REG - 600 Group PLC - Interim Results
15/11/2021 07:05
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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 415000
Neil Carrick, Company Secretary
Instinctif Partners Tel: 0207 457 2020
Tim McCall
Cenkos Securities plc (Nominated Adviser and Broker) Tel: 020 7397 8900
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
2021 2021 2021 2020 2020 2020 2021
$000 $000 $000 $000 $000 $000 $000
Continuing
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) 1,221 172 (370) (198) 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 (185) - (185) (191) - (191) (373)
Loan note amortisation - - - - (300) (300) (642)
Financial expense (720) - (720) (746) (300) (1,046) (2,141)
Profit/(Loss) before tax 731 (37) 694 (568) (670) (1,238) 90
Income tax (charge)/credit (197) 1,286 1,089 140 - 140 (2,663)
Profit/(Loss) for the period attributable to equity holders of the parent 534 1,249 1,783 (428) (670) (1,098) (2,573)
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 205 41 514
Statement:
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 ended 26 weeks ended 52 weeks 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 19 (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 2,579 965 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 Industrial Head Office
Tools Laser & unallocated
& Precision Systems
Engineered
Components 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 2020 Machine Industrial Head Office Total
Tools Laser & Unallocated
& Precision Systems
Engineered
Components
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 Industrial laser systems Head Office Total
52 Weeks ended 31 March 2021 tools & unallocated
& precision
engineered
components
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 2021 30 September 2020 31 March 2021
$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 2021 30 September 2020 31 March 2021
$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 2021 30 September 2020 31 March
2021
$000 $000 $000
Items included in cost 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 - 350
Right of use impairment (b) - - 227
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) - - 452
(149) (370) (313)
Items included in financial income/(expense):
Amortisation of loan notes and associated expenses (c) 186 (300) (642)
Total adjusting items before tax (37) (670) (1,034)
Income tax on adjusting items 1,286 - 257
Total adjusting items after tax 1,249 (670) (777)
5. Financial income and expensE
30 September 2021 30 September 2020 31 March
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 (489) (463) (907)
Finance charges on finance leases (10) - (12)
Interest on employee benefit liabilities - - (35)
IFRS 16 - Lease interest (185) (191) (373)
Amortisation of loan note costs - (300) (642)
Financial expense (720) (1,046) (2,141)
6. Taxation
30 September 30 September 31 March
2021 2020 2021
$000 $000 $000
Current tax:
Corporation tax at 25% (2020: 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 March
2021 2020 2021
Weighted average number of shares Shares Shares Shares
Issued shares at start of period 117,473,341 117,473,341 117,473,341
Weighted average number of shares at end of period 117,473,341 117,473,341 117,473,341
Weighted average number of 8,190,000 (2020: 7,780,000) potentially dilutive 2,100,375 1,630,000 2,040,000
shares
Total Weighted average diluted shares 119,573,716 119,103,341 119,513,341
30 September 2021 30 September 2020 31 March 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) (2.19c)
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 2021 30 September 2020 31 March 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 181 (305) (675)
Exchange effects on net funds 306 (574) (1,451)
Net debt at end of period (24,826) (26,224) (21,991)
9. Analysis of net DEBT
At Exchange/ At
31 March Reserve 30 September
2021 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 710 (3) - (29) 678
sheet)
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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