REG - 600 Group PLC - Results for the year ended 31 March 2022
30/09/2022 12:00
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RNS Number : 3737B 600 Group PLC 30 September 2022
30 September 2022
The 600 Group PLC
("600 Group" or the "Group")
Results for the year ended 31 March 2022
Transformative year with streamlined operations refocused on the high-growth
Industrial Laser Systems market
The 600 Group PLC (AIM: SIXH), the Industrial Laser Systems Business, today
announces its results for the year ended 31 March 2022.
Financial Highlights
· Revenue from continuing operations up 50% to $32.0m (2021:
$21.3m)
· Underlying operating profit from continuing operations of $1.8m
(2021: loss $0.2m)
· Operating profit after adjusting items from continuing operations
$1.2m (2021: loss $1.0m)
· Laser Division underlying operating margin increased to 12.9%
(2021: 8.6%)
· Underlying profit before tax on continuing operations of $0.8m
(2021: loss $1.3m)
· Profit before tax after adjusting items on continuing operations
of $0.2m (2021: loss $2.8m)
· Group net debt at 31 March 2022 excluding lease liabilities was
$17.0m (31 March 2021: $12.7m); all long-term borrowings redeemed post year
end following sale of Machine Tool Division
· Year-end order book increased by 24% to record levels at 31 March
2022, with further 10% growth to the end of September 2022 as the Group sees
heightened demand in FY23
Underlying profits are before adjusting items which are unrelated to the
normal trading activity of the group - see note 4.
Strategic & Operational Highlights
· Completed the Group's strategic refocus towards Industrial Laser
Systems - a higher-margin, growth market - following the disposal of the
Machine Tool Solutions division (completed in April 2022)
· Strong recovery post-pandemic with particularly high activity
levels across the Industrial Laser Systems businesses and a record order book
o 50% revenue increase from Industrial Lasers division driven by strong
organic growth in order intake
o CMS led the order book growth, including a $4.3m order from Goe Goe for
four pill driller machines
· Strengthened operations across Industrial Laser Systems
businesses:
o Integrated Group processes with CMS and TYKMA Electrox now being served by
a combined sales operations and distribution network
o Completed proprietary software upgrade for TYKMA Electrox, providing
upgrade opportunities to customers as well as adding new functionality and
compatibility with other systems and operations
· Redeemed all long-term debt following disposal of the Machine
Tool Division for cash consideration of US$21m; significant credit facilities
to support increased activity levels and finance growth. Current borrowings of
$2.8m are supporting increased receivables, including the balance of the Goe
Goe contract, which are due to be received over the next few months.
· Strong pipeline of opportunities and record order book with the
Group well positioned to take advantage of operational gearing as volumes
continue to increase
Paul Dupee, Executive Chairman of the Group, commented:
"The 600 Group has been transformed into a streamlined business with the
financial flexibility and operational platform to capture the growth potential
of the industrial laser systems market.
"The global market for industrial lasers is valued in the region of $15-20
billion, with further growth projected as lasers are adopted in material
processing across multiple industries, ranging from aerospace and transport to
medical and pharmaceutical.
"We are proud to own two leading brands within this high-growth, future-facing
market. The strength of our offering is reflected in the way we have rebounded
strongly from the impact of the pandemic. Our businesses have seen a
significant increase in activity levels across our operations, achieving
record order books during the year and seeing growth since the year end, which
underpins the Group's growth projections.
"As we enter the new financial year with all long-term debt repaid and 100%
focused on the Laser Division, the Group is in a strong position to deliver
further growth. We are focused on expanding our share of this highly
fragmented industry, both through organic growth and consolidation
opportunities. The Board looks to the future with confidence and will provide
a trading update on H1 FY2023 performance in due course."
Enquiries:
The 600 Group PLC Tel: +1-407-818-1123
Paul Dupee, Executive Chairman
Instinctif Partners (Financial PR) Tel: +44 207 457 2020
Tim McCall / Joe Quinlan 600Group@instinctif.com
Cenkos Securities plc (Nominated Adviser and Broker) Tel: +44 20 7397 8900
Ben Jeynes / Max Gould (Corporate Finance)
Alex Pollen/ Henry Nicol (Sales)
Chairman's Statement
Fiscal 2022 was a truly transformative year for The 600 Group PLC. After more
than 100 years of owning and operating various, often unrelated, businesses in
a number of industries in various countries around the world, the group has
simplified itself and is now engaged in only one line of business with current
manufacturing and executive facilities in only one country, the United States.
The group has transitioned from being a leveraged manufacturer of legacy
products in mature industries to a business that was debt free at the date of
the machine tool disposal and is now focused, flexible and embracing 21st
century technology with inherent attractive growth rates and ample
opportunities, both internal and external, to expand its existing
capabilities.
The sale of our machine tool business, concluded in April, allowed us to
redeem all long-term debt while we remain with significant credit facilities.
This enables us to support the increased level of activity in our remaining
division, Industrial Lasers, where revenues increased by 50% and year-end
order book has grown by 24%.
During the pandemic, our divisional management has done an excellent job of
balancing the challenges faced including adjusting to supply chain issues,
managing personnel absentees and shortages, and taking advantage of government
programs including PPP in the US and the furlough and loan schemes in the UK.
This could not have been accomplished without the hard work and dedication of
our superb work force whom the Board congratulate on a job well done under
very trying circumstances.
Having fundamentally changed the business, we must now leverage our strengths
including our enviable position in laser systems manufacturing, our strong
distribution network, our proprietary intellectual property, our diversified,
blue chip customer base, our strong financial position, our buoyant order book
and our committed and talented employees. We must also take advantage of the
large addressable market available to us and look for synergies within our
technology base.
The last few years-- simplification of the business, the pandemic, the supply
chain disruptions, the relocation of the head office--have created an
opportunity for The 600 Group to thrive and prosper. It is now up to the
board, the management and our employees to take advantage of that opportunity.
Paul Dupee
Chairman
30 September 2022
Strategic Report
Our business
The 600 Group PLC ("the Group") is a leading engineering group focused on the
global industrial laser technology industry. Our market leading businesses
have a diversified, blue-chip customer base to whom we design and supply
industrial laser systems for applications in end-markets ranging from
industrial and aerospace to medical and pharmaceuticals. The Group operates
from locations in North America and sells 21% of its products and services
worldwide. The Group has important relationships directly with customers and
also with a number of distributors Worldwide.
Given the large number of customers and established distributors in many
countries there are no major sales concentrations of customers or products.
Sales are split evenly between direct customers and distributors and in the
year ended 31 March 2022, the top 20 customers, of which 9 (2021: 10) were
distributors, contributed 43% (2021: 23%) of revenues.
Revenues (Continuing activities)
Revenues are generated across many diverse geographical territories:
Percentage of worldwide revenues 2022 2021
(by destination) % %
United States of America 79.0 84.3
United Kingdom 0.4 0.6
Far East 12.5 1.8
Europe (excluding UK) 5.2 6.9
Rest of the World 2.9 6.4
Total 100 100
Macroeconomic and industry trends
Industrial laser systems
The use of industrial lasers for material processing continues to expand
worldwide with laser systems now becoming a mainstream manufacturing process.
Applications include laser machining, including cutting and drilling, marking,
ablation and a host of other niche processes. One of the main drivers of this
industry has been legislation and the continual increase in the requirement
for traceability of products in all industries from aerospace and transport to
medical and pharmaceutical.
The global industrial laser market is estimated to be in the region of $5.6bn
but given this number relates just to the laser sources, the actual market for
systems incorporating these lasers and associated equipment and software is
estimated to be much larger in the region of $15-$20bn. The industry had seen
mid-single digit increases until 2019 when a fall was recorded. Metal cutting
is by far the largest application by value and the market is dominated by
China which is the largest producer and consumer of industrial lasers. The
fall in the overall market in 2019 was estimated to be in the region of 12%
and largely driven by Chinese decline in cutting systems which mirrored the
decline in machine tools, both of which are heavily influenced by Chinese
demand. The effects of the COVID-19 pandemic led to significant reductions in
volumes in the early part of 2020 but as China, in particular, opened up,
volumes recovered and the overall market was estimated to be similar to that
of 2019 as a result. The European and American markets however were slower to
recover and took until Q1 of 2021 to show significant signs of a return to
more normal levels of activity. Whilst there continues to be post pandemic
global issues with increased inflation and the Ukraine war leading to energy
price increases the laser processing markets have shown resilience in recent
years to Global market changes.
The laser marking and micro-materials processing subset of the market (in
which the Group competes) is smaller than the macro-materials processing
subset and has seen low single digit growth in recent years. Growth is
underpinned by enhanced performance in the speed, cost and quality of the
systems being implemented compared to other techniques as well as by
legislative changes driving a requirement for greater traceability of products
and components. The industry subset occupied by the Group has however seen a
proliferation of vendors and selling price pressure at the lower commodity end
of the market thus whilst unit volumes have continued to increase, revenue has
been held back. It is for this reason the Group took the decision to focus on
the higher end custom products where its strengths in design and proprietary
software provide greater opportunities to grow and enhance margin and where
the acquisition of CMS in June 2019 significantly enhanced these capabilities.
Industry predictions for the laser industry expect the volumes to continue to
increase at high single digit percentage levels going forward.
Our main markets
The main market we operate in is the USA. As with all Global markets demand
reduced as a result of the COVID-19 global pandemic but saw a rapid increase
as lockdowns ended. Supply chain issues have created delays in deliveries and
inflationary pressures have resulted in cost increases. The Group has bought
forward inventory and passed on cost increases where possible to mitigate
these factors.
The possibility of disruption remains due to the ongoing effects of COVID-19
and possible new outbreaks and variants. Increased inflationary pressures from
fuel costs and the risk of recession have more recently arisen and may create
further demand issues in the Global markets.
Activity in the year
Industrial laser systems
Following a fall in activity of 10% during the pandemic both CMS and TYKMA
Electrox experienced significant increased order activity leading to record
levels of order book.
The existing TYKMA Electrox business continued to move more into the custom
higher specification market as increased competition and price deflation
continued in the lower end standard products sector and the higher end large
projects undertaken by the CMS business returned. Both businesses continued to
take advantage of the USA Paycheck Protection Program (PPP) scheme at the
start of the year to keep teams and key skills together which allowed them to
respond quickly to the significant increase in activity. This was the second
round of benefits coming from this program. Both businesses have continued to
recruit additional personnel throughout the year as activity continued to
increase.
The completion of the upgraded proprietary software for TYKMA Electrox will
provide upgrade opportunities to customers going forward as well as adding new
functionality and compatibility with other systems and operations.
Results for Continuing activities of the Laser Division for the financial year
were as follows:
2022 2021
$ 000 $ 000
Revenues 31,960 21,331
Underlying operating profit 4,109 1,836
Underlying operating margin 12.9% 8.6%
Underlying operating profit is before adjusting items, which are explained in
note 12 Alternative Performance Measures and set out in note 4.
Discontinued Activity - Machine tools division
Following the agreed sale of the Division in March 2022, this activity is
treated as discontinued with the assets and liabilities shown as held for sale
in current assets and current liabilities in the Consolidated Statement of
Financial Position.
The revenue generated by this in the year ended 31 March 2022 was $37.0m and a
profit of $0.8m after tax and adjusting items. The total of assets and
liabilities held for sale, detailed in note 13, are $32m and $13.8m.
Group Results
Revenue from continuing operations represents the Laser Division and as a
result of record order books increased by 50% to $32.0m (2021: $21.3m). Group
profit before tax and adjusting items including the continuing central costs
was $0.8m (2021: loss $1.3m). The profit before tax after adjusting items was
$0.2m (2021: loss $2.8m).
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 entries 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.
These non-GAAP measures are explained in note 12 alternative performance
measures and set out in note 4. All adjusting items are taken into account in
the GAAP figures in the Income Statement.
Costs incurred on the disposal of the Machine Tool Division up to 31 March
2022 were $0.4m.
Amortisation of the intangible assets acquired through the CMS deal of $0.3m
(2021: $0.3m) are also included in adjusting items.
As a result of the extension of the repayment date of the loan notes in August
2021 the amortisation of the loan note discount and costs were required to be
recalculated to take account of the additional period which resulted in a net
credit of $0.03m (2021: $0.6m charge) and this is also included in adjusting
items. The loan notes were repaid from the proceeds of the Machine Tool
division sale in April 2022.
Taxation
The current year tax recorded in the P&L was a credit of $0.3m (2021:
charge of $1.4m). The majority of this amount relates to deferred taxation
movements with only $0.08m actually paid in State taxes. There was no Federal
tax expense in the USA. There is no USA deferred tax recognised as management
has made the determination that it is more likely than not that the net
deferred tax assets will not be realized in the short to medium term and
therefore have placed a valuation allowance against those deferred tax assets.
There were no significant penalties or interest recognized during the year or
accrued at year-end.
The UK holding company continues to benefit from previous tax losses with
$1.6m of deferred tax asset not recorded on the balance sheet. No taxation is
payable in the UK. There are substantial deferred tax assets in the USA of
$2.5m that are not recorded on the balance sheet. The US businesses are
subject to Federal taxation on their profits at the rate of 21% but also
suffer State taxes which increases their overall composite rate to 25%.
Net profit and earnings per share
The total continuing amount attributable to equity holders of the parent for
the current financial year amounted to $0.5m (2021: loss of $4.2m) with
pre-adjusting items profit of $1.1m (2021: loss $3.0m).
Underlying basic earnings from continuing operations before adjusting items
were 0.93 cents (equivalent to 0.68p) per share (2021: loss 2.53 cents,
equivalent to 1.93p loss) and basic earnings per share from continuing
operations were 0.41 cents (equivalent to 0.30p) (2021: 3.58 cents loss,
equivalent to 2.73p loss) - see note 7 for details.
Financial position and utilisation of resources
Cash flow
Cash generated from operations before working capital movements was $3.4m
(2021: $1.6m).
Working capital increased during the year in response to the increased
revenues and supply chain constraints in particular inventories increasing by
$3.8m. Receivables also increased $3.9m due to the sales growth in the year.
Interest paid on borrowings was in line with the previous year at $1.1m with
the largest component of this being the fixed interest on the £8.5m ($10.7m)
8% loan notes which were repaid in April 2022.
Capital expenditure was $0.8m, higher than prior year (2021: $0.5m) to support
the strong sales growth across the organization.
Net borrowings
Group net debt at 31 March 2022 excluding lease liabilities was $17.0m (of
which $0.7m was in discontinued entities held for sale) against $12.7m in the
prior year.
In order to provide headroom through the COVID-19 pandemic, on 21 August 2020,
the 600 UK Limited machine tools subsidiary drew down a £1.2m ($1.7m) 3-year
term loan with a bullet repayment on 15 September 2023 and interest at 1.92%
under the Government backed Coronavirus Large Business Interruption Loan
Scheme (CLBILS). There are no covenants on the loan. The loan was repaid on
completion of the Machine Tools Division sale in April 2022.
Net bank indebtedness of $6.3m at 31 March 2022 (2021: $4.8m) was all cleared
in April 2022 following the receipt of the proceeds on the Machine Tool
Division sale. The USA working capital credit line was increased to $10m to
facilitate additional requirements to support the substantial order increases
during the year and was reduced in April 2022 to $7.5m following the sale of
Machine tools.
The extension of the repayment date of the loan notes to 14 August 2023 was
agreed in August 2021 but the notes were repaid in April 2022 following
completion of the Machine Tool Division sale. The associated warrants to
subscribe for new ordinary shares at 20p were similarly extended to the same
date and remain outstanding. The loan notes are shown net of unamortised
discounting and costs and also amounts disclosed in equity reserve which
amount to $0.2m in the current financial year (2021: $0.2m).
Working capital facilities totaling $13.9m were renewed with HSBC UK, Bank of
America and Westpac Australia during the year and would have been due to be
reviewed in the normal course in early 2023 however all but the $7.5m working
capital line from Bank of America were repaid and extinguished in April 2022.
All financial covenants in place were met during the year.
Retirement benefits
The US retiree health scheme and pension fund deficits decreased to $0.8m
(2021: $1.0m) during the current year. These liabilities are included in
liabilities held for sale as part of the Machine Tool Division disposal which
was completed in April 2022 and the liabilities transferred as part of that
process.
Key performance indicators (KPIs)
The Group monitors performance against key financial objectives that the
Directors judge to be effective in measuring the delivery of strategic aims
and managing and controlling the business. These focus at Group level on
revenue and underlying operating profit.
At individual business unit level, KPIs also include working capital control,
and customer related performance measures such as on-time delivery and
minimisation of warranty concerns.
These key performance indicators are measured and reviewed against budget
projections and prior year on a regular basis and this enables the business to
set and communicate its performance targets and monitor its performance
against these targets. Given the Global effects of the COVID-19 pandemic,
comparison against prior periods has been difficult and relatively
meaningless, and market estimates have been very volatile and unpredictable.
Revenue targets are to outperform the market forecasts by 1% (5% is considered
a normal ongoing level of growth) and to achieve over a 10% underlying
operating margin target.
The Group's recent performance on these financial KPIs on continuing
operations is set out as follows:
KPI 2022 2021
Revenue (annual growth rate) 50% (10%)
Underlying operating margin (% of revenue) 5.8% (0.8%)
All figures are pre adjusting items on continuing operations
These KPIs are used to assess performance and manage the business and have
been discussed in the strategic report and divisional commentary.
Principal risks
The Board of Directors has identified the main categories of business risk in
relation to the implementation of the Group's strategic aims and objectives,
and has considered reasonable steps to prevent, mitigate or manage these
risks.
Macro-economic - the Group's businesses are active in markets which can be
cyclical in nature as the overall level of market demand is dependent upon
capital investment intentions. Economic or financial market conditions
determine global demand and could adversely affect our customers,
distributors, operations, suppliers, and other parties with whom we transact.
The Directors seek to ensure that overall risk is mitigated by avoiding
excessive concentration of exposure to any given industry segment or to any
individual customer. Market conditions, lead indicators and industry forecasts
are monitored for any early warning signs of changes in overall market demand,
and measures to exploit opportunities or manage elevated risks are taken as
appropriate. Key business risks are set out in the strategic review.
Production and supply chain - the continuity of the Group's business
activities is dependent upon the cost-effective supply of products for sale
from our own facilities, and those of our key vendors. Supply can be disrupted
by a variety of factors including raw material shortages, labour disputes and
unplanned machine down time. Delays in the shipment of goods can affect lead
times and create some disruption.
Laws and regulations - Group businesses may unknowingly fail to comply with
all relevant laws and regulations in the countries in which they operate and
contract business. There is a risk of breach of legal, safety, environmental
or ethical standards which can be more difficult to identify, comprehend, or
monitor in certain territories than others. The Directors believe that they
have taken all reasonable steps to ensure that operations are conducted to
high ethical, environmental and health and safety standards. Controls are in
place to keep regulatory and other requirements under careful review and
scrutinise any identified instances of elevated risk.
Information Technology ("IT") - Group IT systems and the information they
contain are subject to security risks including the unexpected loss of
continuity from virus or other issues, and the deliberate breach of security
controls for commercial gain or mischief. Any such occurrences could have a
significant detrimental effect on the Group's business activities. These risks
are mitigated by the utilisation of physical and embedded security systems,
regular back-ups and comprehensive disaster recovery plans.
Market risks
The Group's main exposure to market risk arises from increases in input costs
in so far as it is unable to pass them on to customers through price
increases. The Group seeks to mitigate increases in input costs through a
combination of continuous improvement activities to minimise increases in
input costs and passing cost increases on to customers, where this is
commercially viable.
The Group is also aware of market risk in relation to the dependence upon key
vendors in its supply chain. This risk could manifest in the event of a
commercial or natural event leading to reduced or curtailed supply. The Group
seeks to mitigate these risks by maintaining transparent and constructive
relationships with key vendors, sharing long term plans and forecasts, and
encouraging effective disaster recovery planning. Alternative sources of
supply with different vendors and in different geographic regions have also
been put in place.
Other risks and uncertainties
The remaining main risks faced by the Group are to its reputation as a
consequence of a significant failure to comply with accepted standards of
ethical and environmental behaviour and Global recessionary risk.
The Directors have taken steps to ensure that all of the Group's operations
are conducted to the highest ethical and environmental standards. Regulatory
requirements are kept under review, and key suppliers are vetted in order to
minimise the risk of the Group being associated with a company that commits a
significant breach of applicable regulations.
The Board of Directors has identified the main categories of business risk in
relation to the implementation of the Group's strategic aims and objectives,
and has considered reasonable steps to prevent, mitigate or manage these
risks.
Paul Dupee
Chairman
30 September 2022
Chief Financial Officer Statement
The year ended 31 March 2022 was pivotal on the positioning of The 600 Group.
The sale of the Machine Tool Division, signed in early March 2022 and closed
on 11 April 2022, repositioned the Group as a pure laser machine manufacturer.
It moreover allowed the Group considerably strengthening the Group's balance
sheet. 2022 also marked a year of recovery from the impact of the COVID-19
restrictions which is reflected in the revenue growth (+29%) and order intake
increase (+29%), including discontinued operations.
Current year review
The Laser Division delivered the strongest performance. Revenue increased
49.8% driven by strong organic order intake growth of 35.9%. While both
companies (Tykma and CMS) grew its order intake, CMS led the group with an
increase of 68.3% which was highly impacted by the order received from Goe Goe
for four pill driller machines that totalled $4.3m. Profit in the Laser
Division grew 123.1% which was the result of a strong customer demand,
including the large contract mentioned before and its operational agility in
spite of supply chain disruptions. However, there was a reduction in gross
margin (-2.5%) as a result of product mix and increased costs of supplies.
The discontinued Machine Tool Division also saw some growth, with revenue
increase of 14.9%. Growth was observed in the European affiliates (+25.5%) and
Clausing (+8.3%) but not in Australia (-3.7%). Order intake was the main
reason for this revenue increase with a total growth of 23.3%. Similarly, to
the revenue, the order intake pattens were substantially increased in Europe
(+48.1%) and Clausing (+14.7%), however the Australian affiliate saw its
orders reduced by -11.1%. Despite the growth in revenue, profitability in the
division declined -47.1% to $1.9m (2021: $2.8m). This profit decline was
influenced by the decrease in margins (-1.1%), which reflects the general
increase in raw materials, and increase overheads as a consequence of the ease
on the pandemic.
The operating profit margin for the overall Group was 5.4% (2021: 4.9%). The
Laser Division generated an operating profit of 12.9% that represents an
increase of 4.2% vs previous year while the Machine Tool Division delivered an
operating profit of 5.2% which is a decline of -2.2% vs prior year.
Statement of financial position
With the considerable growth of the Group's top line and the increased
challenges with supply chain across the world, our working capital was
increased $3.8m on inventories plus $3.9m on trade receivables. This increase
was partially funded by the increase in trade creditors of $2.9m. The
remaining part of it was financed by the increase in the short-term loans.
The sale of the Machine Tool Division, $21.0m price on a cash and debt free
basis, closed on 11 April 2022 with the collection of funds. This amount
(minus the escrow accounts of $0.4m, brokerage and legal fees) was used to pay
the loan notes (£8.5m), HSBC CLBILS Covid loan in the UK (£1.2m), the Bank
of America CMS remaining acquisition loan of $1.6m and the revolving line of
credit with Bank of America of $4.2m.
Because the Machine Tool Division sale closed immediately after year end, the
balance sheet included in the annual report does not reflect the above
movements.
Next year outlook
Entering the new year with all long term paid off and the business focused
100% on the Laser Division, the Group is now in the unique position of being
able to look for options to expand its portfolio within this line of business.
The 2023 financial year has started strongly, with a record order book in
place and the Group currently reviewing several potential business
propositions.
Conclusion
The 600 Group delivered a solid financial performance, despite global
challenges and international economic and political uncertainty including the
COVID pandemic and, more recently, the conflict in Ukraine. Despite this,
trading has remained encouraging thus far in the FY23 year.
Rui Lopes
Chief Financial Officer
30 September 2022
Consolidated income statement
For the Year ended 31 March 2022
RESTATED
Before After Before After
Adjusting Adjusting Adjusting Adjusting Adjusting Adjusting
Items Items Items Items Items Items
year year year year year year
ended ended ended ended ended ended
31 March 31 March 31 March 31 March 31 March 31 March
2022 2022 2022 2021 2021 2021
Notes $000 $000 $000 $000 $000 $000
Continuing
Revenue 2 31,960 - 31,960 21,331 - 21,331
Cost of sales (18,490) 76 (18,414) (12,117) (79) (12,196)
Gross profit 13,470 76 13,546 9,214 (79) 9,135
Net operating expenses 3 (11,622) (707) (12,329) (9,395) (765) (10,160)
Operating profit/(loss) 1,848 (631) 1,217 (181) (844) (1,025)
Financial expense 5 (1,081) 26 (1,055) (1,153) (642) (1,795)
Profit/(loss) before tax 767 (605) 162 (1,334) (1,486) (2,820)
Income tax credit/(charge) 6 322 - 322 (1,639) 257 (1,382)
Profit/(loss) for the period on continuing activities 1,089 (605) 484 (2,973) (1,229) (4,202)
Profit on discontinued operations 13 1,027 (242) 785 1,177 452 1,629
Profit/(loss) for the period attributable to the equity holders of the parent 2,116 (847) 1,269 (1,796) (777) (2,573)
Basic earnings per share - continuing activities 7 0.93c 0.41c (2.53c) (3.58c)
Diluted earnings per share - continuing activities 7 0.91c 0.40c (2.53c) (3.58c)
Basic earnings per share 7 1.80c 1.08c (1.53c) (2.19c)
Diluted earnings per share 7 1.76c 1.06c (1.53c) (2.19c)
As explained in note 4, the directors have highlighted adjusting items which
are material or unrelated to the normal trading activity of the group. The
"before adjusting items" column in the consolidated income statement shows
non-GAAP measures. The "after adjusting items" column shows the GAAP measures.
The prior year figures have been restated for the effects of the discontinued
operations- see note 13.
Consolidated statement of comprehensive income
For the period ended 31 March 2022
year year
ended ended
31 March 31 March
2022 2021
$000 $000
Profit/(loss) for the period 1,269 (2,573)
Other comprehensive income/(expense)
Items that will not be reclassified to the Income Statement:
Re-measurement of defined benefit asset/(liability) (349) 210
Deferred taxation credit/(charge) 106 (51)
Total items that will not be reclassified to the Income Statement: (243) 159
Items that are or may in the future be reclassified to the Income Statement:
Foreign exchange translation differences 903 514
Total items that are or may in the future be reclassified to the Income 903 514
Statement:
Other comprehensive income for the period, net of income tax 660 673
Total comprehensive income/(expense) for the period
1,929 (1,900)
Attributable to:
Equity holders of the Parent Company 1,929 (1,900)
Attributable to continuing
activities
2,416 (5,433)
Attributable to discontinued
activities
(487) 3,533
Equity holders of the Parent Company 1,929 (1,900)
Consolidated statement of financial
position
As at 31 March 2022
As at 31 March 2022 As at 31 March 2021
note $000 $000
Non-current assets
Property, plant and equipment 1,842 2,808
Goodwill 13,174 13,174
Other intangible assets 3,189 3,726
Right of use assets 1,473 8,988
Deferred tax assets 236 2,765
19,914 31,461
Current assets
Inventories 8,041 17,941
Trade and other receivables 8 6,587 8,570
Deferred tax assets 99 809
Taxation 291 -
Cash and cash equivalents 207 4,997
Assets held for sale 13 31,954 -
47,179 32,317
Total assets 67,093 63,778
Non-current liabilities
Employee benefits - (968)
Loans and other borrowings (11,639) (1,590)
Government loans - (1,656)
Lease liabilities (1,081) (7,801)
Provisions (174) (248)
(12,894) (12,263)
Current liabilities
Trade and other payables 9 (6,227) (8,162)
Lease liabilities (486) (1,505)
Taxation - (546)
Provisions (178) (188)
Government loans - (2,234)
Loans and other borrowings (4,871) (12,202)
Liabilities held for sale 13 (13,777) -
(25,539) (24,837)
Total liabilities (38,433) (37,100)
Net assets 28,660 26,678
Shareholders' equity
Called-up share capital 1,803 1,803
Share premium account 3,828 3,828
Equity reserve 201 201
Translation reserve (5,713) (6,616)
Retained earnings 28,541 27,462
Total equity 28,660 26,678
Consolidated statement of changes in equity
As at 31 March 2022
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 - - - - - (2,573) (2,573)
Foreign currency translation - - - 514 - - 514
Property disposal - - (1,348) - - 1,348 -
Net defined benefit pension movement - - - - - 210 210
Deferred tax - - - - - (51) (51)
Total comprehensive Income/(expense) - - (1,348) 514 - (1,066) (1,900)
Credit for share-based payments - - - - - 20 20
Total transactions with owners - - - - - 20 20
At 31 March 2021 1,803 3,828 - (6,616) 201 27,462 26,678
Profit for the period - - - - - 1,269 1,269
Foreign currency translation - - - 903 - - 903
Net defined benefit pension movement - - - - - (349) (349)
Deferred tax - - - - - 106 106
Total comprehensive income - - - 903 - 1,026 1,929
Transactions with owners:
Credit for share-based payments - - - - - 53 53
At 31 March 2022 1,803 3,828 - (5,713) 201 28,541 28,660
Consolidated cash flow
statement
For the period ended 31 March 2022
period ended period ended
31 March 2022 31 March 2021
$000 $000
Cash flows from operating activities
Profit/(loss) for the period 1,269 (2,573)
Adjustments for:
Amortisation 251 417
Depreciation 783 760
Depreciation of right of use assets 1,312 1,217
Net financial expense 1,371 2,138
PPP funding forgiven (2,297) (2,234)
Non-cash adjusting items 406 (357)
(Profit) on disposal of property, plant and equipment - (489)
Equity share option expense 53 20
Income tax charge 243 2,663
Operating cash flow before changes in working capital and provisions 3,391 1,562
Increase in trade and other receivables (3,944) (56)
(Increase)/decrease in inventories (3,801) 1,887
Increase/(decrease) in trade and other payables 2,915 (631)
Employee benefit contributions (60) (118)
Cash (used in)/generated from operations (1,499) 2,644
Interest paid (1,069) (1,126)
Lease interest (311) (373)
Net cash flows (used in)/generated from operating activities (2,879) 1,145
Cash flows (used in)/ generated from investing activities
Interest received 24 3
Proceeds from sale of property, plant and equipment 225 1,745
Purchase of property, plant and equipment (780) (494)
Development and IT software expenditure capitalised (54) (228)
Net cash flows (used in)/ generated from investing activities (585) 1,026
Cash flows used in financing activities
PPP funding - 4,468
Proceeds from/(repayment of) external borrowing 1,037 (5,063)
UK Government loan - 1,656
Lease payments (1,460) (1,383)
Net cash flows used in financing activities (423) (322)
Net (decrease)/increase in cash and cash equivalents (3,887) 1,849
Cash and cash equivalents at the beginning of the period 4,997 2,878
Effect of exchange rate fluctuations on cash held 181 270
Cash and cash equivalents at the end of the period 1,291 4,997
Consolidated cash flow statement includes all activity relating to continuing
and discontinuing activity.
Cash in discontinued entities (Assets held for
sale)
1,084
Cash in continuing
entities
207
Cash and cash equivalents at the end of the
period
1,291
Notes relating to the financial information
1. Basis of preparatioN
The consolidated financial statements of the Group have been prepared in
accordance with UK adopted international accounting standards in conformity
with the requirements of the Companies Act 2006.
The Financial information set out in this preliminary announcement does not
constitute the company's Consolidated Financial Statements for the financial
years ended 31 March 2022 or 31 March 2021 but is derived from those Financial
Statements. Statutory Financial Statements for 2021 have been delivered to the
Registrar of Companies and those for 2022 will be delivered following the
company's adjourned AGM.
The Auditors, BDO LLP, have reported on those financial statements. Their
reports were unqualified, did not draw attention to any matters by way of
emphasis without qualifying their reports and did not contain statements under
Section 498(2) or (3) of the Companies Act 2006.
The Statutory accounts are available on the Company's website and will be
posted to shareholders who have requested a copy and thereafter by request to
the company's registered office.
2 Segment information
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 Board of Directors. The Board
review the Group's internal reporting in order to assess performance and
allocate resources.
The Board consider there to be one operating segment, being Industrial Laser
Systems, with the Machine Tools and Precision Engineered Components Division
being discontinued following the sale agreed in March 2022.
The Board assesses the performance of the operating segments based on a
measure of underlying operating profit. 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, results and net assets by
reportable segment:
Continuing Discontinued
Industrial laser systems Head Office Total Machine Group
Year ended 31 March 2022 & unallocated tools Total
& precision
engineered
components
Segmental analysis of revenue $000 $000 $000 $000 $000
Total revenue 31,960 - 31,960 37,024 68,984
Segmental analysis of operating profit/(loss) before Adjusting Items 4,109 (2,261) 1,848 1.908 3,756
Adjusting Items 76 (707) (631) (242) (873)
Group operating profit/(loss) 4,185 (2,968) 1,217 1,666 2,883
Other segmental information:
Reportable segment assets 20,466 14,673 35,139 31,954 67,093
Reportable segment liabilities (9,040) (15,616) (24,656) (13,777) (38,433)
Fixed asset additions 577 33 610 170 780
Depreciation and amortisation 924 446 1,370 976 2,346
2.Segment information (CONTINUED)
Continuing Discontinued
Industrial laser systems Head Office Total Machine Group
Year ended 31 March 2021 & unallocated tools Total
& precision
engineered
components
Segmental analysis of revenue $000 $000 $000 $000 $000
Total revenue 21,331 - 21,331 32,219 53,550
Segmental analysis of operating profit/(loss) before Adjusting Items 1,836 (2,017) (181) 2,801 2,620
Adjusting Items (79) (765) (844) 452 (392)
Group operating profit/(loss) 1,757 (2,782) (1,025) 3,253 2,228
Other segmental information:
Reportable segment assets 13,424 16,998 30,422 33,469 63,891
Reportable segment liabilities (5,586) (20,187) (25,773) (10,781) (36,554)
Fixed asset additions 432 114 546 176 722
Depreciation and amortisation 1,016 371 1,387 1,007 2,394
Inter-segment pricing is determined on an arm's length basis. Segment results,
assets and liabilities include items directly attributable to a segment as
well as those that can be allocated on a reasonable basis.
Segment capital expenditure is the total cost incurred during the period to
acquire segment assets that are expected to be used for more than one period.
Disaggregation of revenue is shown by origin, destination and product group in
the following two tables:
Disaggregation of revenue by origin for continuing operations 2022 2021
$000 % $000 %
North America 31,960 100.0 21,331 100.0
Disaggregation of revenue by origin for discontinued operations 2022 2021
$000 % $000 %
UK 12,913 34.8 10,131 31.4
Other European 504 1.4 - -
North America 21,069 56.9 19,453 60.4
Australasia 2,538 6.9 2,635 8.2
Total 37,024 100.0 32,219 100.0
2. Segment information (CONTINUED)
Disaggregation of revenue by destination for continuing operations:
2022 2021 (RESTATED)
$000 % $000 %
Revenue:
UK 126 0.4 127 0.6
Other European 1,666 5.2 1,466 6.9
North America (USA) 25,257 79.0 17,982 84.3
Africa 5 0.0 10 0.0
Australasia 7 0.0 39 0.2
Central America 264 0.8 1,044 4.9
Middle East 657 2.1 280 1.3
Far East 3,978 12.5 383 1.8
31,960 100.0 21,331 100.0
Disaggregation of revenue by origin for discontinued operations 2022 2021 (RESTATED)
$000 % $000 %
Revenue:
UK 8,005 21.6 7,315 22.7
Other European 4,848 13.1 2,372 7.4
North America (USA) 21,078 56.9 19,488 60.5
Africa 245 0.7 230 0.7
Australasia 2,546 6.9 2,390 7.4
Central America 10 0.0 74 0.2
Middle East 58 0.2 18 0.1
Far East 234 0.6 333 1.0
37,024 100.0 32,220 100.0
Disaggregation of revenue by product group for continuing operations:
2022 2021 (RESTATED)
$000 % $000 %
Sector
Lasers 29,462 92.2 19,544 91.6
Laser spares and service 2,498 7.8 1,787 8.4
Total 31,960 100.0 21,331 100.0
Timing of revenue recognition
Products and services transferred at a point in time 16,679 52.2 11,936 56.0
Products and services transferred over time 15,281 47.8 9,395 44.0
Total 31,960 100.0 21,331 100.0
There are no customers that represent 10% or more of the Group's revenues.
Assets and liabilities related to contracts with customers:
2. Segment information (CONTINUED)
The group has recognised the following assets and liabilities related to
contracts with customers on continuing operations.
2022 2021
$000 $000
Current contract liabilities relating to deposits from customers 2,668 624
2022 2021
$000 $000
Current contract assets relating to amounts due from customers 2,104 344
Remaining performance obligations
The vast majority of the group's contracts are for the delivery of goods
within the next 12 months for which the practical expedient in paragraph
121(a) of IFRS 15 applies.
The following table shows how much of the revenue recognised in the current
reporting year relates to brought forward contract liabilities:
2022 2021
$'000 $'000
Revenue recognised that was included in the contract liability balance at the 444 385
beginning of the year
3. NET operating expenses
.
Restated
2022 2021
$000 $000
Notes
- government assistance forgiven 1,451 1,456
Total other operating income 1,451 1,456
2022 2021
$000 $000
- administration expenses 13,073 10,851
- adjusting Items 707 765
3
Total operating expenses 13,780 11,616
Total net operating expenses 12,329 10,160
4. adjusting ITEMS
RESTATED
2022 2021
$000 $000
Items included in cost of sales:
US Tariffs & Duty charges relating to prior years (d) 76 (79)
76 (79)
Items included in operating expenses:
Restructuring cost - (928)
Unavoidable lease cost - 350
Right of use asset impairment - 227
Acquisitions cost - (71)
Cost related to sale of the Machine Tool Division (a) (364) -
Amortisation of intangible assets acquired (b) (343) (343)
(707) (765)
(631) (844)
Items included in financial (income)/expense:
Amortisation of Loan notes and costs (c) (530) (642)
Loan Note credit on extension of repayment date (c) 556 -
26 (642)
Total adjusting items before tax (605) (1,486)
Income tax on adjusting items - 257
Total adjusting items after tax (605) (1,229)
The directors have highlighted transactions which are material or 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.
These non-GAAP measures are explained in note12 alternative performance
measures and set out below. All adjusting items are taken into account in the
GAAP figures in the Income Statement.
The items below correspond to the table below:
a) Cost related to the sale of the Machine Tool Division incurred
before 31 March 2022.
b) A charge of $0.3m (2021: $0.3m) arose as a result of amortisation
of intangible assets acquired through the CMS Inc deal.
c) A credit of $0.03m resulted from the recalculation of the
amortization of the loan notes and associated costs on the extension of the
repayment date to 14 August 2023 in July 2021. Costs of amortization of $0.6m
were incurred in the prior year
d) A credit resulted on the settlement of the prior year duty of $0.07m
in the year.
5. Financial expense
RESTATED
2022 2021
$000 $000
Bank overdraft and loan interest (77) (147)
Loan note interest (914) (897)
Finance charges (1)- (11)
Lease interest (89) (98)
Financial expense before adjusting items (1,081) (1,153)
Amortisation of Loan notes and costs (530) (642)
Loan Note credit on extension of repayment date 556 -
Financial expense (1,055) (1,795)
6.
Taxation
RESTATED
2022 2021
$000 $000
UK Corporation tax at 19% (2021: 19%):
- Prior Year: 283 -
Overseas taxation:
- current period 8 (419)
Total tax credit/ (charge) 291 (419)
Deferred taxation:
- current period 31 (1,054)
- prior period - 91
Total deferred taxation credit/ (charge) 31 (963)
Taxation credited/(charged) to the income statement 322 (1,382)
The rate for Federal tax in the USA is 21% and in addition businesses suffer
State taxes estimated at 4%.
Tax reconciliation
The tax credit/charge assessed for the period is higher than (2021: higher
than) the standard rate of corporation tax in the UK of 19% (2021: 19%). The
differences are explained below:
RESTATED
2022 2021
$000 $000
Profit/(loss) before tax 162 (2,820)
Profit/(loss) before tax multiplied by the standard rate of corporation tax
in the UK of 19% (2021: 19%) 31 (536)
Effects of:
- income not taxable and/or expenses not deductible - 75
- overseas tax rates - 97
- US state taxes 8 10
- amount in respect of prior periods (283) -
- tax losses utilised not previously recognised (78) -
- deferred tax de-recognised on losses in the period - 1,736
Taxation credited/(charged) to the income statement (322) 1,382
7. Earnings per share
The calculation of the basic earnings per share for continuing operations of
0.41c (2021: loss 3.58c) is based on the earnings for the financial period
attributable to the Parent Company's shareholders of a profit of $484,000
(2021: loss $4,202,000) and on the weighted average number of shares in issue
during the period of 117,473,341 (2021: 117,473,341). At 31 March 2022, there
were 3,790,000 (2021: 2,040,000) potentially dilutive shares (share options or
warrants with an exercise price below the average share price for the year)
with a weighted average effect of 2,496,578 (2021: 2,040,000) shares giving
diluted earnings per share for continuing operations of 0.40c (2021: loss
3.58c). In accordance with IAS 33 - Earnings per Share, the Group shows no
dilutive impact in respect of its share options and Deferred Share Plan for
the year ended 31 March 2021 as their conversion to ordinary shares would
decrease the loss per share from continuing operations.
RESTATED
2022 2021
Weighted average number of shares
Issued shares at start of period 117,473,341 117,473,341
Effect of shares issued in the year - -
Weighted average number of shares at end of period 117,473,341 117,473,341
Weighted average number of the 3,790,000 (2021: 2,040,000) potentially 2,496,578 2,040,000
dilutive shares
Total weighted average diluted shares 119,969,919 119,513,341
$000 $000
Total post tax profit/(loss) - continuing operations 484 (4,202)
Total post tax profit/ (loss) including discontinued operations 1,269 (2,573)
Basic EPS - continuing operations 0.41c (3.58c)
Diluted EPS - continuing operations 0.40c (3.58c)
Total including discontinued operations
Basic EPS 1.08c (2.19c)
Diluted EPS 1.06c (2.19c)
Underlying earnings $000 $000
Total post tax profit/( loss) - continuing operations 484 (4,202)
Adjusting items - per note 4 605 1,229
Underlying earnings after tax and adjusting items-continuing operations 1,089 (2,973)
Underlying basic EPS 0.93c (2.53c)
Underlying diluted EPS 0.91c (2.53c)
8. Trade and other receivables
2022 2021
$000 $000
Trade receivables 3,424 5,149
Other debtors 411 1,361
Other prepayments 648 1,716
Contract assets 2,104 344
Total 6,587 8,570
2022 2021
$000 $000
Taxation 291 -
9. Trade and other payables
2022 2021
$000 $000
Current liabilities:
Trade payables 2,962 3,792
Social security and other taxes 16 344
Other creditors 35 1,254
Accruals 546 2,148
Contract liabilities 2,668 624
Total 6,227 8,162
2022 2021
$000 $000
Taxation - 546
10. RECONCILIATION OF NET CASH FLOW TO NET DEBT
2022 2021
$000 $000
(Decrease)/increase in cash and cash equivalents (3,887) 1,849
Decrease in debt and lease liabilities 734 6,820
(Increase)/decrease in net debt from cash flows (3,153) 8,669
Net debt at beginning of period (21,991) (24,142)
Government assistance loans USA - (2,234)
Government assistance loans UK - (1,656)
Loan note amortisation (530) (675)
Lease liabilities increase (118) (502)
Shareholder loan adjustment 511 -
Exchange effects on net funds 419 (1,451)
Net debt at end of period (24,862) (21,991)
11. Analysis of net DEBT
Group Transfer to held for sale Continuing activities
Total
At Exchange movement Transfer Other Cash flows At At
31 March 2021 31 March 2022 31 March 2022
$000 $000 $000 $000 $000 $000 $000 $000
Cash at bank and in hand 4,287 175 - - (3,302) 1,160 (1,084) 76
Term Deposits 710 6 - - (585) 131 - 131
4,997 181 - - (3,887) 1,291 (1,084) 207
Debt due within one year (977) - - - (4,089) (5,066) 196 (4,870)
Debt due after one year (1,590) (1) - - 664 (927) 6 (921)
Loan notes due within one year (11,225) 526 10,718 (19) - - - -
Loan notes due after one year - - (10,718) - - (10,718) - (10,718)
Government Assistance loans (3,890) (78) - 2,388 - (1,580) 1,580 -
Lease liabilities (9,306) (209) - (118) 1,771 (7,862) 6,294 (1,568)
Total (21,991) 419 - 2,251 (5,541) (24,862) 6,992 (17,870)
12. Alternative performance measures
The Directors assess the performance of the Group by a number of measures and
frequently present results on an 'underlying' basis, which excludes adjusting
items. The Directors believe the use of these 'non-GAAP measures' provide a
better understanding of the underlying performance of the Group. In addition,
discontinued operations are excluded from underlying figures.
In the review of performance reference is made to 'underlying profit' or
'profit before adjusting items', and in the Consolidated Income Statement the
Group's results are analysed between Before adjusting items and after
adjusting items.
The directors have highlighted transactions which are material or unrelated to
the normal trading activity of the Group.
Adjusting items are detailed in note 4 and are disclosed separately on the
basis that this presentation gives a clearer picture of the underlying
performance of the group.
These measures are used by the Board to assess performance, form the basis of
bonus incentives and are used in the Group's banking covenants. In addition,
the Board makes reference to orders and order book or backlog. This represents
orders received from customers for goods and services and the amount of such
orders not yet fulfilled.
Underlying operating
profit/(loss)
RESTATED
2022 2021
$000 $000
Operating profit/(loss) 1,217 (1,025)
Adjusting items included in net operating expenses (see note 4) 631 844
Underlying operating profit 1,848 (181)
Underlying profit/(loss) for the period from continuing activities
Profit/(Loss) for the period 1,269 (2,573)
Adjusting items included in cost of sales and net operating expenses (see note 631 844
4)
Discontinued activities (785) (1,629)
Adjusting items included in Financial expense (26) 642
Tax on adjusting items - (257)
Underlying profit/(loss) for the period on continuing activities 1,089 (2,973)
Underlying EPS
A reconciliation of underlying EPS is included in note 7.
12. Alternative performance measures (continued)
Net debt excluding IFRS 16 leases liabilities
Net debt (see note 11) (24,862) (21,991)
Lease Liabilities 7,862 9,306
Net Debt excluding leases (17,000) (12,685)
Discontinued activities net debt 698 -
Net debt excluding IFRS 16 lease liabilities- continuing activities (16,302) (12,685)
13. DISCONTINUED OPERATIONS
The Consolidated Income statement reflects the profit after taxation of the
Machine Tool Division as "discontinued operations". The consolidated Statement
of Financial Position reflects the entities to be sold as "Assets held for
sale" and "liabilities held for sale".
Assets and liabilities held for sale detail:
Held for sale as at 31 March 2022
$000
Non-current assets
Property, plant and equipment 1,150
Other intangible assets 27
Right of use assets 6,722
7,899
Current assets
Inventories 13,929
Trade and other receivables 6,025
Deferred tax assets 3,017
Cash and cash equivalents 1,084
24,055
Total assets 31,954
Non-current liabilities
Employee benefits (837)
Loans and other borrowings (1,585)
Lease liabilities (6,294)
(8,716)
Current liabilities
Trade and other payables (4,845)
Taxation 1
Provisions (21)
Loans and other borrowings (196)
(5,061)
Total liabilities (13,777)
Net assets 18,177
Discontinued Operations Income Statement Before After Before After
Adjusting Adjusting Adjusting Adjusting Adjusting Adjusting
Items Items Items Items Items Items
year year year year year year
ended ended Ended ended ended ended
31 March 31 March 31 March 31 March 31 March 31 March
2022 2022 2022 2021 2021 2021
$000 $000 $000 $000 $000 $000
Discontinued operations
Revenue 37,024 - 37,024 32,219 - 32,219
Cost of sales (26,677) - (26,677) (22,436) - (22,436)
Gross profit 10,347 - 10,347 9,783 - 9,783
Net operating expenses (8,439) (242) (8,681) (6,982) 452 (6,530)
Operating profit/(loss) 1,908 (242) 1,666 2,801 452 3,253
Financial expense (316) - (316) (344) - (344)
Profit before tax 1,592 (242) 1,350 2,457 452 2,909
Income tax (charge) (565) - (565) (1,280) - (1,280)
Profit/(loss) for the period on discontinued activities 1,027 (242) 785 1,177 452 1,629
Basic earnings per share - discontinued activities 0.87c 0.67c 1.00c 1.39c
Diluted earnings per share - discontinued activities 0.86c 0.65c 0.98c 1.36c
Total comprehensive (expense)/ income for the period
Attributable to discontinued activities
(487)
3,533
Cashflows of discontinued operations
Net cashflows from
operations
116
Cashflows from investing
activities
(610)
Cashflows from financing
activities
(2,411)
14. Post balance sheet events
On 5 March 2022, the 600 Group signed a contract with Timesavers Acquisitions
LLC to sell its Machine Tool Division. This sale included the following legal
entities: (a) Colchester GmbH, a private company with limited liability
organized under the Legal Requirements of Federal Republic of Germany, (b) 600
UK Limited (registered number 144979), a private limited company organized
under the Legal Requirements of England and Wales, (c) 600 Machine Tools Pty
Ltd. (ACN 000161106), a proprietary company organized under the Legal
Requirements of Australia, and (d) Clausing Industrial, Inc., a Delaware
corporation. The price agreed for the transaction was $21m. While the contract
was signed in early March 2022, the completion date and collection of funds
happened on 8 and 11 April 2022. The agreement included two escrow accounts: a
Net Working Capital (NWC) escrow with the amount of $0.25m and a Retention
escrow with the amount of $0.15m. We are currently in negotiations to finalize
the final working capital.
With the contract signed before 31 March 2022 and the deal closing after this
date, the accounts reflect the profitability of the Machine Tool Division as
"discontinued operations". The 600 Group consolidated balance sheet reflects
the entities to be sold as "Assets held for sale" and "liabilities held for
sale". The sale of this division will be recognized in FY23 accounts for the
price agreed plus the cash collected, plus NWC amount, once agreed, minus all
the expenses and write offs related with the sold entities.
There was no adjustment for impairment to the value of the assets transferred
to held for sale in the year ended 31 March 2022.
As mentioned previously in this report, with the proceeds of the sale, all
debt of the 600 Group was repaid on 11 April 2022. After paying the loan
notes, the HSBC loans in the UK and all remaining loans with Bank of America
in the US, we are now left with a revolving credit line of $7.5m with Bank of
America.
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. END FR SDMFSSEESEIURecent news on 600
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