TIDMSIXH
RNS Number : 3012S
600 Group PLC
15 November 2021
15 November 2021
The 600 Group PLC
Unaudited Interim Results for the six months ended 30 September
2021
The 600 Group PLC ("the Group"), the diversified industrial
engineering company (AIM: SIXH), today announces its unaudited
interim results for the six months ended 30 September 2021.
Financial highlights
-- Revenues up 34% to $34.0m (FY21 H1: $25.4m)
-- Underlying* operating profit of $1.4m (FY21 H1: $0.2m)
-- Net debt, excluding leases and $2.2m of USA PPP funding now
forgiven, of $14m (FY 20 H1: $16.7m, FY21 year end: $12.7m)
-- Orderbook at record $23m - more than double that of the same
time in the previous year and particularly strong in higher margin
Laser business
Strategic & operational highlights
-- Strong recovery from the pandemic with the Group emerging as
a leaner organization positioned for growth
o Activity now back above pre-pandemic levels with record order
book and enquiry pipeline
o Particularly strong demand in higher-margin laser business -
CMS winning large new orders including the largest in its history
and as TYKMA Electrox continues to transition from commoditized
products to a more custom machine focus
-- Strengthened operations and diversified business in key markets
o Integration of Laser Division processes - sales operation and
distribution network now serves both TYKMA Electrox and CMS
o Machine Tools Division established new German operation, a
substantial market that diversifies revenues and is expected to
make a maiden contribution to trading in the second half of the
year
-- Significant pipeline of opportunities ahead with the Group
well positioned for growth in both divisions
o Well positioned to capitalize on orderbook with improved
balance sheet, strengthened operations and skilled workforce
* from continuing operations, before adjusting items .
Paul Dupee, Chairman of the Group, commented:
"We have emerged from the pandemic with a record orderbook,
strengthened operations and the foundations for sustained growth.
The Group successfully retained our highly skilled workforce while
transforming into a leaner, more efficient organization. This
ensured we were able to seamlessly resume operations and capitalize
on the growing orderbook for our market-leading products and
services.
"Industrial activity has now surpassed pre-pandemic levels and
our forward sales are greater than ever before heading into the
second half of the year. Growth is particularly strong in our laser
division where we are benefitting from CMS' focus on high-end
machines and the strategic pivot by TYKMA to manufacture
higher-margin custom machines. As a result, our orderbook not only
reflects increased demand for our products, but also an improvement
in the quality of future earnings.
"While mindful of the ongoing uncertainty caused by COVID-19,
the Board is increasingly confident of the outlook for the Group
and excited about the opportunities ahead."
Enquiries:
The 600 Group PLC
Paul Dupee, Executive Chairman Tel: +1-407-818-1123 / 01924
Neil Carrick, Company Secretary 415000
Instinctif Partners Tel: 0207 457 2020
Tim McCall
Cenkos Securities plc (Nominated Adviser Tel: 020 7397 8900
and Broker)
Ben Jeynes / Max Gould (Corporate Finance)
Alex Pollen / Henry Nicol (Sales)
The 600 Group Plc
Chairman's Statement for the six months ended 30 September
2021
Overview
The six-month period ended 30 September 2021 has seen the Group
recover strongly from the impact of the COVID-19 pandemic with much
improved order intake, which has been particularly strong in the
higher-margin laser Division. Thanks to the operational cost
savings and government assistance programs during the pandemic the
businesses were able to keep their core teams and skilled
workforces together. This has allowed the businesses to react
quickly to the significant increase in activity now being seen
which is above pre-pandemic levels.
Revenue was up 34% to $34m on the same period last year and the
current order book at $23m is more than double that of the previous
year, providing a strong base for the second half of the financial
year. Working capital has increased to support the significant
uplift in activity, although borrowings are on a par with the
previous half year at $16.2m and include $2.2m of USA Government
Paycheck Protection Program (PPP) loans which were subsequently
forgiven in early November 2021 and will be shown as other income
in the second half of the year.
Results
Revenue was up 34% at $34.0m (FY 21 H1: $25.4m) with net
underlying operating profit (excluding adjusting items) at $1.4m
(FY21 H1: $0.2m).
After taking account of interest on bank borrowings, loan notes
and lease liabilities, the underlying profit for the Group pre-tax
before adjusting items was $0.7m (FY21 H1: loss $0.6m) and a profit
of $0.7m (FY 21 H1: loss $1.2m) after adjusting items.
The total profit for the financial period on continuing
activities was $1.8m (FY 21 H1: loss $1.1m), providing Basic
earnings of 1.52 cents (equivalent to 1.10p) per share (FY 210 H1:
loss 0.93 cents (equivalent to 0.78p loss). The underlying
continuing earnings per share (excluding adjusting items) were
0.45c (equivalent to 0.33p) (FY 21 H1: loss 0.36c (equivalent to
0.29p loss).
Given the continuing Global uncertainty no dividend is
proposed.
Financial position
Inventory levels have increased to support the significant
uplift in activity but also as a result of supply issues where
additional quantities are in transit due to extended delivery times
as a consequence of container and transport issues. The Laser
business has also brought forward several months of critical
components to secure supply and also hedge against price increases.
The machine tools Division has also invested in stock for the new
German operation during this period. Inventory overall has
increased by $5.4m since 31 March 2021 to $23.3m.
Trade and other receivables have also seen an increase from
$8.6m at March 2021 to $9.8m. Receivables in Lasers, in particular
on the custom higher specification sales, usually benefit from a
significant deposit with order which helps to keep working capital
lower in that Division.
Trade and other payables have increased in line with the revenue
increase leaving the overall working capital increase at 23%
($4.2m).
Investment in new equipment and improvement to the facilities at
CMS of $0.35m has been made during the period to bring more
operations in house and help improve efficiencies as the volumes
increase.
The three USA businesses took advantage in February 2021 of the
second round of Government assistance under PPP legislation
totaling $2.2m. These loans are included in debt at 30 September
2021 but were subsequently forgiven in early November 2021. The
forgiveness will be shown in other income in the second half of the
financial year.
Total debt, excluding leases, at 30 September 2021 was $16.2m
against $12.7m at 31 March 2021 and $16.7m at 30 September 2020.
The debt at 30 September 2021 includes the $2.2m of PPP funding
which has subsequently been forgiven.
The UK machine tools business also continues to have a
government assistance loan repayable in September 2023 under the
Coronavirus Large Business Interruption Loan Scheme (CLBILS). The
repayment date of the Sterling denominated loan notes of $10.8m was
extended by 18 months to 14 August 2023 in July as were the 43.95m
warrants to subscribe for ordinary shares at 20p.
Both Bank of America and HSBC continue to be very supportive
during these difficult times and the annual reviews of the working
capital facilities totaling $11m have recently been renewed for a
further 12 months. There remains very limited utilization of these
facilities and the Group remains covenant compliant.
Adjusting items
Adjusting Items have been noted separately to provide a clearer
picture of the Group's underlying trading performance and are set
out in note 4. The amortisation of acquisition intangibles relating
to the acquisition of CMS of $0.2m has been recorded as an
adjusting item in operating expenses as has the cost of prior
periods unpaid duty in TYKMA. As a consequence of the extension of
the repayment date of the loan notes a credit of $0.2m is recorded
in financial income in respect of the adjustment to the carrying
value of the amortised cost. The remaining discounted amount and
costs will be amortised over the remaining term to August 2023 and
the comparatives show the amortisation of the loan note discounting
costs as adjusting items within finance costs. As a result of the
change in the rate of UK Corporation tax from 19% to 25% there is a
credit of $1.3m shown in adjusting items taxation reflecting the
increased value of the deferred tax assets in the UK.
Operating activities
Industrial Laser systems
The industrial laser Division experienced significant order
growth from March 2021 onwards. This was particularly strong in the
higher margin custom products where CMS specialises and into which
the TYKMA Electrox business has migrated from the more commodity
end of the market.
The orderbook at the end of September 2021 was nearly $12m
against just over $3m at the same time last year.
New machinery and improvements to the CMS site have been made
during the period to improve efficiency and bring more operations
in house. The Laser Division has also seen disruption and price
increases in the supply chain. Several critical components
including micro processing chips have been bought forward several
months to secure supplies and hedge against price increases which
has pushed up stockholding levels.
The Laser Division internal sales operation and distribution
network now serves both TYKMA Electrox and CMS and further synergy
benefits are being gained in cross fertilization of technology and
product knowledge between the two businesses.
The development of new techniques and technology is forefront to
the Division and the Group is supportive of this through both
internal R &D and the search for appropriate bolt on
acquisitions.
The results of the division were as follows:
FY22 H1 FY21 H1
$m $m
Revenues 15.2 9.85
Operating profit* 1.79 0.24
Operating margin* 11.8% 2.4%
*from continuing operations, before adjusting items.
Machine tools and precision engineered components
Machine tool activity globally has seen a bounce back from the
effects of the COVID-19 pandemic and although there remains some
concern over COVID variants, supply chain and transportation
issues, the forecasts for the industry are for continued double
digit growth through 2021 and 2022. Both the UK and USA operations
experienced growth of over 25% against the same period in the prior
year, but Australian volumes struggled, and the business made a
small operating loss with much of the country in various lockdowns
until very recently. The Divisional growth overall was 21% up on
the same period last year.
Order intake remains strong and the Divisional orderbook at over
$10m is up over 130% on the same time last year.
The German operation, in Dortmund, was established during the
period, although only started trading in the second half of the
financial year, with this reporting period incurring the set-up
costs. This is an important market, almost the size of the USA, in
machine tools and where the Colchester brand name is well known.
The new operation will promote the direct sale of higher
specification machines, support the existing distribution
businesses and will reduce the impact of tariffs on UK to Europe
sales.
All businesses have seen price increases in their supply chains
and transportation cost increases and delivery issues due to
container shortages, dock and lorry delays resulting from the
increased global demand and labour shortages. Price increases and
transport surcharges have largely had to be passed on to the end
users.
The results of the division were as follows:
FY22 H1 FY21 H1
$m $m
Revenues 18.81 15.55
Operating profit* 0.78 0.74
Operating margin* 4.2% 4.8%
*from continuing operations, before adjusting items.
Summary and outlook
The Group has seen a significant increase in activity in this
first six months of the financial year and has a substantial order
book and enquiry pipeline going into the second half of the year.
The de-risking of the Group, both operationally and financially, in
the recent past has created a platform from which it is now
delivering on the strength of the Group's brands and technology and
expanding the businesses into increasingly diversified higher
margin niche markets worldwide.
Whilst there will continue to be concerns over COVID variants
and supply chain disruption, given the strong orderbook activity
and backlog the Board is confident that the fundamentals of brand
promotion, investment in new, higher end product capabilities into
new markets and selective acquisitions will lead to improved
shareholder value in the future.
Paul Dupee
Chairman
15 November 2021
The 600 Group Plc
Condensed consolidated income statement (unaudited)
For the 26 week period ended 30 September 2021
Before After Before After
Adjusting Adjusting Adjusting Adjusting Adjusting Adjusting
Items Items Items Items Items Items
26 weeks 26 weeks 26 weeks 26 weeks 26 weeks 26 weeks 52 weeks
ended ended ended ended ended ended ended
30 September 30 September 30 September 30 September 30 September 30 September 31 March
202 1 2 021 2 021 202 0 2 020 2 020 2 021
$000 $000 $000 $000 $000 $000 $000
----------------- ------------ ------------ ------------ ------------ -------------- ------------ --------
C ontinuing
Revenue 34,000 - 34,000 25,398 - 25,398 53,550
Cost of sales (21,769) - (21,769) (16,405) - (16,405) (34,554)
Adjusting
items in
cost of sales - (74) (74) - - - (79)
Gross profit 12,231 (74) 12,157 8,993 - 8,993 18,917
Net operating
expenses (10,787) - (10,787) (8,821) - (8,821) (16,376)
Adjusting
Items in
operating
expenses - (149) (149) - (370) (370) (313)
Operating
profit/(loss) 1,444 (223) 1,221 1 72 (370 ) (1 98 ) 2 ,228
Bank interest 7 - 7 6 - 6 3
Loan note
amortisation
adjustment - 186 186 - - - -
------------ ------------ ------------ ------------ -------------- ------------ --------
Financial
income 7 186 193 6 - 6 3
------------ ------------ ------------ ------------ -------------- ------------ --------
Bank and
other interest ( 535) - (535) ( 555) - (555) (1,126)
Interest
on lease
liabilities (1 85) - (185 ) (1 91) - (191) (373)
Loan note
amortisation - - - - ( 300) ( 300) (642)
------------ ------------ ------------ ------------ -------------- ------------ --------
Financial
expense ( 720) - (720) ( 746) ( 300) ( 1,046) (2,141)
Profit/(Loss) (1,2 38
before tax 731 (37 ) 694 (568 ) (670) ) 9 0
Income tax
(charge)/credit (197) 1,286 1,089 140 - 140 (2,663)
----------------- ------------ ------------ ------------ ------------ -------------- ------------ --------
Profit/(Loss)
for the period
attributable
to equity
holders of (2 ,573
the parent 534 1,249 1,783 (428) (670) (1,098) )
Basic EPS 0.45c 1.52c (0.36c) (0.93c) (2.19c)
Diluted EPS 0.45c 1.49c (0.36c) (0.93c) (2.19c)
Condensed consolidated statement of
comprehensive income (unaudited)
For the 26 week period ended 30 September
2021
26 weeks 26 weeks 52 weeks
Ended Ended Ended
30 September 30 September 31 March
2021 2020 2021
$000 $000 $000
--------------------------------------------- ------------- -------------- ---------
Profit/(Loss) for the period 1 ,783 (1,098) (2,573)
Other comprehensive (expense)/income:
Items that will not be reclassified
to the Income Statement:
Re-measurement of the net defined benefit
asset - 3 210
Property revaluation - 441 -
Deferred taxation - - (51)
--------------------------------------------- ------------- -------------- ---------
Total items that will not be reclassified
to the Income Statement: - 444 159
Items that are or may in the future
be reclassified to the Income Statement:
Foreign exchange translation differences 205 41 514
--------------------------------------------- ------------- -------------- ---------
Total items that are or may be reclassified
subsequently to the Income Statement: 205 41 514
--------------------------------------------- ------------- -------------- ---------
Other comprehensive income for the
period, net of income tax 205 485 673
Total comprehensive income/(expenses)
for the period 1 ,988 (613) (1,900)
--------------------------------------------- ------------- -------------- ---------
Condensed consolidated statement of financial position (unaudited)
As at 30 September 2021
As at As at As at
30 September 30 September 31 March
2021 2020 2021
$000 $000 $000
------------------------------------ ------------- ------------- ---------
Non-current assets
Property, plant and equipment 2,918 2,876 2,808
Goodwill 13,174 13,174 13,174
Other Intangible assets 3,561 3,723 3,726
Deferred tax assets 4,140 4,415 2,765
Right of use assets 8,252 8,712 8,988
------------------------------------ ------------- ------------- ---------
32,045 32,900 31,461
------------------------------------ ------------- ------------- ---------
Current assets
Inventories 23,306 18,735 17,941
Trade and other receivables 9,791 7,473 8,570
Taxation - 75 -
Deferred tax assets 809 1,463 809
Assets classified as held for sale - 1,563 -
Cash and cash equivalents 2,072 3,450 4,997
------------------------------------ ------------- ------------- ---------
35,978 32,759 32,317
------------------------------------ ------------- ------------- ---------
Total assets 68,023 65,659 63,778
------------------------------------ ------------- ------------- ---------
Non-current liabilities
------------- ------------- ---------
Employee benefits (1,090) (1,271) (968)
Loans and other borrowings (12,040) (14,325) (1,590)
Government Loans (1,616) (1,549) (1,656)
Lease Liabilities (7,139) (8,336) (7.801)
Provisions (203) - (248)
(22,088) (25,481) (12,263)
------------------------------------ ------------- ------------- ---------
Current liabilities
Trade and other payables (10,559) (5,956) (8,162)
Deferred tax liability - (195) -
Lease liabilities (1,471) (1,222) (1,505)
Taxation (368) - (546)
Provisions (201) (613) (188)
Government Loans (2,234) (2,234) (2,234)
Loans and other borrowings (2,398) (2,008) (12,202)
------------- ------------- ---------
(17,231) (12,228) (24,837)
------------------------------------ ------------- ------------- ---------
Total liabilities (39,319) (37,709) (37,100)
------------------------------------ ------------- ------------- ---------
Net assets 28,704 27,950 26,678
------------------------------------ ------------- ------------- ---------
Shareholders' equity
Called-up share capital 1,803 1,803 1,803
Share premium account 3,828 3,828 3,828
Revaluation reserve - 1,789 -
Equity reserve 201 201 201
Translation reserve (6,411) (7,089) (6,616)
Retained earnings 29,283 27,418 27,462
------------------------------------ ------------- ------------- ---------
Total equity 28,704 27,950 26,678
------------------------------------ ------------- ------------- ---------
Consolidated statement of changes in equity (unaudited)
As at 30 September 2021
Ordinary Share
share premium Revaluation Translation Equity Retained
capital account reserve reserve reserve Earnings Total
$000 $000 $000 $000 $000 $000 $000
--------------- -------- ------- ----------- ----------- ------- -------- -------
At 28 March
2020 1,803 3,828 1,348 (7,130) 201 28,508 28,558
--------------- -------- ------- ----------- ----------- ------- -------- -------
Loss for the
period - - - - - (1,098) (1,098)
Other
comprehensive
income:
Foreign
currency
translation - - - 41 - - 41
Property
revaluation - - 441 - - - 441
Net defined
benefit
movement - - - - - 3 3
--------------- -------- ------- ----------- ----------- ------- -------- -------
Total
comprehensive
income - - 441 41 - (1,095) (613)
--------------- -------- ------- ----------- ----------- ------- -------- -------
Transactions
with owners:
Credit for
share-based
payments - - - - - 5 5
--------------- -------- ------- ----------- ----------- ------- -------- -------
Total
transactions
with owners - - - - - 5 5
--------------- -------- ------- ----------- ----------- ------- -------- -------
At 30 September
2020 1,803 3,828 1,789 (7,089) 201 27,418 27,950
--------------- -------- ------- ----------- ----------- ------- -------- -------
Loss for the
period - - - - - (1,475) (1,475)
Other
comprehensive
income:
Foreign
currency
translation - - - 473 - - 473
Property
revaluation - - (1,789) - - 1,348 (441)
Net defined
benefit
movement - - - - - 207 207
Deferred tax - - - - - (51) (51)
-------- ------- ----------- ----------- ------- -------- -------
Total
comprehensive
income - - - 473 - 29 (1,287)
--------------- -------- ------- ----------- ----------- ------- -------- -------
Transactions
with owners:
--------------- -------- ------- ----------- ----------- ------- -------- -------
Credit for
share-based
payments - - - - - 15 15
--------------- -------- ------- ----------- ----------- ------- -------- -------
Total
transactions
with owners - - - - - 15 15
-------- ------- ----------- ----------- ------- -------- -------
At 31 March
2021 1,803 3,828 - (6,616) 201 27,462 26,678
--------------- -------- ------- ----------- ----------- ------- -------- -------
Profit for the
period - - - - - 1,783 1,783
Other
comprehensive
income:
Foreign
currency
translation - - - 205 - - 205
Total
comprehensive
income - - - 205 - 1,783 1,988
--------------- -------- ------- ----------- ----------- ------- -------- -------
Transactions
with owners:
Credit for
share-based
payments - - - - - 38 38
-------- ------- ----------- ----------- ------- -------- -------
Total
transactions
with owners - - - - - 38 38
--------------- -------- ------- ----------- ----------- ------- -------- -------
At 30 September
2021 1,803 3,828 - (6,411) 201 29,283 28,704
--------------- -------- ------- ----------- ----------- ------- -------- -------
Condensed consolidated cash flow statement (unaudited)
For the 26 week period ended 30 September 2021
26 weeks 26 weeks ended 52 weeks
ended ended
30 September 30 September 31 March
2021 2020 2021
$000 $000 $000
-------------------------------------------- ------------- --------------- ---------
Cash flows from operating activities
Profit/ (loss) for the period 1 ,783 (1,098) (2,573)
Adjustments for:
Amortisation of intangible assets 207 206 417
Depreciation 383 375 760
Depreciation of IFRS16 Right of use
assets 637 586 1,217
Net financial expense/(income) 527 1,040 2,138
PPP Funding forgiven - - (2,234)
Non-cash adjusting items 74 - (357)
(Profit)/loss on disposal of fixed
assets 1 9 ( 9) (489)
Equity share option expense 38 5 20
Income tax expense/(credit) ( 1,089) (140) 2,663
-------------------------------------------- ------------- --------------- ---------
Operating cash flow before changes
in working capital and provisions 2,57 9 965 1,562
(Increase) /decrease in trade and other
receivables (1,280) 799 (56)
(Increase)/decrease in inventories (5,519) 675 1,887
Increase/(Decrease) in trade and other
payables 2,274 (2,728) (631)
Employee benefit contributions (60) (9) (118)
Cash (used in)/generated from operations (2,006) (298) 2,644
Interest paid (535) (554) (1,126)
Lease interest (185) (191) (373)
Net cash flows from operating activities (2,726) (1,043) 1,145
-------------------------------------------- ------------- --------------- ---------
Cash flows from investing activities
Interest received 7 6 3
Proceeds from sale of property, plant
and equipment - 81 1,745
Purchase of property, plant and equipment (531) (180) (494)
Development expenditure capitalised (58) (38) (228)
Net cash from investing activities (582) (131) 1,026
-------------------------------------------- ------------- --------------- ---------
Cash flows from financing activities
Proceeds from/(Net repayment of) external
borrowing 1,096 (1,479) (5,063)
Government assistance loans - 2,234 4,468
UK CLBILS Loans - 1,549 1,656
IFRS 16 Lease payments (586) (674) (1,383)
Net cash flows from financing activities 510 1,630 (322)
-------------------------------------------- ------------- --------------- ---------
Net (decrease)/increase in cash and
cash equivalents (2,798) 456 1,849
Cash and cash equivalents at the beginning
of the period 4,997 2,878 2,878
Effect of exchange rate fluctuations
on cash held (127) 116 270
-------------------------------------------- ------------- --------------- ---------
Cash and cash equivalents at the end
of the period 2,072 3,450 4,997
-------------------------------------------- ------------- --------------- ---------
Notes relating to the condensed consolidated financial
statements
For the 26-week period ended 30 September 2021
1. Basis of preparation and accounting policies
These interim consolidated financial statements have been
prepared using accounting policies based on International Financial
Reporting Standards in conformity with the requirements of the
Companies Act 2006. They do not include all disclosures that would
otherwise be required in a complete set of financial statements and
should be read in conjunction with the 31 March 2021 Annual Report.
The financial information for the half years ended 30 September
2021 and 30 September 2020 does not constitute statutory accounts
within the meaning of Section 434 (3) of the Companies Act 2006 and
both periods are unaudited.
The annual financial statements of The 600 Group Plc ('the
Group') are prepared in accordance with International accounting
standard in conformity with the requirements of the Companies Act
2006. The comparative financial information for the year ended 31
March 2021 included within this report does not constitute the full
statutory Annual Report for that period. The statutory Annual
Report and Financial Statements for 2021 have been filed with the
Registrar of Companies. The Independent Auditors' Report on the
Annual Report and Financial Statements for the year ended 31 March
2021 was unqualified, did not draw attention to any matters by way
of emphasis and did not contain a statement under 498(2) - (3) of
the Companies Act 2006.
The Group has applied the same accounting policies and methods
of computation in its interim consolidated financial statements as
in its 2021 annual financial statements.
2. 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 Board to allocate
resources to the segments and to assess their performance.
The chief operating decision maker has been identified as the
Board.
The Board consider there to be two continuing operating segments
being machine tools and precision engineered components and
industrial laser systems.
The Board assess the performance of the operating segments based
on a measure of operating profit/(loss). This measurement basis
excludes the effects of Adjusting Items from the operating
segments. Head Office and unallocated represent central functions
and costs.
The following is an analysis of the Group's revenue and results
by reportable segment:
Continuing
26 Weeks ended 30 September 2021 Machine
Tools
& Precision Industrial
Engineered Laser Head Office
Components Systems & unallocated Group Total
Segmental analysis of revenue $000 $000 $000 $000
--------------------------------- ------------ ---------- -------------- -------------
Total revenue 18,806 15,194 - 34,000
--------------------------------- ------------ ---------- -------------- -------------
Operating profit/(loss) pre-
adjusting items 780 1,791 (1,127) 1,444
Adjusting items - (74) (149) (223)
Group operating profit/(loss) 780 1,717 (1,276) 1,221
--------------------------------- ------------ ---------- -------------- -------------
Other segmental information:
Reportable segment assets 31,627 19,745 16,651 68,023
Reportable segment liabilities (10,045) (8,515) (20,759) (39,319)
Intangible & Property, plant
and equipment additions 40 478 71 589
Depreciation and amortisation 497 505 225 1,227
--------------------------------- ------------ ---------- -------------- -------------
2. SEGMENT ANALYSIS (continued)
Continuing
-------------------------------------------------------
26 Weeks ended 30 September Machine
2020 Tools
& Precision Industrial
Engineered Laser Head Office
Components Systems & Unallocated Total
Segmental analysis of revenue $000 $000 $000 $000
-------------------------------- ------------- -------------- -------------- --------
Total revenue 15,551 9,847 - 25,398
-------------------------------- ------------- -------------- -------------- --------
Operating profit/(loss) pre
adjusting items 737 238 (803) 172
Adjusting items - - (370) (370)
-------------------------------- ------------- -------------- -------------- --------
Group operating profit/(loss) 737 238 (1,173) (198)
-------------------------------- ------------- -------------- -------------- --------
Other segmental information:
Reportable segment assets 34,542 14,602 16,515 65,659
Reportable segment liabilities (19,802) (5,250) (12,657) (37,709)
Intangible & Property, plant
and equipment additions 76 135 - 211
Depreciation and amortisation 494 497 176 1,167
-------------------------------- ------------- -------------- -------------- --------
Continuing
-------------------------------------------------------
Machine
52 Weeks ended 31 March 2021 tools
& precision
engineered Industrial Head Office
components laser systems & unallocated Total
Segmental analysis of revenue $000 $000 $000 $000
-------------------------------- ------------- -------------- -------------- --------
Total revenue 32,219 21,331 - 53,550
-------------------------------- ------------- -------------- -------------- --------
Segmental analysis of operating
profit/(loss) before Adjusting
Items 2,801 1,836 (2,017) 2,620
-------------------------------- ------------- -------------- -------------- --------
Adjusting Items 452 (79) (765) (392)
-------------------------------- ------------- -------------- -------------- --------
Group operating profit/(loss) 3,253 1,757 (2,782) 2,228
-------------------------------- ------------- -------------- -------------- --------
Other segmental information:
Reportable segment assets 33,469 13,424 16,998 63,891
Reportable segment liabilities (10,781) (5,586) (20,187) (36,554)
Intangible & Property, plant
and equipment additions 176 432 114 722
Depreciation and amortisation 1,007 1,016 371 2,394
3. NET operating expenses
30 September 30 September 31 March 2021
2021 2020
$000 $000 $000
------------ ------------ -------------
- government assistance 62 380 2,989
- other operating income 7 10 26
Total other operating income 69 390 3,015
----------------------------- ------------ ------------ -------------
30 September 30 September 31 March 2021
2021 2020
$000 $000 $000
----------------------------- ------------ ------------ -------------
- administration expenses 9,058 7,741 16,263
- distribution costs 1,798 1,470 3,128
- adjusting items (note 4) 149 370 313
Total operating expenses 11,005 9,581 19,704
----------------------------- ------------ ------------ -------------
Total net operating expenses 10,936 9,191 16,689
----------------------------- ------------ ------------ -------------
4. Adjusting ITEMS
The directors have highlighted transactions which are material
and unrelated to the normal trading activity of the Group.
In the opinion of the directors the disclosure of these
transactions should be reported separately for a better
understanding of the underlying trading performance of the Group.
These underlying figures are used by the Board to monitor business
performance, form the basis of bonus incentives and are used for
the purposes of the bank covenants.
The items below correspond to the table below;
a) A charge of $0.07m was expensed in cost of sales relating to
US duty and tariff charges from prior year
b) As a result of the outsourcing of manufacturing in the UK in
the prior year, the existing premises were vacated and not sub-let
at the time and therefore provisions were made for unavoidable
costs in prior years, during the last financial year an assignment
of the lease was agreed and many of these provisions were reversed
resulting in a credit of $0.6m. During the current period some
previously paid costs have been refunded in relation to the
original premises costs.
c) The amortisation of the loan note costs and associated costs
are shown in financial expense. These are non cash movements and
relate to the discounting of the loan notes and associated costs
which unwind over the term of the notes. In the current period a
credit of $0.18m was recognised in financial income as the term of
the notes were extended.
d) A charge was incurred as a result of the acquisition of
Control Micro Systems Inc for legal and professional fees.
e) Amortisation of intangible assets, including customer
relationships, acquired through the Control Micro Systems Inc
deal.
f) Fees of $0.01m relating to historical legal claims were expensed in the period
g) Costs in relation to the Group reorganisation in prior
periods relating to the transfer of management functions to Orlando
Florida including the compensation for loss of office for the CFO's
and COO.
h) Profit on the disposal of the freehold premise in Brisbane,
Australia, sold in October 2020, generated a profit of $0.5m and
proceeds of $1.7m.
30 September 30 September 31 March
2021 2020 202 1
$000 $000 $000
--------------------------------------------------- ------------ ------------ --------
Items included in c ost of sales :
US Tariffs & Duty charges relating to prior years
(a) (74) - (79)
--------------------------------------------------- ------------ ------------ --------
(74) - (79)
--------------------------------------------------- ------------ ------------ --------
Items included in operating profit:
Unavoidable lease costs (b) 33 - 3 50
Right of use impairment (b) - - 2 27
Restructuring costs (g) - (195) (928)
Acquisition costs (d) - - (71)
Amortisation of acquisition intangibles (e) (172) (175) (343)
Legal costs (f) (10) - -
Profit on disposal of Australian property (h) - - 4 52
(1 49) (370 ) ( 313)
--------------------------------------------------- ------------ ------------ --------
Items included in financial income/(expense):
Amortisation of loan notes and associated expenses
(c) 1 86 (300) (6 42 )
Total adjusting items before tax (37) (670) (1,034)
--------------------------------------------------- ------------ ------------ --------
Income tax on adjusting items 1,286 - 2 57
Total adjusting items after tax 1,249 (670) (777)
5. Financial income and expensE
3 0 September 30 September 31 March
202 1 2020 2021
$000 $000 $000
Bank and other interest 7 6 3
Loan note amortisation adjustment 186 - -
Financial income 193 6 3
----------------------------------------- ----------------- ------------ --------
Bank overdraft and loan interest ( 36 ) ( 92) ( 172)
Other loan interest (4 89 ) (46 3) (90 7)
Finance charges on finance leases (10) - (12 )
Interest on employee benefit liabilities - - ( 35)
IFRS 16 - Lease interest (18 5 ) (1 9 1) (373)
Amortisation of loan note costs - (3 00) (642)
Financial expense (720 ) ( 1,046) (2,1 41)
----------------------------------------- ----------------- ------------ --------
6. Taxation
3 0 September 30 September 31 March
202 1 2020 202 1
$000 $000 $000
---------------------------------------------------- ------------- ------------ --------
Current tax:
Corporation tax at 2 5 % (202 0 : 19%): - - -
Overseas taxation:
- current period (197) - (526)
---------------------------------------------------- ------------- ------------ --------
Total current tax charge (197) - (526)
---------------------------------------------------- ------------- ------------ --------
Deferred taxation:
- current period - 140 (1,929)
- effect of rate change in UK 1,286 - -
- prior period - - ( 208)
---------------------------------------------------- ------------- ------------ --------
Total deferred taxation charge 1,286 140 (2,137)
---------------------------------------------------- ------------- ------------ --------
Taxation charged/(credited) to the income statement 1,089 140 (2,663)
---------------------------------------------------- ------------- ------------ --------
7. Earnings per share
The calculation of the basic earnings per share of 1.52c
(2020:loss 0.93c) is based on the earnings for the financial period
attributable to the Parent Company's shareholders of $1,783,000
(2020: loss $1,098,000) and on the weighted average number of
shares in issue during the period of 117,473,341 (2020:
117,473,341). At 30 September 2021, there were 8,190,000 (2020:
7,780,000) potentially dilutive shares on option and 43,950,000
(2020: 43,950,000) share warrants exercisable at 20p. The weighted
average effect of these as at 30 September 2021 was 2,100,375
shares (2020: 1,630,000) giving a diluted earnings per share of
1.49c (2020: loss 0.93c).
30 September 30 September 31 M arch
2021 2020 2021
------------------------------------- -------------- ------------ ------------
Weighted average number of shares Shares Shares Shares
Issued shares at start of period 117,47 3 ,3 41 117,473,341 117,473,341
Weighted average number of shares
at end of period 117,473,341 1 17,473,341 1 17,473,341
------------------------------------- -------------- ------------ ------------
Weighted average number of 8,190,000
(2020: 7,780,000) potentially
dilutive shares 2,100,375 1,630,000 2 ,040,000
------------------------------------- -------------- ------------ ------------
Total Weighted average diluted
shares 119,573,716 1 19,103,341 119,5 13,341
------------------------------------- -------------- ------------ ------------
3 0 September 30 September 3 1 March
202 1 2020 2021
$000 $000 $000
Total post tax earnings - continuing
operations 1 ,783 (1,098) (2,573)
Basic EPS 1. 52c (0.93c) (2.19c)
Diluted EPS 1. 49c (0.93c) (2. 19 c)
------------------------------------- ------------- ------------ ---------
Underlying earnings $000 $000 $000
------------------------------------- ------------- ------------ ---------
Total post tax earnings - continuing
operations 1 ,783 (1,098) (2,573)
Adjusting items - per note 4 1 ,249 (670) 777
Underlying earnings after tax 534 (428) (1,796)
------------------------------------- ------------- ------------ ---------
Underlying basic EPS 0.45c (0.36c) (1.53c)
Underlying diluted EPS 0.45c (0.36c) (1.53c)
8. RECONCILIATION OF NET CASH FLOW TO NET DEBT
30 September 3 0 September 3 1 March
2021 202 0 2021
$000 $000 $000
---------------------------------------- ------------ ------------- ---------
(decrease)/increase in cash and cash
equivalents ( 2,798) 456 1,849
(decrease)/Increase in debt and finance
leases ( 325) 2,345 6 , 820
---------------------------------------- ------------ ------------- ---------
(decrease)/Increase in net debt from
cash flows ( 3,123) 2,801 8,669
Net debt at beginning of period (21 ,991 ) (24,142) (24,142)
Government assistance loans USA - (2,234) (2 ,234 )
Government assistance loans UK - (1,549) ( 1,656)
Lease liabilities increase ( 199) ( 221) (502)
Loan costs amortization and adjustments 1 81 (305) (675)
Exchange effects on net funds 3 06 (574) (1,451)
---------------------------------------- ------------ ------------- ---------
Net debt at end of period (2 4,826 ) (26,224) (21,991)
---------------------------------------- ------------ ------------- ---------
9. Analysis of net DEBT
At Exchange/ At
3 1 March Reserve 3 0 September
202 1 movement Other Cash flows 2021
$000 $000 $000 $000 $000
---------------------------------- --------- --------- -------- ---------- -------------
Cash at bank and in hand 4,287 (124) - (2,769) 1,394
Short term deposits (included
within cash and cash equivalents
on the balance sheet) 710 (3) - (29) 678
4,997 (127) - (2,798) 2,072
Debt due within one year (977) - - (1,421) (2,398)
Debt due after one year (1,590) - - 325 (1,265)
Loan Notes due within one year (11,225) 269 10,956 - -
Loan Notes due after one year - - (10,775) - (10,775)
Lease liabilities (9,306) 124 (199) 771 (8,610)
Government assistance loans (3,890) 40 - - (3,850)
Total (21,991) 306 (18) (3,123) (24,826)
---------------------------------- --------- --------- -------- ---------- -------------
10. 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
11. Principal Risks and Uncertainties
The principal risks and uncertainties affecting the Group remain
those set out in the 2021 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 continuing issues
surrounding the COVID-19 pandemic which may result in exposure to
increased input costs, supply chain and delivery issues and a
downturn in its customers' end markets, particularly in North
America and Europe.
12. Post balance sheet events
On 11 November the three USA operations were all granted
forgiveness of their second round loans under the USA Government
Paycheck Protection Program ("PPP") which in total amounted to
$2.2m. These amounts are expected to be included in other income in
the Consolidated Income Statement for the year ended 31 March
2022.
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