REG - 600 Group PLC - Half Yearly Report <Origin Href="QuoteRef">SIXH.L</Origin> - Part 1

600Announcement

26/11/2014 07:10

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 

2014
2013
2014







'000

'000

'000
Continuing





Revenue
21,051

20,937

41,707 
Cost of sales
(14,145) 

 (14,019) 

 (27,850)






Gross profit
6,906 

6,918 

13,857 
Other operating income
11

90

134 






Net operating expenses
(6,050)

(6,213)

(11,643)
Pensions credit
2,186

-

-
Other special items
-

-

(128)
Share option costs
(63)

(28)

(57)
Total Net operating expenses
(3,927) 

(6,241) 
 
(11,828) 






Operating profit
2,990

767

2,163 






Bank and other interest
1 

2 

7 
Interest on pension surplus
443 

421

827 
Financial income 
444 

423 

834 






Bank and other interest
(198)

(184)

(388)
Amortisation of shareholder loan costs
(72)

(63)

(134)
Financial expense
(270)

(247)

(522)






Profit before tax
3,164

943

2,475 






Income tax charge
(1,021)

(142)

(623) 






Total profit for the financial period attributable to equity holders of the parent
2,143

801

1,852
 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. TheCompany's ordinary shares are traded on the AIM Market of the London Stock Exchange. The Consolidated Interim Financial Statements ofthe 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 offinance 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. 

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