparing the condensed financial statements, management are 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 2008


  

  

3. Segment analysis


Geographical Segments




26 weeks to 27.09.08

£000


26 weeks 

to 29.09.07

£'000


52 weeks to 29.03.08

£000

Revenue based on geographical origin








United Kingdom

23,956

23,491

46,490

Other European Countries

6,268

4,303

8,521

North America

8,235

6,899

17,102

Africa and Australasia

9,553

10,041

13,996

Inter-segment revenue

(3,447)

(4,227)

(7,231)

Revenue from continuing operations

44,565

40,507

78,878

Revenue from discontinued operations

-

-

2,971

Revenue generated in the period

44,565

40,507

81,849

 



26 weeks to 27.09.08

£000


26 weeks 

to 29.09.07

£'000


52 weeks to 29.03.08

£000

Revenue based on geographical destination








United Kingdom

12,607

10,171

21,375

Other European Countries

10,961

9,453

18,457

North America

10,118

12,129

23,898

Africa and Australasia

9,857

7,343

14,890

Central America

58

-

281

Middle East

57

-

370

Far East

907

1,411

2,578

Revenue generated in the period

44,565

40,507

81,849





26 weeks to 27.09.08

£000


26 weeks 

to 29.09.07

£'000


52 weeks to 29.03.08

£000

Operating profit








United Kingdom

(962)

360

456

Other European Countries

(73)

(121)

(407)

North America

(371)

161

969

Africa and Australasia

275

155

330

Operating (loss)/profit from continuing operations

(1,131)

555

1,348

Operating loss from discontinued operations

(364)

(181)

(3,285)

Operating (loss)/profit in the period

(1,495)

374

(1,937)


Exceptional items of £1.2m (2007: £nil) were incurred in the first half of the year. As explained in the Chairman's Statement £0.9m relates to redundancy costs and £0.3m to the closure of overseas sales operations.


4. Taxation


The charge for corporation tax comprises UK taxation £nil (2007: £nil), overseas taxation charge of £9,000 (2007: charge £6,000) and deferred taxation charge of £nil (2007: charge £474,000).



5. Earnings per share


The basic earnings per share of (2.5p) (2007: 1.6p) is based on the loss for the period of £1,429,000 (2007profit £930,000) and the weighted average number of shares outstanding of 57,220,418 (2007: 57,183,559). In determining the diluted earnings per share of (2.5p) (2007: 1.6p), the earnings for the period attributable to shareholders was divided by the weighted average number of shares in the period plus 800,197 of potentially dilutive shares on option. 



6. Interim report


Copies of the interim report will be sent to all shareholders and will be available to members of the
public from the Company's registered office at 600 House, Landmark Court, Revie Road, Leeds,
LS11 8JT. The 600 Group PLC is registered in England and Wales No. 196730.


7Responsibility Statement


We confirm that to the best of our knowledge:


  • the condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU;

  • the interim management report includes a fair review of the information required by:

  • DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and

  • DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so.




M J Temple, Chairman        


D Norman, Group Chief Executive        


M G D WakemanGroup Finance Director    


J A KitchenNon-Executive Director        

    

S RutherfordNon-Executive Director            



This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
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