The 600 Group PLC
annual report and accounts 2012
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Contents
Chairman’s Statement
Group Chief Executive’s Review of Operations
Financial Review
Directors and advisers
Report of the directors
Statement of Directors’ responsibilities
Remuneration report
Independent auditor’s report
Consolidated income statement
Consolidated statement of comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated cash flow statement
Group accounting policies
Notes relating to the consolidated financial statements
Company balance sheet
Company accounting policies
Notes relating to the company financial statements
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Chairman’s Statement
Overview and board composition
Since my appointment as Chairman in September 2011, and that of Neil Carrick as Group Finance Director shortly thereafter, it became
increasingly apparent that the financial performance of the Group was unsatisfactory. Trading results for the financial year ended 31 March
2012 were seriously impaired by the performance of the machine tools business in Europe. In consequence, the Group was unable to
capitalise on improving trading conditions in most major geographical and end user markets, instead suffering from the effects of
operational difficulties and a shortage of working capital.
Since the beginning of the new financial year on 1 April 2012, the Group has made significant changes to address the issues outlined
above and these so far have included the appointment of Nigel Rogers as Chief Executive, the divestment of non-core assets, the
cessation of manufacturing operations in Poland, and the completion of equity and bank refinancing appropriate to the future strategic
direction of the business. Opportunities have also been identified to further reduce the UK cost base over the coming months.
The board is now satisfied that the Group is set fair for a period of much greater stability, and has a robust platform from which to deliver
future growth, and shareholder value.
Strategic review
In July 2012 we announced the divestment of 600 SA Pty Limited, the Group’s wholly owned subsidiary in South Africa. This business sold
mechanical and waste handling equipment into sub-Saharan Africa, and had minimal interaction with the other activities of the Group. This
sale, together with a number of freehold property transactions in the UK, will serve to secure the release of valuable financial resources for
the future development of core businesses.
These divestments form part of a broader strategic review of Group activities, in which the board has focused on developing the key market
strengths of core activities in the design and distribution of machine tools, precision engineered components, and laser marking equipment.
In each of these activities, Group businesses have strong brands, significant market share, diverse geographical spread, and reliable
distribution partners in key markets.
This review also considered the approach to manufacturing and supply chain, and it was determined that Group companies have core
manufacturing competences in CNC turning, precision engineered components and laser marking equipment. These activities offer
significant added value capability, and the Group intends to continue to invest and develop these facilities.
In recent years, the manufacture of machine tools has increasingly been outsourced from the UK, initially to lower cost regions in Asia,
supplemented more latterly by the acquisition of the Group subsidiary in Poland, Fabryka Maszyn Tarnow Sp z.o.o. (“FMT”). In August
2012, the Board considered that continued losses incurred by manufacturing at FMT were unsustainable, and this activity was
discontinued. The Group has excellent links with valued supply chain partners in Asia, and will continue to outsource the manufacture of
conventional and manual/CNC lathes to Group designs.
Results and dividend
Revenue from continuing operations grew by 8.1% to £39.39m (2011: £36.45m) and generated a net operating loss from continuing
operations but before special items of £1.21m (2011: profit of £0.26m).
After taking account of interest, pensions, taxation, discontinued activities and special items, the Group loss for the financial year was
£14.85m (2011: profit of £2.87m).
As any dividend payments continue to be dependent upon the Group’s results, the Board does not recommend that any payment be made.
Financial resources
On 5 September 2012 the company entered into an agreement for the placing of an aggregate of 19.66m ordinary shares of 1p each at a
placing price of 7.5 pence per share, raising an aggregate of £1.47m.
The company also entered into revised facility agreements with its principal banker covering existing term loan and revolving credit facilities
amounting to £3.64m and a new working capital facility of £0.30m.
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Chairman’s Statement
Outlook
Group order books continue to show strength, and revenues in coming months will benefit from greater certainty within supply chains, and
the availability of adequate working capital financing. There are no significant signals to indicate that the current heightened level of
macroeconomic uncertainty will have any adverse effect on levels of underlying customer demand, but the Board remain cognisant of this
potential risk.
A substantial proportion of Group business is derived in North America, where trading in the current year to date has continued to be ahead
of our expectations. Prospects are also positive for precision engineered components and laser marking. Meanwhile, the implementation
of the strategic review has lowered the risk profile of the Group’s machine tools activities in Europe considerably, and provides a stable
base from which to manage and grow the profitability and cash generation of this business in future.
Paul Dupee
Chairman
5 September 2012
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Chairman’s Statement
Group Chief Executive’s Review of Operations
Group order books continue to show strength, and revenues in coming months will benefit from greater certainty within supply chains, and
the availability of adequate working capital financing. There are no significant signals to indicate that the current heightened level of
macroeconomic uncertainty will have any adverse effect on levels of underlying customer demand, but the Board remain cognisant of this
A substantial proportion of Group business is derived in North America, where trading in the current year to date has continued to be ahead
of our expectations. Prospects are also positive for precision engineered components and laser marking. Meanwhile, the implementation
of the strategic review has lowered the risk profile of the Group’s machine tools activities in Europe considerably, and provides a stable
base from which to manage and grow the profitability and cash generation of this business in future.
Outlook
potential risk.
Paul Dupee
Chairman
5 September 2012
Introduction
The 600 Group PLC ("the Group") is a diversified engineering group with a world class reputation in the design and distribution of machine
tools, and the design, manufacture and distribution of precision engineered components and laser marking systems. The Group operates
these businesses from locations in Europe, North America and Australia selling into more than 180 countries worldwide.
The improved market conditions of the previous financial year continued to prevail, with strong demand evident in all three principal
locations, and especially in North America.
Machine tools and precision engineered components
Revenues increased by 11.9% to £32.94m (2011: £29.43m) with particularly strong revenue growth generated by our North American
operations, from which some 50% of revenues are derived. UK and Europe contribute around 35%, with the remaining revenues derived
from the Middle East, Africa and Asia Pacific (including Australia).
Only machine tools for the UK and Europe were sourced from FMT in Poland, and the output from FMT satisfied only about one quarter of
total sales in this region. The large majority of machine tools and components for UK and Europe, and all sales outside this region, were
manufactured in our UK facilities or sourced from our manufacturing partners in Asia.
Segmental operating profit, excluding losses incurred at FMT and special items, was £1.47m (4.7% of revenue) against £1.29m (4.5%) last
year. FMT incurred an operating loss before special items of £1.43m (39% of local revenue), resulting in a segmental operating profit close
to break even in the financial year.
The decision to close FMT in August 2012 has been well received by our customers and distributors across Europe, and we have made
good progress in managing the transition of open orders on FMT into our existing supply chain. Our product range and market leading
brands continue to attract high levels of customer demand, and the order book remains healthy. Our main task now is to sustain
continuous improvements to customer service levels and build on the loyalty of our trading partners.
Revenues from precision engineered components have also shown growth, both for Pratt Burnerd workholding equipment and for Gamet
bearings. These niche activities contribute almost 20% of segmental revenue at above average margins in recognition of their specialist
product ranges. We see further growth opportunities in these product areas as a priority for the future.
We have now overcome some significant short term challenges, and have identified a clear path to achieving growth in revenues and
improvements in costs and efficiencies. Our key focus is now to continue to deliver controlled growth in North America and Australia, whilst
delivering improved operational performance in Europe to grow revenues, restore operating margins, and rebuild customer confidence.
Laser marking
Revenues for Electrox laser marking equipment fell by 8.2% to £6.45m (2011: £7.03m), although operating profits were virtually unchanged
at £0.32m. This was attributable to reduced production output as a consequence of working capital constraints, especially in the final
quarter of the year. These constraints were mitigated during most of the first quarter of the current financial year, and consequently
progressive improvements in output have been achieved.
More than 85% of revenues are derived from outside the UK, with major markets in North America and Northern Europe contributing more
than two thirds of sales. Delivery lead times are now returning to more normal levels, and this provides opportunities to reduce order
backlog and generate increased revenues.
This business relies on technical excellence to provide innovative and pragmatic solutions to end-users across a wide range of industry
sectors. New opportunities continue to emerge from the increasing need for component traceability in manufacturing processes, and the
desire for durable surface marking on consumer and branded products. Electrox offers robust and reliable solutions, whilst also developing
specialist applications knowledge to integrate marking equipment into continuous processes.
We are confident of strong future growth prospects for this business, and plan to continue to invest in people, process and products to
achieve enhanced scale and profitability.
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Group Chief Executive’s Review of Operations
Discontinued activities
The Group’s subsidiary in South Africa, 600 SA Pty Ltd (“600SA”) generated an operating profit of £0.34m (2011: £0.91m) on revenues of
£13.77m (2011: £14.11m) during the financial year. 600SA was involved in the manufacture and distribution of specialist equipment for
handling waste and working at height for markets in South Africa and the surrounding region. These were determined to be non-core
activities, especially in view of certain difficulties encountered in repatriating currency to the parent undertaking.
On 16 July 2012, the sale of 600SA was completed for net cash proceeds of approximately £1.81m. The net assets of the business at 31
March 2012 have been written down to a fair value of £1.81m and are disclosed in the Statement of Financial Position as assets and
liabilities held for sale.
Freehold property divestments
On 3 July 2012 freehold property at Shepshed, Leicestershire, was sold to a privately owned company for net cash proceeds of £1.20m
against a book value of £1.10m. At the time of sale the property was generating rental income of approximately £0.02m per annum.
Further freehold property disposals are anticipated during the current financial year.
Corporate and Social Responsibility
Maintaining the highest ethical and professional standards and accepting social responsibility is fundamental to the way we operate
throughout The 600 Group Plc. We run our businesses based on sustained growth and transparency at all levels.
The development of our people is a core value throughout the Group and we see it as our duty to be a responsible employer. We are
committed to the creation of training opportunities to support our employees in reaching their full potential. The Group operates a global
policy on equality and we are committed to providing a working environment with a culture of respect towards the diversity of our people.
We are committed to offering equal opportunities to all people without discrimination as to race, sex, nationality, ethnic or national origin,
language, age, marital status, sexual orientation, religion or disability.
A comprehensive health and safety policy is in place to ensure a safe working environment at all times. The health and safety policy also
demonstrates our additional responsibility to customers, suppliers and contractors and we maintain communication of the policy at all levels
throughout the Company. We encourage two-way and open lines of communication throughout the Group and are committed to ongoing
dialogue with local and global stakeholders to create trust, opportunity and long term sustainable value.
People
In the relatively short time that I have worked with the Group, I have been impressed by the resilience of employees at all levels, and their
determination to deal with some difficult issues with the overarching objective of improving the level of service to our customers.
On behalf of the board and shareholders, I would like to place on record our recognition of their professionalism, integrity and hard work.
Current trading and prospects
Trading results in operations outside Europe have continued to show good progress in the current financial year to date. The issues
affecting the European results for the year ended 31 March 2012 have prevailed through the first half of the current financial year.
The progress made on divestments, the closure of FMT in August, and the recent refinancing, have resulted in a significant improvement in
the availability and disposition of working capital in European operations. This will take time to impact fully on delivery lead times and
customer service, but there are clear signs that significant improvements will be evident in the second half of the financial year.
Nigel Rogers
Group Chief Executive
5 September 2012
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Group Chief Executive’s Review of Operations
Discontinued activities
Financial review
Results
The Group’s subsidiary in South Africa, 600 SA Pty Ltd (“600SA”) generated an operating profit of £0.34m (2011: £0.91m) on revenues of
£13.77m (2011: £14.11m) during the financial year. 600SA was involved in the manufacture and distribution of specialist equipment for
handling waste and working at height for markets in South Africa and the surrounding region. These were determined to be non-core
activities, especially in view of certain difficulties encountered in repatriating currency to the parent undertaking.
On 16 July 2012, the sale of 600SA was completed for net cash proceeds of approximately £1.81m. The net assets of the business at 31
March 2012 have been written down to a fair value of £1.81m and are disclosed in the Statement of Financial Position as assets and
liabilities held for sale.
Freehold property divestments
On 3 July 2012 freehold property at Shepshed, Leicestershire, was sold to a privately owned company for net cash proceeds of £1.20m
against a book value of £1.10m. At the time of sale the property was generating rental income of approximately £0.02m per annum.
Further freehold property disposals are anticipated during the current financial year.
Revenue from continuing operations increased by 8.1% to £39.39m (2011: £36.45m). Gross margin from continuing operations before
special items was 30.7% (2011: 35.5%) and the loss from operations was £1.21m (2011: profit of £0.26m).
After taking account of financial income and expenses including a net credit in respect of pensions of £1.57m (2011 : £1.39m), the net loss
from continuing operations, before taxation, discontinued activities and Special Items, was £0.29m (2011: profit of £1.12m including a net
credit special item in respect of pensions of £2.57m).
Group operations in South Africa were identified as discontinued during the financial year, and sold in July 2012. Group results reflect the
net profit after taxation of £0.49m and the net loss on sale of this operation of £1.26m in discontinued activities.
Restructuring costs and other costs which in the judgement of management are non-recurring in nature amounting to £12.88m have been
disclosed as Special Items, together with a charge relating to share-based payments of £90,000 (2011 special items credit of £1.35m
including a pension credit of £2.57m and a charge for share based payments of £ 127,000). The cash effect of these Special Items in the
2012 year has been £2.2m with an additional cash impact of £0.6m expected over future periods.
Corporate and Social Responsibility
The net loss for the period was £14.85m (2011: net profit of £2.87m).
Maintaining the highest ethical and professional standards and accepting social responsibility is fundamental to the way we operate
throughout The 600 Group Plc. We run our businesses based on sustained growth and transparency at all levels.
Basic earnings per share from continuing operations before Special Items was a loss of 1.87p (2011: profit of 1.16p) and total basic
earnings per share, after allowing for special items and discontinued activities, was a loss of 23.30p (2011: profit of 5.01p).
The development of our people is a core value throughout the Group and we see it as our duty to be a responsible employer. We are
committed to the creation of training opportunities to support our employees in reaching their full potential. The Group operates a global
policy on equality and we are committed to providing a working environment with a culture of respect towards the diversity of our people.
We are committed to offering equal opportunities to all people without discrimination as to race, sex, nationality, ethnic or national origin,
language, age, marital status, sexual orientation, religion or disability.
A comprehensive health and safety policy is in place to ensure a safe working environment at all times. The health and safety policy also
demonstrates our additional responsibility to customers, suppliers and contractors and we maintain communication of the policy at all levels
throughout the Company. We encourage two-way and open lines of communication throughout the Group and are committed to ongoing
dialogue with local and global stakeholders to create trust, opportunity and long term sustainable value.
People
In the relatively short time that I have worked with the Group, I have been impressed by the resilience of employees at all levels, and their
determination to deal with some difficult issues with the overarching objective of improving the level of service to our customers.
On behalf of the board and shareholders, I would like to place on record our recognition of their professionalism, integrity and hard work.
Statement of Financial Position and cash flow
Net cash outflow from operating activities was £3.87m (2011: net inflow of £1.18m) and a further outflow of £1.06m (2011: £1.79m) was
incurred on investment activities. The net outflow was financed by proceeds from the issue of ordinary shares of £1.81m and net proceeds
from external borrowing of £4.99m.
Net indebtedness at 31 March 2012 stood at £7.99m (2011: £4.80m) and there was headroom on bank facilities of approximately £1.30m
at the year end.
Since the beginning of the new financial year net indebtedness has reduced significantly, mainly as a consequence of the divestment of
600 SA Pty Limited and freehold property at Shepshed announced in July 2012.
On 5 September 2012 the company entered into an agreement for the placing of an aggregate of 19.66m ordinary shares of 1p each at a
placing price of 7.5 pence per share, raising an aggregate of £1.47m. The company also entered into revised facility agreements with its
principal banker covering existing term loan and revolving credit facilities amounting to £3.64m and a new working capital facility of £0.30m.
The net proceeds from these transactions will be used to reduce net indebtedness and fund the ongoing working capital requirements of
the Group.
Current trading and prospects
Taxation
The company has incurred significant trading losses in current and prior years and accordingly has no significant liability for taxation.
Movements in deferred taxation in respect off prior periods recognition of losses and the current deferred taxation movements on employee
benefits account for the majority of the charge shown in the Consolidated income statement.
Trading results in operations outside Europe have continued to show good progress in the current financial year to date. The issues
affecting the European results for the year ended 31 March 2012 have prevailed through the first half of the current financial year.
The progress made on divestments, the closure of FMT in August, and the recent refinancing, have resulted in a significant improvement in
the availability and disposition of working capital in European operations. This will take time to impact fully on delivery lead times and
customer service, but there are clear signs that significant improvements will be evident in the second half of the financial year.
Nigel Rogers
Group Chief Executive
5 September 2012
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Financial review
Treasury and risk management
Financial risks
The main financial risks faced by the Group are credit risk, foreign currency risk, interest rate risk and liquidity risk. The directors regularly
review and agree policies for managing these risks.
Credit risk is managed by monitoring limits and payment performance of counterparties. The directors consider the level of general credit
risk in current market conditions to be higher than normal. Where a customer is deemed to represent an unacceptable level of credit risk,
terms of trade are modified to limit the Group’s exposure.
Foreign currency risk is managed by matching payments and receipts in foreign currency to minimise exposure. Foreign currency is bought
to match liabilities as they fall due where currency receipts are insufficient to match the liability. The results of 600 Inc and 600 Australia Pty
Limited are reported in United States dollars and Australian dollars respectively, and as a result of this the Group’s Statement of Financial
Position and trading results can be affected by movements in these currencies. Part of this exposure is hedged by entering into working
capital facilities denominated in US dollars.
Liquidity risk is managed by the Group maintaining undrawn revolving credit and overdraft facilities in order to provide short term flexibility.
Interest rate risk is managed by holding a mixture of cash and borrowings in Sterling, US dollars and Australian dollars at floating rates of
interest.
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 onto customers through
price increases. The Group does not undertake any hedging activity in this area and all materials and utilities are purchased in spot
markets. 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 a relatively small number of key vendors in its supply chain.
This risk could be 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.
The Group is also exposed to the risk of a downturn in its customers’ end markets leading to reduced levels of activity for the Group. The
directors seek to ensure that the Group’s activities are not significantly concentrated in sales to either one individual customer or into a
single market sector in order to mitigate the exposure to a downturn in activity levels. The directors consider that the current level of market
risk is normal.
Other principal risks and uncertainties
The remaining main risks faced by the Group are its exposure to pension funding and the risk to its reputation of a significant failure to
comply with accepted standards of ethical and environmental behaviour.
Pension funding risk arises from the Group’s operation of a defined benefit pension scheme which gives rise to fluctuations between the
value of its projected liabilities and the value of the assets the scheme holds in order to discharge those liabilities. The amount of any
surplus or deficit may be adversely affected by such factors as lower than expected investment returns, changes in long term interest rates
and inflation expectations and increases in the forecast longevity of members. The directors regularly review the performance of the
pension scheme and any recovery plan.
On 10 August 2012 the Group withdrew financial support for its Polish subsidiary, Fabryka Maszyn Tarnow Sp z o.o. (“FMT”). The board of
FMT are preparing a petition for bankrupt liquidation under local law. The Group directors consider that any risk of material liabilities of
FMT becoming attributable to the parent company is remote.
The directors have taken steps to ensure that all of the Group’s global 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.
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return on sales;
revenue growth;
cash generation;
gross profit percentage;
operating profit percentage; and
Key financial performance indicators constantly under review include:
working capital levels.
Financial review
Key performance indicators
The Group’s key financial objectives that the Directors judge to be effective in measuring the delivery of their strategies and managing
the business concentrate at the Group level on profit, together with its associated earnings per share, forward order book and net cash. At
the business unit level, they include return on net assets and customer related performance measures.
These key performance indicators are measured and reviewed on a regular basis and enable the business to set and communicate its
performance targets and monitor its performance against these targets.
Financial review
Treasury and risk management
Financial risks
The main financial risks faced by the Group are credit risk, foreign currency risk, interest rate risk and liquidity risk. The directors regularly
review and agree policies for managing these risks.
Credit risk is managed by monitoring limits and payment performance of counterparties. The directors consider the level of general credit
risk in current market conditions to be higher than normal. Where a customer is deemed to represent an unacceptable level of credit risk,
terms of trade are modified to limit the Group’s exposure.
Foreign currency risk is managed by matching payments and receipts in foreign currency to minimise exposure. Foreign currency is bought
to match liabilities as they fall due where currency receipts are insufficient to match the liability. The results of 600 Inc and 600 Australia Pty
Limited are reported in United States dollars and Australian dollars respectively, and as a result of this the Group’s Statement of Financial
Position and trading results can be affected by movements in these currencies. Part of this exposure is hedged by entering into working
capital facilities denominated in US dollars.
Interest rate risk is managed by holding a mixture of cash and borrowings in Sterling, US dollars and Australian dollars at floating rates of
interest.
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 onto customers through
price increases. The Group does not undertake any hedging activity in this area and all materials and utilities are purchased in spot
markets. 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 a relatively small number of key vendors in its supply chain.
This risk could be 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.
The Group is also exposed to the risk of a downturn in its customers’ end markets leading to reduced levels of activity for the Group. The
directors seek to ensure that the Group’s activities are not significantly concentrated in sales to either one individual customer or into a
single market sector in order to mitigate the exposure to a downturn in activity levels. The directors consider that the current level of market
risk is normal.
Other principal risks and uncertainties
The remaining main risks faced by the Group are its exposure to pension funding and the risk to its reputation of a significant failure to
comply with accepted standards of ethical and environmental behaviour.
Pension funding risk arises from the Group’s operation of a defined benefit pension scheme which gives rise to fluctuations between the
value of its projected liabilities and the value of the assets the scheme holds in order to discharge those liabilities. The amount of any
surplus or deficit may be adversely affected by such factors as lower than expected investment returns, changes in long term interest rates
and inflation expectations and increases in the forecast longevity of members. The directors regularly review the performance of the
pension scheme and any recovery plan.
On 10 August 2012 the Group withdrew financial support for its Polish subsidiary, Fabryka Maszyn Tarnow Sp z o.o. (“FMT”). The board of
FMT are preparing a petition for bankrupt liquidation under local law. The Group directors consider that any risk of material liabilities of
FMT becoming attributable to the parent company is remote.
The directors have taken steps to ensure that all of the Group’s global 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.
Liquidity risk is managed by the Group maintaining undrawn revolving credit and overdraft facilities in order to provide short term flexibility.
Going concern
In accordance with FRC guidelines, the Board has assessed the Group’s funding and liquidity position and further details can be found in
the basis of preparation accounting policy note. The Directors confirm that, after having made appropriate enquiries, and after taking into
consideration the placing of shares and revisions to banking facilities concluded on 5 September 2012, they have a reasonable
expectation that the Group and the Company have adequate resources to continue operations for the foreseeable future. Accordingly, the
directors continue to adopt the going concern basis in preparation of the financial statements.
Neil Carrick FCA
Group Finance Director
5 September 2012
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Directors and advisers
Paul Dupee*
Appointed to the Board as a non-executive Director on 2 February 2011 and appointed Chairman on 14 September 2011. Currently
Managing Partner of Haddeo Partners LLP. Formerly Director and Chairman of Lynton Aviation, Boston Celtic Communications, and
Boston Celtic Limited Partnership. Previously President and Director of Providence Capitol International Investment Ltd, a subsidiary of Gulf
+ Western Industries.
Nigel Rogers
Appointed to the Board as Chief Executive Officer on 26 March 2012. Previously Chief Executive Officer of Stadium Group Plc
Neil Carrick
Appointed to the Board as Group Finance Director on 3 October 2011. Previously Group Finance Director and Company Secretary of
Cosalt plc.
Stephen Rutherford*
A non-executive Director since 1 October 2007. Managing Director of Neofil Limited.
Derek Zissman*
Appointed to the Board as a non-executive Director on 2 February 2011. Chairman of the advisory board at Alchemy Partners LLP,
Chairman of Seymour Pierce Ltd and a member of the Barclays Wealth Advisory Committee. Previously vice-chairman of KPMG LLP.
* Non-executive Director and member of the Audit Committee and member of the Remuneration Committee.
SECRETARY
Neil Carrick
REGISTERED OFFICE
Union Street
Heckmondwike
West Yorkshire
WF16 0HL
REGISTERED NUMBER
196730
REGISTRARS
Capita Registrars
34 Beckenham Road
Beckenham
Kent
BR3 4TU
AUDITOR
KPMG Audit Plc
BANKERS
Santander Plc
STOCKBROKERS
Finncap
FINANCIAL ADVISORS
Spark Advisory Partners
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Directors and advisers
Report of the directors
Appointed to the Board as a non-executive Director on 2 February 2011 and appointed Chairman on 14 September 2011. Currently
Managing Partner of Haddeo Partners LLP. Formerly Director and Chairman of Lynton Aviation, Boston Celtic Communications, and
Boston Celtic Limited Partnership. Previously President and Director of Providence Capitol International Investment Ltd, a subsidiary of Gulf
Appointed to the Board as Chief Executive Officer on 26 March 2012. Previously Chief Executive Officer of Stadium Group Plc
Appointed to the Board as Group Finance Director on 3 October 2011. Previously Group Finance Director and Company Secretary of
A non-executive Director since 1 October 2007. Managing Director of Neofil Limited.
Appointed to the Board as a non-executive Director on 2 February 2011. Chairman of the advisory board at Alchemy Partners LLP,
Chairman of Seymour Pierce Ltd and a member of the Barclays Wealth Advisory Committee. Previously vice-chairman of KPMG LLP.
* Non-executive Director and member of the Audit Committee and member of the Remuneration Committee.
Paul Dupee*
+ Western Industries.
Nigel Rogers
Neil Carrick
Cosalt plc.
Stephen Rutherford*
Derek Zissman*
REGISTERED OFFICE
SECRETARY
Neil Carrick
Union Street
Heckmondwike
West Yorkshire
WF16 0HL
REGISTERED NUMBER
196730
REGISTRARS
Capita Registrars
34 Beckenham Road
Beckenham
Kent
BR3 4TU
AUDITOR
KPMG Audit Plc
BANKERS
Santander Plc
STOCKBROKERS
Finncap
FINANCIAL ADVISORS
Spark Advisory Partners
The Directors present their report to the members, together with the audited financial statements for the 52 week period ended 31 March
2012, which should be read in conjunction with the Chairman’s Statement on the affairs of the Group (pages 1 to 2), the Group Chief
Executive’s Review of Operations (pages 3 to 4) and the Group Finance Director’s Financial Review (pages 5 to 7). The Consolidated
Financial Statements incorporate financial statements, prepared to the Saturday nearest to the Group’s accounting reference date of 31
March, of the Company and all subsidiary undertakings (the Group). The results for 2012 are for the 52-week period ended 31 March 2012.
The results for 2011 are for the 52-week period ended 2 April 2011.
ACTIVITIES OF THE GROUP
The Group is principally engaged in the manufacture and distribution of machine tools, precision engineered components and laser
marking equipment. The group has subsidiary companies in overseas locations but does not have any overseas branches.
RESULT
The result for the period is shown in the Consolidated Income Statement on page 19.
BUSINESS REVIEW
A balanced and comprehensive analysis of development and performance of the Group is contained in the Chairman’s Statement, the
Group Chief Executive’ Officers Review of Operations and Group Finance Director’s Financial Review on pages 1 to 7. This analysis
includes comments on the position of the Group at the end of the financial period, consideration of the principal risks and uncertainties
facing the business and the key performance indicators which are monitored in relation to the achievement of the strategy of the business.
EMPLOYEES
It is the Group’s policy to employ and train disabled persons wherever their aptitudes and abilities allow and suitable vacancies are
available. An employee becoming disabled would, where appropriate, be offered retraining. All employees are given equal opportunities to
develop their experience and knowledge and to qualify for promotion in furtherance of their careers.
The Group is committed to keeping employees as fully informed as possible with regard to the Group’s performance and prospects and to
seeking their views, whenever practicable, on matters which particularly affect them as employees.
RESEARCH AND DEVELOPMENT
Group policy is to design and develop products that will enable it to retain and improve its market position.
CHARITABLE AND POLITICAL DONATIONS
The Group made no donations to charitable organisations in the period (2011: £nil). The Group made no political donations in the period (2011:
£nil).
INTERESTS IN SHARE CAPITAL
At 5 August 2012, the Directors had been informed of the following interests in shares of 3% or more of the issued ordinary share capital of the
Company:
Haddeo Partners
Henderson Global Investors
Mr A Perloff and the Maland Pension Fund Trustees
Schroder Investment Management
Aerion Fund Management
Percentage
of issued
ordinary
share
capital
Number
16,125,868
25.22
5,414,519
4,100,000
3,671,320
2,270,000
8.47
6.41
5.74
3.08
The Directors have not been notified that any other person had a declarable interest in the nominal value of the ordinary share capital
amounting to 3% or more.
On 3 August 2010 an arrangement was entered into with Haddeo Partners LLP to advance £2.5m to the Group over a five year term which
also involved the issue of 12.5m warrants. These warrants can be used by the holders to either convert the loan into shares or to purchase
shares for a cash consideration. 700,000 warrants were exercised for cash in the period to 2 April 2011 with a further 205,000 warrants
exercised for cash in the current period. 11,595,000 warrants remain outstanding.
Haddeo Partners LLP, in addition to their shareholding above, currently hold 5,050,000 of these warrants.
PURCHASE OF OWN SHARES
Authority granting the Company the option to purchase 6,392,625 of its own ordinary shares in accordance with the Companies Act 2006
was given by shareholders at the Annual General Meeting of the Company on 14 September 2011. This authority remains valid until the
conclusion of the next Annual General Meeting.
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Report of the directors
DIRECTORS
Details of the current Directors of the Company are shown on page 8. In addition, Martin Temple served as a Director and Chairman during
the period until his resignation on 14 September 2011, Martyn Wakeman as a Director until his resignation on 2 October 2011 and David
Norman as Director until his resignation on 26 March 2012.
The director retiring by rotation is S J Rutherford who, being eligible, offers himself for re-election. In addition, Neil Carrick and Nigel
Rogers were appointed as directors of the Company by the board subsequent to the last annual general meeting. As such, they shall retire
and each offer themselves for election as a director of the Company. Both Mr Carrick and Mr Rogers have a rolling service contract of
twelve months with the Company. S J Rutherford, D Zissman and P R Dupee do not have rolling service contracts with the Company.
The beneficial interests of the Directors in the share capital of the Company at 31 March 2012 are shown in the Remuneration Report on
pages 13 to 17.
No Director has a beneficial interest in the shares or debentures of any other Group undertaking.
CREDITOR PAYMENT POLICY
The Company does not follow a code or standard on payment practice. Payment terms are normally agreed with individual suppliers at the
time of order placement. The amount of trade creditors in the balance sheet as at the end of the financial period represents 89 days (2011: 74
days) of average purchases for the Company and 62 days (2011: 53 days) for the Group.
ADMISSION TO AIM
A resolution to cancel the admission of the Company’s ordinary shares from the Official List and to trading on the London Stock Exchange’s
Main Market and to apply for the admission of the Company’s ordinary shares to trading on AIM was approved at a general meeting held on
15 June 2011. The final day of dealings on the Official List was 13 July 2011 with commencement of trading on AIM taking place on 14 July
2011.
POST BALANCE SHEET EVENTS
The group disposed of its surplus freehold property in Shepshed, Leicester on 3 July 2012 for £1.20m and completed the sale of its South
African subsidiary 600SA on 16 July 2012 for net proceeds of £1.81m. These assets have been shown in the balance as current assets and
liabilities for sale at the lower of their carrying value and fair value less costs to sell and the trading operations of 600 SA have been classified
as discontinued .
MARKET VALUE OF LAND AND BUILDINGS
During March 2010 all of the Group’s properties were revalued by independent valuers and the Directors believe that these valuations
remain appropriate at 31 March 2012.
ENVIRONMENTAL POLICY
It is the Group’s policy to seek continually to eliminate and, where this is not practicable, to minimise negative environmental impacts from
the pursuit of its various business interests whilst continuing to produce high quality products to its customers’ requirements.
It is the Group’s policy to comply with all statutory environmental legislation as a minimum and to aim to improve upon the standards set by
the local regulatory authorities.
To this end, each subsidiary is audited by the Group’s internal health, safety and environment manager to:
• benchmark performances across the Group;
• help sites identify and prioritise issues for improvement; and
• ensure legal compliance.
The results of audits are communicated directly to the Directors and to all subsidiary boards and appropriate action is taken.
It is the Group’s policy to foster an informed and responsible approach to all environmental concerns and it encourages the involvement of
employees, customers and suppliers. Regulatory authorities are consulted and informed at all appropriate times. The Group continues to
support long-term strategies to minimise, re-use and recycle packaging.
FINANCIAL INSTRUMENTS
An indication of the financial risk management objectives and policies and the exposure of the Group to price risk, credit risk, liquidity risk
and cash flow risk is provided in Note 26 to the financial statements.
PROVISION OF INFORMATION TO AUDITOR
All of the current Directors have taken all steps that they ought to have taken to make themselves aware of any information needed by the
Company’s auditor for the purposes of their audit and to establish that the auditor is aware of that information. The Directors are not aware
of any relevant audit information of which the auditor is unaware.
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Report of the directors
DIRECTORS
Details of the current Directors of the Company are shown on page 8. In addition, Martin Temple served as a Director and Chairman during
the period until his resignation on 14 September 2011, Martyn Wakeman as a Director until his resignation on 2 October 2011 and David
Norman as Director until his resignation on 26 March 2012.
The director retiring by rotation is S J Rutherford who, being eligible, offers himself for re-election. In addition, Neil Carrick and Nigel
Rogers were appointed as directors of the Company by the board subsequent to the last annual general meeting. As such, they shall retire
and each offer themselves for election as a director of the Company. Both Mr Carrick and Mr Rogers have a rolling service contract of
twelve months with the Company. S J Rutherford, D Zissman and P R Dupee do not have rolling service contracts with the Company.
The beneficial interests of the Directors in the share capital of the Company at 31 March 2012 are shown in the Remuneration Report on
Report of the directors
AUDITOR
In accordance with Section 489 of the Companies Act 2006, a resolution for the re-appointment of KPMG Audit Plc as auditor of the
Company is to be proposed at the forthcoming Annual General Meeting.
QUALIFYING THIRD PARTY INDEMNITY
The Company has provided an indemnity for the benefit of its current Directors which is a qualifying third party indemnity provision for
the purpose of the Companies Act 2006.
pages 13 to 17.
CREDITOR PAYMENT POLICY
No Director has a beneficial interest in the shares or debentures of any other Group undertaking.
On behalf of the Board
The Company does not follow a code or standard on payment practice. Payment terms are normally agreed with individual suppliers at the
time of order placement. The amount of trade creditors in the balance sheet as at the end of the financial period represents 89 days (2011: 74
days) of average purchases for the Company and 62 days (2011: 53 days) for the Group.
A resolution to cancel the admission of the Company’s ordinary shares from the Official List and to trading on the London Stock Exchange’s
Main Market and to apply for the admission of the Company’s ordinary shares to trading on AIM was approved at a general meeting held on
15 June 2011. The final day of dealings on the Official List was 13 July 2011 with commencement of trading on AIM taking place on 14 July
ADMISSION TO AIM
2011.
NEIL CARRICK
DIRECTOR
5 SEPTEMBER 2012
POST BALANCE SHEET EVENTS
The group disposed of its surplus freehold property in Shepshed, Leicester on 3 July 2012 for £1.20m and completed the sale of its South
African subsidiary 600SA on 16 July 2012 for net proceeds of £1.81m. These assets have been shown in the balance as current assets and
liabilities for sale at the lower of their carrying value and fair value less costs to sell and the trading operations of 600 SA have been classified
as discontinued .
MARKET VALUE OF LAND AND BUILDINGS
remain appropriate at 31 March 2012.
ENVIRONMENTAL POLICY
During March 2010 all of the Group’s properties were revalued by independent valuers and the Directors believe that these valuations
It is the Group’s policy to seek continually to eliminate and, where this is not practicable, to minimise negative environmental impacts from
the pursuit of its various business interests whilst continuing to produce high quality products to its customers’ requirements.
It is the Group’s policy to comply with all statutory environmental legislation as a minimum and to aim to improve upon the standards set by
the local regulatory authorities.
To this end, each subsidiary is audited by the Group’s internal health, safety and environment manager to:
• benchmark performances across the Group;
• help sites identify and prioritise issues for improvement; and
• ensure legal compliance.
The results of audits are communicated directly to the Directors and to all subsidiary boards and appropriate action is taken.
It is the Group’s policy to foster an informed and responsible approach to all environmental concerns and it encourages the involvement of
employees, customers and suppliers. Regulatory authorities are consulted and informed at all appropriate times. The Group continues to
support long-term strategies to minimise, re-use and recycle packaging.
An indication of the financial risk management objectives and policies and the exposure of the Group to price risk, credit risk, liquidity risk
FINANCIAL INSTRUMENTS
and cash flow risk is provided in Note 26 to the financial statements.
PROVISION OF INFORMATION TO AUDITOR
All of the current Directors have taken all steps that they ought to have taken to make themselves aware of any information needed by the
Company’s auditor for the purposes of their audit and to establish that the auditor is aware of that information. The Directors are not aware
of any relevant audit information of which the auditor is unaware.
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STATEMENT OF DIRECTORS’ RESPONSIBILITIES IN RESPECT OF THE ANNUAL REPORT AND THE FINANCIAL STATEMENTS
The directors are responsible for preparing the Annual Report and the group and parent company financial statements in accordance with
applicable law and regulations.
Company law requires the directors to prepare group and parent company financial statements for each financial year. As required by the
AIM Rules of the London Stock Exchange they are required to prepare the group financial statements in accordance with IFRSs as
adopted by the EU and applicable law and have elected to prepare the parent company financial statements in accordance with UK
Accounting Standards and applicable law (UK Generally Accepted Accounting Practice).
Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of
the state of affairs of the group and parent company and of their profit or loss for that period. In preparing each of the group and parent
company financial statements, the directors are required to:
select suitable accounting policies and then apply them consistently;
make judgements and estimates that are reasonable and prudent;
for the group financial statements, state whether they have been prepared in accordance with IFRSs as adopted by the EU;
for the parent company financial statements, state whether applicable UK Accounting Standards have been followed, subject to any
material departures disclosed and explained in the financial statements; and
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group and the parent
company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the parent company’s
transactions and disclose with reasonable accuracy at any time the financial position of the parent company and enable them to ensure
that its financial statements comply with the Companies Act 2006. They have general responsibility for taking such steps as are
reasonably open to them to safeguard the assets of the group and to prevent and detect fraud and other irregularities.
The directors are responsible for the maintenance and integrity of the corporate and financial information included on the company’s
website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other
jurisdictions.
NEIL CARRICK
DIRECTOR
5 SEPTEMBER 2012
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for the group financial statements, state whether they have been prepared in accordance with IFRSs as adopted by the EU;
for the parent company financial statements, state whether applicable UK Accounting Standards have been followed, subject to any
material departures disclosed and explained in the financial statements; and
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group and the parent
company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the parent company’s
transactions and disclose with reasonable accuracy at any time the financial position of the parent company and enable them to ensure
that its financial statements comply with the Companies Act 2006. They have general responsibility for taking such steps as are
reasonably open to them to safeguard the assets of the group and to prevent and detect fraud and other irregularities.
The directors are responsible for the maintenance and integrity of the corporate and financial information included on the company’s
website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other
jurisdictions.
NEIL CARRICK
DIRECTOR
5 SEPTEMBER 2012
STATEMENT OF DIRECTORS’ RESPONSIBILITIES IN RESPECT OF THE ANNUAL REPORT AND THE FINANCIAL STATEMENTS
The directors are responsible for preparing the Annual Report and the group and parent company financial statements in accordance with
applicable law and regulations.
Company law requires the directors to prepare group and parent company financial statements for each financial year. As required by the
AIM Rules of the London Stock Exchange they are required to prepare the group financial statements in accordance with IFRSs as
adopted by the EU and applicable law and have elected to prepare the parent company financial statements in accordance with UK
Accounting Standards and applicable law (UK Generally Accepted Accounting Practice).
As an AIM listed company The 600 Group plc is not required to prepare a remuneration report in accordance with Directors Report
Regulations of the Companies Act 2006 , however the Directors recognise the importance and support the principles of the
Regulations. The Auditor is not required to report to the shareholders on the remuneration report
THE REMUNERATION COMMITTEE
The Remuneration Committee (the Committee) is responsible for determining the salary and benefits of Executive Directors. It currently
consists of three non-Executive Directors. The members of the Committee during the year have been:
Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of
the state of affairs of the group and parent company and of their profit or loss for that period. In preparing each of the group and parent
S J Rutherford (Committee Chairman)
company financial statements, the directors are required to:
select suitable accounting policies and then apply them consistently;
make judgements and estimates that are reasonable and prudent;
D Zissman
P Dupee
M J Temple (until his resignation on 14 September 2011)
Remuneration report
The Committee held four meetings during the year. The most significant matters discussed by the Committee at its formal meetings this
year were:
• the operation of a bonus scheme in the current economic climate;
• the formal grant of awards under the share plans; and
• a review of Executive Directors’ salaries.
COMMITTEE’S ADVISERS
During the year, PricewaterhouseCoopers LLP continued to act as independent advisers to the Committee and provided services
relating to the share schemes.
No Director was present when his own remuneration arrangements were being discussed.
EXECUTIVE DIRECTORS’ REMUNERATION
POLICY
The Company aims to attract, motivate and retain the most able Executives in the industry by ensuring that the Executive Directors
are fairly rewarded for their individual contributions to the Group’s overall performance, to the interests of the shareholders and to the
ongoing financial and commercial health of the Group. The Committee feels that including equity incentives in the total remuneration
package encourages alignment of the interests of the Executive Directors and senior management with those of the shareholders. The
Company’s strategy is to reward Executive Directors and key senior employees on both a long-term and short-term basis.
SALARIES
Salaries are established on the basis of market comparisons with positions of similar responsibility and scope in companies of a similar
size in comparable industries. The Committee uses annual surveys conducted by external remuneration consultants as its source of
market information. Individual salaries of Directors are reviewed annually by the Committee and adjusted by reference to individual
performance and market factors. With the approval of the Chairman, Executive Directors may take up appointments as non-Executive
Directors and retain payments from sources outside the Group, provided that there is no conflict of interest with their duties and
responsibilities with the Group.
BONUS SCHEME
Executive Directors previously participated in a discretionary bonus scheme that was linked to the achievement of annual financial and
personal performance targets. There were no cash bonuses paid in the period to 31 March 2012 but Awards of Deferred shares were
made to Mr. Norman and Mr. Wakeman in January 2012 in lieu of cash bonuses in respect of their performance in the period to 2 April
2011.
The Committee is reviewing future incentive arrangements.
LONG-TERM INCENTIVE PLANS
THE 600 GROUP PLC 2008 AND 2009 PERFORMANCE SHARE PLAN (THE PSP)
The PSP provides significant rewards for the achievement of stretching performance targets thus achieving a clear and demonstrable
link between executive performance and executive reward.
The PSP provides for the award of both “nil cost” (or nominal cost) share options and contingent share awards (together referred to as
awards) to Executive Directors and other senior employees who are selected to participate. Awards under the PSP were made on 25
August 2009, 22 March 2011 and 18 January 2012.
At the time of making an award the Committee will set performance targets which must be satisfied before the award can vest. Such
targets will normally be measured over a three-year period. The targets for the awards made on 25 August 2009 , 22 March 2011 and 18
January 2012 were set after consideration at that time of the current economic circumstances of the Company and expectations of the
future. The exercise price of both schemes is nil and both will ordinarily only vest after three years from grant.
The performance conditions in respect of the PSP awards made on 25 August 2009 have not been met and therefore the options have
lapsed.
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Remuneration report
LONG-TERM INCENTIVE PLANS CONTINUED
The performance conditions and vesting schedule attaching to the PSP awards made on 22 March 2011 and 18 January 2012 are set
out in the table below:
22 March 2011
18 January 2012
Average Share Price Achievement
During The Performance Period
Average Share Price Achievement
During The Performance Period
Percentage Of Option That May
Potentially Become Exercisable
Below 31.25 pence
Below 25 pence
31.25 pence (25% increase above Base
Share Price)
25 pence (25% increase above Base
Share Price)
37.50 pence (50% increase above Base
Share Price)
30 pence (50% increase above Base
Share Price)
43.75 pence (75% increase above Base
Share Price)
35 pence (75% increase above Base
Share Price)
50.00 pence (100% increase above
Base Share Price)
40.00 pence (100% increase above
Base Share Price)
Nil
25%
50%
75%
100%
The Committee may set different targets for future awards, having regard to the prevailing business and economic conditions at the
time. This is to ensure that performance targets continue to be demanding and stretching.
The Committee expects future award levels for Executive Directors to be 75% of salary save where it deems there to be circumstances
which justify a larger award of up to 150% of salary, e.g. upon recruitment.
THE 600 GROUP PLC 2009 PERFORMANCE SHARE PLAN (THE PSP) APPROVED SECTION
Share options granted under the PSP Approved Section are subject to the same performance and vesting conditions as the 2009 PSP.
At the time of exercise, but only to the extent that there is a gain on the options granted under the Approved Section, PSP options will be
forfeited to the same value.
THE 600 GROUP PLC 2012 DEFERRED SHARE PLAN (THE DSP)
A new scheme was introduced on 18 January 2012 which provided for deferred shares to be issued to Directors and senior Executive’s.
No performance criteria was attached to the option granted on 18 January 2012 which were granted in lieu of cash bonuses earned in
respect of the period to 2 April 2011.
BENEFITS IN KIND
Executive Directors have the following benefits in kind:
• car allowance;
• medical insurance for self and family;
• Pensions
The Company contributes to certain individual Directors own pension arrangements. Only base salaries are pensionable. The
contribution rate for the Company is 9%.
SERVICE CONTRACTS
Mr N R Carrick has a service contract dated 3 October 2011 with a notice period of twelve months. Mr. N F Rogers has a service
contract dated 26 March with a notice period of twelve months. In the case of early termination, the Company would negotiate
compensation on an individual basis taking into account salary and other benefits as set out in the audited part of this report and the
twelve month notice period.
NON-EXECUTIVE DIRECTORS’ REMUNERATION
Fees for non-executive Directors are determined by the Board on the basis of market comparisons with positions of similar
responsibilities and scope in companies of a similar size in comparable industries.
Non-executive Directors do not have contracts of service, are not eligible for pension scheme contributory membership and do not
participate in any of the Group’s bonus, share option or incentive schemes.
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The performance conditions and vesting schedule attaching to the PSP awards made on 22 March 2011 and 18 January 2012 are set
LONG-TERM INCENTIVE PLANS CONTINUED
out in the table below:
22 March 2011
18 January 2012
Average Share Price Achievement
During The Performance Period
Average Share Price Achievement
During The Performance Period
Percentage Of Option That May
Potentially Become Exercisable
Below 31.25 pence
Below 25 pence
31.25 pence (25% increase above Base
25 pence (25% increase above Base
37.50 pence (50% increase above Base
30 pence (50% increase above Base
43.75 pence (75% increase above Base
35 pence (75% increase above Base
Share Price)
Share Price)
Share Price)
Share Price)
Share Price)
Share Price)
Nil
25%
50%
75%
50.00 pence (100% increase above
40.00 pence (100% increase above
100%
Base Share Price)
Base Share Price)
The Committee may set different targets for future awards, having regard to the prevailing business and economic conditions at the
time. This is to ensure that performance targets continue to be demanding and stretching.
The Committee expects future award levels for Executive Directors to be 75% of salary save where it deems there to be circumstances
which justify a larger award of up to 150% of salary, e.g. upon recruitment.
THE 600 GROUP PLC 2009 PERFORMANCE SHARE PLAN (THE PSP) APPROVED SECTION
Share options granted under the PSP Approved Section are subject to the same performance and vesting conditions as the 2009 PSP.
At the time of exercise, but only to the extent that there is a gain on the options granted under the Approved Section, PSP options will be
forfeited to the same value.
THE 600 GROUP PLC 2012 DEFERRED SHARE PLAN (THE DSP)
A new scheme was introduced on 18 January 2012 which provided for deferred shares to be issued to Directors and senior Executive’s.
No performance criteria was attached to the option granted on 18 January 2012 which were granted in lieu of cash bonuses earned in
respect of the period to 2 April 2011.
BENEFITS IN KIND
Executive Directors have the following benefits in kind:
• medical insurance for self and family;
• car allowance;
• Pensions
contribution rate for the Company is 9%.
SERVICE CONTRACTS
The Company contributes to certain individual Directors own pension arrangements. Only base salaries are pensionable. The
Mr N R Carrick has a service contract dated 3 October 2011 with a notice period of twelve months. Mr. N F Rogers has a service
contract dated 26 March with a notice period of twelve months. In the case of early termination, the Company would negotiate
compensation on an individual basis taking into account salary and other benefits as set out in the audited part of this report and the
twelve month notice period.
NON-EXECUTIVE DIRECTORS’ REMUNERATION
Fees for non-executive Directors are determined by the Board on the basis of market comparisons with positions of similar
responsibilities and scope in companies of a similar size in comparable industries.
Non-executive Directors do not have contracts of service, are not eligible for pension scheme contributory membership and do not
participate in any of the Group’s bonus, share option or incentive schemes.
Remuneration report
Remuneration report
FIVE YEAR TOTAL SHAREHOLDER RETURN
This graph shows the Total Shareholder Return (TSR) of the Company from 1 April 2007 to 31 March 2012 compared with the AIM
Index, rebased to 100. The TSR is defined as share price growth plus dividends reinvested. As the Company has been a constituent of
this index since 14 July 2011, the Board considers that this is now the most appropriate index against which the TSR of the Company
should be measured.
DIRECTORS’ INTERESTS IN SHARES
The interests of Directors holding office at 31 March 2012 in the ordinary shares of the Company were as follows:
P R Dupee
N F Rogers
S J Rutherford
N R Carrick
D Zissman
At
31 March
2012
Number
At
2 April
2011
Number
16,125,868
16,125,868
100,000
20,000
—
50,000
—
20,000
—
—
P R Dupee’s interest in the 16.1m shares arises from his position as Managing Partner of Haddeo Partners LLP, which owns these
shares. P R Dupee holds a 44.5% stake in Haddeo Partners LLP. In addition, Haddeo Partners LLP holds 5,050,000 warrants which
can be used to either convert their share of the shareholder loan into shares or to purchase shares for a cash consideration.
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Remuneration report
DIRECTORS’ EMOLUMENTS
P R Dupee
N F Rogers
N R Carrick[1]
D Zissman
S J Rutherford
D H Norman[2]
M G D Wakeman[3]
M J Temple[4]
C J Cundy[5]
Total
1 From date of appointment as a Director on 2 October 2011.
2 Resigned 26 March 2012.
3 Resigned 2 October 2011.
4 Resigned 14 September 2011.
5 Resigned 2 February 2011.
DIRECTORS’ PENSION ENTITLEMENTS
All benefits Termination
Salary
Fees
in kind
payment
Total
2012
£
Total
2011
£
£
£
£
— 47,625
—
—
£
—
—
— 47,625
8,250
—
—
—
—
72,500
— 10,400
— 82,900
— 33,000
— 33,000
—
—
— 33,000
8,250
— 33,000
33,000
244,500
78,300
—
—
3,666 283,839
532,005
321,291
5,823 247,950
332,073
201,980
— 27,500
— 32,500
60,000
60,000
—
—
—
—
— 33,000
395,300
141,125
19,889 564,289 1,120,603 665,771
Pension contributions of £97,175 (2011: £20,700) for D H Norman, £61,263 (2011: £13,050) for M G D Wakeman and £6,525 for N R
Carrick were paid into their personal pension schemes during the year.
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Remuneration report
DIRECTORS’ EMOLUMENTS
P R Dupee
N F Rogers
N R Carrick[1]
D Zissman
S J Rutherford
D H Norman[2]
M G D Wakeman[3]
M J Temple[4]
C J Cundy[5]
Total
1 From date of appointment as a Director on 2 October 2011.
2 Resigned 26 March 2012.
3 Resigned 2 October 2011.
4 Resigned 14 September 2011.
5 Resigned 2 February 2011.
DIRECTORS’ PENSION ENTITLEMENTS
All benefits Termination
Salary
Fees
in kind
payment
£
£
£
Total
2012
£
Total
2011
£
—
—
— 47,625
8,250
—
—
— 33,000
8,250
— 33,000
33,000
£
—
—
—
—
— 47,625
—
—
— 33,000
— 33,000
72,500
— 10,400
— 82,900
244,500
78,300
3,666 283,839
532,005
321,291
5,823 247,950
332,073
201,980
— 27,500
— 32,500
60,000
60,000
—
—
—
— 33,000
—
—
—
395,300
141,125
19,889 564,289 1,120,603 665,771
Remuneration report
DIRECTORS’ SHARE OPTIONS
Details of share options at 31 March 2012 and 2 April 2011 for each Director who held office during the year are as follows:
D H Norman
M G D Wakeman
N R Carrick
Number of
options at
2 April
2011
2,451,2131
1,613,6703
Granted
308,2472
194,3294
— 1,144,7375
Exercised
Lapsed/
forfeited
Number of
options at
31 March
2012
— (1,245,973)
1,513,487
—
—
(853,845)
954,154
—
1,144,737
1
2
3
4
5
At 2 April 2,266,598 nil cost options were held under The 600 Group PLC 2008 Performance Share Plan and 184,615 options were held under a HM Revenue &
Customs approved share option scheme exercisable between 3 and 10 years of the grant date of 25 August 2009 subject to performance criteria
308,247 nil cost options were granted under The 600 Group PLC Deferred Share Plan on 18 January 2012 exercisable between grant date and 10 years time.
At 2 April 2011 1,429,055 nil cost options were held under The 600 Group PLC 2008 Performance Share Plan and 184,615 options were held under a HM Revenue
& Customs approved share option scheme exercisable between 3 and 10 years of the grant date of 25 August 2009 subject to performance criteria.
194,329 nil cost options were granted under The 600 Group PLC Deferred Share Plan on 18 January 2012 exercisable between grant date and 10 years time.
1,144,737 nil cost options were granted under the 600 Group PLC 2008 Performance Share Plan on 18 January 2012 exercisable between 3 and 10 years from
grant date subject to performance criteria.
The share price at 31 March 2012 was 19.75p and the highest and lowest prices during the period were 37.75p and 18.5p,
respectively.
Pension contributions of £97,175 (2011: £20,700) for D H Norman, £61,263 (2011: £13,050) for M G D Wakeman and £6,525 for N R
Carrick were paid into their personal pension schemes during the year.
On behalf of the Board
NEIL CARRICK
DIRECTOR
5 SEPTEMBER 2012
16
0_600_ar12.indd 17
17
17
07/09/2012 10:18:59
Independent auditor’s report
To the members of The 600 Group PLC
We have audited the financial statements of The 600 Group PLC for the year ended 31 March 2012 set out on pages 19 to 69. The
financial reporting framework that has been applied in the preparation of the group financial statements is applicable law and International
Financial Reporting Standards (IFRSs) as adopted by the EU. The financial reporting framework that has been applied in the preparation
of the parent company financial statements is applicable law and UK Accounting Standards (UK Generally Accepted Accounting Practice).
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our
audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an
auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other
than the company and the company’s members, as a body, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditor
As explained more fully in the Directors’ Responsibilities Statement set out on page 12, the directors are responsible for the preparation of
the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit, and express an opinion on,
the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards
require us to comply with the Auditing Practices Board’s (APB’s) Ethical Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements is provided on the APB’s website at www.frc.org.uk/apb/scope/private.cfm.
Opinion on financial statements
In our opinion:
the financial statements give a true and fair view of the state of the group’s and of the parent company’s affairs as at 31 March 2012
and of the group’s loss for the year then ended;
the group financial statements have been properly prepared in accordance with IFRSs as adopted by the EU;
the parent company financial statements have been properly prepared in accordance with UK Generally Accepted Accounting Practice
and;
the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
Opinion on other matter prescribed by the Companies Act 2006
In our opinion the information given in the Directors’ Report for the financial year for which the financial statements are prepared is
consistent with the financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received
from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors’ remuneration specified by law are not made; or we have not received all the information and
explanations we require for our audit.
David Morritt (Senior Statutory Auditor)
for and on behalf of KPMG Audit Plc, Statutory Auditor
Chartered Accountants
1 The Embankment
Neville Street
Leeds
LS1 4DW
5 September 2012
18
0_600_ar12.indd 18
18
07/09/2012 10:18:59
Independent auditor’s report
To the members of The 600 Group PLC
Consolidated income statement
For the 52-week period ended 31 March 2012
As restated *
After
Before
special items Special items special items
52 weeks
ended
31 March
2012
£'000
52 weeks
ended
31 March
2012
£'000
52 weeks
ended
31 March
2012
£'000
After
Before
special items special items special items
52 weeks
ended
2 April
2011
£'000
52 weeks
ended
2 April
2011
£'000
52 weeks
ended
2 April
2011
£'000
39,393
(27,316)
12,077
126
(13,410)
-
(7,512)
(7,512)
-
(5,367)
39,393
(34,828)
4,565
126
(18,777)
36,451
(23,507)
12,944
332
(13,020)
-
-
36,451
(23,507)
-
-
1,345
12,944
332
(11,675)
(1,207)
(12,879)
(14,086)
256
1,345
1,601
24
10,834
10,858
(669)
(9,268)
(9,937)
24
10,834
10,858
(669)
(9,268)
(9,937)
34
10,876
10,910
(566)
(9,484)
(10,050)
-
-
34
10,876
10,910
(566)
(9,484)
(10,050)
-
-
(286)
(12,879)
(13,165)
1,116
1,345
2,461
(907)
-
(907)
(448)
-
(448)
(1,193)
(12,879)
(14,072)
(777)
-
(777)
668
858
1,345
2,013
-
858
(1,970)
(12,879)
(14,849)
1,526
1,345
2,871
Continuing
Revenue
Cost of sales
Gross profit
Other operating income
Net operating expenses
(Loss)/profit from operations
Bank and other interest
Expected return on pension assets
Financial income
Bank and other interest
Interest on pension obligations
Financial expense
(Loss)/profit before tax
Income tax charge
the parent company financial statements have been properly prepared in accordance with UK Generally Accepted Accounting Practice
(Loss)/profit for the period from continuing operations
Post tax (loss)/profit of discontinued operations
Total (loss)/profit for the financial year
attributable to Equity holders of the parent
Note
1
2
2
4
6
6
7
1
We have audited the financial statements of The 600 Group PLC for the year ended 31 March 2012 set out on pages 19 to 69. The
financial reporting framework that has been applied in the preparation of the group financial statements is applicable law and International
Financial Reporting Standards (IFRSs) as adopted by the EU. The financial reporting framework that has been applied in the preparation
of the parent company financial statements is applicable law and UK Accounting Standards (UK Generally Accepted Accounting Practice).
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our
audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an
auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other
than the company and the company’s members, as a body, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditor
As explained more fully in the Directors’ Responsibilities Statement set out on page 12, the directors are responsible for the preparation of
the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit, and express an opinion on,
the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards
require us to comply with the Auditing Practices Board’s (APB’s) Ethical Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements is provided on the APB’s website at www.frc.org.uk/apb/scope/private.cfm.
Opinion on financial statements
In our opinion:
the financial statements give a true and fair view of the state of the group’s and of the parent company’s affairs as at 31 March 2012
and of the group’s loss for the year then ended;
the group financial statements have been properly prepared in accordance with IFRSs as adopted by the EU;
and;
the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
Opinion on other matter prescribed by the Companies Act 2006
In our opinion the information given in the Directors’ Report for the financial year for which the financial statements are prepared is
consistent with the financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received
from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors’ remuneration specified by law are not made; or we have not received all the information and
explanations we require for our audit.
David Morritt (Senior Statutory Auditor)
for and on behalf of KPMG Audit Plc, Statutory Auditor
Chartered Accountants
1 The Embankment
Neville Street
Leeds
LS1 4DW
5 September 2012
Special items comprise exceptional costs relating to reorganisation, redundancy, inventory and intangibles impairments, and share based payments (see note 3)
* Comparative figures have been restated as a result of the South African business being treated as discontinued
Basic (loss)/earnings per share per share - continuing
- discontinued
- Total
Diluted (loss)/earnings per share - continuing
- discontinued
- Total
9
9
(1.87)p
(1.22)p
(3.09)p
(1.87)p
(1.22)p
(3.09)p
(20.21)p
(20.21)p
(20.21)p
(20.21)p
(22.08)p
(1.22)p
(23.30)p
(22.08)p
(1.22)p
(23.30)p
1.16p
1.50p
2.66p
0.11p
1.28p
1.39p
2.35p
2.35p
0.24p
0.24p
3.51p
1.50p
5.01p
0.35p
1.28p
1.63p
18
0_600_ar12.indd 19
19
19
07/09/2012 10:18:59
Consolidated statement of comprehensive income
for the 52-week period ended 31 March 2012
(Loss)/profit for the period
Other comprehensive (expense)/income
Foreign exchange translation differences
Net actuarial gains on employee benefit schemes
Impact of changes to defined benefit asset limit
Impact of transfer to assets held for sale
Deferred taxation
Other comprehensive expense for the period, net of income tax
Total comprehensive (expense)/income for the period
Attributable to:
Equity holders of the Parent Company
Total recognised (expense)/income
Notes
30
30
13
52-week
52-week
period ended
period ended
31 March
2012
£000
(14,849)
(95)
7,025
(8,810)
349
386
(1,145)
(15,994)
(15,994)
(15,994)
2 April
2011
£000
2,871
—
2,235
(4,130)
—
(1)
(1,958)
975
913
913
20
0_600_ar12.indd 20
20
07/09/2012 10:18:59
Consolidated statement of comprehensive income
for the 52-week period ended 31 March 2012
Consolidated statement of financial position
as at 31 March 2012
(Loss)/profit for the period
Other comprehensive (expense)/income
Foreign exchange translation differences
Net actuarial gains on employee benefit schemes
Impact of changes to defined benefit asset limit
Impact of transfer to assets held for sale
Deferred taxation
Other comprehensive expense for the period, net of income tax
Total comprehensive (expense)/income for the period
Attributable to:
Equity holders of the Parent Company
Total recognised (expense)/income
Notes
30
30
13
52-week
52-week
period ended
period ended
31 March
2012
£000
(14,849)
(95)
7,025
(8,810)
349
386
(1,145)
(15,994)
(15,994)
(15,994)
2 April
2011
£000
2,871
—
2,235
(4,130)
—
(1)
(1,958)
975
913
913
Non-current assets
Property, plant and equipment
Intangible assets
Deferred tax assets
Current assets
Inventories
Trade and other receivables
Assets held for sale
Cash and cash equivalents
Total assets
Non-current liabilities
Employee benefits
Loans and other borrowings
Deferred tax liabilities
Current liabilities
Trade and other payables
Income tax payable
Provisions
Loans and other borrowings
Liabilities held for sale
Total liabilities
Net assets
Shareholders’ equity
Called-up share capital
Share premium account
Revaluation reserve
Capital redemption reserve
Equity reserve
Translation reserve
Retained earnings
Total equity
Notes
11
12
13
14
15
16
17
30
18
13
19
21
18
20
23
As at
31 March
2012
£000
5,085
852
1,473
7,410
10,811
6,528
9,093
409
26,841
34,251
(2,012)
(5,824)
(1,365)
(9,201)
(9,556)
(199)
(1,241)
(2,579)
(4,488)
(18,063)
(27,264)
6,987
14,375
15,645
1,080
2,500
167
1,487
(28,267)
6,987
As at
2 April
2011
£000
10,661
1,350
2,704
14,715
18,742
8,922
—
1,052
28,716
43,431
(1,849)
(2,218)
(1,817)
(5,884)
(11,900)
(83)
(252)
(3,629)
_
(15,864)
(21,748)
21,683
14,315
13,899
1,475
2,500
160
1,697
(12,363)
21,683
The financial statements on pages 19 to 69 were approved by the Board of Directors on 5 September 2012 and were signed on its
behalf by:
NEIL CARRICK
GROUP FINANCE DIRECTOR
5 SEPTEMBER 2012
20
0_600_ar12.indd 21
21
21
07/09/2012 10:18:59
Consolidated statement of changes in equity
As at 31 March 2012
At 3 April 2010
At 4 April 2010
Profit for the period
Other comprehensive income:
Foreign currency translation
Net actuarial losses on employee benefit
schemes
Impact of changes to defined benefit asset limit
Deferred tax
Total comprehensive income
Transactions with owners:
Share capital subscribed for
Shareholder loan issue with convertible warrants
Non-controlling interest reversal
Credit for share-based payments
Total transactions with owners
At 2 April 2011
At 3 April 2011
Loss for the period
Other comprehensive income:
Foreign currency translation
Net actuarial losses on employee benefit
schemes
Impact of write down of assets held for sale
Impact of changes to defined benefit asset limit
Deferred tax
Total comprehensive income
Transactions with owners:
Share capital subscribed for
Shareholder loan issue with convertible warrants
Credit for share-based payments
Total transactions with owners
At 31 March 2012
Ordinary
Share
Capital
share premium Revaluation redemption Translation Equity
Retained
Minority
capital
account
reserve
reserve[1]
reserve reserve
Earnings
Total
interest[2]
£000
£000
£000
£000
£000
£000
£000
£000
£000
Total
equity
£000
14,308 13,766
1,433
2,500
1,570 — (13,550) 20,027
634
20,661
14,308 13,766
1,433
2,500
1,570 — (13,550) 20,027
634
20,661
—
—
2,871
2,871
— 2,871
—
—
—
—
—
—
—
7
—
—
—
7
—
—
—
—
—
133
—
—
—
133
—
42
—
—
(66)
(24)
—
—
66
—
66
—
—
—
—
—
—
—
—
—
—
—
(38)
—
—
—
(38)
—
—
—
—
— 160
165
—
—
—
165
160
—
—
—
4
—
4
2,235
2,235
— 2,235
— (4,130)
(4,130)
— (4,130)
(1)
975
—
—
85
127
212
(67)
913
140
160
—
—
—
—
(67)
913
140
160
316
(634)
(318)
127
—
743
(634)
127
109
14,315 13,899
1,475
2,500
1,697
160 (12,363) 21,683
— 21,683
14,315 13,899
1,475
2,500
1,697
160 (12,363) 21,683
— 21,683
—
—
—
—
—
— (14,849) (14,849)
— (14,849)
—
—
—
—
—
—
—
—
—
—
(46)
—
(349)
—
—
— (210)
—
—
—
—
—
—
—
—
—
—
—
(95)
(351)
— (351)
7,025
7,025
— 7,025
349
—
—
—
— (8,810)
(8,810)
— (8,810)
—
386
386
—
386
—
—
(395)
— (210)
— (15,994) (16,599)
— (16,599)
60 1,746
—
—
—
—
60 1,746
—
—
—
—
—
—
—
—
—
—
—
—
—
7
—
7
— 1,806
—
—
—
1,806
7
90
7
90
1,903
— 1,903
—
90
90
14,375 15,645
1,080
2,500
1,487
167 (28,267)
6,987
— 6,987
1 The capital redemption reserve was set up on cancellation and repayment of cumulative preference shares in 2001.
2 The minority interest related to the 25.1% in 600SA Holdings (Pty) Limited acquired by a South African individual on 3 April 2005 which was divested during the prior period.
22
0_600_ar12.indd 22
22
07/09/2012 10:19:00
Shareholder loan issue with convertible warrants
—
—
— 160
At 3 April 2010
At 4 April 2010
Profit for the period
Other comprehensive income:
Foreign currency translation
Net actuarial losses on employee benefit
schemes
Deferred tax
Total comprehensive income
Transactions with owners:
Share capital subscribed for
Non-controlling interest reversal
Credit for share-based payments
Total transactions with owners
At 2 April 2011
At 3 April 2011
Loss for the period
Other comprehensive income:
Foreign currency translation
Net actuarial losses on employee benefit
schemes
Impact of write down of assets held for sale
Impact of changes to defined benefit asset limit
Deferred tax
Total comprehensive income
Transactions with owners:
Share capital subscribed for
Shareholder loan issue with convertible warrants
Credit for share-based payments
Total transactions with owners
60 1,746
60 1,746
Ordinary
Share
Capital
share premium Revaluation redemption Translation Equity
Retained
Minority
capital
account
reserve
reserve[1]
reserve reserve
Earnings
Total
interest[2]
£000
£000
£000
£000
£000
£000
£000
£000
£000
Total
equity
£000
14,308 13,766
1,433
2,500
1,570 — (13,550) 20,027
634
20,661
14,308 13,766
1,433
2,500
1,570 — (13,550) 20,027
634
20,661
—
—
—
—
2,871
2,871
— 2,871
—
4
—
4
2,235
2,235
— 2,235
(67)
913
140
160
127
—
—
—
—
—
(1)
975
—
—
85
127
212
(67)
913
140
160
127
109
—
—
—
—
—
7
—
—
—
7
—
—
—
—
—
—
—
—
—
—
—
—
133
—
—
—
133
—
—
—
—
—
—
—
—
42
—
—
(66)
(24)
—
—
66
—
66
(46)
—
(349)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(38)
—
—
—
(38)
165
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
7
—
7
165
160
743
(634)
14,315 13,899
1,475
2,500
1,697
160 (12,363) 21,683
— 21,683
14,315 13,899
1,475
2,500
1,697
160 (12,363) 21,683
— 21,683
—
—
—
—
—
— (14,849) (14,849)
— (14,849)
— (210)
(95)
(351)
— (351)
7,025
7,025
— 7,025
349
—
—
—
— (8,810)
(8,810)
— (8,810)
—
386
386
—
386
—
—
(395)
— (210)
— (15,994) (16,599)
— (16,599)
— 1,806
1,806
—
—
—
7
90
7
90
1,903
— 1,903
—
90
90
At 31 March 2012
14,375 15,645
1,080
2,500
1,487
167 (28,267)
6,987
— 6,987
1 The capital redemption reserve was set up on cancellation and repayment of cumulative preference shares in 2001.
2 The minority interest related to the 25.1% in 600SA Holdings (Pty) Limited acquired by a South African individual on 3 April 2005 which was divested during the prior period.
Consolidated statement of changes in equity
As at 31 March 2012
Consolidated cash flow statement
For the 52-week period ended 31 March 2012
Impact of changes to defined benefit asset limit
— (4,130)
(4,130)
— (4,130)
Impairment of tangible fixed assets
Net financial income
Net pension credit
Loss on disposal of plant and equipment
Equity share option expense
Income tax expense/(income)
316
(634)
(318)
Operating cash flow before changes in working capital and provisions
Cash flows from operating activities
(Loss)/profit for the period
Adjustments for:
Amortisation of development expenditure
Depreciation
Impairment of goodwill
(Increase)/decrease in trade and other receivables
Decrease in inventories
Increase in trade and other payables
Decrease in employee benefits
Cash (used in )/generated from operations
Interest paid
Income tax (paid)
Net cash flows from operating activities
Cash flows from investing activities
Interest received
Proceeds from sale of property, plant and equipment
Acquisition of Polish manufacturing company
Purchase of property, plant and equipment
Development expenditure capitalised
Net cash flows from investing activities
Cash flows from financing activities
Proceeds from issue of ordinary shares
Proceeds from issue of shareholder loan net of costs
Net proceeds from external borrowing
Net cash flows from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the period
Effect of exchange rate fluctuations on cash held
Cash and cash equivalents at the end of the period
22
0_600_ar12.indd 23
52-week
52-week
period ended
period ended
31 March
2012
£000
2 April
2011
£000
(14,849)
2,871
Notes
116
1,033
931
1,158
(921)
(1,224)
—
90
907
(12,759)
(1,240)
5,896
3,358
1,767
(2,978)
(757)
(132)
(3,867)
68
380
—
(963)
(549)
(1,064)
1,806
—
4,986
6,792
1,861
(1,905)
(73)
(117)
513
994
—
—
(756)
(2,570)
16
127
(307)
888
549
578
652
(788)
1,879
(645)
(53)
1,181
7
245
(632)
(1,002)
(406)
(1,788)
140
2,104
(171)
2,073
1,466
(3,371)
—
(1,905)
23
23
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24
17
Group accounting policies
BASIS OF PREPARATION
The 600 Group PLC is a public limited company incorporated and domiciled in England and Wales. The Company’s ordinary shares are
traded on the Alternative Investment Market (AIM) of the London Stock Exchange.
The Group Consolidated Financial Statements incorporate accounts, prepared to the Saturday nearest to the Group’s accounting reference
date of 31 March, of the Company and its subsidiary undertakings (together referred to as the Group). The results for 2012 are for the 52-
week period ended 31 March 2012. The results for 2011 are for the 52-week period ended 2 April 2011. The Parent Company financial
statements present information about the Company as a separate entity and not about its Group.
The Group financial statements have been prepared and approved by the Directors in accordance with International Financial Reporting
Standards (IFRS) as adopted by the EU and with those parts of the Companies Act 2006 applicable to companies reporting under adopted
IFRS.
IFRS and IFRIC are issued by the International Accounting Standards Board (the IASB) and must be adopted into European Union law,
referred to as endorsement, before they become mandatory under the IAS Regulation.
There have been no further alterations made to the accounting policies as a result of considering all amendments to IFRS and IFRIC
interpretations that became effective during the accounting period as these were considered to be immaterial to the Group’s operations or
were not relevant. A change to the Deed and Rules is in the process of being agreed with the Trustees of the UK 600 Group Pension
Scheme which would allow the accounting surplus, which at 31 March 2012 stood at £12.9m, to be included on the Group balance sheet.
There are a number of standards and interpretations issued by the IASB that are effective for financial statements after this reporting
period. The following have not been adopted by the Group:
Effective for accounting periods starting on or after:
International Financial Reporting Standards:
IFRS 7 Amendment to Financial Instruments: Disclosures on
derecognition
IAS 12 Amendment to Income taxes on deferred tax
IAS 1 Amendment to Financial Statement presentation
IAS 19 Amendment to Employee benefits
IFRS 9 Financial Instruments
IFRS 10 Consolidated financial statements
IFRS 11 Joint arrangements
IFRS 12 Disclosures of interests in other entities
IFRS 13 Fair Value measurement
IAS 27 Separate financial statements (revised)
IAS 28 Associates and joint ventures (revised)
1 July 2011
1 January 2012
1 July 2012
1 January 2013
1 January 2015
1 January 2013
1 January 2013
1 January 2013
1January 2013
1 January 2013
1 January 2013
These standards and interpretations have been endorsed by the European Union
The application of these standards and interpretations are not anticipated to have a material effect on the Group’s financial statements
The Company has elected to prepare its Parent Company financial statements in accordance with UK GAAP; these are presented on pages 61
to 69.
The preparation of financial statements in conformity with adopted IFRS requires management to make judgements, estimates and
assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and
associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the
circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not
readily apparent from other sources. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the
period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision
affects both current and future periods.
Judgements made by management in the application of IFRS that have a significant effect on the Group financial statements and estimates
with a significant risk of material adjustment in the next year are discussed in Note 32.
The consolidated financial statements are presented in sterling rounded to the nearest thousand.
The following principal accounting policies have been applied consistently to all periods presented in these Group financial statements.
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Group accounting policies
Group accounting policies
BASIS OF PREPARATION
The 600 Group PLC is a public limited company incorporated and domiciled in England and Wales. The Company’s ordinary shares are
traded on the Alternative Investment Market (AIM) of the London Stock Exchange.
The Group Consolidated Financial Statements incorporate accounts, prepared to the Saturday nearest to the Group’s accounting reference
date of 31 March, of the Company and its subsidiary undertakings (together referred to as the Group). The results for 2012 are for the 52-
week period ended 31 March 2012. The results for 2011 are for the 52-week period ended 2 April 2011. The Parent Company financial
statements present information about the Company as a separate entity and not about its Group.
The Group financial statements have been prepared and approved by the Directors in accordance with International Financial Reporting
Standards (IFRS) as adopted by the EU and with those parts of the Companies Act 2006 applicable to companies reporting under adopted
IFRS.
IFRS and IFRIC are issued by the International Accounting Standards Board (the IASB) and must be adopted into European Union law,
referred to as endorsement, before they become mandatory under the IAS Regulation.
There have been no further alterations made to the accounting policies as a result of considering all amendments to IFRS and IFRIC
interpretations that became effective during the accounting period as these were considered to be immaterial to the Group’s operations or
were not relevant. A change to the Deed and Rules is in the process of being agreed with the Trustees of the UK 600 Group Pension
Scheme which would allow the accounting surplus, which at 31 March 2012 stood at £12.9m, to be included on the Group balance sheet.
There are a number of standards and interpretations issued by the IASB that are effective for financial statements after this reporting
period. The following have not been adopted by the Group:
Effective for accounting periods starting on or after:
International Financial Reporting Standards:
IFRS 7 Amendment to Financial Instruments: Disclosures on
derecognition
IAS 12 Amendment to Income taxes on deferred tax
IAS 1 Amendment to Financial Statement presentation
IAS 19 Amendment to Employee benefits
IFRS 9 Financial Instruments
IFRS 10 Consolidated financial statements
IFRS 11 Joint arrangements
IFRS 12 Disclosures of interests in other entities
IFRS 13 Fair Value measurement
IAS 27 Separate financial statements (revised)
IAS 28 Associates and joint ventures (revised)
1 July 2011
1 January 2012
1 July 2012
1 January 2013
1 January 2015
1 January 2013
1 January 2013
1 January 2013
1January 2013
1 January 2013
1 January 2013
These standards and interpretations have been endorsed by the European Union
The application of these standards and interpretations are not anticipated to have a material effect on the Group’s financial statements
The Company has elected to prepare its Parent Company financial statements in accordance with UK GAAP; these are presented on pages 61
to 69.
The preparation of financial statements in conformity with adopted IFRS requires management to make judgements, estimates and
assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and
associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the
circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not
readily apparent from other sources. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the
period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision
affects both current and future periods.
Judgements made by management in the application of IFRS that have a significant effect on the Group financial statements and estimates
with a significant risk of material adjustment in the next year are discussed in Note 32.
The consolidated financial statements are presented in sterling rounded to the nearest thousand.
The following principal accounting policies have been applied consistently to all periods presented in these Group financial statements.
The financial statements are prepared under the historical cost convention except that properties are stated at their fair value.
The Group’s business activities, together with the factors likely to affect its future development, performance and position are set out
in the Chairman’s Statement on pages 1 to 2 and the Group Chief Executive’s Review of Operations on pages 3 to 4. The financial position
of the Group, its cash flows, liquidity position and borrowing facilities are described in the Group Finance Director’s Financial Review on
pages 5 to 7 and Note 26 to the financial statements. In addition Note 26 to the financial statements includes the Group’s objectives,
policies and processes for managing its capital; its financial risk management objectives; details of its financial instruments and hedging
activities; and its exposures to credit risk and liquidity risk.
The Group refinanced in August 2011 with Santander PLC who provided a Term Loan facility of £2.5m with scheduled repayments through
to June 2015 and a Revolving Credit facility of £2.5m until 30 June 2014. Security over the UK assets which is shared with Haddeo and the
UK Pension Trustees was put in place at this time. The new facility was utilised to repay existing bank debt and provide working capital for
the European operations including Poland.
As a result of continued supply disruption and poor trading in Poland the Group negotiated a further £800,000 overdraft facility in early
January 2012 to provide additional working capital whilst it completed a number of asset divestments. Subsequent to the year end date the
Group divested of its Shepshed property and its South African subsidiary and the proceeds of £2.9m were used to repay the overdraft and
part of the term loan facility with the balance being used for working capital.
As a result of these divestments and the recent strategic review including the decision to close its manufacturing operation in Poland the
Group has agreed amendments on the 5 September 2012 to the existing facilities including revised covenants and a deferment of the
quarterly capital repayments on the Term Loan until September 2013. In addition a new overdraft facility of £300,000 until 1 October 2013
has been agreed. These amendments were conditional upon the placing of shares undertaken with institutions raising £1.47m which was
completed on 5 September 2012.
The Group’s forecasts and projections, taking account of reasonably possible changes in trading performance, show that the Group should
be able to operate within the level of these revised facilities. This includes consideration of working capital requirements and the impact of
funding further reorganisation costs and the possible delay in the divestment of further property assets. Additional property asset disposals
have been factored into future banking covenants and the disposal of these properties and allocation of the proceeds will require the
agreement of all debenture holders including Haddeo and the Pension Trustees.
The overseas bank overdrafts in place around the Group are all due for renewal within the next 6 months. The Group has held discussions
with its overseas bankers about its future borrowing needs and no matters have been drawn to its attention to suggest that renewals may
not be forthcoming on acceptable terms. The Group also considers that alternative sources of finance would be available should the need
arise.
After making enquiries, the Directors have a reasonable expectation that the Company and the Group have adequate resources to continue
in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the Annual
Report and Accounts.
BASIS OF CONSOLIDATION
The Group’s financial statements consolidate the financial statements of the Company and its subsidiary undertakings. Subsidiary
undertakings are those entities that are controlled by the Group. The results of any subsidiaries sold or acquired are included in the Group’s
income statement up to, or from, the date control passes. All intra-Group balances and transactions, including unrealised profits arising
from intra-Group transactions, are eliminated fully on consolidation.
FOREIGN CURRENCY TRANSLATION
Transactions denominated in foreign currencies are translated into Sterling at the rates of exchange ruling on the date of the transaction.
Monetary assets and liabilities are translated into Sterling at the rate of exchange ruling at the balance sheet dates. Earnings of foreign
operations are translated at the average exchange rate for the period as an approximation to actual transaction date rates. Exchange rates
used to express the assets and liabilities of overseas companies in Sterling are the rates ruling at the balance sheet dates. Exchange
differences arising from the re-translation of the investments in overseas subsidiaries are recorded as a movement on reserves. All other
exchange differences are dealt with through the income statement.
On transition to adopted IFRS, the Group took the exemption under IFRS 1 to start the translation reserve at £nil. The balance on this
reserve only relates to post transition.
REVENUE
Revenue represents commission on agency sales and the total of the amounts invoiced to customers outside the Group for goods supplied
and services rendered, excluding VAT, and after deducting discounts allowed and credit notes issued. Revenue is recognised at the point
at which goods are supplied to customers. No revenue is recognised if there are significant uncertainties regarding recovery of the
consideration due, associated completion costs, the possible return of goods or continuing management involvement with the goods.
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Group accounting policies
SEGMENT ANALYSIS
The Group has adopted IFRS 8 “Operating segments” which 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.
Following the restructuring undertaken the two business streams of Machine Tools and Precision Engineered Equipment have been
aggregated as they are operationally managed and reported internally to the Executive Directors as a single Division. The South African
business consisted of the Mechanical Handling and Waste activity and has been classified as a discontinued activity in these accounts.
The Executive Directors consider there to be two continuing operating segments being Machine Tools and Precision Engineered
Components and Laser Marking.
The executive directors assess the performance of the operating segments based on a measure of operating profit/(loss). This
measurement basis excludes the effects of Special Items from the operating segments. Head Office and unallocated represent central
functions and costs and include the effects of the Group Final Salary Scheme in the UK.
OPERATING PROFIT AND SPECIAL ITEMS
In order for users of the financial statements to better understand the underlying performance of the Group, the Board have separately
disclosed transactions which, whilst falling within the ordinary activities of the Group, are, by the virtue of their size or incidence, considered
to be one off in nature. In addition they include the charge for share based payments.
Such items include gains and losses on the revaluation or sale of properties and assets, exceptional costs relating to reorganisation,
redundancy, restructuring, legal disputs,inventory and intangibles impairments.
PENSIONS AND POST-RETIREMENT HEALTH BENEFITS
The Group operates both defined benefit and defined contribution pension schemes. It also operates a retirement healthcare benefit
scheme for certain of its employees in the US. The Group’s net obligation in respect of the defined benefit schemes and the retirement
healthcare benefit scheme is calculated by estimating the amount of future benefit that employees have earned in return for their service in
the current and prior periods; that benefit is discounted to determine its present value and the fair value of any scheme assets is deducted.
The discount rate for the UK schemes is based on the annualised yield on AA credit rated corporate bonds. The discount rate for the
retirement healthcare benefit scheme is based on a similar measure which is appropriate for the US market. The calculations are performed
by a qualified actuary using the projected unit method. Actuarial gains and losses are recognised immediately through the statement of
comprehensive income. The extent to which the schemes’ assets exceed the liabilities is shown as a surplus in the balance sheet to the
extent that the surplus is recoverable by the Group. Further provision is made to the extent that the Group has any additional obligation under
a minimum funding requirement.
Items recognised in the income statement and statement of comprehensive income are as follows:
WITHIN PROFIT FROM OPERATIONS
• current service cost – representing the increase in the present value of the defined benefit obligation resulting from employee service in
the current period;
• past service cost – representing the increase in the present value of the defined benefit obligation resulting from employee service in
prior periods, which arises from changes made to the benefits under the scheme in the current period. To the extent that the changes to
benefits vest immediately, past service costs are recognised immediately, otherwise they are recognised on a straight-line basis over the
vesting period; and
• gains and losses arising on settlements and curtailments – where the item that gave rise to the settlement or curtailment is recognised
within operating profit.
• obligations for contributions to defined contribution pension schemes are recognised as an expense in the income statement as incurred.
BELOW PROFIT FROM OPERATIONS
• interest cost on the liabilities of the scheme – calculated by reference to the scheme liabilities and discount rate at the beginning of the
period and allowing for changes in liabilities during the period; and
• expected return on the assets of the scheme – calculated by reference to the scheme assets and long-term expected rate of return at the
beginning of the period and allowing for changes during the period.
WITHIN THE STATEMENT OF COMPREHENSIVE INCOME
• actuarial gains and losses arising on the assets and liabilities of the scheme; and
• any change in the unrecognised asset of the scheme due to the asset limit test.
GOODWILL
Goodwill arising on acquisition of subsidiaries and businesses is capitalised as an asset and represents the excess of the fair value of the
consideration given over the fair value of the net identifiable assets, liabilities and contingent liabilities acquired.
In accordance with IFRS 1 “First-time Adoption of IFRS”, goodwill has been frozen at its net book value as at the date of transition and will
not be amortised. Instead it will be subject to an annual impairment review with any impairment losses being recognised immediately in the
income statement.
Goodwill written off in prior years under previous UK GAAP will not be reinstated.
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Group accounting policies
SEGMENT ANALYSIS
and to assess their performance.
The Group has adopted IFRS 8 “Operating segments” which 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
Following the restructuring undertaken the two business streams of Machine Tools and Precision Engineered Equipment have been
aggregated as they are operationally managed and reported internally to the Executive Directors as a single Division. The South African
business consisted of the Mechanical Handling and Waste activity and has been classified as a discontinued activity in these accounts.
The Executive Directors consider there to be two continuing operating segments being Machine Tools and Precision Engineered
Components and Laser Marking.
The executive directors assess the performance of the operating segments based on a measure of operating profit/(loss). This
measurement basis excludes the effects of Special Items from the operating segments. Head Office and unallocated represent central
functions and costs and include the effects of the Group Final Salary Scheme in the UK.
OPERATING PROFIT AND SPECIAL ITEMS
In order for users of the financial statements to better understand the underlying performance of the Group, the Board have separately
disclosed transactions which, whilst falling within the ordinary activities of the Group, are, by the virtue of their size or incidence, considered
to be one off in nature. In addition they include the charge for share based payments.
Such items include gains and losses on the revaluation or sale of properties and assets, exceptional costs relating to reorganisation,
redundancy, restructuring, legal disputs,inventory and intangibles impairments.
PENSIONS AND POST-RETIREMENT HEALTH BENEFITS
The Group operates both defined benefit and defined contribution pension schemes. It also operates a retirement healthcare benefit
scheme for certain of its employees in the US. The Group’s net obligation in respect of the defined benefit schemes and the retirement
healthcare benefit scheme is calculated by estimating the amount of future benefit that employees have earned in return for their service in
the current and prior periods; that benefit is discounted to determine its present value and the fair value of any scheme assets is deducted.
The discount rate for the UK schemes is based on the annualised yield on AA credit rated corporate bonds. The discount rate for the
retirement healthcare benefit scheme is based on a similar measure which is appropriate for the US market. The calculations are performed
by a qualified actuary using the projected unit method. Actuarial gains and losses are recognised immediately through the statement of
comprehensive income. The extent to which the schemes’ assets exceed the liabilities is shown as a surplus in the balance sheet to the
extent that the surplus is recoverable by the Group. Further provision is made to the extent that the Group has any additional obligation under
Items recognised in the income statement and statement of comprehensive income are as follows:
a minimum funding requirement.
WITHIN PROFIT FROM OPERATIONS
the current period;
vesting period; and
within operating profit.
• current service cost – representing the increase in the present value of the defined benefit obligation resulting from employee service in
• past service cost – representing the increase in the present value of the defined benefit obligation resulting from employee service in
prior periods, which arises from changes made to the benefits under the scheme in the current period. To the extent that the changes to
benefits vest immediately, past service costs are recognised immediately, otherwise they are recognised on a straight-line basis over the
• gains and losses arising on settlements and curtailments – where the item that gave rise to the settlement or curtailment is recognised
• obligations for contributions to defined contribution pension schemes are recognised as an expense in the income statement as incurred.
BELOW PROFIT FROM OPERATIONS
• interest cost on the liabilities of the scheme – calculated by reference to the scheme liabilities and discount rate at the beginning of the
period and allowing for changes in liabilities during the period; and
• expected return on the assets of the scheme – calculated by reference to the scheme assets and long-term expected rate of return at the
beginning of the period and allowing for changes during the period.
WITHIN THE STATEMENT OF COMPREHENSIVE INCOME
• actuarial gains and losses arising on the assets and liabilities of the scheme; and
• any change in the unrecognised asset of the scheme due to the asset limit test.
Goodwill arising on acquisition of subsidiaries and businesses is capitalised as an asset and represents the excess of the fair value of the
consideration given over the fair value of the net identifiable assets, liabilities and contingent liabilities acquired.
In accordance with IFRS 1 “First-time Adoption of IFRS”, goodwill has been frozen at its net book value as at the date of transition and will
not be amortised. Instead it will be subject to an annual impairment review with any impairment losses being recognised immediately in the
GOODWILL
income statement.
Goodwill written off in prior years under previous UK GAAP will not be reinstated.
Group accounting policies
RESEARCH AND DEVELOPMENT
Research expenditure undertaken with the prospect of gaining new scientific or technical knowledge and understanding is recognised in the
income statement as an expense as incurred.
Expenditure on development activities, whereby research findings are applied to a plan or design for the production of new or
substantially improved products and processes, is capitalised if the product or process is technically and commercially feasible and the
Group has sufficient resources to complete development. The expenditure capitalised includes direct labour and an appropriate proportion
of overheads. Amortisation is charged to the income statement on a straight-line basis over the useful economic life of the activity. Currently
the annual rates used are between two and five years.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are held at cost, subject to property revaluations every three to five years, or indications of changes in fair value of
properties. During March 2010 the Group’s properties were revalued. The valuations were performed by independent valuers, Eddisons,
and the valuations were determined by market rate for sale with vacant possession. The Directors believe that these valuations remain
appropriate at 31 March 2012. Revalued amounts are reflected in the balance sheet with the resulting credit taken to revaluation reserve.
Depreciation is calculated to write off the cost (or amount of the valuation) of property, plant and equipment less the estimated residual
value on a straight-line basis over the expected useful economic life of the assets concerned. The annual rates used are generally:
• freehold buildings
• leasehold buildings
• plant and machinery
– 2 to 4%
– over residual terms of the leases
– 10 to 20%
• fixtures, fittings, tools and equipment
– 10 to 33.3%
INVENTORIES
Inventories are valued at the lower of cost and net realisable value after making due allowance for obsolete and slow moving items.
Costs incurred in bringing each product to its present location and condition are accounted for as follows:
• raw materials
– purchase cost on a first in, first out basis
• finished goods and work in progress
– cost of direct materials on a first in, first out basis and labour and a proportion of
manufacturing overheads based on normal operating capacity
Net realisable value is the estimated selling price in the ordinary course of business, less estimated cost of completion and the estimated
costs necessary to make the sale.
TRADE AND OTHER RECEIVABLES
Trade receivables are initially measured on the basis of their fair value and are subsequently reduced by appropriate provisions for
estimated unrecoverable amounts. Trade receivables are subsequently measured at amortised cost. Bad debts are written off when
identified.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents in the balance sheet comprise cash at bank and in hand.
For the purpose of the consolidated cash flow statement, cash and cash equivalents consist of cash and cash equivalents as described
above, net of outstanding bank overdrafts which are repayable on demand and form an integral part of cash management.
COMPOUND FINANCIAL INSTRUMENTS
Compound financial instruments issued by the Group comprise convertible notes that can be converted to share capital at the option of the
holder, when the number of shares to be issued does not vary with changes in their fair value. The liability component of a compound
financial instrument is recognised initially at the fair value of a similar liability that does not have an equity conversion option. The equity
component is recognised initially at the difference between the fair value of the compound financial instrument as a whole and the fair value
of the liability component. Any directly attributable transaction costs are allocated to the liability and equity components in proportion to their
initial carrying amounts.
Subsequent to initial recognition, the liability component of a compound financial instrument is measured at amortised cost using the
effective interest method. The equity component of a compound financial instrument is not remeasured subsequent to initial recognition.
Interest and gains and losses related to the financial liability are recognised in profit or loss. On conversion, the financial liability is
reclassified to equity; no gain or loss is recognised on conversion.
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Group accounting policies
SHARE-BASED PAYMENTS
The grant-date fair value of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in
which the performance conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award
(vesting date). The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date reflects the
extent to which the vesting period has expired and the number of awards that, in the opinion of the Directors of the Group and based on the
best available estimates at that date, will ultimately vest. The charge is trued-up only for service and non-market conditions. The income
statement charge or credit for a period represents the movement in cumulative expenses recognised as at the beginning and end of that
period.
Charges for employee services received in exchange for share-based payment have been made for all options granted after 7 November
2002 in accordance with IFRS 2 “Share-based payment”. The fair value of such options has been calculated using a binomial or Monte
Carlo option-pricing model, based upon publicly available market data at the point of grant.
TAXATION
Income tax on the profit or loss for the period comprises current and deferred tax. Income tax is recognised in the income statement except
to the extent that it relates to items recognised directly in equity, in which case it is recognised in the statement of comprehensive income.
Income tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the balance
sheet date, and any adjustment to tax payable in respect of previous years.
Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the carrying amounts of
assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The amount of deferred tax provided is
based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or
substantively enacted at the balance sheet date.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which an asset can be
utilised.
LEASES
Assets financed by leasing arrangements, which give rights approximating to ownership, are treated as if they had been purchased outright
and are capitalised and depreciated over the shorter of the estimated useful life of the assets and the period of the leases. The capital
element of future rentals is treated as a liability and the interest element is charged against profits in proportion to the balances outstanding.
Leases where the risk and reward of ownership remain with the lessor are treated as operating leases and the rental costs are charged
against profits on a straight-line basis.
DERIVATIVE FINANCIAL INSTRUMENTS
The Group does not hedge account but uses on occasion derivative financial instruments to hedge its commercial exposure to foreign
exchange arising from operational, financing and investment activities. In accordance with its treasury policy, the Group does not hold
or issue derivative financial instruments for trading purposes. Derivative financial instruments are accounted for as trading instruments and
are recognised initially at cost. Subsequent to initial recognition, derivative financial instruments are stated at fair value. The gain or loss on
remeasurement to fair value is recognised immediately in the income statement.
The fair value of forward exchange contracts is their quoted market price at the balance sheet date, which is based on the quoted forward
price.
INTEREST-BEARING BORROWINGS
Interest-bearing borrowings are recognised initially at fair value less attributable transaction costs. Subsequent to initial recognition,
interest-bearing borrowings are stated at amortised cost with any difference between cost and redemption value being recognised in the
income statement over the period of the borrowings on an effective interest basis.
PROVISIONS
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an
outflow of resources embodying economic benefit will be required to settle the obligation, although there remains uncertainty over timing or
the amount of the obligation, and a reliable estimate can be made of the amount of the obligation.
IMPAIRMENT
The carrying amount of the Group’s assets, other than inventories and deferred tax assets (see accounting policies above), are reviewed at
each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount
is estimated.
For goodwill, the recoverable amount is estimated at each balance sheet date.
An impairment loss is recognised whenever the carrying amount of an asset or cash generating unit exceeds its recoverable amount.
Impairment losses are recognised in the consolidated income statement. Those relating to revalued property are treated in accordance with
IAS 16.
Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated
to cash-generating units (group of units) and then to reduce the carrying amount of the other assets of the unit (group of units) on a pro rata
basis.
ASSETS AND LIABILITIES HELD FOR SALE
Assets and liabilities held for sale are those which are being actively marketed for sale at the period-end and which management believes
will be disposed of within 12 months of the balance sheet date. These assets are stated at fair value with any gain or loss resulting from
the changes in fair value recognised within the consolidated income statement as a special item. Where the asset is an investment in a
subsidiary undertaking then any corresponding liabilities are disclosed in liabilities held for sale.
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Group accounting policies
Group accounting policies
SHARE-BASED PAYMENTS
The grant-date fair value of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in
which the performance conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award
(vesting date). The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date reflects the
extent to which the vesting period has expired and the number of awards that, in the opinion of the Directors of the Group and based on the
best available estimates at that date, will ultimately vest. The charge is trued-up only for service and non-market conditions. The income
statement charge or credit for a period represents the movement in cumulative expenses recognised as at the beginning and end of that
BUSINESS COMBINATIONS
The Group measures goodwill at the acquisition date as:
•
•
•
The fair value of the consideration transferred: plus
The recognised amount of any non-controlling interest in the acquire: plus if the business combination is achieved in stages, the
fair value of the existing equity interest in the acquire: less
The net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed.
Charges for employee services received in exchange for share-based payment have been made for all options granted after 7 November
2002 in accordance with IFRS 2 “Share-based payment”. The fair value of such options has been calculated using a binomial or Monte
Carlo option-pricing model, based upon publicly available market data at the point of grant.
NON-CONTROLLING INTERESTS
Transactions that result in changes in ownership interests while retaining control are accounted for as transactions with equity holders in
their capacity as equity holders. As a result, no gain or loss on such changes is recognised in profit or loss but rather in equity.
DIVIDENDS
Dividends on non-equity shares are recognised as a liability and accounted for on an accruals basis. Equity dividends are recognised as a
liability in the period in which they are declared (appropriately authorised and no longer at the discretion of the Company).
RESERVES
A consolidated statement of changes in equity is shown on page 22.
Share premium account
The share premium reserve comprises the premium paid over the nominal value of shares for shares issued.
Revaluation reserve
The Group’s properties are valued periodically and the difference between the valuation and the carrying value of the property is taken to
revaluation reserve. Any impairments in property valuation in excess of credits made to the revaluation reserve for that property are
charged to the consolidation income statement.
Capital redemption reserve
The capital redemption reserve was created on the cancellation and repayment of cumulative preference shares in 2001.
Translation reserve
The translation reserve comprises all foreign exchange differences arising from the translation of the financial statements of foreign
subsidiaries.
Equity reserve
The equity reserve was created on the issue of the shareholder loan which includes convertible warrants the value of which is recognised
in equity.
period.
TAXATION
utilised.
LEASES
Income tax on the profit or loss for the period comprises current and deferred tax. Income tax is recognised in the income statement except
to the extent that it relates to items recognised directly in equity, in which case it is recognised in the statement of comprehensive income.
Income tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the balance
sheet date, and any adjustment to tax payable in respect of previous years.
Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the carrying amounts of
assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The amount of deferred tax provided is
based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or
substantively enacted at the balance sheet date.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which an asset can be
Assets financed by leasing arrangements, which give rights approximating to ownership, are treated as if they had been purchased outright
and are capitalised and depreciated over the shorter of the estimated useful life of the assets and the period of the leases. The capital
element of future rentals is treated as a liability and the interest element is charged against profits in proportion to the balances outstanding.
Leases where the risk and reward of ownership remain with the lessor are treated as operating leases and the rental costs are charged
against profits on a straight-line basis.
DERIVATIVE FINANCIAL INSTRUMENTS
The Group does not hedge account but uses on occasion derivative financial instruments to hedge its commercial exposure to foreign
exchange arising from operational, financing and investment activities. In accordance with its treasury policy, the Group does not hold
or issue derivative financial instruments for trading purposes. Derivative financial instruments are accounted for as trading instruments and
are recognised initially at cost. Subsequent to initial recognition, derivative financial instruments are stated at fair value. The gain or loss on
remeasurement to fair value is recognised immediately in the income statement.
The fair value of forward exchange contracts is their quoted market price at the balance sheet date, which is based on the quoted forward
price.
INTEREST-BEARING BORROWINGS
Interest-bearing borrowings are recognised initially at fair value less attributable transaction costs. Subsequent to initial recognition,
interest-bearing borrowings are stated at amortised cost with any difference between cost and redemption value being recognised in the
income statement over the period of the borrowings on an effective interest basis.
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an
outflow of resources embodying economic benefit will be required to settle the obligation, although there remains uncertainty over timing or
the amount of the obligation, and a reliable estimate can be made of the amount of the obligation.
The carrying amount of the Group’s assets, other than inventories and deferred tax assets (see accounting policies above), are reviewed at
each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount
For goodwill, the recoverable amount is estimated at each balance sheet date.
An impairment loss is recognised whenever the carrying amount of an asset or cash generating unit exceeds its recoverable amount.
Impairment losses are recognised in the consolidated income statement. Those relating to revalued property are treated in accordance with
Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated
to cash-generating units (group of units) and then to reduce the carrying amount of the other assets of the unit (group of units) on a pro rata
PROVISIONS
IMPAIRMENT
is estimated.
IAS 16.
basis.
ASSETS AND LIABILITIES HELD FOR SALE
Assets and liabilities held for sale are those which are being actively marketed for sale at the period-end and which management believes
will be disposed of within 12 months of the balance sheet date. These assets are stated at fair value with any gain or loss resulting from
the changes in fair value recognised within the consolidated income statement as a special item. Where the asset is an investment in a
subsidiary undertaking then any corresponding liabilities are disclosed in liabilities held for sale.
28
0_600_ar12.indd 29
29
29
07/09/2012 10:19:01
Notes relating to the consolidated financial statements
For the 52-week period ended 31 March 2012
1. 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 Executive Directors. The Executive Directors
review the Group’s internal reporting in order to assess performance and allocate resources.
Following the restructuring undertaken the two business streams of Machine Tools and Precision Engineered Equipment have
been aggregated as they are operationally managed and reported internally to the Executive Directors as a single Division. The
South African business consisted of the Mechanical Handling and Waste activity and has been classified as a discontinued activity
in these accounts. The Executive Directors consider there to be two continuing operating segments being Machine Tools and
Precision Engineered Components and Laser Marking .
The executive directors assess the performance of the operating segments based on a measure of operating profit/(loss). This
measurement basis excludes the effects of Special Items from the operating segments. Head Office and unallocated represent
central functions and costs and include the effects of the Group Final Salary Scheme in the UK.
The following is an analysis of the Group’s revenue and results by reportable segment:
52-weeks ended 31 March 2012
Segmental analysis of revenue
Revenue from external customers
Inter-segment revenue
Total segment revenue
USA, UK
Australia
£000
31,114
—
31,114
Poland
£000
1,828
1,903
3,731
Less: inter-segment revenue
—
(1,903)
Continuing
Discontinued
Machine
Tools
& Precision
Engineered
Components
Laser
Marking
Head Office
&
unallocated
Total
continuing
Mechanical
Handling
& Waste
£000
£000
£000
£000
£000
Total
£000
32,942
1,903
34,845
(1,903)
6,451
200
6,651
(200)
—
—
—
—
—
39,393
2,103
41,496
(2,103)
13,772
53,165
— 2,103
13,772
55,268
— (2,103)
39,393
13,772
53,165
Total revenue per statutory accounts
31,114
1,828
32,942
6,451
Segmental analysis of operating
profit/(loss) before special Items
1,468
(1,432)
36
316
(1,559)
(1,207)
335
(872)
Special Items
(6,435)
(3,048)
(9,483)
(1,372)
(2,024)
(12,879)
— (12,879)
Group (loss) from operations
(4,967)
(4,480)
(9,447)
(1,056)
(3,583)
(14,086)
Financial income
Financial expense
Loss from write down of 600SA
50
(216)
—
—
—
—
50
(216)
—
—
(2)
—
10,808
(9,719)
—
10,858
(9,937)
— 10,858
—
(9,937)
—
(1,263)
(1,263)
Profit before tax
(5,133)
(4,480)
(9,613)
(1,058)
(2,494)
(13,165)
(928) (14,093)
Other segmental information:
Reportable segment assets
21,034
1,479
22,513
4,056
1,385
27,954
6,300
34,251
Reportable segment liabilities
(15,441)
(1,479)
(16,920)
(3,977)
(1,903)
(22,800)
(4,488) (27,264)
Non-current assets
Fixed asset additions
Depreciation and amortisation
Impairment of fixed assets
Impairment of development costs
30
3,063
229
613
—
—
—
410
197
1,158
—
3,063
2,310
2,037
639
810
1,158
—
151
225
—
931
1
28
—
—
7,410
791
1,063
1,158
931
— 7,410
172
86
963
1,149
— 1,158
—
931
30
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Notes relating to the consolidated financial statements
For the 52-week period ended 31 March 2012
Notes relating to the consolidated financial statements
For the 52-week period ended 31 March 2012
1. SEGMENT INFORMATION
1. SEGMENT INFORMATION CONTINUED
IFRS 8 – “Operating Segments” requires operating segments to be identified on the basis of internal reporting about components of
the Group that are regularly reviewed by the chief operating decision maker to allocate resources to the segments and to assess
their performance. The chief operating decision maker has been identified as the Executive Directors. The Executive Directors
52-weeks ended 2 April 2011
review the Group’s internal reporting in order to assess performance and allocate resources.
Following the restructuring undertaken the two business streams of Machine Tools and Precision Engineered Equipment have
been aggregated as they are operationally managed and reported internally to the Executive Directors as a single Division. The
Continuing
Discontinued
Machine
Tools
& Precision
Engineered
Components
Laser
Marking
Head Office
&
unallocated
Total
continuing
Mechanical
Handling
& Waste
£000
£000
£000
£000
£000
Total
£000
USA, UK
Australia
£000
Poland
£000
South African business consisted of the Mechanical Handling and Waste activity and has been classified as a discontinued activity
Segmental analysis of revenue
in these accounts. The Executive Directors consider there to be two continuing operating segments being Machine Tools and
Revenue from external customers
29,040
Precision Engineered Components and Laser Marking .
The executive directors assess the performance of the operating segments based on a measure of operating profit/(loss). This
measurement basis excludes the effects of Special Items from the operating segments. Head Office and unallocated represent
central functions and costs and include the effects of the Group Final Salary Scheme in the UK.
Inter-segment revenue
Total segment revenue
Less: inter-segment revenue
29,040
386
480
866
(480)
29,426
7,025
480
29,906
(480)
332
7,357
(332)
Total revenue per statutory accounts
29,040
386
29,426
7,025
—
—
—
—
—
36,451
812
37,263
(812)
14,113
50,564
—
812
14,113
51,376
— (812)
36,451
14,113
50,564
The following is an analysis of the Group’s revenue and results by reportable segment:
Continuing
Discontinued
Segmental analysis of operating
profit/(loss) before special Items
1,293
226
1,519
325
(1,588)
256
911
1,167
Special Items
(847)
—
(847)
—
2,192
1,345
— 1,345
Machine
Tools
& Precision
Engineered
52-weeks ended 31 March 2012
Group profit from operations
446
226
672
325
604
1,601
911
2,512
USA, UK
Australia
Poland
Components
Marking
unallocated
continuing
Head Office
Laser
&
Total
£000
£000
£000
£000
£000
£000
£000
Mechanical
Handling
& Waste
Total
£000
Segmental analysis of revenue
Revenue from external customers
Inter-segment revenue
Total segment revenue
Less: inter-segment revenue
—
(1,903)
31,114
—
31,114
1,828
1,903
3,731
32,942
1,903
34,845
(1,903)
6,451
200
6,651
(200)
39,393
2,103
41,496
(2,103)
13,772
53,165
— 2,103
13,772
55,268
— (2,103)
Total revenue per statutory accounts
31,114
1,828
32,942
6,451
39,393
13,772
53,165
—
—
—
—
—
Other segmental information:
Reportable segment assets
28,123
2,151
30,274
4,960
1,365
36,599
6,832
43,431
Reportable segment liabilities
(13,848)
(1,016)
(14,864)
(2,016)
(1,976)
(18,856)
(2,892) (21,748)
Fixed asset additions
Depreciation and amortisation
345
873
936
38
1,281
911
410
510
-
30
1,691
1,451
154
56
1,845
1,507
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.
Segmental analysis of operating
profit/(loss) before special Items
1,468
(1,432)
36
316
(1,559)
(1,207)
335
(872)
Geographical segmental analysis of revenue is shown by origin and destination in the following two tables:
Special Items
(6,435)
(3,048)
(9,483)
(1,372)
(2,024)
(12,879)
— (12,879)
Group (loss) from operations
(4,967)
(4,480)
(9,447)
(1,056)
(3,583)
(14,086)
Financial income
Financial expense
Loss from write down of 600SA
50
(216)
—
—
—
—
50
(216)
—
—
(2)
—
10,808
(9,719)
—
10,858
(9,937)
— 10,858
—
(9,937)
—
(1,263)
(1,263)
Profit before tax
(5,133)
(4,480)
(9,613)
(1,058)
(2,494)
(13,165)
(928) (14,093)
Other segmental information:
Reportable segment assets
21,034
1,479
22,513
4,056
1,385
27,954
6,300
34,251
Reportable segment liabilities
(15,441)
(1,479)
(16,920)
(3,977)
(1,903)
(22,800)
(4,488) (27,264)
Non-current assets
Fixed asset additions
Depreciation and amortisation
Impairment of fixed assets
Impairment of development costs
3,063
229
613
—
—
—
410
197
1,158
—
639
810
1,158
—
151
225
—
931
3,063
2,310
2,037
7,410
791
1,063
1,158
931
1
28
—
—
— 7,410
172
86
963
1,149
— 1,158
—
931
30
Segmental analysis by origin
Gross sales revenue:
UK
Other European
North America
Australasia
Less: Inter-company
Continuing Revenue
Discontinued - Africa
Total Revenue
2012
£000
2011
%
£000
%
16,414
1,828
17,167
3,984
—
39,393
558
39,951
41.0
4.6
43.0
10.0
—
98.6
1.4
100.0
21,111
865
15,216
3,234
(3,975)
36,451
14,113
50,564
41.8
1.7
30.1
6.4
(7.9)
72.1
27.9
100.0
31
31
0_600_ar12.indd 31
07/09/2012 10:19:02
Notes relating to the consolidated financial statements
For the 52-week period ended 31 March 2012
1. SEGMENT INFORMATION CONTINUED
Segmental analysis by destination:
Gross sales revenue:
UK
Other European
North America
Africa
Australasia
Central America
Middle East
Far East
Continuing Revenue
Discontinued – Africa
2012
£000
2011
%
£000
%
6,034
6,810
20,063
500
4,103
425
665
793
39,393
558
39,951
15.1
17.0
50.2
1.2
10.3
1.1
1.7
2.0
98.6
1.4
100.0
6,325
6,260
17,884
171
3,252
167
1,629
763
36,451
14,113
50,564
12.5
12.4
35.4
0.3
6.4
0.3
3.3
1.5
72.1
27.9
100.0
There are no customers that represent 10% or more of the Group’s revenues.
Discontinued operations
600SA the Group’s South African business was sold on 16 July 2012 to Eqstra Holdings Limited for a total consideration of ZAR ( South
African Rand) 24.3m which resulted in net proceeds after costs received in the UK of £1.81m. This represented the full activities of the
Mechanical Handling and Waste business segment and the results for 52-week period ended 31 March 2012 are included in the post tax
loss on discontinued activities in the Group’s consolidated income statement. The figures for 2011 also include the discontinued
operations in Germany. The results of these discontinued operations are as follows:
Results of the discontinued operations
Revenue
Expenses
Profit /(loss) before tax from discontinued operations
Taxation
Profit/Loss from operating activities after tax
Loss from sale of discontinued activities
Loss for the period
Cash flows from discontinued operations
Net cash flow from operating activities
Cash flow from investing activities
Net cash used /generated from discontinued activities
32
2012
£000
South
Africa
South
Africa
Germany
2011
£000
Total
13,772
14,113
303
14,416
(13,437)
(13,306)
(1,007)
(14,313)
335
151
486
(1,263)
(777)
£000
South
Africa
(511)
460
(51)
807
755
1,562
—
1,562
(704)
—
(704)
—
(704)
South
Africa
Germany
—
—
—
(704)
—
(704)
103
755
858
—
858
£000
Total
(704)
—
(704)
32
0_600_ar12.indd 32
07/09/2012 10:19:02
Notes relating to the consolidated financial statements
For the 52-week period ended 31 March 2012
1. SEGMENT INFORMATION CONTINUED
Segmental analysis by destination:
Notes relating to the consolidated financial statements
For the 52-week period ended 31 March 2012
2. OTHER OPERATING INCOME/OPERATING EXPENSES
Other operating income
Operating expenses:
– administration expenses
– distribution costs
Total operating expenses
3. SPECIAL ITEMS
2012
£000
126
17,035
1,742
18,777
2011
£000
332
8,508
3,167
11,675
In order for users of the financial statements to better understand the underlying performance of the Group the Board have separately
disclosed transactions which by virtue of their size or incidence, are considered to be one off in nature. In addition, they include the
charge for share based payments.
Such items include gains and losses on the sale of properties and assets, impairments of assets re FMT-Colchester closure, exceptional
costs relating to reorganisation, redundancy and restructuring, legal disputes and inventory and intangibles impairments.
Cost of sales
Inventory impairments
Plant and equipment impairments
Development expenditure impairments
Redundancies
Operating costs
Redundancies
Refinancing
Reorganisation and restructuring costs
Share-based payments
Pension credit
Restructuring costs
2012
£000
5,171
1,158
931
252
1,159
451
3,667
90
—
12,879
2011
£000
201
—
—
—
242
—
655
127
(2,570)
(1,345)
Reorganisation and restructuring costs relate to legal disputes and costs incurred both in the UK and Poland with regard to the move
of the machine tools manufacturing to Poland. As a result of these manufacturing transfers and trading losses in Poland, inventory
levels were reviewed for obsolescence and age and impairments were made to inventories and plant and machinery. Subsequent to
the year end the decision was taken to cease manufacturing in Poland.
Within the laser marking business there has been a sales trend towards the most recent technological ranges with the result that the
carrying value of the development expenditure and related stock of older generation products has been impaired.
Redundancies relate to the reduction in UK production capacity on the transfer of machine tool manufacturing to Poland and the
termination costs related to Head Office and Board changes.
Refinancing costs relate to the costs of the share placing in the early part of the year and the re-banking completed in August 2011.
0_600_ar12.indd 33
33
33
07/09/2012 10:19:02
There are no customers that represent 10% or more of the Group’s revenues.
Discontinued operations
600SA the Group’s South African business was sold on 16 July 2012 to Eqstra Holdings Limited for a total consideration of ZAR ( South
African Rand) 24.3m which resulted in net proceeds after costs received in the UK of £1.81m. This represented the full activities of the
Mechanical Handling and Waste business segment and the results for 52-week period ended 31 March 2012 are included in the post tax
loss on discontinued activities in the Group’s consolidated income statement. The figures for 2011 also include the discontinued
operations in Germany. The results of these discontinued operations are as follows:
Gross sales revenue:
UK
Other European
North America
Africa
Australasia
Central America
Middle East
Far East
Continuing Revenue
Discontinued – Africa
Results of the discontinued operations
Revenue
Expenses
Taxation
Profit /(loss) before tax from discontinued operations
Profit/Loss from operating activities after tax
Loss from sale of discontinued activities
Loss for the period
Cash flows from discontinued operations
Net cash flow from operating activities
Cash flow from investing activities
Net cash used /generated from discontinued activities
2012
£000
2011
%
£000
%
6,034
6,810
20,063
500
4,103
425
665
793
39,393
558
39,951
15.1
17.0
50.2
1.2
10.3
1.1
1.7
2.0
98.6
1.4
100.0
6,325
6,260
17,884
171
3,252
167
1,629
763
36,451
14,113
50,564
12.5
12.4
35.4
0.3
6.4
0.3
3.3
1.5
72.1
27.9
100.0
13,772
14,113
303
14,416
(13,437)
(13,306)
(1,007)
(14,313)
2012
£000
South
Africa
335
151
486
(1,263)
(777)
£000
South
Africa
(511)
460
(51)
South
Africa
Germany
807
755
1,562
—
1,562
(704)
(704)
—
—
(704)
South
Africa
Germany
—
—
—
(704)
—
(704)
2011
£000
Total
103
755
858
—
858
£000
Total
(704)
—
(704)
32
Notes relating to the consolidated financial statements
For the 52-week period ended 31 March 2012
4. (LOSS)/PROFIT FROM OPERATIONS
– depreciation of assets held under finance leases
– amortisation of development expenditure
– research and development expensed as incurred
– hire of plant
– other operating lease rentals
– loss on sale of property, plant and equipment
and after crediting:
– rents receivable
– profit on sale of property, plant and equipment
2012
£000
25
116
—
13
112
1
52
2
2011
£000
34
513
65
33
117
16
222
2
Special Items
–Reorganisation, redundancy, share bases payments, inventory and intangibles impairment (note 3)
12,879
(1,345)
Auditor’s remuneration:
– audit of these financial statements
– amounts receivable by auditor and its associates in respect of:
– auditing of accounts of associates of the company pursuant to legislation (including that of countries and
territories outside of Great Britain)
– other services relating to taxation
– other services pursuant to such legislation
82
71
21
51
Amounts paid to the Company’s auditor in respect of services to the Company, other than the audit of the Company’s financial
statements have not been disclosed as the information is required instead to be disclosed on a consolidated basis.
5. PERSONNEL EXPENSES
Staff costs:
– wages and salaries
– social security costs
– pension charges relating to defined contribution schemes
– pension charges relating to defined benefit schemes
– equity share options expense (included in Special Items)
2012
£000
10,483
1,363
258
269
(61)
75
86
17
12
2011
£000
11,020
1,273
201
300
127
In addition to the above staff costs, redundancy costs of £1,411,000 were incurred during the year (2011 - £242,000). Redundancy
amounts payable to directors during the year amounted to £643,000 (2011 - £nil). Director’s emoluments including disclosure of the
highest paid director are included in the Director’s Emoluments table contained within the Remuneration report.
12,312
12,921
34
0_600_ar12.indd 34
34
07/09/2012 10:19:02
– depreciation of assets held under finance leases
– amortisation of development expenditure
– research and development expensed as incurred
– hire of plant
– other operating lease rentals
– loss on sale of property, plant and equipment
and after crediting:
– rents receivable
Special Items
– profit on sale of property, plant and equipment
Auditor’s remuneration:
– audit of these financial statements
territories outside of Great Britain)
– other services relating to taxation
– other services pursuant to such legislation
5. PERSONNEL EXPENSES
Staff costs:
– wages and salaries
– social security costs
– pension charges relating to defined contribution schemes
– pension charges relating to defined benefit schemes
– equity share options expense (included in Special Items)
2012
£000
25
116
—
13
112
1
52
2
82
71
21
51
2011
£000
34
513
65
33
117
16
222
2
75
86
17
12
2012
£000
10,483
1,363
258
269
(61)
2011
£000
11,020
1,273
201
300
127
12,312
12,921
In addition to the above staff costs, redundancy costs of £1,411,000 were incurred during the year (2011 - £242,000). Redundancy
amounts payable to directors during the year amounted to £643,000 (2011 - £nil). Director’s emoluments including disclosure of the
highest paid director are included in the Director’s Emoluments table contained within the Remuneration report.
Notes relating to the consolidated financial statements
For the 52-week period ended 31 March 2012
Notes relating to the consolidated financial statements
For the 52-week period ended 31 March 2012
4. (LOSS)/PROFIT FROM OPERATIONS
5. PERSONNEL EXPENSES CONTINUED
The average number of employees of the Group (including Executive Directors) during the period was as follows:
Management and administration
Production
Sales
All operating segments
2012
Number
2011
Number
137
382
102
621
117
356
99
572
Details of Directors’ emoluments, share option schemes and pension entitlements are given in the Directors’ Remuneration Report on pages
13 to 17.
–Reorganisation, redundancy, share bases payments, inventory and intangibles impairment (note 3)
12,879
(1,345)
– amounts receivable by auditor and its associates in respect of:
– auditing of accounts of associates of the company pursuant to legislation (including that of countries and
6. FINANCIAL INCOME AND EXPENSE
Interest income
Expected return on defined benefit pension scheme assets
Financial income
Bank overdraft and loan interest
Shareholder loan interest
Other loan interest
Other finance charges
Finance charges on finance leases
Amounts paid to the Company’s auditor in respect of services to the Company, other than the audit of the Company’s financial
statements have not been disclosed as the information is required instead to be disclosed on a consolidated basis.
Interest on defined benefit pension scheme obligations
Financial expense
7. TAXATION
Current tax:
Corporation tax at 26% (2011: 28%):
– current period relating to prior period
Overseas taxation:
– current period
Total current tax charge
Deferred taxation:
– current period
– prior period
Total deferred taxation charge (Note 13)
Taxation charged to the income statement
34
0_600_ar12.indd 35
2012
£000
24
10,834
10,858
(385)
(200)
(23)
—
(61)
(9,268)
(9,937)
2012
£000
—
(74)
(74)
(50)
(783)
(833)
(907)
2011
£000
34
10,876
10,910
(311)
(118)
(55)
(31)
(51)
(9,484)
(10,050)
2011
£000
—
(60)
(60)
(213)
(175)
(388)
(448)
35
35
07/09/2012 10:19:03
Notes relating to the consolidated financial statements
For the 52-week period ended 31 March 2012
7. TAXATION CONTINUED
TAX RECONCILIATION
The tax charge assessed for the period is lower than the standard rate of corporation tax in the UK of 26% (2011: 28%). The differences
are explained below:
(Loss)/profit before tax
(Loss)/profit before tax multiplied by the standard rate of corporation tax
in the UK of 26% (2011 28%)
Effects of:
– expenses not deductible
– non-taxable income
– overseas tax rates
– deferred tax prior period adjustment
– unrecognised losses utilised/tax not recognised on losses
– impact of rate change
Taxation charged/(credited) to the income statement
2012
£000
(13,165)
%
2011
£000
2,461
%
(3,423)
(26.0)
689
28.0
120
—
104
783
3,345
(22)
907
0.9
—
0.8
5.9
25.4
(0.2)
6.9
475
(72)
44
(580)
(219)
111
448
19.3
(2.9)
1.8
(23.6)
(8.9)
4.5
18.2
Following the enactment of legislation in the UK to reduce the corporation tax rate from 26% to 24% from 1 April 2012, the effective tax
rate this year includes the impact on the income statement of calculating the UK deferred tax balances at the lower UK corporation tax
rate. The impact of this rate change is a £22,000 decrease in the tax charge in the income statement. A further reduction in the UK tax
rate to 23% has been enacted on 3 July 2012.
Deferred taxation balances are analysed in note 13.
8. DIVIDENDS
No dividend was paid in period (2011: no dividend paid).
9. EARNINGS PER SHARE
The calculation of the basic loss per share of 23.30p (2011: profit of 5.01p) is based on the earnings for the financial period attributable to
the Parent Company’s shareholders of a loss of £14,849,000 (2011: profit of £2,871,000) and on the weighted average number of shares
in issue during the period of 63,717,224 (2011: 57,347,141). At 31 March 2012, there were 2,272,102 (2011: 16,511,898) potentially
dilutive shares on option with a weighted average effect of 2,272,102 (2011: 9,863,832) shares. As a loss cannot be diluted the figures for
2012 will remain the same as the basic loss per share for continuing operations is 22.08p (2011: profit of 3.51p) and the basic loss per
share for discontinued operations is (1.22)p (2011: profit of 1.50p).
Weighted average number of shares
Issued shares at start of period
Effect of shares issued in the year
Weighted average number of shares at end of period
2012
2011
57,933,679
57,233,679
5,783,545
113,462
63,717,224
57,347,141
36
0_600_ar12.indd 36
36
07/09/2012 10:19:03
Notes relating to the consolidated financial statements
For the 52-week period ended 31 March 2012
Notes relating to the consolidated financial statements
For the 52-week period ended 31 March 2012
The tax charge assessed for the period is lower than the standard rate of corporation tax in the UK of 26% (2011: 28%). The differences
2012
£000
(13,165)
%
%
2011
£000
2,461
(3,423)
(26.0)
689
28.0
120
—
104
783
3,345
(22)
907
0.9
—
0.8
5.9
25.4
(0.2)
6.9
475
(72)
44
(580)
(219)
111
448
19.3
(2.9)
1.8
(23.6)
(8.9)
4.5
18.2
(Loss)/profit before tax multiplied by the standard rate of corporation tax
7. TAXATION CONTINUED
TAX RECONCILIATION
are explained below:
(Loss)/profit before tax
in the UK of 26% (2011 28%)
Effects of:
– expenses not deductible
– non-taxable income
– overseas tax rates
– deferred tax prior period adjustment
– unrecognised losses utilised/tax not recognised on losses
– impact of rate change
Taxation charged/(credited) to the income statement
rate to 23% has been enacted on 3 July 2012.
Deferred taxation balances are analysed in note 13.
8. DIVIDENDS
No dividend was paid in period (2011: no dividend paid).
9. EARNINGS PER SHARE
Weighted average number of shares
Issued shares at start of period
Effect of shares issued in the year
Weighted average number of shares at end of period
Following the enactment of legislation in the UK to reduce the corporation tax rate from 26% to 24% from 1 April 2012, the effective tax
rate this year includes the impact on the income statement of calculating the UK deferred tax balances at the lower UK corporation tax
rate. The impact of this rate change is a £22,000 decrease in the tax charge in the income statement. A further reduction in the UK tax
The calculation of the basic loss per share of 23.30p (2011: profit of 5.01p) is based on the earnings for the financial period attributable to
the Parent Company’s shareholders of a loss of £14,849,000 (2011: profit of £2,871,000) and on the weighted average number of shares
in issue during the period of 63,717,224 (2011: 57,347,141). At 31 March 2012, there were 2,272,102 (2011: 16,511,898) potentially
dilutive shares on option with a weighted average effect of 2,272,102 (2011: 9,863,832) shares. As a loss cannot be diluted the figures for
2012 will remain the same as the basic loss per share for continuing operations is 22.08p (2011: profit of 3.51p) and the basic loss per
share for discontinued operations is (1.22)p (2011: profit of 1.50p).
10. EMPLOYEE SHARE OPTION SCHEMES
The Group has granted share options to employees under The 600 Group PLC 2008 and 2009 Performance Share Plan and the 600 Group
PLC Deferred Share plan 2011.
On 25 August 2009, awards were made to certain senior employees under a new Performance Share Plan (the PSP).The performance
criteria attached to these shares have not been met and therefore they have now lapsed. On 22 March 2011 and 18 January 2012,
further awards were made to the Executive Directors and other senior employees under the PSP scheme. Existing options under the
PSP are exercisable at the end of a three year performance period and are subject to performance criteria relating to EPS targets as set
out in the Remuneration Report. Options were also made to certain Executive Directors on 18 January under the new Deferred Share
Plan (DSP).Options are exercisable immediately and no performance criteria are attached to the current options. The schemes are
equity-settled.
SHARE-BASED EXPENSE
The Group recognised a total charge of £90,000 (2011: charge of £127,000) in relation to equity-settled share-based payment
transactions.
The number and weighted average exercise prices of share options
Number of options outstanding at beginning of period
4,711,898 2,404,669
2012
PSP
2011
PSP
2012
DSP
__
Number of options granted in period
Number of options forfeited/lapsed in period
Number of options exercised in period
Number of options outstanding at end of period
Number of options exercisable at end of period
1,144,737 2,612,080
502,576
(2,099,818)
(304,851)
—
—
3,756,817 4,711,898
—
—
__
—
502,576
502,576
2011
DSP
—
—
—
—
—
—
During the current and prior period, the Group has not granted equity as consideration for goods or services received.
FAIR VALUE ASSUMPTIONS OF SHARE-BASED PAYMENTS
THE 600 GROUP PLC 2008 PERFORMANCE SHARE PLAN
The fair value of awards granted under The 600 Group PLC 2008 Performance Share Plan are determined using the Monte Carlo
valuation model. The fair value of share options and assumptions are shown in the table below:
2012
2011
57,933,679
57,233,679
5,783,545
113,462
63,717,224
57,347,141
Fair value
Share price at grant
Exercise price
Dividend yield
Expected volatility
Expected life
Risk-free interest rate
Number of shares under option
2012
£000
2011
£000
£0.1625
£0.1625
£0.19
£0.28625
£nil
0%
50%
£nil
0%
12%
3.0 years
3.0 years
5%
4.08%
1,144,737
2,507,277
As the share options issued under the DSP scheme on 18 January 2012 have no performance criteria and are excercisable
immediately they have been valued at their issue price of 19p.
36
0_600_ar12.indd 37
37
37
07/09/2012 10:19:03
Notes relating to the consolidated financial statements
For the 52-week period ended 31 March 2012
11. PROPERTY, PLANT AND EQUIPMENT
Cost or valuation
At 2 April 2011
Exchange differences
Additions during period
Reclassification
Disposals during period
Transferred to assets held for sale
At 31 March 2012
At professional valuation
At cost
Depreciation
At 2 April 2011
Exchange differences
Reclassification
Charge for period
Impairment
Disposals during period
Transferred to assets held for sale
At 31 March 2012
Net book value
At 31 March 2012
At 2 April 2011
Land and buildings
Plant and
Fixtures,
fittings,
tools and
Freehold
Leasehold
machinery
equipment
£000
£000
£000
£000
4,684
(83)
28
—
—
(3,565)
1,064
1,064
—
1,064
121
—
—
112
—
—
(126)
107
957
4,563
2,576
(7)
83
—
—
(134)
2,518
2,395
123
2,518
174
(4)
—
59
—
—
(53)
176
2,342
2,402
22,242
(137)
835
409
(653)
(483)
22,213
—
22,213
22,213
18,983
(31)
282
737
1,158
(273)
(258)
20,598
1,615
3,259
2,858
(14)
17
(409)
—
(71)
2,381
—
2,381
2,381
2,421
(12)
(282)
125
—
—
(42)
2,210
171
437
Total
£000
32,360
(241)
963
—
(653)
(4,253)
28,176
3,459
24,717
28,176
21,699
(47)
—
1,033
1,158
(273)
(479)
23,091
5,085
10,661
The net book value of property, plant and equipment includes £172,000 (2011: £196,000) of assets held under finance leases. The
depreciation charged in the period against assets held under finance leases was £25,000 (2011: £34,000).
The impairment of £1,158,000 relates entirely to the write-down of the group’s Polish subsidiary’s plant and machinery following the
decision to close the subsidiary in August 2012 and has been recognised in the special items in the consolidated income statement.
38
0_600_ar12.indd 38
38
07/09/2012 10:19:03
Notes relating to the consolidated financial statements
For the 52-week period ended 31 March 2012
11. PROPERTY, PLANT AND EQUIPMENT
Cost or valuation
At 2 April 2011
Exchange differences
Additions during period
Reclassification
Disposals during period
Transferred to assets held for sale
At 31 March 2012
At professional valuation
At cost
Depreciation
At 2 April 2011
Exchange differences
Reclassification
Charge for period
Impairment
Disposals during period
At 31 March 2012
Net book value
At 31 March 2012
At 2 April 2011
Transferred to assets held for sale
Land and buildings
Plant and
Freehold
Leasehold
machinery
equipment
£000
£000
£000
£000
Total
£000
Fixtures,
fittings,
tools and
2,858
(14)
17
(409)
—
(71)
2,381
—
2,381
2,381
2,421
(12)
(282)
125
—
—
(42)
2,210
171
437
4,684
(83)
28
—
—
(3,565)
1,064
1,064
—
1,064
121
112
—
—
—
—
(126)
107
957
4,563
2,576
(7)
83
—
—
(134)
2,518
2,395
123
2,518
174
(4)
—
59
—
—
(53)
176
2,342
2,402
22,242
(137)
835
409
(653)
(483)
22,213
—
22,213
22,213
18,983
(31)
282
737
1,158
(273)
(258)
20,598
1,615
3,259
The net book value of property, plant and equipment includes £172,000 (2011: £196,000) of assets held under finance leases. The
depreciation charged in the period against assets held under finance leases was £25,000 (2011: £34,000).
The impairment of £1,158,000 relates entirely to the write-down of the group’s Polish subsidiary’s plant and machinery following the
decision to close the subsidiary in August 2012 and has been recognised in the special items in the consolidated income statement.
32,360
(241)
963
—
(653)
(4,253)
28,176
3,459
24,717
28,176
21,699
(47)
—
1,033
1,158
(273)
(479)
23,091
5,085
10,661
38
Notes relating to the consolidated financial statements
For the 52-week period ended 31 March 2012
11. PROPERTY, PLANT AND EQUIPMENT CONTINUED
This impairment of the plant and machinery at FMT results from the losses which the group’s Polish subsidiary has incurred during the
period ending 31 March 2012.
During March 2010 the Group’s properties were revalued. The valuations were performed by independent valuers and the valuations
were determined by market rate for sale with vacant possession. The Directors believe that these valuations remain appropriate at 31
March 2012.
Various UK properties with a net book value of £5,116,000 (2011: £6,965,000) are charged as security for borrowing facilities.
Land and buildings
Plant and
Fixtures,
fittings,
tools and
Freehold
Leasehold
machinery
equipment
£000
£000
£000
£000
Total
£000
4,595
2,583
21,021
Cost or valuation
At 3 April 2010
Exchange differences
Acquisitions during period (note 31)
Additions during period
Disposals during period
At 2 April 2011
At professional valuation
At cost
Depreciation
At 3 April 2010
Exchange differences
Charge for period
Disposals during period
At 2 April 2011
Net book value
At 2 April 2011
At 3 April 2010
12. INTANGIBLE ASSETS
Cost
At 2 April 2011
Additions
Written off
At 31 March 2012
Amortisation and impairment
At 2 April 2011
Amortisation
Impairment
Written off
At 31 March 2012
Net book value
At 31 March 2012
At 2 April 2011
63
—
26
—
4,684
4,367
317
4,684
—
—
121
—
121
—
—
24
(31)
2,576
2,370
206
2,576
168
—
37
(31)
174
4,563
4,595
2,402
2,415
1
843
941
(564)
22,242
—
22,242
22,242
2,905
(43)
—
11
(15)
2,858
—
2,858
2,858
31,104
21
843
1,002
(610)
32,360
6,737
25,623
32,360
18,603
2,337
21,108
(5)
704
(319)
18,983
3,259
2,418
(33)
132
(15)
2,421
437
568
Development
Goodwill
expenditure
£000
£000
1,514
—
—
1,514
3,325
549
(2,634)
1,240
1,514
1,975
—
—
—
1,514
—
—
116
931
(2,634)
388
852
1,350
(38)
994
(365)
21,699
10,661
9,996
Total
£000
4,839
549
(2,634)
2,754
3,489
116
931
(2,634)
1,902
852
1,350
39
39
0_600_ar12.indd 39
07/09/2012 10:19:04
Notes relating to the consolidated financial statements
For the 52-week period ended 31 March 2012
12. INTANGIBLE ASSETS CONTINUED
Development
Goodwill
expenditure
£000
£000
Cost
At 3 April 2010
Additions
At 2 April 2011
Amortisation and impairment
At 3 April 2010
Amortisation
At 2 April 2011
Net book value
At 2 April 2011
At 3 April 2010
1,514
—
1,514
1,514
—
1,514
—
—
Amortisation and impairment charges are recorded in the following line items in the income statement:
Operating expenses
2,919
406
3,325
1,462
513
1,975
1,350
1,457
2012
£000
1,047
Total
£000
4,433
406
4,839
2,976
513
3,489
1,350
1,457
2011
£000
513
IMPAIRMENT OF DEVELOPMENT EXPENDITURE
Within the Laser Marking business segment there has been a sales trend during the year towards the most recent technological
ranges. During the year a review of the carrying value of development expenditure was made. This review resulted in an impairment
charge of £931,000 in respect of those technologies that are becoming obsolete and whose future income stream is unlikely to recover
the full carrying value. This impairment has been charged to special items.
IMPAIRMENT OF GOODWILL
Goodwill of £1.51m arose on acquisitions before the date of transition to adopted IFRS and is retained at the previous UK GAAP
amounts, subject to it being tested for impairment at that date. £1.0m related to the Parat operation in Germany, £0.1m related to the
Gamet operation in the UK and £0.4m related to the Metal Muncher operation in the US. All of these cash-generating units have been
reviewed for impairment and had been fully provided against at the start of the current reporting period.
40
0_600_ar12.indd 40
40
07/09/2012 10:19:04
Amortisation and impairment
Cost
At 3 April 2010
Additions
At 2 April 2011
At 3 April 2010
Amortisation
At 2 April 2011
Net book value
At 2 April 2011
At 3 April 2010
Operating expenses
Development
Goodwill
expenditure
£000
£000
1,514
—
1,514
1,514
—
1,514
—
—
2,919
406
3,325
1,462
513
1,975
1,350
1,457
2012
£000
1,047
Total
£000
4,433
406
4,839
2,976
513
3,489
1,350
1,457
2011
£000
513
IMPAIRMENT OF DEVELOPMENT EXPENDITURE
Within the Laser Marking business segment there has been a sales trend during the year towards the most recent technological
ranges. During the year a review of the carrying value of development expenditure was made. This review resulted in an impairment
charge of £931,000 in respect of those technologies that are becoming obsolete and whose future income stream is unlikely to recover
the full carrying value. This impairment has been charged to special items.
IMPAIRMENT OF GOODWILL
Goodwill of £1.51m arose on acquisitions before the date of transition to adopted IFRS and is retained at the previous UK GAAP
amounts, subject to it being tested for impairment at that date. £1.0m related to the Parat operation in Germany, £0.1m related to the
Gamet operation in the UK and £0.4m related to the Metal Muncher operation in the US. All of these cash-generating units have been
reviewed for impairment and had been fully provided against at the start of the current reporting period.
Notes relating to the consolidated financial statements
For the 52-week period ended 31 March 2012
12. INTANGIBLE ASSETS CONTINUED
Notes relating to the consolidated financial statements
For the 52-week period ended 31 March 2012
13. DEFERRED TAX ASSETS AND LIABILITIES
RECOGNISED DEFERRED TAX ASSETS AND LIABILITIES
Deferred tax assets and liabilities are attributable to the following:
Assets
Liabilities
Net
Accelerated capital allowances
Short-term timing differences
Tax losses
Overseas tax losses
Revaluations and rolled over gains
Research and development
Tax assets/(liabilities)
Held for sale
Net tax assets/(liabilities)
2012
£000
72
36
1.365
405
—
—
1,878
(405)
1,473
Amortisation and impairment charges are recorded in the following line items in the income statement:
MOVEMENT IN DEFERRED TAX DURING THE PERIOD
Accelerated capital allowances
Short-term timing differences
Tax losses
Overseas tax losses
Employee benefits
Revaluations and rolled over gains
Research and development
MOVEMENT IN DEFERRED TAX DURING THE PRIOR PERIOD
Accelerated capital allowances
Short-term timing differences
Tax losses
Overseas tax losses
Revaluations and rolled over gains
Research and development
2011
£000
118
39
1,370
1,177
—
—
2,704
—
2,704
As at
2 April
2011
£000
99
39
1,370
1,177
—
(1,398)
(400)
887
As at
3 April
2010
£000
118
7
1,433
736
(1,335)
(400)
559
2012
£000
—
—
—
—
(1,226)
(139)
(1,365)
—
(1,365)
2011
£000
(19)
—
—
—
(1,398)
(400)
(1,817)
—
(1,817)
2012
£000
72
36
1,365
405
(1,226)
(139)
513
(405)
108
Statement of
Income
comprehensive
Exchange
statement
income
Fluctuations
£000
(27)
(3)
(5)
(694)
(386)
172
261
(682)
£000
£000
—
—
—
—
386
—
—
386
—
—
—
(78)
—
—
—
(78)
Statement of
Income
comprehensive
Exchange
statement
income
Fluctuations
£000
(19)
32
(63)
417
—
—
367
£000
£000
—
—
—
—
(67)
—
(67)
—
—
—
24
4
—
28
2011
£000
99
39
1,370
1,177
(1,398)
(400)
887
—
887
As at
31 March
2012
£000
72
36
1,365
405
—
(1,226)
(139)
513
As at
2 April
2011
£000
99
39
1,370
1,177
(1,398)
(400)
887
Following the enactment of legislation in the UK to reduce the corporation tax rate from 28% to 26% from 1 April 2011, the effective tax
rate this year includes the impact on the income statement of calculating the UK deferred tax balances at the lower UK corporation tax
rate. The impact of this rate change is a £111,000 increase in the tax charge in the income statement. A further reduction in the UK tax
rate to 23% has been enacted on 3 July 2012.
No provision is made for taxation that would arise if reserves in overseas companies were to be distributed.
40
0_600_ar12.indd 41
41
41
07/09/2012 10:19:04
Notes relating to the consolidated financial statements
For the 52-week period ended 31 March 2012
13. DEFERRED TAX ASSETS AND LIABILITIES CONTINUED
The following deferred tax assets have not been recognised on the basis that their future economic benefit is uncertain:
Advance corporation tax recoverable
Tax losses
There is no expiry date for the advance corporation tax recoverable or the tax losses.
14. INVENTORIES
Raw materials and consumables
Work in progress
Finished goods and goods for resale
2012
£000
1,670
7,600
2012
£000
2,559
628
7,624
2011
£000
1,670
4,942
2011
£000
7,025
2,072
9,645
10,811
18,742
The Directors consider all inventories to be essentially current in nature although the Group’s operational cycle is such that a proportion
of inventories will not be realised within twelve months. It is not possible to determine with accuracy when specific inventory will be
realised as this is subject to a number of issues, including customer demand.
During the period, the Group conducted a review of the net realisable value of its inventories in light of the deterioration in the global
economic environment and obsolescence of certain product lines. When the estimated net realisable value was less than its carrying
value within the balance sheet, the Group impaired the inventory values. During the period inventory provisions have increased by
£3,389,000 (2011: reduced by £2,000). Following the impairment provisions, inventories are valued at fair value less costs to sell rather
than at historical cost.
The value of inventories expensed in 2012 and included in cost of sales was £30,076,000 (2011: £26,880,000).
15. TRADE AND OTHER RECEIVABLES
Trade receivables
Other debtors
Other prepayments and accrued income
The trade receivables disclosed above are shown net of the provisions which are disclosed below.
The movements on the Group’s provisions against trade receivables are as follows:
At start of year
Exchange differences on opening balances
Utilised in the period
Charged in the period
Receivables written off during the year as uncollectable
At end of year
42
2012
£000
5,392
318
818
6,528
2012
£000
572
(3)
(164)
62
(39)
428
2011
£000
7,535
542
845
8,922
2011
£000
818
(11)
(163)
(51)
(21)
572
42
0_600_ar12.indd 42
07/09/2012 10:19:04
Notes relating to the consolidated financial statements
For the 52-week period ended 31 March 2012
Notes relating to the consolidated financial statements
For the 52-week period ended 31 March 2012
13. DEFERRED TAX ASSETS AND LIABILITIES CONTINUED
The following deferred tax assets have not been recognised on the basis that their future economic benefit is uncertain:
15. TRADE AND OTHER RECEIVABLES CONTINUED
The ageing analysis of gross trade receivables is as follows:
Current (not overdue and no provision held)
Overdue but no provision held:
– 0–3 months overdue
– 3–6 months overdue
– 6–12 months overdue
– more than 12 months overdue
Total gross trade receivables before provision
2012
£000
3,980
1,210
589
3
38
2011
£000
5,195
1,771
1,011
59
71
5,820
8,107
10,811
18,742
The other classes of debtors do not contain impaired assets.
As at 31 March 2012, trade receivables that were neither past due nor impaired related to a number of independent customers for whom
there is no recent history of default.
The Directors consider all inventories to be essentially current in nature although the Group’s operational cycle is such that a proportion
16. ASSETS HELD FOR SALE
of inventories will not be realised within twelve months. It is not possible to determine with accuracy when specific inventory will be
realised as this is subject to a number of issues, including customer demand.
During the period, the Group conducted a review of the net realisable value of its inventories in light of the deterioration in the global
economic environment and obsolescence of certain product lines. When the estimated net realisable value was less than its carrying
value within the balance sheet, the Group impaired the inventory values. During the period inventory provisions have increased by
£3,389,000 (2011: reduced by £2,000). Following the impairment provisions, inventories are valued at fair value less costs to sell rather
The value of inventories expensed in 2012 and included in cost of sales was £30,076,000 (2011: £26,880,000).
Properties held for sale
600SA assets held for sale (including property, plant and equipment)
Total assets held for sale
2012
£000
2,793
6,300
9,093
2011
£000
-
-
-
The assets of 600SA, the Group’s South African business, are shown as assets held for sale as the business was being actively
marketed at the period-end and has subsequently been sold to Eqstra Holdings Limited on 16 July 2012. The liabilities of this business
are also disclosed separately in the Consolidated statement of financial position (note 20).
The properties held for sale relate to UK land and buildings which were being actively marketed at the period-end.
17. CASH AND CASH EQUIVALENTS
Cash at bank
Short-term deposits
Cash and cash equivalents per statement of financial position
Bank overdrafts (note 18 )
Cash and cash equivalents per cash flow statement
0_600_ar12.indd 43
2012
£000
309
100
409
(526)
(117)
2011
£000
952
100
1,052
(2,957)
(1,905)
43
43
07/09/2012 10:19:04
There is no expiry date for the advance corporation tax recoverable or the tax losses.
Advance corporation tax recoverable
Tax losses
14. INVENTORIES
Raw materials and consumables
Work in progress
Finished goods and goods for resale
than at historical cost.
15. TRADE AND OTHER RECEIVABLES
Trade receivables
Other debtors
Other prepayments and accrued income
The trade receivables disclosed above are shown net of the provisions which are disclosed below.
The movements on the Group’s provisions against trade receivables are as follows:
At start of year
Exchange differences on opening balances
Utilised in the period
Charged in the period
At end of year
Receivables written off during the year as uncollectable
2012
£000
1,670
7,600
2012
£000
2,559
628
7,624
2012
£000
5,392
318
818
6,528
2012
£000
572
(3)
(164)
62
(39)
428
2011
£000
1,670
4,942
2011
£000
7,025
2,072
9,645
2011
£000
7,535
542
845
8,922
2011
£000
818
(11)
(163)
(51)
(21)
572
42
Notes relating to the consolidated financial statements
For the 52-week period ended 31 March 2012
18. LOANS AND OTHER BORROWINGS
CURRENT:
Bank overdrafts (note 17)
Bank loans
Obligations under finance leases (note 22)
NON-CURRENT:
Bank loans
Shareholder loan
Obligations under finance leases (note 22)
2012
£000
526
1,761
292
2,579
2012
£000
3,638
2,052
134
5,824
2011
£000
2,957
374
298
3,629
2011
£000
—
1,957
261
2,218
The £2.5m shareholder loan was issued with 12.5m convertible warrants attached to it. These warrants allow the holders to either convert
the loan into 20p shares or to purchase 20p shares for a cash consideration. During the period 205,000 of these warrants have been
exercised and as a result share capital has increased by £2,050 and share premium by £38,950. The loan has both debt and equity
components and so the value has been split between these components. The debt element is only repayable in August 2015 and as a
result the loan is classified as non-current. Deferred borrowing costs relating to the loan of £281,000 are also netted off the loan carrying
value which at the period-end is £2,052,000.
The Term Loan of £1,138,000 included within Bank loans will be repaid on a quarterly basis with payments of £160,000 starting on 30
September 2013. The revolving credit facility of £2,500,000 included within Bank Loans is repayable in June 2014.
Given the nature of the Group’s financial assets and liabilities, it is the Directors’ opinion that there is no material difference between their
reported book values and estimated fair values.
The above loans and borrowings are secured by way of fixed and floating charges over the assets of the Company and its subsidiaries.
19. TRADE AND OTHER PAYABLES
Payments received on account
Trade payables
Social security and other taxes
Other creditors
Accruals and deferred income
The above includes the following balances due in more than one year:
Other creditors
44
0_600_ar12.indd 44
2012
£000
168
5,776
930
1,082
1,600
9,556
2012
£000
—
2011
£000
82
7,399
987
1,670
1,762
11,900
2011
£000
25
44
07/09/2012 10:19:04
Notes relating to the consolidated financial statements
For the 52-week period ended 31 March 2012
Notes relating to the consolidated financial statements
For the 52-week period ended 31 March 2012
18. LOANS AND OTHER BORROWINGS
20. LIABILITIES HELD FOR SALE
CURRENT:
Bank overdrafts (note 17)
Bank loans
Obligations under finance leases (note 22)
NON-CURRENT:
Bank loans
Shareholder loan
Obligations under finance leases (note 22)
The £2.5m shareholder loan was issued with 12.5m convertible warrants attached to it. These warrants allow the holders to either convert
the loan into 20p shares or to purchase 20p shares for a cash consideration. During the period 205,000 of these warrants have been
exercised and as a result share capital has increased by £2,050 and share premium by £38,950. The loan has both debt and equity
components and so the value has been split between these components. The debt element is only repayable in August 2015 and as a
result the loan is classified as non-current. Deferred borrowing costs relating to the loan of £281,000 are also netted off the loan carrying
value which at the period-end is £2,052,000.
The Term Loan of £1,138,000 included within Bank loans will be repaid on a quarterly basis with payments of £160,000 starting on 30
September 2013. The revolving credit facility of £2,500,000 included within Bank Loans is repayable in June 2014.
Given the nature of the Group’s financial assets and liabilities, it is the Directors’ opinion that there is no material difference between their
reported book values and estimated fair values.
The above loans and borrowings are secured by way of fixed and floating charges over the assets of the Company and its subsidiaries.
19. TRADE AND OTHER PAYABLES
Payments received on account
Trade payables
Social security and other taxes
Other creditors
Accruals and deferred income
The above includes the following balances due in more than one year:
Other creditors
2012
£000
526
1,761
292
2,579
2012
£000
3,638
2,052
134
5,824
2012
£000
168
5,776
930
1,082
1,600
9,556
2012
£000
—
2011
£000
2,957
374
298
3,629
2011
£000
—
1,957
261
2,218
2011
£000
82
7,399
987
1,670
1,762
11,900
2011
£000
25
44
600SA liabilities held for sale
2012
£000
4,488
4,488
2011
£000
—
—
The liabilities of 600SA, the Group’s South African business, are shown as liabilities held for sale as the business was being actively
marketed at the period-end and has subsequently been sold to Eqstra Holdings Limited on 16 July 2012. The assets of this business are
also disclosed separately in the Consolidated statement of position (note 16).
21. PROVISIONS
Provision carried forward at 2 April 2011
Exchange differences
Charged to income statement
Transferred to liabilities held for sale
Utilised in the period
Provision carried forward at 31 March 2012
Other
£000
—
—
1,158
—
(43)
1,115
Warranties
£000
252
(6)
62
(64)
(118)
126
Total
£000
252
(6)
1,220
(64)
(161)
1,241
The timing of warranty payments are uncertain in nature. The warranty provisions are calculated based on historical experience of claims
received, taking into account recent sales of items which are covered by warranty. The provision relates mainly to products sold in the
last twelve months. The typical warranty period is now twelve months.
The other provisions relate to various legal disputes that the directors believe should be provided against. This charge is included within
special items within net operating expenses. The timing of these outflows is not clear due to the uncertainty around the timescales of the
various legal processes.
22. OBLIGATIONS UNDER FINANCE LEASES
The maturity of obligations under finance leases is as follows:
Falling due:
– within one year
– within two to five years
– less future finance charges
Amounts falling due within one year
Amounts falling due after one year
0_600_ar12.indd 45
2012
£000
292
140
(6)
426
292
134
426
2011
£000
298
351
(90)
559
298
261
559
45
45
07/09/2012 10:19:05
Notes relating to the consolidated financial statements
For the 52-week period ended 31 March 2012
23. SHARE CAPITAL
Authorised
626,391,704 ordinary shares of 1p each
57,233,679 deferred shares of 24p each
Allotted, called-up and fully paid:
Ordinary shares of 1p each
2012
£000
6,264
13,736
20,000
2011
£000
6,264
13,736
20,000
57,933,679 ordinary shares of 1p each on issue at start of the period (2011: 57,233,679 ordinary shares of
25p each on issue at start of period)
579
14,308
57,233,679 ordinary shares of 25p each converted into 1p ordinary shares and 24p deferred shares
5,787,574 ordinary shares of 1p each issued in institutional placing
205,000 ordinary shares of 1p each issued under exercised warrants (2011: 700,000 ordinary shares of 1p
each issued under exercised warrants)
63,926,253 ordinary shares of 1p each on issue at end of period (2011: 57,933,679 ordinary shares of 1p
each on issue at end of period)
Deferred shares of 24p each:
57,233,679 deferred shares of 24p each on issue at start of period (2011: nil)
57,233,679 ordinary shares of 25p each converted into 1p ordinary shares and 24p deferred shares
57,233,679 deferred shares of 24p each on issue at end of period
Total Allotted, called-up and fully paid at the end of period
—
58
2
639
(13,736)
—
7
579
13,736
—
13,736
—
13,736
13,736
14,375
14,315
The Company has one class of ordinary shares which carry no rights to fixed income. The ordinary shareholders are entitled to receive
dividends as declared and are entitled to vote at meetings of the Company. During the year 205,000 of these warrants have been
exercised and as a result share capital has increased by £2,050 and share premium by £38,950. In addition, an institutional placing of
5,787,574 in April 2011 resulted in share capital increasing by £57,876 and share premium by £1,707,334.
During the prior period each issued ordinary share of 25p was sub-divided and converted into one new ordinary share of 1p and one
deferred share of 24p. Each of the unissued ordinary shares of 25p was also sub-divided into 25 ordinary shares of 1p.
During the prior period a £2.5m related party loan was issued with 12.5m convertible warrants attached to it. These warrants allow the
holders to either convert the loan into 1p shares (at a price of 20p per share) or to purchase 1p shares for cash consideration (at a price
of 20p per share).
24. RECONCILIATION OF NET CASH FLOW TO NET DEBT
Increase/(decrease) in cash and cash equivalents
Increase in debt and finance leases
Increase in net debt from cash flows
Net debt at beginning of period
Exchange effects on net funds
Net debt at end of period
46
0_600_ar12.indd 46
2012
£000
1,861
(4,988)
(3,127)
(4,795)
(72)
(7,994)
2011
£000
1,466
(1,933)
(467)
(4,328)
—
(4,795)
46
07/09/2012 10:19:05
Notes relating to the consolidated financial statements
For the 52-week period ended 31 March 2012
Notes relating to the consolidated financial statements
For the 52-week period ended 31 March 2012
23. SHARE CAPITAL
Authorised
626,391,704 ordinary shares of 1p each
57,233,679 deferred shares of 24p each
Allotted, called-up and fully paid:
Ordinary shares of 1p each
25p each on issue at start of period)
57,933,679 ordinary shares of 1p each on issue at start of the period (2011: 57,233,679 ordinary shares of
579
14,308
57,233,679 ordinary shares of 25p each converted into 1p ordinary shares and 24p deferred shares
5,787,574 ordinary shares of 1p each issued in institutional placing
205,000 ordinary shares of 1p each issued under exercised warrants (2011: 700,000 ordinary shares of 1p
each issued under exercised warrants)
63,926,253 ordinary shares of 1p each on issue at end of period (2011: 57,933,679 ordinary shares of 1p
—
58
2
639
(13,736)
—
7
579
each on issue at end of period)
Deferred shares of 24p each:
57,233,679 deferred shares of 24p each on issue at start of period (2011: nil)
57,233,679 ordinary shares of 25p each converted into 1p ordinary shares and 24p deferred shares
57,233,679 deferred shares of 24p each on issue at end of period
Total Allotted, called-up and fully paid at the end of period
13,736
—
13,736
—
13,736
13,736
14,375
14,315
The Company has one class of ordinary shares which carry no rights to fixed income. The ordinary shareholders are entitled to receive
dividends as declared and are entitled to vote at meetings of the Company. During the year 205,000 of these warrants have been
exercised and as a result share capital has increased by £2,050 and share premium by £38,950. In addition, an institutional placing of
5,787,574 in April 2011 resulted in share capital increasing by £57,876 and share premium by £1,707,334.
During the prior period each issued ordinary share of 25p was sub-divided and converted into one new ordinary share of 1p and one
deferred share of 24p. Each of the unissued ordinary shares of 25p was also sub-divided into 25 ordinary shares of 1p.
During the prior period a £2.5m related party loan was issued with 12.5m convertible warrants attached to it. These warrants allow the
holders to either convert the loan into 1p shares (at a price of 20p per share) or to purchase 1p shares for cash consideration (at a price
of 20p per share).
24. RECONCILIATION OF NET CASH FLOW TO NET DEBT
Increase/(decrease) in cash and cash equivalents
Increase in debt and finance leases
Increase in net debt from cash flows
Net debt at beginning of period
Exchange effects on net funds
Net debt at end of period
2012
£000
1,861
(4,988)
(3,127)
(4,795)
(72)
(7,994)
2011
£000
1,466
(1,933)
(467)
(4,328)
—
(4,795)
2012
£000
6,264
13,736
20,000
2011
£000
6,264
13,736
20,000
25. ANALYSIS OF NET DEBT
Cash at bank and in hand
Term deposits (included within cash and cash equivalents on the balance sheet)
Overdrafts
Debt due within one year
Debt due after one year
Shareholder loan
Finance leases
Total
At
2 April
Exchange
2011
£000
952
100
(2,957)
(1,905)
(374)
—
(1,957)
(559)
(4,795)
movement
Cash flows
£000
(73)
—
—
(73)
1
—
—
—
£000
(570)
—
2,431
1,861
(1,388)
(3,638)
(95)
133
(72)
(3,127)
At
31 March
2012
£000
309
100
(526)
(117)
(1,761)
(3,638)
(2,052)
(426)
(7,994)
26. FINANCIAL INSTRUMENTS
OVERVIEW
The Group has exposure to the following risks from its use of financial instruments:
• credit risk;
• liquidity risk; and
• market risk.
This note presents information about the Group’s exposure to each of the above risks, the Group’s objectives, policies and processes
for measuring and managing exposure to these.
The Board of Directors has overall responsibility for the establishment and oversight of the Group’s risk management framework. The
Board is responsible for developing and monitoring the Group’s risk management policies.
The Group’s risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk limits and
controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in
market conditions and the Group’s activities. The Group, through its training and management standards and procedures, aims to develop a
disciplined and constructive control environment in which all employees understand their roles and obligations.
The Group actively manages and monitors capital across the different businesses within the Group. Targets in relation to return on capital are
considered as part of the annual budgeting process. During the prior year a shareholder loan was raised which had 12.5m warrants
attached to it. These warrants allow the holders to either convert the loan into 20p shares or to purchase 20p shares for a cash
consideration. During the prior year 700,000 of these warrants were exercised for a cash. A further 205,000 shares were issued on
exercise of warrants for cash and as a result share capital has increased by £2,050 and share premium by £38,950.
The Directors determine the appropriate capital structure of the Group between funds raised from equity shareholders (equity), through the
issue of shares and retention of profits generated, and funds borrowed from financial institutions, other businesses, individuals and
preference shareholders (debt) in order to finance the Group’s activities both now and in the future. The Board’s objectives when
managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns to Shareholders and
benefits to other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the
capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or
sell assets to reduce debt. The Directors have decided that it has not been possible to pay a dividend to equity shareholders.
In addition, on 5 April 2011 the Group raised approximately £1.76m through an institutional placing of 5,787,574 new ordinary shares of 1p
each at a price of 30.5p per share on 5 April 2011.
The Audit Committee oversees how management monitors compliance with the Group’s risk management policies and procedures and
reviews the adequacy of the risk management framework in relation to the risks faced by the Group. The Audit Committee is assisted in
its oversight role by head office staff undertaking both regular and ad hoc reviews of risk management controls and procedures, the
results of which are reported to the Audit Committee.
46
0_600_ar12.indd 47
47
47
07/09/2012 10:19:05
Notes relating to the consolidated financial statements
For the 52-week period ended 31 March 2012
26. FINANCIAL INSTRUMENTS CONTINUED
CREDIT RISK
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual
obligations, and arises principally from the Group’s receivables from customers.
The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. The demographics of the
Group’s customer base, including the default risk of the industry and country in which customers operate, has less of an influence on
credit risk. Geographically, there is no significant concentration of credit risk.
The Board has established a credit policy under which each new customer is analysed individually for creditworthiness before the Group’s
standard payment and delivery terms and conditions are offered. The Group’s review includes external ratings, where available, and in
some cases bank references. Purchase limits are established for each customer, which represents the maximum open amount without
requiring approval from the Board; these limits are reviewed quarterly. Customers that fail to meet the Group’s benchmark
creditworthiness may transact with the Group only on a prepayment basis.
Goods are sold subject to retention of title clauses, so that in the event of non-payment the Group may have a secured claim. The Group
does not require collateral in respect of trade and other receivables.
The Group establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade and other
receivables. The main components of this allowance are a specific loss component that relates to individually significant exposures, and
a collective loss component established for groups of similar assets in respect of losses that have been incurred but not yet identified. The
collective loss allowance is determined based on historical data of payment statistics for similar financial assets.
The carrying value of financial assets represents the maximum credit exposure. The maximum exposure at the reporting date was:
Trade receivables
Cash and cash equivalents
The maximum exposure to credit risk for trade receivables at the reporting date by geographic region was:
UK
Other European countries
North America
Africa
Australasia
2012
£000
5,392
409
5,801
2012
£000
3,229
107
1,811
—
245
5,392
2011
£000
7,535
1,052
8,587
2011
£000
3,360
122
1,344
2,219
490
7,535
48
0_600_ar12.indd 48
48
07/09/2012 10:19:05
Notes relating to the consolidated financial statements
For the 52-week period ended 31 March 2012
26. FINANCIAL INSTRUMENTS CONTINUED
CREDIT RISK
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual
obligations, and arises principally from the Group’s receivables from customers.
The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. The demographics of the
Group’s customer base, including the default risk of the industry and country in which customers operate, has less of an influence on
credit risk. Geographically, there is no significant concentration of credit risk.
The Board has established a credit policy under which each new customer is analysed individually for creditworthiness before the Group’s
standard payment and delivery terms and conditions are offered. The Group’s review includes external ratings, where available, and in
some cases bank references. Purchase limits are established for each customer, which represents the maximum open amount without
requiring approval from the Board; these limits are reviewed quarterly. Customers that fail to meet the Group’s benchmark
creditworthiness may transact with the Group only on a prepayment basis.
Goods are sold subject to retention of title clauses, so that in the event of non-payment the Group may have a secured claim. The Group
does not require collateral in respect of trade and other receivables.
The carrying value of financial assets represents the maximum credit exposure. The maximum exposure at the reporting date was:
Notes relating to the consolidated financial statements
For the 52-week period ended 31 March 2012
26. FINANCIAL INSTRUMENTS CONTINUED
LIQUIDITY RISK
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s approach to managing
liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and
stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation.
Due to banking facilities being held with different banks in USA, Australia and South Africa certain restrictions on the repatriation of funds
to the UK may be imposed by the local bank or in the case of South Africa the Central Reserve Bank as at the period-end date.
Typically the Group ensures that it has sufficient cash or overdraft facilities on demand to at least meet any unexpected operational
expenses; this excludes the potential impact of extreme circumstances that cannot reasonably be predicted, such as natural disasters.
The following are the contractual maturities of financial liabilities, including interest payments:
The Group establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade and other
Bank overdrafts
receivables. The main components of this allowance are a specific loss component that relates to individually significant exposures, and
a collective loss component established for groups of similar assets in respect of losses that have been incurred but not yet identified. The
collective loss allowance is determined based on historical data of payment statistics for similar financial assets.
Bank loan
Other loan
The maximum exposure to credit risk for trade receivables at the reporting date by geographic region was:
Trade receivables
Cash and cash equivalents
UK
Other European countries
North America
Africa
Australasia
2012
£000
5,392
409
5,801
2012
£000
3,229
107
1,811
—
245
5,392
2011
£000
7,535
1,052
8,587
2011
£000
3,360
122
1,344
2,219
490
7,535
Finance lease obligations
Interest bearing financial liabilities
Trade and other payables
Financial liabilities
Bank overdrafts
Bank loan
Other loan
Finance lease obligations
Interest bearing financial liabilities
Trade and other payables
Financial liabilities
Contractual
Less than
2012
carrying
amount
£000
526
5,399
2,052
426
8,403
5,776
cash flows
£000
526
5,399
2,052
426
8,403
5,776
14,179
14,179
1 year
£000
526
1,761
—
292
2,579
5,776
8,355
1–2 years
2–5 years
£000
—
640
—
134
774
—
774
£000
—
2,998
2,052
—
5,050
—
5,050
2011
carrying
amount
£000
2,957
374
1,957
559
5,847
7,399
Contractual
Less than
cash flows
£000
2,957
374
1,957
649
5,937
7,399
1 year
£000
2,957
374
—
298
3,629
7,399
13,246
13,336
11,028
1–2 years
2–5 years
£000
£000
—
—
—
351
351
—
351
—
—
1,957
—
1,957
—
1,957
MARKET RISK
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the
Group’s income. The objective of market risk management is to manage and control market risk exposures within acceptable
parameters, while optimising the return on risk.
48
0_600_ar12.indd 49
49
49
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Notes relating to the consolidated financial statements
For the 52-week period ended 31 March 2012
26. FINANCIAL INSTRUMENTS CONTINUED
CURRENCY RISK
The Group is exposed to currency risk on sales, purchases and borrowings that are denominated in a currency other than the respective
currencies of Group entities, primarily the Euro (€) and US Dollars ($).
The Group’s exposure to foreign currency risk may be summarised as follows:
Trade receivables
Trade payables
Balance sheet exposure
The following exchange rates applied during the year:
US Dollar
Polish zloty
Euro
US Dollar
PLN
000
276
(1,479)
(1,203)
2012
US Dollars
$000
1,811
(533)
1,278
Euro
€000
95
(1,142)
(1,047)
2011
US Dollars
$000
89
(226)
(137)
PLN
000
122
(866)
(744)
2012
Average
rate
1.600
4.83
1.160
Year end
spot rate
1.598
4.983
1.200
2011
Average
rate
1.556
4.637
1.169
Euro
€000
117
(1,291)
(1,174)
Year end
spot rate
1.603
4.566
1.133
Change if
appreciated/
depreciated
Net assets
by 25%
in foreign
against local
currency
currency
4,062
1,016
The Group has operations around the world and is therefore exposed to foreign exchange risk arising from net investments in foreign
operations. Where cost effective, the exposures arising from the translation of the net assets of the Group’s foreign operations are
managed through the use of borrowings or cross-currency swaps in the relevant foreign currency.
Some Group operations on occasion also enter into commercial transactions in currencies other than their functional currencies. Exposures
arising from the translation of foreign currency transactions are continually monitored and material exposures are managed where
necessary through the use of forward contracts or options once cash flows can be identified with sufficient certainty. Exposures arising
from the translation of intra-group lending are managed through the use of borrowings in the relevant foreign currency.
50
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Notes relating to the consolidated financial statements
For the 52-week period ended 31 March 2012
26. FINANCIAL INSTRUMENTS CONTINUED
CURRENCY RISK
The Group is exposed to currency risk on sales, purchases and borrowings that are denominated in a currency other than the respective
currencies of Group entities, primarily the Euro (€) and US Dollars ($).
The Group’s exposure to foreign currency risk may be summarised as follows:
Trade receivables
Trade payables
Balance sheet exposure
The following exchange rates applied during the year:
US Dollar
Polish zloty
Euro
US Dollar
PLN
000
276
(1,479)
(1,203)
2012
US Dollars
$000
1,811
(533)
1,278
Euro
€000
95
(1,142)
(1,047)
2011
US Dollars
$000
89
(226)
(137)
PLN
000
122
(866)
(744)
2012
Average
rate
1.600
4.83
1.160
Year end
spot rate
1.598
4.983
1.200
2011
Average
rate
1.556
4.637
1.169
Euro
€000
117
(1,291)
(1,174)
Year end
spot rate
1.603
4.566
1.133
Change if
appreciated/
depreciated
Net assets
by 25%
in foreign
against local
currency
currency
4,062
1,016
Notes relating to the consolidated financial statements
For the 52-week period ended 31 March 2012
26. FINANCIAL INSTRUMENTS CONTINUED
The following table shows the impact (due to the retranslation of non-functional currency monetary assets and liabilities in the Group's
operations) of a, reasonably possible, 10% movement in the Group’s principal foreign currency exchange rates at the year-end date.
31 March 2012
US$
AUD
2 April 2011
US$
AUD
10%
increase
Effect on
profit
before tax
10 %
decrease
Effect on
profit before
tax
Effect on
shareholders’
equity
Effect on
shareholders’
equity
(399)
(70)
(341)
(146)
(399)
(70)
(341)
(146)
488
86
418
178
488
86
418
178
The effect on profit before taxation is due to the retranslation of trade receivables, cash and cash equivalents, borrowings, trade payables
and derivative financial assets and liabilities denominated in non-functional currencies. The effect on shareholders’ equity is due to the
effect on profit as well as the effect of financial assets and liabilities denominated in foreign currencies qualified as either cash flow or net
investment hedges.
INTEREST RATE RISK
The Group holds a mixture of both fixed and floating interest borrowings to control its exposure to interest rate risk although it has no
formal target for a ratio of fixed to floating funding. The level of debt is continually reviewed by the Board. The sensitivity analysis is set
out below:
The Group has operations around the world and is therefore exposed to foreign exchange risk arising from net investments in foreign
operations. Where cost effective, the exposures arising from the translation of the net assets of the Group’s foreign operations are
managed through the use of borrowings or cross-currency swaps in the relevant foreign currency.
Some Group operations on occasion also enter into commercial transactions in currencies other than their functional currencies. Exposures
arising from the translation of foreign currency transactions are continually monitored and material exposures are managed where
necessary through the use of forward contracts or options once cash flows can be identified with sufficient certainty. Exposures arising
from the translation of intra-group lending are managed through the use of borrowings in the relevant foreign currency.
US Dollar
South African Rand
AUS Dollar
Polish Zloty
CAD Dollar
Net cash/
Change if
in foreign interest rates
borrowings
in foreign
in foreign
Currency
currency
£’000
(288)
614
121
19
16
change by
1%
£’000
(3)
6
1
—
—
The impact of interest rate risk on the Group's result is due to changes in interest rates on net floating rate cash and cash equivalents and
borrowings. At 31 March 2012, if interest rates on the Group's net floating rate cash and cash equivalents and borrowings had been 100
basis points higher, a reasonably possible movement, with all other variables held constant, the effect on profit before taxation in the year
would have been a credit of £0.06m (2011: charge of £0.03m). A reduction of 100 basis points would have the equal and opposite effect.
There is no further impact on shareholders' equity.
50
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Notes relating to the consolidated financial statements
For the 52-week period ended 31 March 2012
26. FINANCIAL INSTRUMENTS CONTINUED
HEDGING OF FLUCTUATIONS IN FOREIGN CURRENCY
The Group is exposed to foreign currency risk on sales, purchases and borrowings that are denominated in a currency other than
Sterling.
The Group uses on occasion forward exchange contracts to hedge its commercial foreign currency risk. The Group does not apply a
policy of hedge accounting. Most of the forward exchange contracts have maturities of less than one year after the balance sheet date.
Where necessary, the forward exchange contracts are rolled over at maturity.
In respect of other monetary assets and liabilities held in currencies other than Sterling, the Group ensures that the net exposure is kept
to an acceptable level by buying or selling foreign currencies at spot rates where necessary to address short-term imbalances.
At the period-end there were no outstanding derivative contracts in place.
SENSITIVITY ANALYSIS
In managing interest rate and currency risks, the Group aims to reduce the impact of short-term fluctuations on the Group’s earnings.
Over the longer term, however, permanent changes in foreign exchange and interest rates would have an impact on consolidated earnings.
FINANCIAL INSTRUMENTS
The Group’s financial instruments include bank loans, overdrafts and cash. These financial instruments are used for the purpose of
funding the Group’s operations.
In addition, the Group enters into forward currency derivative transactions on occasion which have been used in the management of risks
associated with currency exposure. There were no contracts in place at the period-end.
ASSETS AND LIABILITIES
The Group does not hedge account but uses derivative financial instruments to hedge its commercial exposure to foreign exchange.
These instruments are recognised at fair value. Any gain or loss is immediately recognised in the income statement.
The fair value of forward exchange contracts used at 2 April 2011 was a liability of £nil (Note 18) (2010: liability of £nil) and the movement
has been recognised within cost of sales.
FINANCIAL ASSETS
The Group’s financial assets comprise cash, trade receivables and derivative contract assets. The profile of the financial assets at 31
March 2012 and 2 April 2011 was:
Currency
Sterling
US Dollars
Australian Dollars
Euros
Polish Zloty
Canadian Dollars
South African Rand
2012
Financial
assets
2011
Financial
assets
Floating rate
Fixed rate
on which
Floating rate
Fixed rate
on which
financial
financial
no interest
financial
financial
no interest
assets
£000
11
345
291
—
5
3
—
assets
is earned
£000
100
—
—
—
—
—
—
£000
3,118
2,851
312
—
276
—
—
Total
£000
3,229
3,196
603
—
281
3
—
655
100
6,557
7,312
assets
£000
15
86
202
—
19
16
614
952
assets
is earned
£000
100
—
—
—
—
—
—
100
£000
3,752
1,981
490
—
336
—
2,361
8,920
The weighted average interest rate on floating rate financial assets is:
Currency
US Dollars
Australian Dollars
South African Rand
Polish Zloty
Canadian Dollars
Total
£000
3,867
2,067
692
—
355
16
2,975
9,972
%
2.0%
2.5%
7.0%
0.0%
0.0%
Sterling fixed-rate financial assets are centrally controlled. At 31 March 2012 the weighted average interest rate on these deposits was 1.0%
(2010: 3.0%).
The floating rate financial assets comprise other deposits that earn interest based on short-term deposit rates.
52
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26. FINANCIAL INSTRUMENTS CONTINUED
HEDGING OF FLUCTUATIONS IN FOREIGN CURRENCY
Sterling.
The Group is exposed to foreign currency risk on sales, purchases and borrowings that are denominated in a currency other than
The Group uses on occasion forward exchange contracts to hedge its commercial foreign currency risk. The Group does not apply a
policy of hedge accounting. Most of the forward exchange contracts have maturities of less than one year after the balance sheet date.
Where necessary, the forward exchange contracts are rolled over at maturity.
In respect of other monetary assets and liabilities held in currencies other than Sterling, the Group ensures that the net exposure is kept
to an acceptable level by buying or selling foreign currencies at spot rates where necessary to address short-term imbalances.
At the period-end there were no outstanding derivative contracts in place.
SENSITIVITY ANALYSIS
FINANCIAL INSTRUMENTS
funding the Group’s operations.
ASSETS AND LIABILITIES
In managing interest rate and currency risks, the Group aims to reduce the impact of short-term fluctuations on the Group’s earnings.
Over the longer term, however, permanent changes in foreign exchange and interest rates would have an impact on consolidated earnings.
The Group’s financial instruments include bank loans, overdrafts and cash. These financial instruments are used for the purpose of
In addition, the Group enters into forward currency derivative transactions on occasion which have been used in the management of risks
associated with currency exposure. There were no contracts in place at the period-end.
The Group does not hedge account but uses derivative financial instruments to hedge its commercial exposure to foreign exchange.
These instruments are recognised at fair value. Any gain or loss is immediately recognised in the income statement.
The fair value of forward exchange contracts used at 2 April 2011 was a liability of £nil (Note 18) (2010: liability of £nil) and the movement
has been recognised within cost of sales.
FINANCIAL ASSETS
March 2012 and 2 April 2011 was:
The Group’s financial assets comprise cash, trade receivables and derivative contract assets. The profile of the financial assets at 31
Notes relating to the consolidated financial statements
For the 52-week period ended 31 March 2012
Notes relating to the consolidated financial statements
For the 52-week period ended 31 March 2012
26. FINANCIAL INSTRUMENTS CONTINUED
FINANCIAL LIABILITIES
Financial liabilities comprise short-term loans, overdrafts, trade payables, obligations under finance leases, other creditors more than one
year, forward exchange contract liabilities and other provisions for liabilities and charges (excluding accrued post-retirement health care
accrual and deferred tax provision). The profile of the Group’s financial liabilities at 31 March 2012 and 2 April 2011 was:
2012
Financial
liabilities
2011
Financial
liabilities
Floating rate
Fixed rate
on which
Floating rate
Fixed rate
on which
financial
financial
no interest
financial
financial
no interest
liabilities
liabilities
is paid
Currency
Sterling
US Dollars
South African Rand
Australian Dollars
Canadian Dollars
£000
3,025
1,064
—
—
—
4,089
£000
298
—
—
128
—
426
£000
7,776
1,519
—
261
21
Total
£000
11,099
2,583
—
389
21
liabilities
liabilities
£000
2,957
374
—
—
—
£000
478
—
—
81
—
is paid
£000
7,365
1,287
2,810
423
267
Total
£000
10,800
1,661
2,810
504
267
9,577
14,092
3,331
559
12,152
16,042
The floating rate financial liabilities comprise bank borrowings and overdrafts that bear interest rates based on local currency base
interest rates.
BORROWING FACILITIES
At 31 March 2012 and 2 April 2011 the Group had undrawn committed borrowing facilities as follows:
Floating rate
Fixed rate
on which
Floating rate
Fixed rate
on which
financial
financial
no interest
financial
financial
no interest
assets
is earned
assets
is earned
2012
Financial
assets
£000
100
—
—
—
—
—
—
£000
3,118
2,851
312
—
276
—
—
assets
£000
11
345
291
—
5
3
—
655
100
6,557
7,312
Total
£000
3,229
3,196
603
—
281
3
—
assets
£000
15
86
202
—
19
16
614
952
2011
Financial
assets
£000
100
—
—
—
—
—
—
100
£000
3,752
1,981
490
—
336
—
2,361
8,920
UK
US
Australia
South Africa
FAIR VALUES OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES
Trade receivables
Cash and cash equivalents
Bank overdrafts
Bank loan
Other loans
Finance lease obligations
Trade payables
Fair value of derivative contracts
The weighted average interest rate on floating rate financial assets is:
2012
‘000
£200
$800
AUD$900
R16,000
2011
‘000
£400
$1,000
AUD$900
R2,600
2012
£000
5,392
409
(526)
(5,399)
(2,052)
(426)
(5,776)
—
2011
£000
7,535
1,052
(2,957)
(374)
(1,957)
(559)
(7,399)
—
(8,378)
(4,659)
Sterling fixed-rate financial assets are centrally controlled. At 31 March 2012 the weighted average interest rate on these deposits was 1.0%
The floating rate financial assets comprise other deposits that earn interest based on short-term deposit rates.
Given the nature of the Group’s financial assets and liabilities, it is the Directors’ opinion that there is no material difference between their
reported book values and estimated fair values.
0_600_ar12.indd 53
53
53
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Currency
Sterling
US Dollars
Australian Dollars
Euros
Polish Zloty
Canadian Dollars
South African Rand
Currency
US Dollars
Australian Dollars
South African Rand
Polish Zloty
Canadian Dollars
(2010: 3.0%).
Total
£000
3,867
2,067
692
—
355
16
2,975
9,972
%
2.0%
2.5%
7.0%
0.0%
0.0%
52
Notes relating to the consolidated financial statements
For the 52-week period ended 31 March 2012
27. CONTINGENT LIABILITIES
Third-party guarantees
2012
£000
86
2011
£000
60
These guarantees and letters of credit are entered into in the normal course of business. A liability would only arise in the event of the
Group failing to fulfil its contractual obligations.
28. CAPITAL COMMITMENTS
Capital expenditure contracted for but not provided in the accounts
2012
£000
—
2011
£000
—
29. OPERATING LEASE COMMITMENTS
The Group has outstanding commitments for future minimum lease payments under non-cancellable operating leases which fall due as
follows:
Land and buildings
Within one year
More than one year and less than five years
Over five years
Other
Within one year
More than one year and less than five years
2012
£000
33
49
—
82
31
4
35
2011
£000
239
652
49
940
116
45
161
30. EMPLOYEE BENEFITS
The Group operates a number of defined benefit pension schemes throughout the world. The assets of these schemes are held in
separate trustee-administered funds.
The benefits from these schemes are based upon years of pensionable service and pensionable remuneration of the employee as
defined under the respective scheme provisions. The schemes are funded by contributions from the employee and from the employing
company over the period of the employees’ service. Contributions are determined by independent qualified actuaries based upon triennial
actuarial valuations in the UK and on annual valuations in the US.
UK
In relation to the fund in the UK, the Group’s funding policy is to ensure that assets are sufficient to cover accrued service liabilities
allowing for projected pay increases. The most recent triennial full valuation was carried out as at 31 March 2007.
During the prior period, a credit of £2.57m arose in respect of changes to the assumptions within the Group’s pension and healthcare
plans and was primarily as a result of using the consumer price index as the measure of price inflation as opposed to the retail price
index due to the UK Government’s announcement that the former will be used from April 2011 onwards. The directors have taken the
view that the actions of the company in the past have created a valid expectation for scheme members to receive RPI-linked benefits.
The scheme booklet refers specifically to the RPI and deferred benefit statements sent to members also refers to RPI-linked benefits.
The directors believed that the announcement of the change to CPI by the government and subsequent changes to payments made by
the Company changed this constructive obligation and so the gain was recognised under UITF 48 as a benefit change through the
consolidated income statement in the prior period.
US
In relation to the fund in the US, the funding policy is to ensure that assets are sufficient to cover accrued service liabilities allowing for
projected pay increases.
In addition, the Group operates a retirement healthcare benefit scheme for certain of its retired employees in the US, which is also treated as
a defined benefit scheme. The scheme has 37 members (2011 – 39) who are retired employees.
The most recent annual valuation was carried out as at 2 April 2011. The disclosures for the US schemes that follow refer to the US
defined benefit scheme and the retirement healthcare benefit scheme.
54
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2012
£000
86
2012
£000
—
2012
£000
33
49
—
82
31
4
35
2011
£000
60
2011
£000
—
2011
£000
239
652
49
940
116
45
161
The Group has outstanding commitments for future minimum lease payments under non-cancellable operating leases which fall due as
29. OPERATING LEASE COMMITMENTS
follows:
More than one year and less than five years
Land and buildings
Within one year
Over five years
Other
Within one year
More than one year and less than five years
30. EMPLOYEE BENEFITS
separate trustee-administered funds.
The Group operates a number of defined benefit pension schemes throughout the world. The assets of these schemes are held in
The benefits from these schemes are based upon years of pensionable service and pensionable remuneration of the employee as
defined under the respective scheme provisions. The schemes are funded by contributions from the employee and from the employing
company over the period of the employees’ service. Contributions are determined by independent qualified actuaries based upon triennial
actuarial valuations in the UK and on annual valuations in the US.
UK
In relation to the fund in the UK, the Group’s funding policy is to ensure that assets are sufficient to cover accrued service liabilities
allowing for projected pay increases. The most recent triennial full valuation was carried out as at 31 March 2007.
During the prior period, a credit of £2.57m arose in respect of changes to the assumptions within the Group’s pension and healthcare
plans and was primarily as a result of using the consumer price index as the measure of price inflation as opposed to the retail price
index due to the UK Government’s announcement that the former will be used from April 2011 onwards. The directors have taken the
view that the actions of the company in the past have created a valid expectation for scheme members to receive RPI-linked benefits.
The scheme booklet refers specifically to the RPI and deferred benefit statements sent to members also refers to RPI-linked benefits.
The directors believed that the announcement of the change to CPI by the government and subsequent changes to payments made by
the Company changed this constructive obligation and so the gain was recognised under UITF 48 as a benefit change through the
consolidated income statement in the prior period.
In relation to the fund in the US, the funding policy is to ensure that assets are sufficient to cover accrued service liabilities allowing for
US
projected pay increases.
In addition, the Group operates a retirement healthcare benefit scheme for certain of its retired employees in the US, which is also treated as
a defined benefit scheme. The scheme has 37 members (2011 – 39) who are retired employees.
The most recent annual valuation was carried out as at 2 April 2011. The disclosures for the US schemes that follow refer to the US
defined benefit scheme and the retirement healthcare benefit scheme.
Notes relating to the consolidated financial statements
For the 52-week period ended 31 March 2012
Notes relating to the consolidated financial statements
For the 52-week period ended 31 March 2012
27. CONTINGENT LIABILITIES
Third-party guarantees
Group failing to fulfil its contractual obligations.
28. CAPITAL COMMITMENTS
Capital expenditure contracted for but not provided in the accounts
These guarantees and letters of credit are entered into in the normal course of business. A liability would only arise in the event of the
30. EMPLOYEE BENEFITS CONTINUED
MORTALITY RATES
The mortality assumptions for the UK scheme are based on standard mortality tables which allow for future mortality improvements. The
assumptions are that a member who retires in 2011 at age 65 will live on average for a further 21.6 years (2011: 20.5 years) after retirement
if male and for a further 23.6 years (2011: 22.9 years) after retirement if female.
For a member who is currently aged 45 retiring in 2030 at age 65, the assumptions are that they will live on average for a further 22.4
years (2011: 22.4 years) after retirement if they are male and for a further 24.8 years (2011: 24.8 years) after retirement if they are
female.
The mortality rates for the US scheme are based on the 1983 Group Annuity Mortality (GAM) tables for males and females.
IAS 19
Disclosures in accordance with IAS 19 are set out below. The principal assumptions used for the purpose of the IAS 19 valuation were as
follows:
Inflation under RPI
Inflation under CPI
Rate of general long-term increase in salaries
Rate of increase for CARE benefit while an active member
Rate of increase to pensions in payment – LPI 5%
Rate of increase to pensions in payment – LPI 2.5%
Discount rate for scheme liabilities
2010
2011
UK scheme
UK scheme
% p.a.
% p.a.
3.2
2.2
4.7
3.1
3.1
2.1
4.7
3.5
2.6
5.0
3.5
3.3
2.2
5.6
The principal assumptions for the US schemes relate to the discount rate for scheme liabilities. The discount rate used for the US defined
benefit scheme was 0.68% (2011: 0.68%) and for the US medical scheme was 0.68% (2011: 0.68%).
Expected return on assets UK scheme
Long-term
rate of return
expected at
Long-term
rate of return
Value at
expected at
31 March
31 March
2012
% p.a.
8.00
8.00
3.50
3.50
4.70
3.50
6.30
2012
£m
53.61
19.39
70.69
n/a
40.97
3.12
187.78
2 April
2011
% p.a.
8.70
8.70
4.70
4.70
5.60
4.70
6.60
Long-term
rate of return
expected at
3 April
2010
% p.a.
9.80
10.30
4.80
4.80
6.00
4.80
6.601
Value at
2 April
2011
£m
54.20
18.95
63.82
n/a
34.64
1.42
173.03
Value at
3 April
2010
£m
45.72
10.22
62.97
21.76
16.72
14.47
171.86
Equities
Property
LDI funds
Government bonds
Corporate bonds
Other
Combined
1 The overall expected rate of return on scheme assets is a weighted average of the individual expected rates of return on each asset class.
The Group employs a building block approach in determining the long-term rate of return on pension plan assets. Historical markets are
studied and assets with higher volatility are assumed to generate higher returns consistent with widely accepted capital market principles.
The assumed long-term rate of return on each asset class is set out within this note. The overall expected rate of return on assets is then
derived by aggregating the expected return for each asset class over the actual asset allocation for the scheme at 31 March 2012.
The assets held within the US scheme amount to £0.89m and are held mainly in bonds.
54
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Notes relating to the consolidated financial statements
For the 52-week period ended 31 March 2012
30. EMPLOYEE BENEFITS CONTINUED
IAS 19 CONTINUED
Assumed healthcare cost trend rates have a significant effect on the amounts recognised in the income statement. From 1 November
2010 future changes in healthcare costs re the US retirement healthcare benefit scheme will be borne by the participants rather than the
company. As a result the effect of healthcare cost changes are not disclosed for 2012 and 2011 year-ends.
2012
One
2011
One
One
One
percentage
percentage
percentage
percentage
point
increase
point
decrease
point
point
increase
decrease
(Increase)/decrease in the aggregate cost of the service and interest cost
(Increase)/decrease in defined benefit obligation
The assets and liabilities of the schemes at 31 March 2012 and 2 April 2011 were:
Assets
Liabilities
(Deficit)/surplus
US
schemes
£000
885
(2,897)
(2,012)
£000
n/a
n/a
Total
£000
2012
UK
scheme
£000
187,780
188,665
(174,840)
(177,737)
12,940
10,928
£000
n/a
n/a
US
schemes
£000
922
(2,771)
(1,849)
£000
n/a
n/a
2011
UK
scheme
£000
£000
n/a
n/a
Total
£000
173,030
173,952
(168,900)
(171,671)
4,130
2,281
Unrecognised asset due to limit in paragraph
58 (b) of IAS 19
—
12,940
12,940
—
4,130
4,130
Amounts recognised in the income statement in respect of the defined benefit schemes before taxation are as follows:
Included within operating profit:
– current service cost
– past service cost credit
– curtailment cost
Included within financial income:
US
schemes
£000
22
—
—
2012
UK
scheme
£000
260
—
—
Total
£000
282
—
—
US
schemes
£000
33
—
—
2011
UK
scheme
£000
310
Total
£000
343
(2,570)
(2,570)
—
—
– expected return on scheme assets
(44)
(10,790)
(10,834)
(46)
(10,830)
(10,876)
Included within financial expense:
– interest cost on scheme liabilities
128
9,140
9,268
154
9,330
9,484
56
56
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Notes relating to the consolidated financial statements
For the 52-week period ended 31 March 2012
30. EMPLOYEE BENEFITS CONTINUED
IAS 19 CONTINUED
Amounts recognised in the statement of comprehensive income are as follows:
Actual return on scheme assets
Expected return on scheme assets
Change in irrecoverable surplus –
limit on paragraph 58 (b) of IAS 19
Experience gain/(loss) on liabilities
Net gain/(loss) before exchange
Exchange differences
Amounts recognised during the period
Balance brought forward
Balance carried forward
US
schemes
£000
22
(44)
(22)
—
(152)
(174)
—
(174)
413
239
2012
UK
scheme
£000
Total
£000
24,570
24,592
(10,790)
(10,834)
13,780
13,758
(8,810)
(6,580)
(1,610)
—
(8,810)
(6,732)
(1,784)
—
(1,610)
(1,784)
1,144
(466)
1,557
(227)
Changes in the present value of the defined benefit obligations before taxation are as follows:
Opening defined benefit obligation
Exchange differences
Current service cost
Past service cost credit
Curtailments
Interest cost
Benefits paid
Actuarial (gains)/losses
Contributions by scheme participants
US
Schemes
£000
2,771
9
22
—
—
128
(184)
151
—
2012
UK
scheme
£000
Total
£000
168,900
171,671
—
260
—
—
9
282
—
—
9,140
9,268
(10,260)
(10,444)
6,580
220
6,731
220
Closing defined benefit obligations
2,897
174,840
177,737
US
schemes
£000
52
(46)
6
—
249
255
(7)
248
165
413
US
schemes
£000
3,187
(154)
33
—
—
154
(200)
(249)
—
2,771
2011
UK
scheme
£000
Total
£000
10,800
10,852
(10,830)
(10,876)
(30)
(24)
(4,130)
2,010
(2,150)
—
(4,130)
2,259
(1,895)
(7)
(2,150)
(1,902)
3,294
1,144
3,459
1,557
2011
UK
scheme
£000
Total
£000
173,770
176,957
—
310
(154)
343
(2,570)
(2,570)
—
9,330
—
9,484
(10,190)
(10,390)
(2,010)
(2,259)
260
260
168,900
171,671
0_600_ar12.indd 57
57
57
07/09/2012 10:19:07
Notes relating to the consolidated financial statements
For the 52-week period ended 31 March 2012
30. EMPLOYEE BENEFITS CONTINUED
IAS 19 CONTINUED
Changes in the fair value of the schemes’ assets before taxation are as follows:
Opening fair value of scheme assets
Exchange differences
Expected return
Actuarial gains/(losses)
Contribution by scheme participants
Contributions by employer
Benefits paid
Closing fair value of schemes’ assets
Unrecognised asset due to limit in paragraph
58 (b) of IAS 19
US
schemes
£000
922
2
44
(22)
—
—
(61)
885
—
885
2012
UK
scheme
£000
Total
£000
173,030
173,952
—
10,790
13,780
220
220
(10,260)
187,780
2
10,834
13,758
220
220
(10,321)
188,665
—
—
187,780
188,665
The history of the schemes for the current and prior period before taxation is as follows:
Present value of defined benefit obligation
Fair value of scheme assets
(Deficit)/surplus in the scheme
Experience adjustments on the scheme liabilities
Experience adjustments on scheme assets
Exchange differences
US
Schemes
£000
2,897
885
(2,012)
(151)
(22)
(8)
2012
UK
Scheme
£000
174,840
187,780
12,940
(6,580)
13,780
—
Total
£000
177,737
188,665
10,928
(6,731)
13,758
(8)
Total contributions to the defined benefit schemes for 2012 are expected to be £180,000.
History of asset values, defined benefit obligation and surplus/deficit in schemes:
US
schemes
£000
960
(47)
46
7
—
16
(60)
922
—
922
US
schemes
£000
2,771
922
(1,849)
249
7
(8)
2011
UK
scheme
£000
Total
£000
171,860
172,820
—
10,830
(30)
260
300
(47)
10,876
(23)
260
316
(10,190)
(10,250)
173,030
173,952
—
—
173,030
173,952
2011
UK
scheme
£000
168,900
173,030
4,130
2,010
(30)
—
Total
£000
171,671
173,952
2,281
2,259
(23)
(8)
Fair value of scheme assets
Defined benefit obligation
Surplus/(Deficit) in schemes
Unrecognised asset due to limit in paragraph 58 (b) of IAS 19
Deficit in schemes
History of experience gains and losses
Experience gains/(losses) on scheme assets
Experience (losses)/gains on scheme liabilities[1]
31 March
2012
£000
2 April
2011
£000
3 April
28 March
29 March
2010
£000
2009
£000
2008
£000
188,665
173,952
172,820
158,568
176,452
(177,737)
(171,671)
(176,957)
(159,327)
(152,417)
10,928
(12,940)
(2,012)
2012
£000
13,758
(6,731)
2,281
(4,130)
(1,849)
(4,137)
—
(4,137)
(759)
(3,070)
(3,829)
24,035
(27,000)
(2,965)
2011
£000
2010
£000
2009
£000
2008
£000
(23)
2,259
16,275
(18,819)
(19,323)
(5,612)
(6,190)
(9,798)
1 This item consists of gains/(losses) in respect of liability experience only, and excludes any change in liabilities in respect of changes to the actuarial assumptions used.
58
0_600_ar12.indd 58
58
07/09/2012 10:19:07
Opening fair value of scheme assets
173,030
173,952
171,860
172,820
Exchange differences
Expected return
Actuarial gains/(losses)
Contribution by scheme participants
Contributions by employer
Benefits paid
Closing fair value of schemes’ assets
Unrecognised asset due to limit in paragraph
58 (b) of IAS 19
The history of the schemes for the current and prior period before taxation is as follows:
—
—
187,780
188,665
US
schemes
£000
960
(47)
46
7
—
16
(60)
922
—
922
US
schemes
£000
2,771
922
(1,849)
249
7
(8)
2011
UK
scheme
£000
—
10,830
(30)
260
300
Total
£000
(47)
10,876
(23)
260
316
(10,190)
(10,250)
173,030
173,952
—
—
173,030
173,952
2011
UK
scheme
£000
168,900
173,030
4,130
2,010
(30)
—
Total
£000
171,671
173,952
2,281
2,259
(23)
(8)
Total
£000
2
10,834
13,758
220
220
(10,321)
188,665
Total
£000
177,737
188,665
10,928
(6,731)
13,758
(8)
Present value of defined benefit obligation
Fair value of scheme assets
(Deficit)/surplus in the scheme
Experience adjustments on the scheme liabilities
Experience adjustments on scheme assets
Exchange differences
Total contributions to the defined benefit schemes for 2012 are expected to be £180,000.
History of asset values, defined benefit obligation and surplus/deficit in schemes:
Fair value of scheme assets
Defined benefit obligation
Surplus/(Deficit) in schemes
Deficit in schemes
Unrecognised asset due to limit in paragraph 58 (b) of IAS 19
History of experience gains and losses
Experience gains/(losses) on scheme assets
Experience (losses)/gains on scheme liabilities[1]
31 March
2012
£000
2 April
2011
£000
3 April
28 March
29 March
2010
£000
2009
£000
2008
£000
188,665
173,952
172,820
158,568
176,452
(177,737)
(171,671)
(176,957)
(159,327)
(152,417)
2,281
(4,130)
(1,849)
(4,137)
—
(4,137)
(759)
(3,070)
(3,829)
24,035
(27,000)
(2,965)
2011
£000
2010
£000
2009
£000
2008
£000
(23)
2,259
16,275
(18,819)
(19,323)
(5,612)
(6,190)
(9,798)
1 This item consists of gains/(losses) in respect of liability experience only, and excludes any change in liabilities in respect of changes to the actuarial assumptions used.
US
schemes
£000
922
(22)
2
44
—
—
(61)
885
—
885
US
Schemes
£000
2,897
885
(2,012)
(151)
(22)
(8)
2012
UK
scheme
£000
—
10,790
13,780
220
220
(10,260)
187,780
2012
UK
Scheme
£000
174,840
187,780
12,940
(6,580)
13,780
—
10,928
(12,940)
(2,012)
2012
£000
13,758
(6,731)
Notes relating to the consolidated financial statements
For the 52-week period ended 31 March 2012
30. EMPLOYEE BENEFITS CONTINUED
IAS 19 CONTINUED
Changes in the fair value of the schemes’ assets before taxation are as follows:
Notes relating to the consolidated financial statements
For the 52-week period ended 31 March 2012
31. ACQUISITIONS
In November 2010 the Group acquired 100% of the shares of Fabryka Maszyn Tarnow Sp z.o.o., a machine tool manufacturer, in Poland.
The consideration of €1m was paid in stages with €500,000 paid upon acquisition, €250,000 paid in February 2011 and the final
€250,000 paid on 31 July 2011.
Consideration
Consideration Consideration
Cash paid
Deferred consideration
Total consideration
€000
750
250
1,000
£000
632
211
843
The deferred consideration of £211,000 was included within Trade and other payables at the prior period-end.
Identifiable assets acquired
Plant and machinery
€000
1,000
£000
843
The fair value of the plant and machinery was evaluated by the directors. No inventory was included in the acquisition.
FMT’s revenue for the current period was £3,731,000 with a loss from operations before special items of £1,432,000 (2011 – revenue of
£866,000 with a profit from operations before special items of £226,000).
32. ACCOUNTING ESTIMATES AND JUDGEMENTS
Management discussed with the Audit Committee the development, selection and disclosures of the Group’s accounting policies and
estimates and the application of these policies and estimates. The accounting policies are set out above on pages 24 to 29.
Management considers there are no critical accounting judgements made in the preparation of the financial statements. The key sources of
estimation and uncertainty are:
FINANCIAL INSTRUMENTS
Note 24 contains information about the assumptions and estimates and the risk factors relating to interest rate and foreign currency
exposures.
PENSIONS
The Directors have employed the services of a qualified, independent actuary in assessing pension assets and liabilities. However they note
that final liabilities and asset returns may differ from actuarial estimates and therefore the pension liability may differ from that included in the
financial statements. Note 30 contains information about the principal actuarial assumptions used in the determination of the net assets for
defined benefit obligations.
DEFERRED TAXATION
Note 13 contains details of the Group’s deferred taxation. Liabilities recognised are determined by the likelihood of settlement and the
likelihood that assets are received are based on assumptions of future actions. The recognition of deferred taxation assets is particularly
subjective and may be undermined by adverse economic decisions.
INVENTORY VALUATION
The Directors have reviewed the carrying value of inventory and believe this is appropriate in the context of current trading levels and
strategic direction of the Group.
DEVELOPMENT EXPENDITURE
The level of development expenditure capitalised is at risk if technological advancements make new developments obsolete. However
management constantly reviews the appropriateness of the product portfolio and have reviewed the carrying value of capitalised
development expenditure and believe it to be appropriate given expected future trading levels and strategic direction of the Group.
DISCONTINUED OPERATIONS
The decision to treat closed operations as discontinued is subjective. The Directors have carefully considered the presentation of the
financial statements to ensure that the users of the financial statements can gain an understanding of the financial performance of the
Group and of the comparability of results between accounting periods. The decision to treat the results of 600SA as discontinued is
driven from the fact that the sale of the company was being actively marketed prior to the year-end and this sale has been subsequently
finalised in July 2012.
58
0_600_ar12.indd 59
59
59
07/09/2012 10:19:08
Notes relating to the consolidated financial statements
For the 52-week period ended 31 March 2012
33. RELATED PARTY TRANSACTIONS
Detailed disclosure of the individual remuneration of Board members is included in the Remuneration Report. There is no difference
between transactions with Key Management Personnel of the Company and the Group.
Mr P Dupee is the managing partner of Haddeo Partners LLP who have received £200,000 in interest payments during the financial year
in respect of the Shareholder Loan of £2.5m.
There have been no other transactions between Key Management Personnel and the Company. None of the directors were due any
monies at the end of the current period or the prior period.
The Group contributed £0.22m to the UK pension scheme during the current period (2011 - £0.30m) and no contributions were overdue
at the period-end. In the US no employer contributions were made to the US pension scheme during the current period (2011 - £0.16m)
and no payments were overdue at the period-end.
34. POST BALANCE SHEET EVENTS
The company raised £1.47m through an institutional placing of new ordinary shares of 1p each at a price of 7.5p per share on 5 September
2012.
On 3 July 2012 the Group announced that it had sold its surplus freehold property at Shepshed for £1.2m. This property has been
treated as an asset held for sale in the Group Accounts at 31 March 2012. On the same day the Group announced the sale of its
South African operation for a net cash consideration of £1.86m. This activity has been treated as discontinued in the financial
statements and its assets and liabilities were included within assets and liabilities held for sale in the Group Accounts at 31 March
2012at fair value less costs to sell.
On 10 August 2012 the Group announced that it was closing its manufacturing subsidiary FMT in Poland. This activity has been
included in continuing activities at 31 March 2012 but is expected to be treated as a discontinued activity in the year to March 2013. No
material claims against the group are foreseen as a result of this closure.
60
60
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Company balance sheet
As at 31 March 2012
Company No. 00196730
Fixed assets
Tangible assets
Investments
Current assets
Debtors
Cash at bank and in hand
Current liabilities
Creditors: amounts falling due within one year
Net current assets
Total assets less current liabilities
Creditors: amounts falling due after more than one year
Net assets
Capital and reserves
Called-up share capital
Share premium account
Revaluation reserve
Capital redemption reserve
Equity reserve
Translation reserve
Profit and loss account
Equity shareholders’ funds
Notes
4
5
6
As at
31 March
2012
£000
1,169
8,713
9,882
34,879
6,143
41,022
7
(28,450)
12,572
22,454
(5,690)
16,764
14,375
15,645
236
2,500
167
(22)
(16,137)
16,764
8
9
10
10
10
10
10
10
13
As at
3 April
2011
£000
1,197
20,110
21,307
11,690
874
12,564
(1,945)
10,619
31,926
(1,957)
29,969
14,315
13,899
236
2,500
160
(22)
(1,119)
29,969
The financial statements on pages 61 to 69 were approved by the Board of Directors on 5 September 2012 and were signed on its behalf
by:
NEIL CARRICK
GROUP FINANCE DIRECTOR
5 SEPTEMBER 2012
0_600_ar12.indd 61
61
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Company accounting policies
BASIS OF PREPARATION
As used in the financial statements and related notes, the term “Company” refers to The 600 Group PLC. The separate financial statements
of the Company are presented as required by the Companies Act 2006. As permitted by the Act, the separate financial statements have
been prepared in accordance with UK Generally Accepted Accounting Principles (UK GAAP).
BASIS OF ACCOUNTING
The following principal accounting policies have been applied consistently in dealing with items which are considered material in relation to
the Company’s financial statements, except as detailed below.
These accounts have been prepared under the historical cost convention, modified to include the revaluation of certain properties, and in
accordance with applicable accounting standards. The accounts are prepared to the Saturday nearest to the Company’s accounting reference
date of 31 March. The results for 2012 are for the 52-week period ended 31 March 2012. The results for 2011 are for the 52-week period
ended 2 April 2011.
A separate profit and loss account dealing with the results of the Company only has not been presented, as permitted by Section 408 of the
Companies Act 2006.
Under FRS 1 the Company is exempt from the requirement to present its own cash flow statement.
NOTES ON INTERPRETATION OF ACCOUNTING STANDARDS
FRS 20 “SHARE-BASED PAYMENTS”
The Company has adopted FRS 20 and the accounting policies followed are in all material regards the same as the Group’s policy under
IFRS 2. This policy is shown in The Group accounting policies on pages 24 to 29.
REVALUATION OF FIXED ASSETS
Property, plant and equipment are held at cost, subject to triennial property revaluations.
In 2010 the Company adopted a policy of revaluation for properties. As a result all properties were independently revalued during March
2010.
DEPRECIATION
Depreciation is calculated to write off the cost (or amount of the valuation) of fixed assets less the estimated residual value on a straight-line
basis over the expected useful economic life of the assets concerned. The annual rates used are generally:
• freehold buildings
• leasehold buildings
• plant and machinery
– 2 to 4%
– over residual terms of the leases
– 10 to 20%
• fixtures, fittings, tools and equipment
– 10 to 33.3%
LEASES
Assets financed by leasing arrangements, which give rights approximating to ownership, are treated as if they had been purchased outright
and are capitalised and depreciated over the shorter of the estimated useful life of the assets and the period of the leases. The capital
element of future rentals is treated as a liability and the interest element is charged against profits in proportion to the balances outstanding.
The rental costs of all other leased assets are charged against profits on a straight-line basis.
TAXATION
The charge for taxation is based on the profit or loss for the period and takes into account taxation deferred because of timing differences
between the treatment of certain items for taxation and accounting purposes. Deferred tax is recognised, without discounting, in respect of all
timing differences between the treatment of certain items for taxation and accounting purposes which have arisen but not reversed by the
balance sheet date, except as otherwise required by FRS 19 “Deferred tax”.
CURRENCY TRANSLATION
Transactions denominated in foreign currencies are translated into Sterling at the rates of exchange ruling on the date of the transaction.
Monetary assets and liabilities are translated into Sterling at the year-end rates.
PENSIONS AND POST-RETIREMENT HEALTH BENEFITS
The Company participates in UK pension scheme providing benefits based on career average related earnings. The assets of the scheme
are held separately from those of the Company. The Company is unable to identify its share of the underlying assets and liabilities of the
scheme on a consistent and reasonable basis and therefore, as required by FRS 17 “Retirement benefits”, accounts for the scheme as if it
were a defined contribution scheme. As a result, the amount charged to the profit and loss account represents the contributions payable to the
scheme in respect of the accounting period.
INVESTMENTS
Investments in respect of subsidiaries are stated at cost less any impairment in value.
FINANCIAL INSTRUMENTS: MEASUREMENT
Where the Company enters into financial guarantee contracts to guarantee the indebtedness of other companies within its Group, the
Company considered these to be insurance arrangements and accounts for them as such. In this respect, the Company treats the
guarantee contract as a contingent liability until such time as it becomes probable that the Company will be required to make a payment
under the guarantee.
62
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Company accounting policies
Company accounting policies
DIVIDENDS
Dividends on non-equity shares are recognised as a liability and accounted for on an accruals basis. Equity dividends are recognised as a
liability in the period in which they are declared (appropriately authorised and no longer at the discretion of the Company).
FRS8 EXEMPTION
As these Parent Company Financial Statements are presented together with the Consolidated Financial Statements, the Company has
taken advantage of the exemption contained in FRS 8 and has therefore not disclosed transactions or balances with wholly owned entities
which form part of the Group (or investees of theGroup qualifying as related parties).
BASIS OF PREPARATION
BASIS OF ACCOUNTING
ended 2 April 2011.
Companies Act 2006.
As used in the financial statements and related notes, the term “Company” refers to The 600 Group PLC. The separate financial statements
of the Company are presented as required by the Companies Act 2006. As permitted by the Act, the separate financial statements have
been prepared in accordance with UK Generally Accepted Accounting Principles (UK GAAP).
The following principal accounting policies have been applied consistently in dealing with items which are considered material in relation to
the Company’s financial statements, except as detailed below.
These accounts have been prepared under the historical cost convention, modified to include the revaluation of certain properties, and in
accordance with applicable accounting standards. The accounts are prepared to the Saturday nearest to the Company’s accounting reference
date of 31 March. The results for 2012 are for the 52-week period ended 31 March 2012. The results for 2011 are for the 52-week period
A separate profit and loss account dealing with the results of the Company only has not been presented, as permitted by Section 408 of the
Under FRS 1 the Company is exempt from the requirement to present its own cash flow statement.
NOTES ON INTERPRETATION OF ACCOUNTING STANDARDS
FRS 20 “SHARE-BASED PAYMENTS”
IFRS 2. This policy is shown in The Group accounting policies on pages 24 to 29.
REVALUATION OF FIXED ASSETS
Property, plant and equipment are held at cost, subject to triennial property revaluations.
The Company has adopted FRS 20 and the accounting policies followed are in all material regards the same as the Group’s policy under
In 2010 the Company adopted a policy of revaluation for properties. As a result all properties were independently revalued during March
Depreciation is calculated to write off the cost (or amount of the valuation) of fixed assets less the estimated residual value on a straight-line
basis over the expected useful economic life of the assets concerned. The annual rates used are generally:
– over residual terms of the leases
– 2 to 4%
– 10 to 20%
• fixtures, fittings, tools and equipment
– 10 to 33.3%
Assets financed by leasing arrangements, which give rights approximating to ownership, are treated as if they had been purchased outright
and are capitalised and depreciated over the shorter of the estimated useful life of the assets and the period of the leases. The capital
element of future rentals is treated as a liability and the interest element is charged against profits in proportion to the balances outstanding.
The rental costs of all other leased assets are charged against profits on a straight-line basis.
The charge for taxation is based on the profit or loss for the period and takes into account taxation deferred because of timing differences
between the treatment of certain items for taxation and accounting purposes. Deferred tax is recognised, without discounting, in respect of all
timing differences between the treatment of certain items for taxation and accounting purposes which have arisen but not reversed by the
balance sheet date, except as otherwise required by FRS 19 “Deferred tax”.
CURRENCY TRANSLATION
Transactions denominated in foreign currencies are translated into Sterling at the rates of exchange ruling on the date of the transaction.
Monetary assets and liabilities are translated into Sterling at the year-end rates.
PENSIONS AND POST-RETIREMENT HEALTH BENEFITS
The Company participates in UK pension scheme providing benefits based on career average related earnings. The assets of the scheme
are held separately from those of the Company. The Company is unable to identify its share of the underlying assets and liabilities of the
scheme on a consistent and reasonable basis and therefore, as required by FRS 17 “Retirement benefits”, accounts for the scheme as if it
were a defined contribution scheme. As a result, the amount charged to the profit and loss account represents the contributions payable to the
scheme in respect of the accounting period.
INVESTMENTS
Investments in respect of subsidiaries are stated at cost less any impairment in value.
FINANCIAL INSTRUMENTS: MEASUREMENT
Where the Company enters into financial guarantee contracts to guarantee the indebtedness of other companies within its Group, the
Company considered these to be insurance arrangements and accounts for them as such. In this respect, the Company treats the
guarantee contract as a contingent liability until such time as it becomes probable that the Company will be required to make a payment
under the guarantee.
2010.
DEPRECIATION
• freehold buildings
• leasehold buildings
• plant and machinery
LEASES
TAXATION
62
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Notes relating to the company financial statements
1. PERSONNEL EXPENSES
Staff costs:
– wages and salaries
– social security costs
– pension charges
– equity share options (credit)/expense
2012
£000
680
79
95
(61)
793
2011
£000
728
88
33
127
976
The average number of employees of the Company (including Executive Directors) during the period was as follows:
Machine tools and equipment
2012
Number
5
2011
Number
4
These staff costs related entirely to the Directors and head office staff who are all classified as administration and management.
Details of Directors’ emoluments, share option schemes and pension entitlements are given in the Remuneration Report on pages 13 to 17.
2. EMPLOYEE SHARE OPTION SCHEMES
The Group has granted share options to employees under The 600 Group PLC 2008 and 2009 Peformance Share Plan.
On 25 August 2009, awards were made to the Executive Directors under the Performance Share Plan (the PSP). On 22 March 2011,
further awards were made to the Executive Directors and other senior employees under the PSP scheme. Options are exercisable at the
end of a three year performance period and are subject to performance criteria relating to TSR, EPS and average share price targets as set
out in the Remuneration Report. The scheme is equity-settled.
SHARE-BASED EXPENSE
The Group recognised total expense of £90,000 (2011:expense of £127,000) in relation to equity-settled share-based payment transactions.
The number and weighted average exercise prices of share options
Number of options outstanding at beginning of period
4,711,898 2,404,669
2012
PSP
2011
PSP
2012
DSP
__
Number of options granted in period
Number of options forfeited/lapsed in period
Number of options exercised in period
Number of options outstanding at end of period
Number of options exercisable at end of period
1,144,737 2,612,080
502,576
(2,099,818)
(304,851)
—
—
3,756,817 4,711,898
—
—
__
—
502,576
502,576
2011
DSP
—
—
—
—
—
—
During the current and prior period, the Group has not granted equity as consideration for goods or services received.
FAIR VALUE ASSUMPTIONS OF SHARE-BASED PAYMENTS
THE 600 GROUP PLC 2008 PERFORMANCE SHARE PLAN
The fair value of awards granted under the 600 group plc 2008 and 2009 Performance Share Plan is determined using the monte carlo
valuation model. The fair value of share options and assumptions are shown in the table below:
Fair value
Share price at grant
Exercise price
Dividend yield
Expected volatility
Expected life
Risk-free interest rate
Number of shares under option
64
0_600_ar12.indd 64
2012
£000
2011
£000
£0.1625
£0.1625
£0.28625
£0.28625
£nil
0%
50%
£nil
0%
12%
3.0 years
3.0 years
5%
4.08%
2,404,669
4,711,898
64
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Notes relating to the company financial statements
Notes relating to the company financial statements
1. PERSONNEL EXPENSES
Staff costs:
– wages and salaries
– social security costs
– pension charges
– equity share options (credit)/expense
Machine tools and equipment
The average number of employees of the Company (including Executive Directors) during the period was as follows:
These staff costs related entirely to the Directors and head office staff who are all classified as administration and management.
Details of Directors’ emoluments, share option schemes and pension entitlements are given in the Remuneration Report on pages 13 to 17.
2. EMPLOYEE SHARE OPTION SCHEMES
The Group has granted share options to employees under The 600 Group PLC 2008 and 2009 Peformance Share Plan.
On 25 August 2009, awards were made to the Executive Directors under the Performance Share Plan (the PSP). On 22 March 2011,
further awards were made to the Executive Directors and other senior employees under the PSP scheme. Options are exercisable at the
end of a three year performance period and are subject to performance criteria relating to TSR, EPS and average share price targets as set
out in the Remuneration Report. The scheme is equity-settled.
SHARE-BASED EXPENSE
The Group recognised total expense of £90,000 (2011:expense of £127,000) in relation to equity-settled share-based payment transactions.
The number and weighted average exercise prices of share options
Number of options outstanding at beginning of period
4,711,898 2,404,669
Number of options granted in period
Number of options forfeited/lapsed in period
Number of options exercised in period
Number of options outstanding at end of period
Number of options exercisable at end of period
2012
PSP
2011
PSP
1,144,737 2,612,080
502,576
(2,099,818)
(304,851)
3,756,817 4,711,898
—
—
—
—
502,576
502,576
During the current and prior period, the Group has not granted equity as consideration for goods or services received.
FAIR VALUE ASSUMPTIONS OF SHARE-BASED PAYMENTS
THE 600 GROUP PLC 2008 PERFORMANCE SHARE PLAN
The fair value of awards granted under the 600 group plc 2008 and 2009 Performance Share Plan is determined using the monte carlo
valuation model. The fair value of share options and assumptions are shown in the table below:
2012
£000
680
79
95
(61)
793
2011
£000
728
88
33
127
976
2012
Number
5
2011
Number
4
2012
DSP
__
__
—
2012
£000
£nil
0%
50%
2011
DSP
—
—
—
—
—
—
2011
£000
£nil
0%
12%
64
£0.1625
£0.1625
£0.28625
£0.28625
3.0 years
3.0 years
5%
4.08%
2,404,669
4,711,898
Fair value
Share price at grant
Exercise price
Dividend yield
Expected volatility
Expected life
Risk-free interest rate
Number of shares under option
3. DIVIDENDS
No dividend was paid in period (2011: no dividend paid).
4. TANGIBLE FIXED ASSETS
Cost or valuation
At 2 April 2011
Additions
At 31 March 2012
At professional valuation
At cost
Depreciation
At 2 April 2011
Charge for period
At 31 March 2012
Net book value
At 31 March 2012
At 2 April 2011
Land and buildings
Fixtures,
fittings,
tools and
Long lease
Short lease
equipment
£000
£000
£000
1,217
—
1,217
1,217
—
1,217
26
26
52
1,165
1,191
92
—
92
92
—
92
92
—
92
—
—
93
1
94
—
94
94
87
3
90
4
6
Total
£000
1,402
1
1,403
1,309
94
1,403
205
29
234
1,169
1,197
Historic cost disclosures are not made as, in the opinion of the Directors, unreasonable expense and delay would be incurred in obtaining
the original costs.
During March 2010 the Group’s properties were revalued. The valuations were performed by independent valuers, Eddisons, and the
valuations were determined by market rate for sale with vacant possession. The Directors believe that these valuations remain appropriate
at 31 March 2012. Revalued amounts are reflected in the balance sheet with the resulting credit taken to revaluation reserve.
Various UK properties are charged as security for borrowing facilities.
5. INVESTMENTS
Cost:
At 2 April 2011
Additions in the period
At 31 March 2012
Provisions
At 2 April 2011
Impairment in the period
At 31 March 2012
Net book values
At 31 March 2012
At 2 April 2011
Shares
In Group
Undertakings
£000
40,423
—
40,423
20,313
11,398
31,710
8,713
20,110
During the period the company provided in full against the carrying value of the investment in FMT-Colchester z.o.o. in Poland of
£870,000 as a result of the group’s decision to close FMT-Colchester in August 2012.
0_600_ar12.indd 65
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Notes relating to the company financial statements
5. INVESTMENTS CONTINUED
During the period an impairment review of the carrying values of investments in other group companies resulted in an additional increase in the
provision of £10,528,000. This review comprised a comparison of the investment with its recoverable amount (the higher of net realisable value
and value in use). To the extent that the carrying amount exceeds the recoverable amount, an impairment charge is recognised. Value in use
calculations are based on Board approved profit forecasts and the resulting cashflows are discounted at the Group’s pre-tax weighted average
cost of capital, which is adjusted for CGU risk factors, resulting in a rate of 19%. Cash flows are extrapolated beyond their term (of between 1 and
4 years) using an estimated growth rate of 2% and are appropriate because these are long term businesses. The growth rates used are consistent
with the long-term average growth rates for the countries in which the CGUs are located. This has no impact on the group accounts.
The principal subsidiary undertakings of The 600 Group PLC and their countries of incorporation are:
ENGLAND
600 UK Limited*
The 600 Group (Overseas) Limited*
CONTINENTAL EUROPE
FMT-Colchester z.o.o. (Poland) *
US
600 Group Inc.
Clausing Industrial, Inc.
REST OF THE WORLD
600 Machine Tools Pty Limited (Australia)
600SA Holdings (Pty) Limited (South Africa)
All undertakings marked * are 100% owned directly by the Parent Company. The others are 100% owned through intermediate holding
companies. All undertakings above are included in the consolidated accounts.
All other subsidiary undertakings will be shown in the company’s next annual return.
6. DEBTORS
Amounts owed by subsidiary undertakings1
Other debtors
Other prepayments and accrued income
1 All inter-company loans are repayable on demand and as such are recorded at their face value.
7. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
Bank loans
Other loans
Trade creditors
Amounts owed to subsidiary undertakings1
Corporation tax
Sundry creditors
Accruals and deferred income
Other creditors
1 All inter-company loans are repayable on demand and as such are recorded at their face value.
The 600 Group PLC has undertaken to discharge the liability for corporation tax of all UK Group undertakings.
2012
£000
2011
£000
34,673
11,523
206
—
97
70
34,879
11,690
2012
£000
824
1,042
1,852
24,700
32
—
—
2011
£000
—
—
416
1,054
44
149
282
28,450
1,945
66
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Notes relating to the company financial statements
Notes relating to the company financial statements
5. INVESTMENTS CONTINUED
During the period an impairment review of the carrying values of investments in other group companies resulted in an additional increase in the
provision of £10,528,000. This review comprised a comparison of the investment with its recoverable amount (the higher of net realisable value
and value in use). To the extent that the carrying amount exceeds the recoverable amount, an impairment charge is recognised. Value in use
calculations are based on Board approved profit forecasts and the resulting cashflows are discounted at the Group’s pre-tax weighted average
cost of capital, which is adjusted for CGU risk factors, resulting in a rate of 19%. Cash flows are extrapolated beyond their term (of between 1 and
4 years) using an estimated growth rate of 2% and are appropriate because these are long term businesses. The growth rates used are consistent
with the long-term average growth rates for the countries in which the CGUs are located. This has no impact on the group accounts.
The principal subsidiary undertakings of The 600 Group PLC and their countries of incorporation are:
ENGLAND
600 UK Limited*
The 600 Group (Overseas) Limited*
CONTINENTAL EUROPE
FMT-Colchester z.o.o. (Poland) *
US
600 Group Inc.
Clausing Industrial, Inc.
REST OF THE WORLD
600 Machine Tools Pty Limited (Australia)
600SA Holdings (Pty) Limited (South Africa)
All undertakings marked * are 100% owned directly by the Parent Company. The others are 100% owned through intermediate holding
companies. All undertakings above are included in the consolidated accounts.
All other subsidiary undertakings will be shown in the company’s next annual return.
6. DEBTORS
Amounts owed by subsidiary undertakings1
Other debtors
Other prepayments and accrued income
1 All inter-company loans are repayable on demand and as such are recorded at their face value.
7. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
Amounts owed to subsidiary undertakings1
Bank loans
Other loans
Trade creditors
Corporation tax
Sundry creditors
Accruals and deferred income
Other creditors
1 All inter-company loans are repayable on demand and as such are recorded at their face value.
The 600 Group PLC has undertaken to discharge the liability for corporation tax of all UK Group undertakings.
8. CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR
Shareholder loan
Bank loans
2012
£000
2,052
3,638
5,690
2011
£000
1,957
—
1,957
The £2.5m shareholder loan was issued with 12.5m convertible warrants attached to it. These warrants allow the holders to either convert
the loan into 20p shares or to purchase 20p shares for a cash consideration. During the year 205,000 of these warrants have been
exercised and as a direct result share capital has increased by £2,050 and share premium by £38,950. The loan has both debt and equity
components and so the value has been split between these components. The debt element is only repayable in August 2015 and as a
result the loan is classified as non-current. Deferred borrowing costs relating to the loan of £281,000 are also netted off the loan carrying
value which at the period-end is £2,052,000.
The Term Loan of £1,138,000 within bank loans will be repaid on a quarterly basis with payments of £160,000 starting on 30 September
2013. The revolving credit facility of £2,500,000 is repayable in June 2014.
9. SHARE CAPITAL
Authorised
626,391,704 ordinary shares of 1p each
57,233,679 deferred shares of 24p each
Allotted, called-up and fully paid:
Ordinary shares of 1p each
57,933,679 ordinary shares of 1p each on issue at start of the period (2011: 57,233,679 ordinary shares of
25p each on issue at start of period)
57,233,679 ordinary shares of 25p each converted into 1p ordinary shares and 24p deferred shares
5,787,574 ordinary shares of 1p each issued in institutional placing
205,000 ordinary shares of 1p each issued under exercised warrants (2011: 700,000 ordinary shares of 1p
each issued under exercised warrants)
63,926,253 ordinary shares of 1p each on issue at end of period (2011: 57,933,679 ordinary shares of 1p
each on issue at end of period)
Deferred shares of 24p each:
57,233,679 deferred shares of 24p each on issue at start of period (2011: nil)
57,233,679 ordinary shares of 25p each converted into 1p ordinary shares and 24p deferred shares
57,233,679 deferred shares of 24p each on issue at end of period
34,673
11,523
34,879
11,690
2012
£000
206
—
2012
£000
824
1,042
1,852
24,700
32
—
—
2011
£000
97
70
2011
£000
—
—
416
44
149
282
1,054
28,450
1,945
Total Allotted, called-up and fully paid at the end of period
2012
£000
6,264
13,736
20,000
2011
£000
6,264
13,736
20,000
579
14,308
-
58
2
(13,736)
-
7
639
579
13,736
-
13,736
-
13,736
13,736
14,375
14,315
The Company has one class of ordinary shares which carry no rights to fixed income. The ordinary shareholders are entitled to receive
dividends as declared and are entitled to vote at meetings of the Company. During the year 205,000 of these warrants have been
exercised and as a result share capital has increased by £2,050 and share premium by £38,950. In addition, an institutional placing of
5,787,574 in April 2011 resulted in share capital increasing by £57,876 and share premium by £1,707,334.
During the prior period each issued ordinary share of 25p was sub-divided and converted into one new ordinary share of 1p and one
deferred share of 24p. Each of the unissued ordinary shares of 25p was also sub-divided into 25 ordinary shares of 1p.
During the prior period a £2.5m related party loan was issued with 12.5m convertible warrants attached to it. These warrants allow the
holders to either convert the loan into 1p shares (at a price of 20p per share) or to purchase 1p shares for cash consideration (at a price
of 20p per share).
66
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Notes relating to the company financial statements
10. RESERVES
At 3 April 2010
Profit for the period
Shareholder loan
Exercised warrants
At 2 April 2011
Loss for the period
Share-based payment
Shareholder loan
On shares issued
At 31 March 2012
Share
Capital
premium
Revaluation
redemption
Equity
Translation
account
£000
13,766
—
—
133
reserve
£000
236
—
—
—
reserve
£000
2,500
—
—
—
13,899
236
2,500
—
—
—
1,746
15,645
—
—
—
—
—
—
—
—
reserve
£000
—
—
160
—
160
—
—
7
—
Profit
and loss
Account
£000
(3,148)
2,029
—
—
reserve
£000
(22)
—
—
—
(22)
(1,119)
—
—
—
—
(15,108)
90
—
—
236
2,500
167
(22)
(16,137)
In accordance with the exemption allowed under Section 408 of the Companies Act 2006, the Company has not presented its own profit
and loss account but has returned a loss in the period of £15,108,,000 (2011: profit of £2,029,000). Amounts paid to the Company’s auditor
in respect of services to the Company, other than the audit of the Company’s financial statements, have not been disclosed as the
information required is instead disclosed in Note 3 to the Consolidated financial statements.
11. CONTINGENT LIABILITIES
Bank guarantees in respect of Group undertakings
12. PENSION
2012
£000
86
2011
£000
43
The Company operates a multi-employer defined benefit scheme for its employees. The date of the most recent full actuarial valuation for
the scheme was 31 March 2007. The Company is unable to identify its share of the underlying assets and liabilities of the fund. The surplus
on the fund amounted to £12.9m at 31 March 2012. Under IFRS the surplus has not been recognised in the period (Note 30 of the
Consolidated financial statements). Under FRS 17, the Company treats its contributions into these schemes as though they were defined
contribution schemes. The pension contribution charge for the Company amounted to £22,000 (2011: £34,000).
13. RECONCILIATION OF MOVEMENT IN SHAREHOLDERS’ FUNDS
Retained (loss)/profit
Issued share capital/share premium
Equity reserve
Net increase/(reduction) in shareholders’ funds
Opening shareholders’ funds
Closing shareholders’ funds
14. RELATED PARTY TRANSACTIONS
There are no related party transactions which require disclosure.
2012
£000
(15,018)
1,806
7
(13,205)
29,969
16,764
2011
£000
2,029
140
160
2,329
27,640
29,969
15. POST BALANCE SHEET EVENT REVIEW
The company raised £1.47m through an institutional placing of new ordinary shares of 1p each at a price of 7.5p per share on 5 September
2012.
On 10 August 2012 the Group announced that it was closing its manufacturing subsidiary FMT in Poland. This activity has been
included in continuing activities at 31 March 2012 but is expected to be treated as a discontinued activity in the year to March 2013.
Certain impairments have been made as a result of this decision and included in the Group Accounts at 31 March 2012.
68
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The 600 Group PLC
Union Street
Heckmondwike
West Yorkshire
WF16 0HL
T: +44 (0)1924 415000
W: www.600group.com
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