SIXH.L Regulatory News (SIXH)

16 Nov 2007 07:01

600 Group PLC16 November 2007 16 November 2007 THE 600 GROUP PLC INTERIM RESULTS FOR THE 26 WEEKS TO 29 SEPTEMBER 2007 Interim Management Report Market Conditions During the first half of the current financial year our European markets,including the UK, experienced significant growth. North America has shown somesoftness in recent months reflecting current difficulties in financial marketsbut the weakness of the US dollar should ultimately increase domesticmanufacturing activity as outsourcing decisions are being reversed. Our othermajor market, South Africa, continues to reflect the generally positive trendsthat have been seen over the last three years. Results Overall sales for the half year increased by 10% to £41m (2006: £37m). Afteradjustment for the disposal of Erickson Machine Tools Inc. in April 2007underlying sales increased by 14%. Underlying order intake increased by 15%compared to last year, with substantial improvements in our UK, North Americanand European businesses. Our outstanding order book is 18% higher than at thistime last year and includes the major contract, which was previously announced,for three Mitsui Seiki machines that are to be supplied to a major UK aerospacecompany in the next financial year. Subsequent to the half-year end we havesigned further contracts for in excess of £1m of Toyoda-Mitsui machinesbenefiting from the total support package that we can now provide following theacquisition of the Toyoda-Mitsui UK parts and service business earlier thisyear. Gross profit margins have improved to 31% (2006: 29%) and remain in line withour expectations as we maintain strict cost controls. Net operating expenseshave increased by £1m as compared to the first half of 2006 as we continue toinvest in product design and development as well as in sales and marketing andin our distribution network. Included in net operating expenses are one-offcosts of £0.3m associated with the highly successful EMO exhibition in Germanywhere we launched a new range of machine tools for the European markets. Operating profit before net financial income and tax was £0.6m (2006: loss of£0.5m). Net financial income increased to £1.1m (2006: £0.9m) mainly due to thenon-cash impact of the UK pension scheme. This has resulted in profit before taxincreasing to £1.6m (2006: £0.3m). Costs of £0.2m relating to the closure of theFrench operation were incurred in the period. The basic and diluted earnings pershare for continuing operations was 1.9p (2006: 0.3p) and for discontinuedoperations is (0.3)p (2006: (0.1)p). As anticipated, due to seasonal factors, new product introduction and increasedactivity levels, net cash balances at 29 September 2007 were £2.4m (30 September2006: £3.5m). Strategy Update Our strategy remains to develop a customer-focused business concentrating on theNorth American, UK and European markets and based on our two strategic growthplatforms of machine tools and laser marking, supported by our technologiesbusiness. The implementation of the strategy, which evolved from the strategicreview undertaken in 2006, is progressing positively and is ahead of plan. The sourcing of product from China remains a vital part of our strategic plans.The supply of machines from our partner, DMTG, continues to improve and theirnewly branded Dalian machines were extremely well received at the EMO exhibitionin Germany. Our 600 China operation has been expanded considerably over the lastyear to provide technical and logistical support to DMTG. We are confident thatthe Dalian brand, which is being sold throughout Europe in partnership with us,will enable us to accelerate our rate of market penetration during the nextfinancial year. In addition, preliminary discussions continue with otherpotential strategic partners that have the product ranges and capabilities toleverage both our machine tool and laser market brands and distribution networkfurther. We are restructuring our Canadian operation to improve the efficiency of ourNorth American operations through the integration of our sales and servicesupport activities for conventional machine tools in the region. As a result, wewill be reducing the number of employees in Canada by 18 and selling the landand buildings currently used by the operation. A new sales office will be openedin Canada fully focused on supporting both our 600 solutions business and theexpanding third party distributor base. We have sold a small piece of land in Letchworth for £0.6m that was not requiredfor our future growth plans. We intend, subject to any necessary approvals, torealise further value from the Letchworth site through the sale and leaseback ofthe remaining land and buildings. Dividend We have previously stated that future dividend payments will be directly relatedto our results. Whilst further positive progress has been made in the half-year,the Board does not consider it is appropriate to pay a dividend at the presenttime. Employee Benefits As noted in our 2007 Annual Report the 600 Group Pension Scheme is significantin terms of size and impact. The Group accounts for its pensions in accordancewith IAS 19 and their value is based on actuarial assumptions. At 29 September2007 the IAS 19 asset recognised in respect of employee benefits was £16.2m(2006: £7.1m). A full actuarial valuation is currently being finalised and thiswill demonstrate the current funding position of the scheme. People In April 2007 the Board appointed Martin Temple CBE as a non-executive directorand he succeeded Michael Wright as non-executive Chairman of the Company at theend of July 2007. Tony Sweeten also retired as a director at the same time, butcontinues to be available to assist the Board in a consultancy capacity until 31December 2008. Stephen Rutherford joined the Board as a non-executive director on 1 October2007. Stephen brings extensive international operational experience to theBoard, particularly in the Far East. Principal Risks and Uncertainties The principal risks and uncertainties remain as outlined in our 2007 AnnualReport. Related Party Transactions No transactions took place in the period that would materially affect thefinancial position of the Group. Related party transactions for the year ended31 March 2007 are as described in our Annual Report. Indicative Approach from Precision Technologies Group Limited Shareholders will recall that the Board wrote to them on 8 October 2007confirming that the Board had rejected an indicative approach that had been madeby Precision Technologies Group Limited ("PTG") in relation to an offer for theissued share capital of the Company. PTG subsequently announced that it was considering its position following thatrejection of its approach. The Board considers that the lack of clarity with regards to PTG's position isunhelpful for 600 Group's shareholders and is therefore pleased to confirm thatthe Takeover Panel has imposed a deadline of 5pm on 29 November 2007 by when PTGmust either announce a firm intention to make an offer for the Company or mustannounce that it does not intend to make an offer for the Company. Outlook The continued investment in and introduction of new products across all theGroup's businesses combined with improved sales, marketing and distributionnetworks has been reflected in the results achieved over the last 18 months.Notwithstanding the current financial climate the Board is confident that theGroup will make further positive progress in the second half of the year. Enquiries: The 600 Group PLC Telephone: 0113 277 6100Andrew Dick, Group Chief ExecutiveMartyn Wakeman, Group Finance Director Altium Capital Limited Telephone: 020 7484 4040Ben ThorneTim Richardson Hudson Sandler Telephone: 020 7796 4133Nick LyonWendy Baker Notes to Editors: The 600 Group PLC is an international group, manufacturing and marketing machinetools, machine tool accessories, lasers and other engineering products. The Group operate from some 30 locations world-wide and sell its products aroundthe world. Its international marketing and distribution network handles bothGroup products and those of other manufacturers. Website: www. 600group.com Consolidated income statement (unaudited) 26 weeks 26 weeks 52 weeks to 29.09.07 to 30.09.06 to 31.03.07 £000 £'000 £000Revenue 40,507 36,872 78,666 Cost of sales (27,921) (26,328) (55,754) Gross profit 12,586 10,544 22,912Net operating expenses (12,031) (11,075) (22,297) Operating profit/(loss) 555 (531) 615before financing costs Financial income 5,589 5,078 10,373Financial expense (4,518) (4,202) (8,561) Profit before tax 1,626 345 2,427 Income tax charge (note 5) (480) (97) (696)Profit for the period from 1,146 248 1,731continuing operations Post tax loss of (181) (90) (290)discontinued business Total profit for the 965 158 1,441financial period Attributable to: Equity holders of the 930 89 1,382parentMinority interest 35 69 59Profit for the period 965 158 1,441 Earnings per share - basicand diluted (note 6)- continuing operations 1.9p 0.3p 2.9p- total 1.6p 0.2p 2.4p Consolidated statement of recognised income and expense (unaudited) 26 weeks 26 weeks 52 weeks to 29.09.07 to 30.09.06 to 31.03.07 £000 £000 £000 Foreign exchange 377 (1,039) (1,241)translation differencesNet actuarial (620) (1,280) 5,375(losses)/gains onemployee benefit schemesDeferred tax on 266 384 (1,691)above items Net income/(expense) 23 (1,935) 2,443recognised directly in equity Profit for the period 965 158 1,441 Total recognised 988 (1,777) 3,884income/(expense)for the period Attributable to:Equity holders of 949 (1,756) 3,930the parentMinority interest 39 (21) (46)Total recognised 988 (1,777) 3,884income/(expense)for the period Summarised consolidated balance sheet (unaudited) At 29.09.07 At 31.03.07 At 30.09.06 £000 £000 £000Non-current assetsProperty, plant and equipment 12,784 13,034 13,477Intangible assets 2,704 2,433 2,174Investments - - 84Employee benefits 16,180 15,570 7,060Deferred tax assets 316 315 303 31,984 31,352 23,098Current assetsInventory 25,557 22,307 21,573Trade and other receivables 18,873 19,479 17,054Cash and cash equivalents 5,989 6,944 5,557 50,419 48,730 44,184 Total assets 82,403 80,082 67,282 Non-current liabilitiesEmployee benefits (2,844) (2,915) (2,146)Deferred tax liability (5,705) (5,498) (2,715) (8,549) (8,413) (4,861)Current liabilitiesTrade and other payables (18,199) (18,227) (15,226)Income tax payable (93) (80) (83)Provisions (490) (417) (465)Loans and other borrowings (3,606) (2,547) (2,057) (22,388) (21,271) (17,831) Total liabilities (30,937) (29,684) (22,692) Net assets 51,466 50,398 44,590 Shareholders' equityCalled-up share capital 14,307 14,287 14,212Share premium account 13,765 13,747 13,680Revaluation reserve 3,166 3,148 3,397Capital redemption reserve 2,500 2,500 2,500Translation reserve 141 (172) (106)Retained earnings 17,201 16,541 10,535Total equity attributable to equity holders of 51,080 50,051 44,218the parent Minority interest 386 347 372 Total equity 51,466 50,398 44,590 Summarised consolidated cash flow statement (unaudited) 26 weeks 26 weeks 52 weeks to 29.09.07 to 30.09.06 to 31.03.07 £000 £000 £000Cash flows from operating activities Profit for the period 965 158 1,441 Adjustments for:Amortisation of development expenditure 87 54 120Depreciation 532 622 1,218Impairment of goodwill - - 24Net financial income (1,071) (877) (1,812)Profit on disposal of plant and equipment (391) - 40Equity share option expense 43 9 14Income tax expense 480 97 696Operating profit before changes in working 645 63 1,741capital and provisionsDecrease/(increase) in trade and other 781 (4,184) (4,602)receivablesIncrease in inventories (3,188) (1,457) (2,433)(Decrease)/increase in trade and other (91) 3,665 4,650payablesDecrease in employee benefits 41 20 30Cash generated from the operations (1,812) (1,893) (614)Interest paid (165) (56) (278)Income tax received/(paid) 11 (56) (8)Net cash from operating activities (1,966) (2,005) (900) Cash flows from investing activitiesInterest received 41 0 157Proceeds from sale of plant and equipment 704 0 236Purchase of plant and equipment (486) (192) (680)Development expenditure capitalised (371) (182) (548)Net cash from investing activities (112) (374) (835) Cash flows from financing activitiesProceeds from the issue of ordinary shares 38 0 142Net receipt of external borrowing 871 1,191 151Reduction in current asset investments - - 64Net cash from financing activities 909 1,191 357 Net decrease in cash and cash equivalents (1,169) (1,188) (1,378)Cash and cash equivalents at beginning of 5,331 6,718 6,718periodEffect of exchange rate fluctuations on cash 35 27 (9)held Cash and cash equivalents at end of the 4,197 5,557 5,331period Notes to the financial information 1. Basis of preparation The 600 Group PLC (the "Company") is a public limited company incorporated anddomiciled in England and Wales. The Company's ordinary shares are traded on theLondon Stock Exchange. The Consolidated Interim Financial Statements of theCompany for the 26-week period ended 29 September 2007 comprise the Company andits subsidiaries (together referred to as the "Group"). This Half-yearly financial report is the condensed consolidated financialinformation of the Group for the 26 weeks ended 29 September 2007. It has beenprepared in accordance with the Disclosure and Transparency Rules of the UKFinancial Services Authority and the requirements of IAS 34 Interim FinancialReporting as adopted by the European Union. The Half-yearly financial report 2007/08 was approved by the Board of Directorson 15 November 2007. The Half-yearly financial report 2007/08 does not constitute financialstatements as defined in section 240 of the Companies Act 1985 and does notinclude all of the information and disclosures required for full annualfinancial statements. It should be read in conjunction with the Annual reportand financial statements for the 52-week period ended 31 March 2007, copies ofwhich can be obtained from the Company's registered office or website. The financial information contained in this half-yearly report in respect of the52 weeks ended 31 March 2007 has been extracted from the Annual report andfinancial statements 2007 which have been filed with the Registrar of Companies.The auditors report on these financial statements was unqualified and did notcontain a statement under Section 237(2) or (3) of the Companies Act 1985. The half-yearly results for the current and comparative period are neitheraudited nor reviewed by the Company's auditors. 2. New IFRS and amendments to IAS The financial statements for the year ended 29 March 2008 are impacted by thefollowing new standards and interpretations. IFRS 7 Financial Instruments : Disclosure and IAS 1 Presentation of FinancialStatements - Capital Disclosures will increase the amount of disclosure in thefull financial statements. The accounting, income and net assets will remainunchanged. 3. Significant accounting policies The condensed consolidated financial statements in this Half-yearly financialreport for the 26 weeks ended 29 September 2007 have been prepared usingaccounting policies and methods of computation consistent with those set out inThe 600 Group PLC's Annual report and financial statements for the 52-weekperiod ended 31 March 2007. In preparing the condensed financial statements, management are required to makeaccounting assumptions and estimates. The assumptions and estimation methodswere consistent with those applied to the Annual report and financial statementsfor the 52-week period ended 31 March 2007. 4. Segment analysis Geographical Segments 26 weeks 26 weeks 52 weeks to 29.09.07 to 30.09.06 to 31.03.07 £000 £'000 £000Revenue based ongeographical origin United Kingdom 23,491 23,489 50,113Other European Countries 4,303 2,798 5,969North America 6,899 5,552 11,846Africa and Australasia 10,041 9,712 20,721Inter-segment revenue (4,227) (4,679) (9,983)Revenue from continuing 40,507 36,872 78,666operationsRevenue from discontinued 0 286 259operationsRevenue generated in the 40,507 37,158 78,925period 26 weeks 26 weeks 52 weeks to 29.09.07 to 30.09.06 to 31.03.07 £000 £'000 £000Revenue based ongeographical destination United Kingdom 10,171 10,103 21,460Other European Countries 9,453 7,158 15,204North America 12,129 11,843 25,154Africa and Australasia 7,343 8,054 17,107Far East 1,411 0 0Revenue generated in the 40,507 37,158 78,925period 26 weeks 26 weeks 52 weeks to 29.09.07 to 30.09.06 to 31.03.07 £000 £'000 £000Operating profit United Kingdom 360 (585) 678Other European Countries (121) 219 (253)North America 161 48 (56)Africa and Australasia 155 (213) 246Operating profit from 555 (531) 615continuing operations Operating loss from (181) (90) (290)discontinued operationsOperating profit in the 374 (621) 325period 5. Taxation The charge for corporation tax comprises UK taxation £nil (2006: £nil), overseastaxation charge of £6,000 (2006: charge £1,000) and deferred taxation charge of£474,000 (2006: charge £96,000). On 21 March 2007, the Chancellor announced that with effect from 1 April 2008the standard rate of UK corporation tax will reduce from 30% to 28%. This chargehas been adopted for deferred tax in the period and has led to an additionalcredit of £36,000 being recognised in the income statement and £80,000 beingrecognised in the SORIE in the 26-week period ended 29 September 2007. 6. Earnings per share The basic earnings per share of 1.6p (2006: 0.2p) is based on the profit for theperiod of £930,000 (2006: profit £89,000) and the weighted average number ofshares outstanding of 57,183,559 (2006: 56,847,149). In determining the dilutedearnings per share of 1.6p (2006: 0.2p), the earnings for the periodattributable to shareholders was divided by the weighted average number ofshares in the period plus 962,233 of potentially dilutive shares on option. 7. Interim report Copies of the interim report will be sent to all shareholders and will beavailable to members of the public from the company's registered office at 600House, Landmark Court, Revie Road, Leeds, LS11 8JT. The 600 Group PLC is registered in England and Wales No. 196730. 8. Responsibility 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: a) 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 b) 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 A J Dick, Group Chief Executive J A Kitchen, Non-Executive Director S J Rutherford, Non-Executive Director M G D Wakeman, Group Finance Director This information is provided by RNS The company news service from the London Stock Exchange