The 600 Group PLC
Annual Report and Accounts 2013
Contents
Chairman’s Statement
Group Chief Executive’s Review of Operations
Financial Review
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
1
2
6
9
12
13
17
18
19
20
21
22
23
29
59
60
62
Chairman’s statement
Overview
I am pleased to report satisfactory financial results for the year ended 30 March 2013 after a period of major management and
strategic change. Following the execution of the turnaround plan during the first half of the year, excellent progress has been made
in delivering profitable growth from a stable base. Following the successful refinancing in September 2012, it is particularly
pleasing to report financial results for the second half of the year which were ahead of market expectations.
Strategy
Management aim to develop the Group’s key strengths in metal turning machine tools, precision engineered components, and laser
marking equipment. In each of these activities, Group businesses have strong products and brands, significant market share,
diverse geographical spread, robust manufacturing and supply chains, and reliable distribution partners.
Non-core businesses in South Africa and Poland, and surplus freehold properties in the UK were sold during the year. The
financial effects of these divestments are dealt with in discontinued activities and special items.
Towards the end of the financial year, the Group had started to marshal the financial and management capacity to begin evaluating
potential acquisition targets as a means of generating additional scale, market penetration and accelerating growth.
Results and dividend
Revenue from continuing operations grew by 11.2% to £41.79m (2012: £37.57m) and generated a net operating profit from
continuing operations but before Special Items of £0.97m (2012: £0.23m) and a net operating profit after Special Items of £1.67m
(2012: loss of £9.61m).
After taking account of financial income and expense, Special Items, taxation and discontinued activities the net profit of the Group
for the financial year was £3.94m (2012: loss of £14.85m).
Underlying earnings (from continuing operations before Special Items) amounted to 5.84 pence per share (2012: 0.38p) and
earnings from continuing operations after special items amounted to 5.64 pence per share (2012: loss of 15.05p). Total earnings
were 5.25 pence per share (2012: loss of 23.30p). 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 before expenses. 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.
At the end of the financial year, group net indebtedness had reduced from £7.99m to £5.41m, and gearing was 25%. The group
had financial headroom on existing borrowing facilities of £3.20m and was in full compliance with all financial covenants.
Prospects
Market conditions became more challenging in the final quarter of the year, especially in the Eurozone and Australia. Greater focus
on customer service, supply chain efficiency and reduced lead times have facilitated increased market share despite this
environment, and the board is confident that these improvements can be sustained in future.
Paul Dupee
Chairman
26 June 2013
1
Group chief executive’s review of operations
Introduction
The 600 Group PLC ("the Group") is a leading 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.
During the early part of the financial year, the initial priorities were to stabilise the financial position of the Group and to implement a
strategic review designed to introduce a stable, profitable and cash generative business model. This business plan was
determined by the time of the refinancing in September 2012, and the financial performance of the Group in the second half of the
year has slightly exceeded the expectations which were set at that time, despite some softening of end-user markets.
Throughout the second half, the emphasis has moved towards the strengthening of the financial and operational control
environment, and delivering measurable improvements in customer service levels. This has involved the introduction of a
dashboard of key performance indicators for each business unit covering both financial and non-financial measures.
The improved financial position of the Group has also facilitated necessary investment in new product development, production
equipment and facilities, and a return to normalised levels of inventory holdings to support sales activity in the UK businesses.
Customer backlogs, which had become unacceptably high in Europe, have now returned to acceptable levels by industry
standards, although further improvements can still be achieved.
Our businesses have excellent products, and unrivalled brand heritage. Customer loyalty has been tested over a troubled period in
recent years, but has been found to be robust now that lead times and quality standards that meet or exceed the requirements of
end-users have been re-established. Furthermore, the main focus of the relationships with our supply chain partners has moved
away from financial issues, and towards greater flexibility, design-led cost reduction activity and the need for product development.
Financial highlights
A full discussion of the financial results is set out in the Financial review on the following pages.
Revenues from continuing operations increased by 11.2% to £41.79m, with gross margins steady and net operating margins
increasing to almost 5% of revenues in the second half. Group businesses have sufficient capacity to deliver further growth in
revenues without corresponding step changes in fixed costs (including central overheads), and consequently there remains scope
for further improvement in net operating margin in future.
Group net indebtedness stood reduced at £5.41m by the end of the year (2012: £7.99m), despite additional investment in inventory
in the UK businesses to support customer service improvements, and reduction in average trade creditor days in the UK from 89
days to 61 days to ease supply chain bottlenecks following the refinancing in September 2012
Overall, the primary objective of delivering a stable, profitable and cash generative core business has been delivered, and this
moves the main emphasis now on the delivery of organic growth, and the assessment of opportunities to expand by acquisition.
Machine tools and precision engineered components
Group companies design and develop metal cutting machine tools sold under the brand names Colchester and Harrison and
design and manufacture precision engineering components under the brand names Pratt Burnerd and Gamet. These are sold
worldwide, with direct sales operations in North America (Clausing), Europe, and Australia and a network of distributors in all other
key end-user markets. Clausing is a customer service led distribution business and, in addition to branded Group products, carries
a broad range of other machine tools, spares and accessories to serve the North American market.
2
Group chief executive’s review of operations
The financial results of these activities were as follows:
Revenues
Adjusted operating profit before
special items
Operating margin
2013
£ 000
34,906
2,145
2012
£ 000
31,114
1,468
6.1%
4.7%
Revenues increased by 12.2% with particularly strong growth in the well established markets of North America, and Europe.
Industry statistics for machine tool consumption in North America, which have been broadly stable since 2010, displayed a
declining trend in the second half of the year. The North American business, trading under the Clausing brand name, has been able
to deliver continuous healthy growth in this environment by focusing on enhanced market share through customer service. Almost
half of revenues are derived from the sale of work-holding, accessories, spares and service, and these activities tend to be less
reliant on the manufacturing investment cycle than the sale of machine tools. In addition, recent development of products derived
from domestic sources has generated a favourable market reaction in the current economic climate.
Market conditions in Europe have been somewhat mixed during the year, with UK and CEE markets beginning to show signs of
some improvement, contrasting with a more general slowdown in the Eurozone including France and Germany. Revenues have
shown growth of almost 15% during the year, partly as a result of reducing the unacceptable order backlog evident at the beginning
of the year. With customer lead times now at industry standard in the range 2-3 months, there is now the opportunity to increase
selling activity and continue to recover market share, and this will be the key to delivering revenue growth in the coming year.
In December 2012, we announced the sale and partial leaseback of the main facility at Heckmondwike in West Yorkshire.
Refurbishment of the newer portion of the facility, No.1 Union Works, is substantially complete and was the recent venue for a well-
attended European distributor open house event. The facility houses manufacturing for Pratt Burnerd work-holding, cellular
assembly of Tornado CNC controlled turning machines, and the custom fitting of controls and accessories onto conventional and
Alpha machines, the manufacture of which is outsourced to our design. Measures to engender a culture of continuous
improvement are underway, and further reductions in lead times, production costs and working capital commitments are targeted
as a result of these initiatives.
Laser marking
Electrox designs, develops and manufactures equipment for the permanent marking of a wide variety of materials using lasers from
its operations at Letchworth Garden City. These can be sold as a custom product for integration into automated production lines, or
already fitted into a range of standard and custom workstations built at our own facility. This equipment is then sold by di rect sales
operations in the UK and North America, and through an established network of distributor partners throughout Europe and
beyond.
Results for the financial period were as follows:
Revenues
Adjusted operating profit before
special items
Operating margin
2013
£ 000
6,882
213
3.1%
2012
£ 000
6,451
316
4.9%
3
Group chief executive’s review of operations
Revenues for Electrox increased by 6.7%, with stronger growth in the second half of the year. Gross margins were slightly lower,
mostly as a consequence of increased sales commissions, and operating profits were also lower due to increased expenditure on
sales and marketing.
Throughout the year, we have engaged in extensive new product development and will introduce a complete range of workstations
and state-of-the-art software controls during the first half of the current financial year. These new product launches will position
Electrox with an industry leading product range and well spread geographical markets. Prototypes were shown at a recent
distributor event, and were well received.
The world market for laser marking equipment is quite fragmented and currently estimated to exceed £200m. This provides ample
opportunity for Electrox to deliver improving results in future.
Discontinued activities and divestments
In July 2012, the sale of the Group’s subsidiary in South Africa, 600 SA Pty Ltd (“600SA”) was completed for net cash proceeds of
£1.7m. In September 2012, the Group also completed the sale of its subsidiary in Poland, FMT Colchester Sp. Zo.o ("FMT") for a
nominal sum. This sale followed the closure of FMT which was announced in August 2012 due to the withdrawal of financial
support from FMT by 600 Group.
During the period these businesses made a net loss after taxation of £0.5m and a profit on sale of £0.2m. These amounts are dealt
with as discontinued activities in the current financial period and comparative figures have been adjusted as required. No
significant further costs are expected to arise in future periods.
The Group also sold surplus freehold property at Shepshed, Leicestershire, and at Batley in West Yorkshire, realising net cash
proceeds of £1.6m. In December 2012, the Group entered into a sale and partial leaseback of the freehold site at Heckmondwike
in West Yorkshire realising net proceeds of £1.1m. The net effect of these transactions is treated under the category “Special
Items” and set out in Note 3 to the financial statements.
UK pension scheme
The Group operated a defined benefit pension scheme in the UK which, with effect from 31 March 2013, was closed to the accrual
of benefits in respect of future service. All UK employees are now offered membership of a replacement money-purchase scheme.
At 31 March 2013, the defined benefit scheme had investment assets of £203.30m which were estimated to be sufficient to cover
111% of the cost of future benefits measured on an on-going accounting basis. The Company and the Trustees of the scheme
work in close co-operation to ensure the security of future member benefits, whilst mitigating the risk and cost of contributions to
Group companies.
Accordingly, it is considered reasonably unlikely that the Group will be required to make significant cash contributions to the
Scheme on a more conservative funding basis for the foreseeable future.
Corporate 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
4
Group chief executive’s review of operations
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 continuous dialogue with local and global stakeholders to create trust, opportunity and long term sustainable
value.
Current trading and outlook
There was clear evidence from industry statistics and other sources of market intelligence of a slowing in machine tool consumption
across both mature and developing markets towards the latter part of the financial year. In March 2013, Oxford Economics – the
most widely quoted authority – downgraded the 2013 forecast growth in global demand from approximately 8% to just above 2%,
with much of the growth emanating from the domestic market in China.
Revenues in the first quarter of the current financial year are expected to be marginally higher than the corresponding period last
year. Results for the quarter will be ahead of last year as a consequence of reductions achieved in the group cost base during the
second half.
Order intake in the quarter to date represented 109% of revenues (FY13Q1: 104%), indicating improving conditions as we enter the
second quarter. The current order book is ahead of last year as a consequence of reductiforward revenue at the current rate.
The underlying level of customer enquiries is encouraging, with early signs of recovery in North America and the UK. Demand in
the Eurozone and Australia is expected to continue to be patchy, at least during the first half. Accordingly, the board is cautiously
optimistic of continued progress in the current financial year.
Nigel Rogers
Group Chief Executive
26 June 2013
5
Financial review
Results
Revenue from continuing operations increased by 11.2% to £41.79m (2012: £37.57m). The corresponding operating profit before Special
Items was £0.97m (2012: profit of £0.23m) and £1.67m (2012: loss £9.61m) after Special Items.
After taking account of financial income and expenses including a net credit in respect of pensions interest of £3.50m (2012 : £1.57m), the
net profit from continuing operations, before taxation, discontinued activities and Special Items, was £3.90m (2012: £1.15m).
Group operations in South Africa and Poland were sold in July and September 2012 respectively and have been treated as discontinued
operations in this year’s results and comparative figures adjusted accordingly. The net loss after taxation of £0.30m in respect of the
trading activity and loss on sale of these operations is disclosed in discontinued operation in the Consolidated Income Statement.
A curtailment credit of £2.43m in respect of the closure of the UK final salary scheme to future accrual, and restructuring and other costs
amounting to £1.73m which in the judgement of management are non-recurring in nature and resulting in a net credit of £0.70m (2012 cost
of £9.83m) have been disclosed as Special Items.
The total net profit for the period was £3.94m (2012: loss of £14.85m).
Basic earnings per share from continuing operations before Special Items was 5.84p (2012: 0.38p) and total basic earnings per share, after
allowing for Special Items and discontinued activities, was 5.25p (2012: loss of 23.30p).
Taxation
The company incurred significant trading and capital losses in prior years in the UK and accordingly has no liability for taxation in the UK.
In North America prior tax losses have now been utilised and the current year Group charge is principally in respect of t axation of profits in
North America. Taxation will be payable going forward on profits in North America and tax continues to be paid in Australia on profits made
there.
Deferred taxation was recognised this year in North America in respect of their prior years’ losses and other timing differences and
consequently a large credit of £1.7m has been recorded for prior year deferred taxation. The pensions curtailment gain and net notional
pensions credit from interest on pension liabilities and return on pensions assets has resulted in a large deferred taxation charge in the
current year of £1.6m. The inclusion of the UK final salary scheme surplus on the balance sheet this year has required all tax provisions
relating to these pension entries to be calculated at 35% being the rate of taxation which would be applicable to any refund from the
scheme. Additional deferred taxation has been provided on the pension scheme surplus recognised through the Consolidated Statement of
Comprehensive Income and shown within this Statement.
Retirement Benefits
The accounting surplus on the UK final salary scheme has been included on the Group Statement of Financial Position for the first time this
year as a result of a change in the wording of the scheme rules which has allowed the requirements on surplus recognition within IFRIC 14
to be applied. The accounting surplus at 30 March 2013 was £19.46m. The US retiree health scheme and pension fund deficits reduced
during the year due to changes in actuarial assumptions to £1.35m (2012:£2.01m).
As a result of the closure of the UK scheme to future accrual a curtailment gain has arisen on the actuarial calculation of the liabilities which
has been shown as a Special Item in the Group Income Statement. The income statement in addition to the current service charge within
operating costs, also reflects the interest on the scheme liabilities and the return on the scheme assets within financial income and
expense in the Group Income Statement which resulted this year in a net credit of £3.5m (2012: £1.6m). In accordance with the current
legislation on taxation of pension surplus returns to a company, deferred taxation has been provided for on the pension entries at 35% as
opposed to the normal 23% rate.
Cashflow and borrowings
Group net debt at 30 March 2013 had reduced to £5.4m (2012: £8.0m). The Term Loan facility in the UK had been paid down to £0.8m by
30 March 2013 but further capital repayments were deferred until September 2013 as part of the refinancing in September 2012 which also
provided a further £300k overdraft facility for the UK businesses in addition to the existing £2.5m Revolving Credit facility. Surplus
properties at Shepshed, Batley and Heckmondwike were sold during the year raising £2.7m and the divestment of the South African
business in July 2012 resulted in a further £1.7m of cash being generated. The net proceeds of the equity raise in September was £1.2m
and the refinancing allowed the release of extended UK creditors and stock levels to return to a normal position in the UK from their low
point before the refinancing. Trade and other payables had reduced year on year by £2.6m at 30 March 2013. Capital expenditure was
£0.66m with the majority of this being on the Electrox development of their new software and workstations. £0.5m was expended on
redundancies, reorganisation and restructuring.
Headroom on bank facilities was £3.2m at the year end.
6
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 ge neral 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 i nto 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. Proactive steps are taken to identify and implement cost effective activities to mitigate the pension
scheme deficit.
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.
7
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 a nd 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 working capital control 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.
Key financial performance indicators:
Revenue growth - annual growth rate of Revenue 11.2% (2012: 4.2%)
Gross Margin – gross profit before special items as a percentage of Revenue 31.7% (2012: 32.3%)
Operating margin – operating profit before special items as a percentage of Revenue; 2.3% (2012: 0.6%)
Working Capital levels – inventory plus trade and other receivables less trade and other payables as a percentage of Revenue 22.8%
(2012: 20.7%)
Book to bill ratio – ratio of new orders to revenue on a 3 monthly rolling basis - 85%
Order backlog – the value of outstanding orders expressed in months - 2 months
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, 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
26 June 2013
8
Report of the directors
Paul Dupee*
Appointed to the Board as a non-executive Director on 2 February 2011 and appointed Chairman on 14 September 2011. A private
investor and currently Managing Partner of Haddeo Partners LLP.
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, and director of Cares UK PLC.
Derek Zissman*
Appointed to the Board as a non-executive Director on 2 February 2011. Currently a non-executive director of GFI Software S.a.r.l and
member of Barclays Wealth & Investment Management Committee. Previously vice-chairman, KPMG LLP.
* Non-executive Director and member of the Audit Committee and member of the Remuneration Committee.
SECRETARY
Neil Carrick
REGISTERED OFFICE
1 Union Works
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
NOMINATED ADVISOR AND BROKER
Finncap
FINANCIAL ADVISORS
Spark Advisory Partners
9
Report of the directors
The Directors present their report to the members, together with the audited financial statements for the 52 week period ended 30
March 2013, which should be read in conjunction with the Chairman’s Statement on the affairs of the Group (page 1), the Group Chief
Executive’s Review of Operations (pages 2 to 5) and the Group Finance Director’s Financial Review (pages 6 to 8). 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 2013 are for the 52-week period ended 30 March 2013.
The results for 2012 are for the 52-week period ended 31 March 2012.
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 18.
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 8. 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 (2012: £nil). The Group made no political donations in the
period (2012: £nil).
INTERESTS IN SHARE CAPITAL
At 5 June 2013, 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
Miton Capital Partners
Aerion Fund Management
Schroder Investment Management
Percentage
of issued
ordinary
share
capital
Number
22,792,535
27.05
5,326,509
5,100,000
4,253,777
4,126,667
3,671,320
6.32
6.05
5.05
4.90
4.36
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 year to 31 March 2012. 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 8,425,609 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 28 September 2012. This authority remains valid
until the conclusion of the next Annual General Meeting.
10
Report of the directors
DIRECTORS
Details of the current Directors of the Company are shown on page 9.
The directors retiring by rotation are Mr D Zissman and Mr P Dupee who, being eligible, offer themselves for re-election, 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 30 March 2013 are shown in the Remuneration Report
on pages 13 to 16.
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 61 days
(2012: 89 days) of average purchases for the Company and 51 days (2012: 62 days) for the Group.
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 30 March 2013.
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.
AUDITOR
Our auditor, KPMG Audit Plc, has instigated an orderly wind down of business. The Board has decided to put KPMG LLP forward to be
appointed as auditors and a resolution concerning their appointment will be put to the members at the 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.
On behalf of the Board
NEIL CARRICK
DIRECTOR
26 JUNE 2013
11
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 t o 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
26 JUNE 2013
12
Remuneration report
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 Regul ations.
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:
S J Rutherford (Committee Chairman)
D Zissman
P Dupee
The Committee held two 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.
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 currently participate in a discretionary bonus scheme linked to the achievement of annual financial and personal
performance targets. 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 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 but have subsequently lapsed or been forfeited.
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. Options granted on 18 January 2012 have been forfeited. Options were granted on 19 November 2012 which are
exercisable at 10p between three and ten years after grant date.
BENEFITS IN KIND
Executive Directors benefits include car allowance, medical insurance for self and family. Pension contributions of 9% of basic salary
were also to paid to Mr Carrick.
13
Remuneration report
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 servic e
contract dated 26 March 2012 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.
FIVE YEAR TOTAL SHAREHOLDER RETURN
This graph shows the Total Shareholder Return (TSR) of the Company from 1 April 2008 to 30 March 2013 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.
The 600 Group PLC
AIM Index
45
40
35
30
25
20
15
10
)
0
0
1
o
t
d
e
s
a
b
-
e
r
(
n
r
u
t
e
R
r
e
d
o
h
e
r
a
h
S
l
l
a
t
o
T
5
0
Mar 08 Jun 08 Sep 08 Dec 08 Mar 09 Jun 09 Sep 09 Dec 09 Mar 10 Jun 10 Sep 10 Dec 10 Mar 11 Jun 11 Sep 11 Dec 11 Mar 12 Jun 12 Sep 12 Dec 12 Mar 13
14
Remuneration report
DIRECTORS’ INTERESTS IN SHARES
The interests of Directors holding office at 30 March 2013 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
At
30 March
31 March
2013
Number
2012
Number
22,792,535 16,125,868
1,036,667
100,000
20,000
20,000
—
—
150,000
50,000
P R Dupee’s interest in the 22.8m 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.
DIRECTORS’ EMOLUMENTS
P R Dupee
N F Rogers
N R Carrick
D Zissman
S J Rutherford
D H Norman[1]
M G D Wakeman[2]
M J Temple[3]
Total
.
Salary
Fees
Bonus
Shares[4]
Bonus
All benefits
Cash
in kind
£
£
£
£
£
Total
2013
£
Total
2012
£
—
60,000
—
—
—
60,000
47,625
200,000
145,000
—
—
158,056 20,000
2,481 380,537
—
14,500 43,500
13,852 216,853
82,900
—
—
—
—
—
33,000
33,000
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
33,000
33,000
33,000
33,000
— 532,005
— 332,073
—
60,000
345,000 126,000
172,556 63,500
16,333 723,390 1,120,603
1 Resigned 26 March 2012. Prior year termination payment was subsequently reduced by £105,890.
2 Resigned 2 October 2011. Prior year termination payment was subsequently reduced by £69,470.
3 Resigned 14 September 2011.
4 Bonus after tax used to subscribe for new shares
DIRECTORS’ PENSION ENTITLEMENTS
Pension contributions of £13,050 (2012:£6,525) for N R Carrick, £nil (2012: £97,175) for D H Norman and £nil (2012: £61,263) for M G
D Wakeman were paid into their personal pension schemes.
15
Remuneration report
DIRECTORS’ SHARE OPTIONS
Details of share options at 30 March 2013 and 31 March 2012 for each Director who held office during the year are as follows:
D H Norman
M G D Wakeman
N R Carrick
N F Rogers
Number of
options at
31 March
2012
Granted
Exercised
1,513,487
954,154
1,144,737
Nil
—
—
1,750,0002
2,750,0002
—
—
—
—
Number of
options at
Lapsed/
30 March
forfeited
(1,513,487)1
(954,154)1
(1,144,737)3
2013
Nil
Nil
1,750,000
—
2,750,000
1Options in respect of Mr Norman and Mr Wakeman were forfeited as part of amendment to their termination agreements during the year.
24,500,000 options with an exercise price of 10p were granted under The 600 Group PLC Deferred Share Plan on 19 November 2012 and are exercisable between 3 and 10
years from the grant date.
3 1,144,737 nil cost options granted under the 600 Group PLC 2008 Performance Share Plan on 18 January 2012 were cancelled on 19 November 2012.
The charge to the Income Statement in respect of share based payments was £100,000 (2012: £90,000).
The share price at 30 March 2013 was 12.625p and the highest and lowest prices during the period were 22.75p and 7.375p,
respectively.
On behalf of the Board
NEIL CARRICK
DIRECTOR
26 JUNE 2013
16
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 30 March 2013 set out on pages 18 to 67. 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 s tandards
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/auditscopeukprivate.
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 30 March 2013
and of the group’s profit 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
26 June 2013
17
Consolidated income statement
For the 52-week period ended 30 March 2013
Company Number 00196730
18
BeforeAfterBeforeAfterspecial itemsSpecial itemsspecial itemsspecial itemsspecial itemsspecial items52 weeks52 weeks52 weeks52 weeks 52 weeks 52 weeks endedendedendedendedendedended30 March30 March30 March31 March31 March31 March201320132013201220122012Note£'000£'000£'000£'000£'000£'000ContinuingRevenue141,788 -41,788 37,565 -37,565 Cost of sales (28,538) (600) (29,138) (25,429) (4,464) (29,893)Gross profit13,250 (600)12,650 12,136 (4,464)7,672 Other operating income279 -79 126 -126 Net operating expenses2 (12,356)1,298 (11,058) (12,037) (5,367) (17,404)Operating profit/(loss)4973 698 1,671 225 (9,831) (9,606)Bank and other interest7 7 24 24 Expected return on pension assets11,570 11,570 10,834 10,834 Financial income 611,577 -11,577 10,858 -10,858 Bank and other interest (469) (469) (560) (560)Amortisation of shareholder loan expenses (117) (117) (109) (109)Interest on pension obligations (8,067) (8,067) (9,268) (9,268)Financial expense6 (8,653) - (8,653) (9,937) - (9,937)Profit/(loss) before tax3,897 698 4,595 1,146 (9,831) (8,685)Income tax credit / (charge)7486 (850) (364) (907) - (907)Profit/(loss) for the period from continuing operations4,383 (152)4,231 239 (9,831) (9,592)Post tax loss of discontinued operations1 (295) - (295) (5,257) - (5,257)Total (loss)/profit for the financial year4,088 (152)3,936 (5,018) (9,831) (14,849)attributable to Equity holders of the parent* Comparative figures have been restated as a result of the South African and Polish businesses being treated as discontinuedBasic earnings/(loss) per share per share - continuing95.84p (0.20)p5.64p 0.38p (15.43)p (15.05)p - discontinued (0.39)p (0.39)p (8.25)p (8.25)p - Total5.45p (0.20)p5.25p (7.87)p (15.43)p (23.30)pDiluted earnings/(loss) per share - continuing95.72p (0.20)p5.52p 0.38p (15.43)p (15.05)p - discontinued (0.39)p (0.39)p (8.25)p (8.25)p - Total5.34p (0.20)p5.14p (7.87)p (15.43)p (23.30)pAs restated *Special items comprise exceptional costs and credits relating to reorganisation, redundancy, inventory and intangibles impairments, property disposals, refinancing, pension scheme closure and share based payments (see note 3)
Consolidated statement of comprehensive income
for the 52-week period ended 30 March 2013
Profit/(loss) for the period
Other comprehensive income/(expense)
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 income/(expense) for the period, net of income tax
Total comprehensive income/(expense) 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
30 March
31 March
2013
£000
2012
£000
3,936
(14,849)
-
1,406
12,940
(616)
(4,720)
(95)
7,025
(8,810)
349
386
9,010
(1,145)
12,946
(15,994)
12,946
12,946
(15,994)
(15,994)
19
Consolidated statement of financial position
As at 30 March 2013
Company Number 00196730
Non-current assets
Property, plant and equipment
Intangible assets
Deferred tax assets
Employee benefits
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
30
14
15
16
17
30
18
13
19
21
18
20
23
As at
As at
30 March
31 March
2013
£000
4,500
1,297
3,120
18,105
27,022
10,273
6,183
-
1,025
17,481
44,503
-
(5,100)
(7,597)
(12,697)
(6,973)
(535)
(1,309)
(1,332)
-
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)
(10,149)
(18,063)
(22,846)
(27,264)
21,657
6,987
14,579
16,858
909
2,500
173
1,860
14,375
15,645
1,080
2,500
167
1,487
(15,222)
(28,267)
21,657
6,987
The financial statements on pages 18 to 67 were approved by the Board of Directors on 26 June 2013 and were signed on its behalf
by:
NEIL CARRICK
GROUP FINANCE DIRECTOR
26 June 2013
20
Consolidated statement of changes in equity
As at 30 March 2013
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
Ordinary
Share
Capital
share premium Revaluation redemption Translation Equity
Retained
Total
capital account
reserve
reserve[1]
reserve reserve
Earnings
Equity
£000
£000
£000
£000
£000
£000
£000
£000
14,315 13,899
1,475
2,500
1,697 160
(12,363) 21,683
14,315 13,899
1,475
2,500
—
—
—
—
1,697 160
— —
(12,363) 21,683
(14,849) (14,849)
—
—
—
—
—
—
—
—
—
—
—
—
60 1,746
—
—
—
—
60 1,746
(46)
—
(349)
—
—
(395)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(210) —
(95)
(351)
— —
7,025
7,025
— —
349
—
— —
(8,810)
(8,810)
— —
(210) —
386
386
(15,994) (16,599)
— —
—
—
—
7
—
7
—
—
90
90
1,806
7
90
1,903
At 31 March 2012
At 1 April 2012
Profit for the period
14,375 15,645
1,080
2,500
1,487
167
(28,267)
6,987
14,375 15,645
1,080
2,500
—
—
—
—
1,487 167
— —
(28,267)
6,987
3,936
3,936
Other comprehensive income:
Foreign currency translation
Net actuarial losses on employee benefit
schemes
Impact of assets disposed of
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
—
—
—
—
—
—
—
—
—
—
—
—
204 1,213
—
—
—
—
204 1,213
26
—
(197)
—
—
(171)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
373 —
—
399
— —
1,406
1,406
— —
(616)
(813)
— —
12,940 12,940
— —
373 —
(4,720)
(4,720)
12,946 13,148
— —
—
1,417
—
—
—
6
—
6
—
99
99
6
99
1,522
At 30 March 2013
14,579 16,858
909
2,500
1,860
173 1.1
(15,222) 21,657
1 The capital redemption reserve was set up on cancellation and repayment of cumulative preference shares in 2001.
21
Consolidated cash flow statement
For the 52-week period ended 30 March 2013
Cash flows from operating activities
Profit/(loss) for the period
Adjustments for:
Amortisation of development expenditure
Depreciation
Impairment of goodwill
Impairment of tangible fixed assets
Net financial income
Net pension credit
Other Special Items
Equity share option expense
Discontinued operations
Income tax expense
Operating cash flow before changes in working capital and provisions
Decrease/(increase) in trade and other receivables
Decrease in inventories
(Decrease)/Increase in trade and other payables
Restructuring and redundancy expenditure
Decrease in employee benefits
Cash used in 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
Proceeds from sale of subsidiary undertakings
Purchase of property, plant and equipment
Development expenditure capitalised
Refinancing expenditure
Net cash flows from investing activities
Cash flows from financing activities
Proceeds from issue of ordinary shares
Repayment from external borrowing
Net proceeds from external borrowing
Finance lease expenditure
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
52-week
52-week
period ended
period ended
30 march
31 March
2013
£000
2012
£000
3,936
(14,849)
Notes
87
627
—
—
(2,924)
(2,429)
1,631
100
(295)
364
1,097
346
104
(2,701)
(572)
—
(1,726)
(469)
(40)
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)
(2,235)
(3,867)
7
2,710
1,708
(129)
(532)
(286)
3,478
1,416
(1,383)
—
(173)
(140)
1,103
(117)
39
1,025
24
17
68
380
—
(963)
(549)
—
(1,064)
1,806
—
4,986
—
6,792
1,861
(1,905)
(73)
(117)
22
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 2013
are for the 52-week period ended 30 March 2013. The results for 2012 are for the 52-week period ended 31 March 2012. 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 was agreed with the Trustees of the UK 600 Group Pension Scheme on 28
September 2012 allowing the accounting surplus on the scheme to be included on the Group balance sheet under IFRIC 14.
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:
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)
IAS 32 Offsetting Financial Assets and liabilities
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
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
with the exception of IAS 19 where the expected return on pension assets at a rate above that of the interest on pension obligations will
be replaced by a net figure based upon the discount rate applied to the net defined benefit asset or liability. Had the standard been
applied to the current year the net credit to the Consolidated Income Statement would have been £760,000.
The Company has elected to prepare its Parent Company financial statements in accordance with UK GAAP; these are presented on
pages 59 to 67.
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 31.
The consolidated financial statements are presented in sterling rounded to the nearest thousand.
23
Group accounting policies
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 page 1 and the Group Chief Executive’s Review of Operations on pages 2 to 5. 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 6 to 8 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. On the 5 September 2012 these existing facilities were amended
to include 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 was put in place. Overseas bank overdrafts in place around the Group are all
due for renewal within the next 6 months. The Group’s forecasts and projections, taking account of reasonably possible changes in
trading performance, show that the Group should be able to operate within the level of these facilities.
The Group has held discussions with Santander PLC and its overseas banks and no matters have been drawn to its attention to
suggest the renewal of, or provision of, similar working capital facilities would not be forthcoming on acceptable terms at the expiry of
the current facility terms. The Group also considers that alternative sources of finance would be available should the need arise.
The Directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational
existence for the foreseeable future. Accordingly, they 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, depending on the respective terms of sale. No revenue is recognised if there are
significant uncertainties regarding recovery of the consideration due, associated completion costs, the possible return of go ods or
continuing management involvement with the goods.
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 resourc es 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 the Polish business was the only Group operation in that country
and both have 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.
24
Group accounting policies
OPERATING PROFIT, SPECIAL ITEMS AND DISCONTINUED OPERATIONS
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.
Special Items include gains and losses on the revaluation or sale of properties and assets, exceptional costs relating to reorganisation,
redundancy, restructuring, legal disputes, inventory and intangibles impairments and pension scheme curtailment costs and credits.
Discontinued operations include the results for the South African and Polish businesses which were disposed of during the period.
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. The UK defined benefit scheme was closed to future
accrual on 31 March 2013 after a period of consultation with employees and the agreement of the scheme trustees.
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.
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
25
Group accounting policies
valuers, Eddisons, and the valuations were determined by market rate for sale with vacant possession. The Directors believe that these
valuations remain appropriate at 30 March 2013. Revalued amounts are reflected in the balance sheet with the resulting credit taken to
revaluation reserve. Profits or losses on disposals are calculated using the carrying value in the balance sheet.
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 whe n
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 de scribed
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 o ption 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 financi al liability is
reclassified to equity; no gain or loss is recognised on conversion.
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 Black Scholes option-pricing model, based upon publicly available market data at the point of grant.
26
Group accounting policies
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 purchas ed
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
based on market valuations obtained. 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 recognit ion,
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 acc ordance
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.
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.
27
Group accounting policies
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 21.
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.
28
Notes relating to the consolidated financial statements
For the 52-week period ended 30 March 2013
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 the Polish business was the only Group
operation in that country and both have 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 30 March 2013
Segmental analysis of revenue
Revenue from external customers
Inter-segment revenue
Total segment revenue
Less: inter-segment revenue
Total revenue
Continuing
Machine
Tools
& Precision
Engineered
Components
Laser
Marking
Head Office
&
unallocated
Total
continuing Discontinued
£000
£000
£000
34,906
6,882
—
131
34,906
7,013
—
(131)
34,906
6,882
—
—
—
—
—
£000
41,788
131
41,919
(131)
41,788
£000
Total
£000
3,658
45,446
323
454
3,981
45,900
(323)
(454)
3,658
45,446
Segmental analysis of operating Profit/(loss)
before Special Items
Special Items
Group profit from operations
2,145
(1,391)
754
213
7
220
(1,385)
2,082
973
698
(500)
—
473
698
697
1,671
(500)
1,171
Other segmental information:
Reportable segment assets
Reportable segment liabilities
Fixed asset additions
Depreciation and amortisation
25,981
5,170
12,405
43,556
(32,387)
(5,167)
3,831
(33,723)
72
491
57
195
—
28
129
714
29
Notes relating to the consolidated financial statements
For the 52-week period ended 30 March 2013
1. SEGMENT INFORMATION CONTINUED
52-weeks ended 31 March 2012
Segmental analysis of revenue
Revenue from external customers
Inter-segment revenue
Total segment revenue
Less: inter-segment revenue
Continuing
Machine
Tools
& Precision
Engineered
Components
Laser
Marking
Head Office
& unallocated
£000
£000
£000
31,114
6,451
—
200
31,114
6,651
—
(200)
Total revenue per statutory accounts
31,114
6,451
Total Discontinued
£000
£000
Total
£000
37,565
15,600 53,165
200
1,903
2,103
37,765
(200)
17,503 55,268
(1,903)
(2,103)
37,565
15,600 53,165
—
—
—
—
—
Segmental analysis of operating Profit/(loss) before
special Items
1,468
316
(1,559)
225
(1,097)
(872)
Special Items
(6,435)
(1,372)
(2,024)
(9,831)
(3,048) (12,879)
Group (Loss)/profit from operations
Other segmental information:
Reportable segment assets
Reportable segment liabilities
Non-current assets
Fixed asset additions
Depreciation and amortisation
Impairment of fixed assets
Impairment of development costs
(4,967)
(1,056)
(3,583)
(9,606)
(4,145) (13,751)
21,034
4,056
1,385
26,475
7,776 34,251
(15,441)
(3,977)
(1,903)
(21,321)
(5,943) (27,264)
3,063
2,310
2,037
7,410
229
613
—
—
151
225
—
931
1
28
—
—
381
866
—
931
—
7,410
582
283
963
1,149
1,158
1,158
—
931
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 us ed for
more than one period.
Geographical segmental analysis of revenue is shown by origin and destination in the following two tables:
Segmental analysis by origin
Gross sales revenue:
UK
North America
Australasia
Continuing Revenue
Discontinued
Total Revenue
2013
£000
2012
%
£000
%
18,076
39.8
16,414
30.9
19,994
3,718
41,788
3,658
45,446
44.0
8.2
92.0
8.0
100.0
17,167
3,984
37,565
15,600
53,165
32.3
7.5
70.7
29.3
100.0
30
Notes relating to the consolidated financial statements
For the 52-week period ended 30 March 2013
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
2013
£000
6,581
6,662
22,691
79
3,765
142
729
1,139
41,788
3,657
45,445
2012
%
£000
%
15.1
17.0
50.2
1.2
10.3
1.1
1.7
2.0
98.6
1.4
6,034
4,982
20,063
500
4,103
425
665
793
37,565
558
100.0
38,123
15.8
13.1
52.6
1.3
10.8
1.1
1.7
2.1
98.5
1.5
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 £1.7m. This represented the full activities of the
Mechanical Handling and Waste business segment. FMT Colchester Sp. Zoo the Group’s Polish business was sold for a nominal sum on
11 September 2012. This business was the Group’s only activity in Poland. The results for both these businesses are included in the post
tax loss on discontinued activities in the Group’s consolidated income statement. The figures for 2012 have been restated to show both
these activities as discontinued. The results of these discontinued operations are as follows:
Results of the discontinued operations
Revenue
Expenses
Loss before tax from discontinued operations
Taxation
Profit/(Loss) from operating activities after tax
Profit/(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
Poland
South
Africa
2013
£000
Total
2012
£000
South
Africa
Poland
Total
3,042
616
3,658
13,772
1,828
15,600
(3,002)
(1,156)
(4,158) (13,437)
(6,308)
(19,745)
40
—
40
—
40
(540)
—
(540)
205
(335)
(500)
—
(500)
335
151
486
(4,480)
(4,145)
—
151
(4,480)
(3,994)
205
(1,263)
—
(1,263)
(295)
(777)
(4,480)
(5,257)
£000
Poland
Total
South
Africa
South
Africa
Poland
£000
Total
40
—
40
(134)
(94)
(511)
—
(134)
—
(94)
460
(51)
—
—
—
(511)
460
(511)
31
Notes relating to the consolidated financial statements
For the 52-week period ended 30 March 2013
2. OTHER OPERATING INCOME/OPERATING EXPENSES
Other operating income
Operating expenses:
– administration expenses
– distribution costs
Total operating expenses
3. SPECIAL ITEMS
2013
£000
79
9,569
1,489
11,058
2012
£000
126
15,662
1,742
17,404
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, exceptional costs relating to reorganisation, redun dancy and
restructuring, legal disputes and inventory,asset and intangibles impairments.
Cost of sales
Inventory impairments
Plant and equipment impairments
Development expenditure impairments
Redundancies
Operating costs
Redundancies
Refinancing
Reorganisation and restructuring costs
Property disposals
Share-based payments
Pension curtailment credit
Continuing
Discontinued
Restructuring costs
2013
£000
246
—
—
354
—
295
760
(23)
99
(2,429)
(698)
—
(698)
2012
£000
2,706
1,158
931
252
1,159
451
3,084
—
90
—
9,831
3,048
12,879
Reorganisation and restructuring costs relate to legal disputes and costs incurred in the UK with regard to site closures.
The property disposals relate to the disposal of the three UK sites at Shepshed, Batley and Heckmondwike.
Inventory impairments relate to a review of the recoverability of stock following these closures.
The pensions curtailment gain arose on the change to actuarial assumptions as a result of the closure to the UK final scheme to future
accrual at the end of March 2013.
Refinancing costs relate to the costs of the share placing and bank facility restructuring in September 2012.
Prior Year
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, invent ory levels
were reviewed for obsolescence and age and impairments were made to inventories and plant and machinery.
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 th e
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.
32
Notes relating to the consolidated financial statements
For the 52-week period ended 30 March 2013
4. OPERATING PROFIT/(LOSS)
– 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
2013
£000
25
87
—
11
12
1
52
2
2012
£000
25
116
—
13
112
1
52
2
Special Items
–Reorganisation, redundancy, share based payments, pensions, inventory and intangibles impairment (note
3)
(698)
9,831
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
88
42
36
66
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)
2013
£000
8,193
1,219
227
234
100
2012
£000
8,091
1,188
258
269
(61)
9,973
9,745
In addition to the above staff costs, redundancy costs of £354,000 were incurred during the year (2012 - £1,411,000). Redundancy
amounts payable to directors during the year amounted to £nil (2012 - £643,000). Director’s emoluments including disclosure of the
highest paid director are included in the Director’s Emoluments table contained within the Remuneration report.
Comparatives have been restated to exclude discontinued operations.
33
Notes relating to the consolidated financial statements
For the 52-week period ended 30 March 2013
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
Continuing
Discontinued
Total
2013
Number
2012
Number
44
105
79
228
109
337
67
139
83
289
332
621
Details of Directors’ emoluments, share option schemes and pension entitlements are given in the Directors’ Remuneration Report on
pages 13 to 16.
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
Amortisation of shareholder loan expenses
Interest on defined benefit pension scheme obligations
Financial expense
7. TAXATION
Current tax:
Corporation tax at 24% (2012: 26%):
– 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
2013
£000
7
11,570
11,577
(185)
(200)
(23)
—
(61)
(117)
(8,067)
(8,653)
2012
£000
24
10,834
10,858
(276)
(200)
(23)
—
(61)
(109)
(9,268)
(9,937)
2013
£000
2012
£000
—
—
(499)
(499)
(1,579)
1,714
135
(364)
(74)
(74)
(50)
(783)
(833)
(907)
34
Notes relating to the consolidated financial statements
For the 52-week period ended 30 March 2013
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 24% (2012: 26%). The
differences are explained below:
Profit/(Loss) before tax
Profit/(Loss) before tax multiplied by the standard rate of corporation tax
in the UK of 24% (2012 26%)
Effects of:
– expenses not deductible
– non-taxable income
– overseas tax rates
– pension fund surplus taxed at higher rate
– property disposals
– deferred tax prior period adjustment
– unrecognised losses utilised/tax not recognised on losses
– impact of rate change
Taxation charged to the income statement
2013
£000
4,595
2012
%
£000
%
(13,165)
1,103
24.0
(3,423)
(26.0)
109
—
182
657
(656)
(1,714)
725
(42)
364
2.4
—
4.0
14.3
(14.3)
(37.3)
15.8
(0.9)
7.9
120
—
104
—
—
783
3,345
(22)
907
0.9
—
0.8
—
—
5.9
25.4
(0.2)
6.9
Following the enactment of legislation in the UK to reduce the corporation tax rate from 24% to 23% from 1 April 2013, 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 £42,000 decrease in the tax charge in the income statement. The March 2013 Budget
announced that the rate will further reduce to 20% by 2015 in addition to the planned reduction to 21% by 2014 previously announced
in December 2012. It has not yet been possible to quantify fully the anticipated effect of the further 3% rate reduction although this will
further reduce the company’s future current tax charge and deferred tax assets and liabilities. No taxation is expected on the property
disposals due to the availability of losses in the UK.
Deferred taxation balances are analysed in note 13.
8. DIVIDENDS
No dividend was paid in period (2012: no dividend paid).
9. EARNINGS PER SHARE
The calculation of the basic earnings per share of 5.25p (2012: loss of 23.30p) is based on the earnings for the financial period
attributable to the Parent Company’s shareholders of a profit of £3,936,000 (2012: loss of £14,849,000) and on the weighted average
number of shares in issue during the period of 74,997,407 (2012: 63,717,224). At 30 March 2013, there were 4,500,000 (2012:
2,272,102) potentially dilutive shares on option with a weighted average effect of 1,615,068 (2012: 9,863,832) shares giving a diluted
profit per share of 5.14p . As a loss cannot be diluted the diluted figures for 2012 remained the same as the basic loss per share for
continuing operations at 23.30p
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
2013
2012
63,926,253
57,933,679
11,071,154
5,783,545
74,997,407
63,717,224
35
Notes relating to the consolidated financial statements
For the 52-week period ended 30 March 2013
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 22 March 2011 and 18 January 2012, awards were made to Executive Directors and other senior employees under the PSP
scheme. These awards to Executive Directors have either been forfeit on cessation of employment or cancelled during the year. The
outstanding Options to senior employees under the PSP are exercisable at the end of a three year performance period and are subject
to achievement of a minimum share price of at least 31.25p to obtain 25% of the share award, rising on a sliding scale to 100% at over
50p per share. Options granted on 18 January 2012 under the new Deferred Share Plan (DSP) to former Executive Directors were
forfeit during the year on cessation of employment. Options under the DSP were granted to the Executive Directors on 19 November
2012 which are exercisable between 3 and 10 years from the grant date at 10p per share. The schemes are equity-settled.
SHARE-BASED EXPENSE
The Group recognised a total charge of £99,000 (2012: charge of £90,000) in relation to equity-settled share-based payment
transactions.
2013
PSP
2012
PSP
2013
DSP
2012
DSP
The number and weighted average exercise prices of share options
Number of options outstanding at beginning of period
3,756,817
4,711,898
502,576
—
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
4,500,000
502,576
(3,109,802)
(2,099,818)
(502,576)
—
—
—
—
—
647,015
3,756,817
4,500,000
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 (PSP) AND 2011 DEFERRED SHARE PLAN (DSP)
The fair value of awards granted under these Share Plans are determined using the Black Scholes 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
2013
DSP
£000
£0.04
£0.13
10p
0%
50%
2012
PSP
£000
£0.1625
£0.19
£nil
0%
50%
3.0 years
3.0 years
4.08%
5%
4,500,000
1,144,737
36
Notes relating to the consolidated financial statements
For the 52-week period ended 30 March 2013
11. PROPERTY, PLANT AND EQUIPMENT
Cost or valuation
At 31 March 2012
Exchange differences
Additions during period
Disposals during period
At 30 March 2013
At professional valuation
At cost
Depreciation
At 31 March 2012
Exchange differences
Charge for period
Disposals during period
At 30 March 2013
Net book value
At 30 March 2013
At 31 March 2012
Land and buildings
Plant and
Fixtures,
fittings,
tools and
Freehold
Leasehold
machinery
equipment
£000
£000
£000
£000
Total
£000
1,064
2,518
22,213
2,381
28,176
60
—
—
1,124
1,124
—
1,124
107
6
56
—
169
955
957
—
—
(91)
2,427
2,395
32
2,427
176
—
27
(91)
112
2,315
2,342
48
127
(2,498)
19,890
—
19,890
19,890
50
2
(275)
2,158
—
2,158
2,158
158
129
(2,864)
25,599
3,519
22,080
25,599
20,598
2,210
23,091
34
451
(2,349)
18,734
1,156
1,615
44
93
(263)
2,084
74
171
84
627
(2,703)
21,099
4,500
5,085
The net book value of property, plant and equipment includes £129,700 (2012: £172,000) of assets held under finance leases. The
depreciation charged in the period against assets held under finance leases was £25,000 (2012: £25,000).
37
Notes relating to the consolidated financial statements
For the 52-week period ended 30 March 2013
11. PROPERTY, PLANT AND EQUIPMENT CONTINUED
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 30
March 2013.
Various UK properties with a net book value of £410,000 (2012: £5,116,000) 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
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
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
22,242
(137)
835
409
(653)
(483)
22,213
—
22,213
22,213
174
18,983
(4)
—
59
—
—
(53)
176
(31)
282
737
1,158
(273)
(258)
2,858
(14)
17
(409)
—
(71)
2,381
—
2,381
2,381
2,421
(12)
(282)
125
—
—
(42)
32,360
(241)
963
—
(653)
(4,253)
28,176
3,459
24,717
28,176
21,699
(47)
—
1,033
1,158
(273)
(479)
20,598
2,210
23,091
2,342
2,402
1,615
3,259
171
437
5,085
10,661
38
Notes relating to the consolidated financial statements
For the 52-week period ended 30 March 2013
12. INTANGIBLE ASSETS
Cost
At 31 March 2012
Additions
Written off
At 30 March 2013
Amortisation and impairment
At 31 March 2012
Amortisation
At 30 March 2013
Net book value
At 30 March 2013
At 31 March 2012
Development
Goodwill
Expenditure
£000
£000
Total
£000
1,514
1,240
2,754
—
—
532
—
532
—
1,514
1,772
3,286
1,514
—
1,514
—
—
388
87
475
1,297
852
1,902
87
1,989
1,297
852
The additions to Development Expenditure of £532k in the period and £549k in the prior period related primarily to internal
development.
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
Development
Goodwill
Expenditure
£000
£000
Total
£000
4,839
549
1,514
—
—
3,325
549
(2,634)
(2,634)
1,514
1,240
2,754
1,514
1,975
3,489
—
—
—
116
931
116
931
(2,634)
(2,634)
1,514
388
1,902
—
—
852
1,350
852
1,350
Amortisation and impairment charges are recorded in the following line items in the income statement:
Operating expenses
2013
£000
87
2012
£000
1,047
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.
39
Notes relating to the consolidated financial statements
For the 52-week period ended 30 March 2013
13. DEFERRED TAX ASSETS AND LIABILITIES
RECOGNISED DEFERRED TAX ASSETS AND LIABILITIES
Deferred tax assets and liabilities are attributable to the following:
Accelerated capital allowances
Short-term timing differences
Tax losses
Overseas tax losses
Employee benefits
Revaluations and rolled over gains
Research and development
Tax assets/(liabilities)
Held for sale
Net tax assets/(liabilities)
Assets
Liabilities
Net
2013
£000
725
438
1.308
649
—
—
—
3,120
—
3,120
2012
£000
72
36
1,365
405
—
—
—
1,878
(405)
1,473
2013
£000
—
—
—
—
(6,350)
(1,133)
(114)
(7,597)
—
2012
£000
—
—
—
—
—
(1,226)
(139)
(1,365)
—
2013
£000
725
438
1,308
649
(6,350)
(1,133)
(114)
(4,477)
—
(7,597)
(1,365)
(4,477)
2012
£000
72
36
1,365
405
—
(1,226)
(139)
513
(405)
108
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
As at
Statement of
As at
31 March
Income
Eliminated
comprehensive
Exchange
30 March
2012
£000
72
36
1,365
405
—
(1,226)
(139)
513
statement
On disposal
income
Fluctuations
£000
653
389
(57)
617
(1,653)
93
25
67
£000
£000
£000
—
—
—
(405)
—
—
—
—
—
—
(4,720)
—
—
(405)
(4,720)
—
13
—
32
23
—
—
68
2013
£000
725
438
1,308
649
(6,350)
(1,133)
(114)
(4,477)
MOVEMENT IN DEFERRED TAX DURING THE PRIOR PERIOD
Accelerated capital allowances
Short-term timing differences
Tax losses
Overseas tax losses
Employee benefits
Revaluations and rolled over gains
Research and development
As at
2 April
2011
£000
99
39
1,370
1,177
—
(1,398)
(400)
887
Statement of
As at
Income
comprehensive
Exchange
31 March
statement
income
Fluctuations
£000
(27)
(3)
(5)
(694)
(386)
172
261
(682)
£000
£000
—
—
—
—
386
—
—
386
—
—
—
(78)
—
—
—
(78)
2012
£000
72
36
1,365
405
—
(1,226)
(139)
513
40
Notes relating to the consolidated financial statements
For the 52-week period ended 30 March 2013
13. Deferred tax assets and liabilities CONTINUED
Following the enactment of legislation in the UK to reduce the corporation tax rate from 24% to 23% from 1 April 2013, 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 £42,000 decrease in the tax charge in the income statement. The March 2013 Budget
announced that the rate will further reduce to 20% by 2015 in addition to the planned reduction to 21% by 2014previously announced in
December 2012. It has not yet been possible to quantify fully the anticipated effect of the further 3% rate reduction although this will
further reduce the company’s future current tax charge and deferred tax assets and liabilities. No taxation is expected on the property
disposals due to the availability of losses in the UK.
No provision is made for taxation that would arise if reserves in overseas companies were to be distributed.
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
2013
£000
1,670
8,978
2012
£000
1,670
7,600
2013
£000
2,835
680
6,758
2012
£000
2,559
628
7,624
10,273
10,811
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 inventory provisions have decreased by £1,991,000 (2012: increased by £3,389,000). 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 £27,326,000 (2012: £30,076,000).
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.
2013
£000
5,502
262
418
6,182
2012
£000
5,392
318
818
6,528
41
Notes relating to the consolidated financial statements
For the 52-week period ended 30 March 2013
15. TRADE AND OTHER RECEIVABLES CONTINUED
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
The ageing analysis of gross trade receivables, before provisions, 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
2013
£000
428
9
(71)
117
(3)
480
2013
£000
4,149
1,176
578
151
12
2012
£000
572
(3)
(164)
62
(39)
428
2012
£000
3,980
1,210
589
3
38
6,066
5,820
As at 30 March 2013, 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 other classes of debtors do not contain impaired assets.
16. ASSETS HELD FOR SALE
Properties held for sale
600SA assets held for sale (including property, plant and equipment)
Total assets held for sale
2013
£000
-
-
-
2012
£000
2,793
6,300
9,093
In the prior year the assets of 600SA, the Group’s South African business, were shown as assets held for sale as the business was
being actively marketed at the previous period-end and was subsequently sold to Eqstra Holdings Limited on 16 July 2012. The
liabilities of this business were also disclosed separately in the Consolidated statement of financial position (note 20).
The properties held for sale in the prior year related to UK land and buildings which were being actively marketed at the period-end and
were subsequently sold during the 2013 financial year
42
Notes relating to the consolidated financial statements
For the 52-week period ended 30 March 2013
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
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)
2013
£000
925
100
1,025
-
1,025
2013
£000
-
1,208
124
1,332
2013
£000
2,808
2,163
129
5,100
2012
£000
309
100
409
(526)
(117)
2012
£000
526
1,761
292
2,579
2012
£000
3,638
2,052
134
5,824
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. 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 t he
loan is classified as non-current. Deferred costs relating to the loan of £164,000 are also netted off the loan carrying value which at the
period-end is £2,163,000.
The Term Loan of £788,000 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 diff erence 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
2013
£000
86
4,034
206
1,279
1,368
6,973
2012
£000
168
5,776
930
1,082
1,600
9,556
43
Notes relating to the consolidated financial statements
For the 52-week period ended 30 March 2013
20. LIABILITIES HELD FOR SALE
600SA liabilities held for sale
2013
£000
-
-
2012
£000
4,488
4,488
In the prior year the liabilities of 600SA, the Group’s South African business, were shown as liabilities held for sale as the business was
being actively marketed at the prior period-end and was subsequently sold to Eqstra Holdings Limited on 16 July 2012. The assets of
this business were also disclosed separately in the Consolidated statement of position (note 16).
21. PROVISIONS
Provision carried forward at 31 March 2012
Exchange differences
Charged to income statement
Utilised in the period
Provision carried forward at 30 March 2013
Other
£000
1,115
—
523
(424)
1,214
Warranties
£000
126
4
36
(71)
95
Total
£000
1,241
4
559
(495)
1,309
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 pro ducts 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
2013
£000
124
139
(10)
253
124
129
253
2012
£000
292
140
(6)
426
292
134
426
44
Notes relating to the consolidated financial statements
For the 52-week period ended 30 March 2013
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
2013
£000
2012
£000
6,264
13,736
20,000
6,264
13,736
20,000
63,926,253 ordinary shares of 1p each on issue at start of the period (2012: 57,933,679 ordinary shares )
19,663,171 ordinary shares of 1p each issued in institutional placing
666,667 ordinary shares of 1p each issued to N Rogers on subscription following bonus payment
205,000 ordinary shares of 1p each under exercised warrants
84,256,091 ordinary shares of 1p each on issue at end of period (2012: 63,926,253 ordinary shares of 1p)
639
197
7
843
579
58
2
639
Deferred shares of 24p each:
57,233,679 deferred shares of 24p each on issue at start and end of period
13,736
13,736
Total Allotted, called-up and fully paid at the end of period
14,579
14,375
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 an institutional placing of 19,663,171
shares and subscription for 666,667 shares by N Rogers took place in September 2012. This resulted in share capital increasing by
£203,298. The corresponding share premium increase was £1,328,106 from which expenses of issue of £114,991 have been
deducted.
During 2011 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. The deferred shares are
not marketed,cannot be converted and are cancellable by the company without compensaton.
During 2011 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 pr ice of 20p
per share).
24. RECONCILIATION OF NET CASH FLOW TO NET DEBT
Increase in cash and cash equivalents
Decrease/(Increase) in debt and finance leases
Increase in net debt from cash flows
Net debt at beginning of period
Shareholder loan adjustment
Exchange effects on net funds
Net debt at end of period
2013
£000
1,103
1,556
2,659
(7,994)
(111)
39
2012
£000
1,861
(4,885)
(3,024)
(4,795)
(103)
(72)
(5,407)
(7,994)
45
Notes relating to the consolidated financial statements
For the 52-week period ended 30 March 2013
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
31 March
Exchange
2012
£000
309
100
(526)
(117)
(1,761)
(3,638)
(2,052)
(426)
(7,994)
movement
£000
Other
£000
—
—
39
—
—
—
—
—
39
—
—
—
—
—
—
(111)
—
(111)
At
30 March
2013
£000
925
100
—
1,025
(1,208)
(2,808)
(2,163)
(253)
Cash flows
£000
616
—
487
1,103
553
830
—
173
2,659
(5,407)
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 2011 a shareholder loan was raised which had 12.5m war rants
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. 905,000 of these warrants have so far been exercised and shares issued on exercise for cash.
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.
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.
The Directors have considered the hierarchical fair value disclosure requirements of the relevant accounting Standards and these will be
applied as appropriate. At the period end the Directors do not believe there is a material difference between any financial asset or liability
and the book values disclosed.
46
Notes relating to the consolidated financial statements
For the 52-week period ended 30 March 2013
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
Australasia
2013
£000
5,392
1,025
6,417
2013
£000
3,627
-
1,837
121
5,585
2012
£000
5,392
409
5,801
2012
£000
3,229
107
1,811
245
5,392
47
Notes relating to the consolidated financial statements
For the 52-week period ended 30 March 2013
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 and Australia certain restrictions on the repatriation of funds to the UK
may be imposed by the local bank.
Typically the Group ensures that it has sufficient cash or overdraft facilities on demand to at least meet any unexpected ope rational
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:
Bank overdrafts
Bank loan
Shareholder loan
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
2013
carrying
amount
£000
—
4,016
2,163
253
6,432
6,973
Contractual
cash flows
£000
—
4,016
2,163
253
6,432
6,973
13,405
13,405
Less than
1 year
£000
—
1,208
—
124
1,332
6,973
8,305
1–2 years
2–5 years
£000
—
2,808
—
129
2,937
—
2,937
£000
—
—
2,163
—
2,163
—
2,163
2012
carrying
Contractual
Less than
amount
cash flows
£000
526
5,399
2,052
426
8,403
5,776
£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
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
Notes relating to the consolidated financial statements
For the 52-week period ended 30 March 2013
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
2013
US Dollars
$000
1,837
(472)
1,365
Euro
€000
95
(1,142)
(1,047)
PLN
000
276
(1,479)
2012
US Dollars
$000
1,811
(533)
(1,203)
(1,278)
Euro
€000
95
(1,142)
(1,047)
2013
Average
rate
1.579
Year end
spot rate
1.519
1.223
1.183
2012
Average
rate
1.600
4.830
1.160
Year end
spot rate
1.598
4.983
1.200
Change if
appreciated/
Depreciated
Net assets
by 25%
in foreign
against local
currency
Currency
7,145
1,786
The Group has operations around the world and is therefore exposed to foreign exchange risk arising from net investments in foreign
operations. Where cost effective, the exposures arising from the translation of the net assets of the Group’s foreign operations are
managed through the use of borrowings or cross-currency swaps in the relevant foreign currency.
Some Group operations on occasion also enter into commercial transactions in currencies other than their functional currencies. Exposures
arising from the translation of foreign currency transactions are continually monitored and material exposures are managed where
necessary through the use of forward contracts or options once cash flows can be identified with sufficient certainty. Exposures arising
from the translation of intra-group lending are managed through the use of borrowings in the relevant foreign currency.
49
Notes relating to the consolidated financial statements
For the 52-week period ended 30 March 2013
26. FINANCIAL INSTRUMENTS CONTINUED
The following table shows the impact (due to the retranslation of non-functional currency monetary assets and liabilities in the Group's
operations) of a, reasonably possible, 10% movement in the Group’s principal foreign currency exchange rates at the year-end date.
30 March 2013
US$
AUD
31 March 2012
US$
AUD
10%
increase
Effect on
profit
before tax
Effect on
shareholders’
equity
10 %
decrease
Effect on
profit before
tax
Effect on
shareholders’
equity
(106)
(18)
(399)
(70)
(432)
(121)
(399)
(70)
106
18
488
86
432
121
488
86
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:
US Dollar
AUS Dollar
CAD Dollar
Net cash/
Change if
in foreign interest rates
borrowings
in foreign
in foreign
Currency
currency
change by
1%
£’000
£’000
(288)
121
16
(3)
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. On 30 March 2013, 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 £0.05m (2012: charge of £0.06m). A reduction of 100 basis points would have the equal and opposite effect.
There is no further impact on shareholders' equity.
50
Notes relating to the consolidated financial statements
For the 52-week period ended 30 March 2013
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. Forward exchange contracts generally have maturities of less than one year. There were no contracts
outstanding at the period end.
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 occasionally 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 30 March 2013 was a liability of £nil (Note 18) (2012: 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 30
March 2013 and 31 March 2012 was:
Currency
Sterling
US Dollars
Australian Dollars
Euros
Polish Zloty
Canadian Dollars
2013
Financial
assets
2012
Financial
assets
Floating rate
Fixed rate
on which
Floating rate
Fixed rate
on which
financial
financial
no interest
financial
financial
no interest
assets
assets
is earned
£000
469
—
456
—
—
—
£000
100
—
—
—
—
—
£000
3,790
2,197
196
—
—
—
Total
£000
4,359
2,197
652
—
—
—
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
925
100
6,183
7,208
655
100
6,557
7,312
The weighted average interest rate on floating rate financial assets is:
Currency
US Dollars
Australian Dollars
Sterling
Canadian Dollars
%
2.0%
2.5%
0.0%
0.0%
Sterling fixed-rate financial assets are centrally controlled. At 30 March 2013 the weighted average interest rate on these deposits was
1.0% (2012: 1.0%).
The floating rate financial assets comprise other deposits that earn interest based on short-term deposit rates.
51
Notes relating to the consolidated financial statements
For the 52-week period ended 30 March 2013
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 30 March 2013 and 31 March 2012 was:
2013
Financial
liabilities
2012
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
liabilities
liabilities
Currency
Sterling
US Dollars
South African Rand
Australian Dollars
Canadian Dollars
£000
3,289
728
—
—
—
4,017
£000
124
—
—
130
—
254
£000
4,439
799
—
198
—
Total
£000
7,852
1,527
—
328
—
£000
3,025
1,064
—
—
—
£000
298
—
—
128
—
426
is paid
£000
Total
£000
7,776
11,099
1,519
2,583
—
261
21
—
389
21
9,577
14,092
5,436
9,707
4,089
The floating rate financial liabilities comprise bank borrowings and overdrafts that bear interest rates based on local currency base
interest rates.
BORROWING FACILITIES
At 30 March 2013 and 31 March 2012 the Group had undrawn committed borrowing facilities as follows:
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
2013
‘000
£1,652
$1,395
2012
‘000
£200
$800
AUD$900
AUD$900
—
R16,000
2013
£000
6,183
1,025
—
(4,017)
(2,162)
(254)
(4,068)
—
2012
£000
5,392
409
(526)
(5,399)
(2,052)
(426)
(5,776)
—
(3,293)
(8,378)
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.
52
Notes relating to the consolidated financial statements
For the 52-week period ended 30 March 2013
27. CONTINGENT LIABILITIES
Third-party guarantees
2013
£000
86
2012
£000
86
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
2013
£000
170
2012
£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
2013
£000
76
199
—
275
13
19
32
2012
£000
33
49
—
82
31
4
35
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 servic e liabilities
allowing for projected pay increases. The most recent triennial full valuation was carried out as at 31 March 2010.
During the period, a credit of £2.43m arose in respect of a curtailment gain due to the closure of the UK scheme to future accrual from
31 March 2013 onwards. This amount has been disclosed as a special item within operating costs in the income statement.
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 most recent annual valuation was carried out as at 30 March 2013. The disclosures for the US schemes that follow refer to the US
defined benefit scheme and the retirement healthcare benefit scheme.
53
Notes relating to the consolidated financial statements
For the 52-week period ended 30 March 2013
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 2013 at age 65 will live on average for a further 21.6 years (2012: 21.6 years) after
retirement if male and for a further 23.6 years (2012: 23.6 years) after retirement if female.
For a member who is currently aged 45 retiring in 2033 at age 65, the assumptions are that they will live on average for a further 22.7
years (2012: 22.4 years) after retirement if they are male and for a further 24.6 years (2012: 24.8 years) after retirement if they are
female.
The mortality rates for the US scheme are based on the RP-2000 Mortality Table 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
2013
2012
UK scheme
UK scheme
% p.a.
% p.a.
3.5
2.3
5.0
3.35
3.33
2.2
4.2
3.2
2.2
4.7
3.1
3.1
2.1
4.7
The principal assumptions for the US schemes relate to the discount rate for scheme liabilities. The discount rate used for t he US
defined benefit scheme was 3.53% (2012: 4.08%) and for the US medical scheme was 3.53% (2012: 4.08%).
Expected return on assets UK scheme
Long-term
rate of return
Long-term
rate of return
Long-term
rate of return
expected at
Value at
expected at
Value at
expected at
30 March
30 March
31 March
31 March
2013
% p.a.
4.20
4.20
4.20
4.20
4.20
4.20
4.20
4.20
2013
£m
51.30
19.30
76.80
n/a
14.30
29.80
11.80
203.30
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
Value at
2 April
2011
£m
54.20
18.95
63.82
n/a
34.64
1.42
173.03
Equities
Property
LDI funds
Government bonds
Corporate bonds
Absolute Return
Other
Combined
The accounting for pensions under IAS 19 will change for the forthcoming year in that there will no longer be any allowance for asset
outperformance above the discount rate used for valuation of the scheme liabilities. Previously the Group had employed a building
block approach in determining the long-term rate of return on pension plan assets. Historical markets were studied and assets with
higher volatility assumed to generate higher returns consistent with widely accepted capital market principles. The assumed long-term
rate of return on each asset class in prior years is set out within this note. The assets held within the US scheme amount to £0.914m
(2012: £0.89m) and are held mainly in bonds.
54
Notes relating to the consolidated financial statements
For the 52-week period ended 30 March 2013
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.
The assets and liabilities of the schemes at 30 March 2013 and 31 March 2012 were:
Assets
Liabilities
(Deficit)/surplus
Unrecognised asset due to limit in
paragraph 58 (b) of IAS 19
2013
US
UK
schemes
scheme
£000
£000
914
Total
£000
203,300
204,214
US
schemes
£000
885
2012
UK
scheme
£000
Total
£000
187,780
188,665
(2,269)
(183,840)
(186,109)
(2,897)
(174,840)
(177,737)
(1,355)
19,460
18,105
(2,012)
12,940
10,928
—
—
—
—
12,940
12,940
Following a change to UK scheme rules in September 2012 the accounting surplus can now be recognised on the Group balance sheet
under IFRIC 14
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
– curtailment credit (Special Items)
Included within financial income:
2013
US
UK
schemes
scheme
£000
£000
Total
£000
US
schemes
£000
27
—
308
335
(2,429)
(2,429)
22
—
2012
UK
scheme
£000
260
—
Total
£000
282
—
– expected return on scheme assets
(43)
(11,527)
(11,570)
(44)
(10,790)
(10,834)
Included within financial expense:
– interest cost on scheme liabilities
86
7,981
8,067
128
9,140
9,268
55
Notes relating to the consolidated financial statements
For the 52-week period ended 30 March 2013
30. EMPLOYEE BENEFITS CONTINUED
IAS 19 CONTINUED
Amounts recognised in the statement of comprehensive income are as follows:
2013
US
UK
schemes
scheme
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/change
in assumptions
Net gain/(loss) before exchange
Exchange differences
Amounts recognised during the period
Balance brought forward
Balance carried forward
£000
47
(45)
2
—
£000
Total
£000
25,291
25,338
(11,527)
(11,572)
13,764
13,766
12,940
12,940
766
(13,126)
(12,360)
768
—
768
239
1,007
13,578
14,346
—
13,578
(466)
13,112
—
14,346
(227)
14,119
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
Curtailment credit
Interest cost
Benefits paid
Actuarial (gains)/losses
Contributions by scheme participants
US
Schemes
£000
2,897
155
27
—
—
86
(130)
(766)
—
2013
UK
scheme
£000
Total
£000
174,840
177,737
—
308
—
155
335
—
(2,429)
(2,429)
7,981
8,067
(10,201)
(10,331)
13,126
12,360
215
215
US
schemes
£000
22
(44)
(22)
—
(152)
(174)
—
(174)
413
239
US
schemes
£000
2,771
9
22
—
—
128
(184)
151
—
2012
UK
scheme
£000
Total
£000
24,570
24,592
(10,790)
(10,834)
13,780
13,758
(8,810)
(8,810)
(6,580)
(6,732)
(1,610)
(1,784)
—
—
(1,610)
(1,784)
1,144
(466)
1,557
(227)
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
2,269
183,840
186,109
2,897
174,840
177,737
56
Notes relating to the consolidated financial statements
For the 52-week period ended 30 March 2013
30. EMPLOYEE BENEFITS CONTINUED
IAS 19 CONTINUED
Changes in the fair value of the schemes’ assets before taxation are as follows:
2013
US
UK
schemes
scheme
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
£000
885
47
44
2
—
—
(64)
914
£000
Total
£000
187,780
188,665
—
11,527
13,764
215
215
47
11,571
13,766
215
215
(10,201)
(10,265)
203,300
204,214
US
schemes
£000
922
2
44
(22)
—
—
(61)
885
2012
UK
scheme
£000
Total
£000
173,030
173,952
—
10,790
13,780
220
220
2
10,834
13,758
220
220
(10,260)
(10,321)
187,780
188,665
The history of the schemes for the current and prior period before taxation is as follows:
2013
US
UK
Schemes
Scheme
£000
£000
Total
£000
US
schemes
£000
2012
UK
scheme
£000
Total
£000
Present value of defined benefit obligation
(2,269)
(183,840)
(186,109)
(2,897)
(174,840)
(177,737)
Fair value of scheme assets
(Deficit)/surplus in the scheme
Experience adjustments on the scheme liabilities
Experience adjustments on scheme assets
Exchange differences
914
203,300
204,214
885
187,780
188,665
(1,355)
19,460
766
2
155
638
13,764
—
18,105
1,404
13,766
155
(2,012)
(151)
(22)
(8)
12,940
(6,580)
13,780
—
10,928
(6,731)
13,758
(8)
Following the closure of the UK scheme to future accrual there will be no further payments to the scheme. Pension provision has been
replaced by a money purchase arrangement in the UK.
History of asset values, defined benefit obligation and surplus/deficit in schemes:
Fair value of scheme assets
Defined benefit obligation
Surplus/(Deficit) in schemes
Unrecognised asset due to limit in paragraph 58 (b) of IAS 19
Surplus /(Deficit) in schemes
History of experience gains and losses
Experience gains/(losses) on scheme assets
Experience (losses)/gains on scheme liabilities[1]
30 march
31 March
2013
£000
2012
£000
2 April
2011
£000
3 April
2010
£000
28 March
2009
£000
204,214
188,665
173,952
172,820
158,568
(186,109)
(177,737)
(171,671)
(176,957)
(159,327)
18,105
10,928
2,281
(4,137)
—
(12,940)
18,105
(2,012)
(4,130)
(1,849)
—
(4,137)
(759)
(3,070)
(3,829)
2013
£000
2012
£000
2011
£000
2010
£000
2009
£000
13,766
1,404
13,758
(6,731)
(23)
2,259
16,275
(18,819)
(19,323)
(5,612)
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.
57
Notes relating to the consolidated financial statements
For the 52-week period ended 30 March 2013
31. 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 23 to 28.
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 26 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.
32. 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 £0.3m to the UK pension scheme during the current period (2012 - £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 (2012 - nil) and
no payments were overdue at the period-end.
58
Company balance sheet
For the 52-week period ended 30 March 2013
Fixed assets
Tangible assets
Investments
Current assets
Debtors
Cash at bank and in hand
Current liabilities
As at
As at
30 March
31 March
Notes
4
5
2013
£000
1,142
8,713
9,855
6
33,508
-
33,508
2012
£000
1,169
8,713
9,882
34,879
6,143
41,022
Creditors: amounts falling due within one year
7
(20,749)
(28,450)
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
12,759
22,614
(4,986)
17,628
14,579
16,858
236
2,500
173
(22)
12,572
22,454
(5,690)
16,764
14,375
15,645
236
2,500
167
(22)
(16,696)
(16,137)
17,628
16,764
8
9
10
10
10
10
10
10
13
The financial statements on pages 59 to 67 were approved by the Board of Directors on 26 June 2013 and were signed on its behalf
by:
NEIL CARRICK
GROUP FINANCE DIRECTOR
26 JUNE 2013
59
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 2013 are for the 52-week period ended 30 March 2013. The results for 2012 are for the 52-
week period ended 31 March 2012.
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 23 to 28.
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.
60
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 the Group qualifying as related parties).
61
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
2013
£000
643
69
24
99
835
2012
£000
680
79
95
(61)
793
The average number of employees of the Company (including Executive Directors) during the period was as follows:
Machine tools and equipment
2013
Number
5
2012
Number
5
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 16.
2. 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 22 March 2011 and 18 January 2012, awards were made to Executive Directors and other senior employees under the PSP
scheme.These awards to Executive Directors have either been forfeit on cessation of employment or cancelled during the year. The
outstanding Options to senior employees under the PSP are exercisable at the end of a three year performance period and are subject
to achievement of a minimum share price of at least 31.25p to obtain 25% of the share award ,rising on a sliding scale to 100% at over
50p per share. Options granted on 18 January 2012 under the new Deferred Share Plan (DSP) to former Executive Directors were
forfeit during the year on cessation of employment. Options under the DSP were granted to the Executive Directors on 19 November
2012 which are exercisable between 3 and 10 years from the grant date at 10p per share. The schemes are equity-settled.
SHARE-BASED EXPENSE
The Group recognised a total charge of £99,000 (2012: charge of £90,000) in relation to equity-settled share-based payment
transactions.
2013
PSP
2012
PSP
2013
DSP
2012
DSP
The number and weighted average exercise prices of share options
Number of options outstanding at beginning of period
3,756,817 4,711,898
502,576
—
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
4,500,000
502,576
(3,109,802) (2,099,818)
(502,576)
—
—
—
—
—
647,015 3,756,817
4,500,000
502,576
—
—
—-
502,576
During the current and prior period, the Group has not granted equity as consideration for goods or services received.
62
Notes relating to the company financial statements
2. EMPLOYEE SHARE OPTION SCHEMES CONTINUED
THE 600 GROUP PLC 2008 PERFORMANCE SHARE PLAN
The fair value of awards granted under these Share Plans are determined using the Black Scholes valuation model. The fair val ue 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
3. DIVIDENDS
No dividend was paid in period (2012: no dividend paid).
4. TANGIBLE FIXED ASSETS
Cost or valuation
At 31 March 2012
Additions
At 30 March 2013
At professional valuation
At cost
Depreciation
At 31 March 2012
Charge for period
At 30 March 2013
Net book value
At 30 March 2013
At 31 March 2012
2013
DSP
£000
£0.04
£0.13
10p
0%
50%
2012
PSP
£000
£0.1625
£0.19
£nil
0%
50%
3.0 years
3.0 years
4.08%
5%
4,500,000
1,144,737
Land and buildings
Fixtures,
fittings,
tools and
Long lease
Short lease
equipment
£000
£000
£000
1,217
—
1,217
1,217
—
1,217
52
26
78
1,139
1,165
92
—
92
92
—
92
92
—
92
—
—
94
—
94
—
94
94
90
1
91
3
4
Total
£000
1,403
—
1,403
1,309
94
1,403
234
27
261
1,142
1,169
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 30 March 2013. 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.
63
Notes relating to the company financial statements
5. INVESTMENTS
Cost:
At 31 March 2012
Additions in the period
At 30 March 2013
Provisions
At 31 March 2012
Impairment in the period
At 30 March 2013
Net book values
At 30 March 2013
At 31 March 2012
Shares
In Group
Undertakings
£000
40,423
—
40,423
31,710
—
31,710
8,713
8,713
During the period an impairment review of the carrying values of investments in other group companies was carried out with no further
impairment deemed necessary. 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*
US:
600 Group Inc
Clausing Industrial, Inc
REST OF THE WORLD:
600 Machine Tools Pty Limited (Australia)
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.
2013
£000
2012
£000
33,242
34,673
266
—
206
—
33,508
34,879
64
Notes relating to the company financial statements
7. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
Bank overdraft
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.
8. CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR
Shareholder loan
Bank loans
Deferred taxation
2013
£000
78
480
—
1,481
18,663
47
—
—
20,749
2013
£000
2,163
2,808
15
4,986
2012
£000
—
824
1,042
1,852
24,700
32
—
—
28,450
2012
£000
2,052
3,638
—
5,690
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.
65
Notes relating to the company financial statements
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
2013
£000
2012
£000
6,264
13,736
20,000
6,264
13,736
20,000
63,926,253 ordinary shares of 1p each on issue at start of the period (2012: 57,933,679 ordinary shares )
19,663,171 ordinary shares of 1p each issued in institutional placing
666,667 ordinary shares of 1p each issued to N Rogers on subscription following bonus payment
205,000 ordinary shares of 1p each under exercised warrants
84,256,091 ordinary shares of 1p each on issue at end of period (2012: 63,926,253 ordinary shares of 1p)
639
197
7
843
579
58
2
639
Deferred shares of 24p each:
57,233,679 deferred shares of 24p each on issue at start and end of period
13,736
13,736
Total Allotted, called-up and fully paid at the end of period
14,579
14,375
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 an institutional placing of 19,663,171
shares and subscription for 666,667 shares by N Rogers took place in September 2012. This resulted in share capital increasing by
£203,298. The corresponding share premium increase was £1,328,106 from which expenses of issue of £114,991 have been
deducted.
During 2011 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 2011 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
Notes relating to the company financial statements
10. RESERVES
At 2 April 2011
Loss for the period
Share-based payment
Shareholder loan
On shares issued
At 31 March 2012
Loss for the period
Share-based payment
Shareholder loan
On shares issued
At 30 March 2013
Share
Capital
premium
Revaluation
redemption
Equity
Translation
reserve
reserve
reserve
reserve
£000
236
—
—
—
—
£000
2,500
—
—
—
—
£000
160
—
—
7
—
£000
(22)
—
—
—
—
Profit
and loss
Account
£000
(1,119)
(15,108)
90
—
—
236
2,500
167
(22)
(16,137)
—
—
—
—
—
—
—
—
—
—
6
—
—
—
—
—
(658)
99
—
—
236
2,500
173
(22)
(16,696)
account
£000
13,899
—
—
—
1,746
15,645
—
—
—
1,213
16,858
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 £658,000 (2012: loss of £15,108,000). 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 disc losed as
the information required is instead disclosed in Note 4 to the Consolidated financial statements.
11. CONTINGENT LIABILITIES
Bank guarantees in respect of Group undertakings
12. PENSION
2013
£000
86
2012
£000
86
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 2010. The Company is unable to identify its share of the underlying assets and liabilities of the fund. The
surplus on the fund amounted to £19.46m at 30 March 2013. 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 (2012: £22,000).
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.
2013
£000
(559)
1,417
6
864
16,764
17,628
2012
£000
(15,018)
1,806
7
(13,205)
29,969
16,764
67