169531 600 Group Report & Accounts Cover_169531 600 Group Report & Accounts Cover 25/07/2017 14:24 Page 1
The 600 Group PLC
Union Street
Heckmondwike
West Yorkshire
WF16 0HL
T: +44 (0)1924 415000
W: www.600group.com
ANNUAL REPORT & ACCOUNTS 2017
The 600 Group PLC
Contents
Chairman’s statement
Strategic report
Report of the directors
Statement of directors’ responsibilities
Remuneration report
Independent auditor’s report to the members of The 600 Group Plc
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 statement of financial position
Company statement of changes in equity
Company accounting policies
Notes relating to the company financial statements
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21
22
23
24
25
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32
67
68
69
71
Chairman’s statement
I am pleased to report that we have produced a solid performance in what has been a turbulent period with both
Brexit disrupting markets in the UK and Europe and the presidential elections materially slowing down activity in the
USA.
This solid performance is all the more significant in that it was delivered against a backdrop of global market
weakness in machine tools. This performance was largely as a result of the successful integration of our industrial
laser systems manufacturing facilities into the new site in Ohio, USA, which has reduced the overall cost base
significantly combined with further efficiencies achieved by revising the supply chain.
Although many economic forecasters predict risks associated with the UK leaving the EU, we believe The 600 Group
is less prone to the possible adverse consequences given that over 60% of the Group’s activities are now conducted
in the USA and these businesses are the main profit drivers of the Group. Furthermore, the US dollar income the
Group generates provides a natural currency hedge against the majority of our purchases which are in US dollars.
In the current year, only 12% of Group sales were to EU countries excluding the UK and we remain firmly focused on
developing new markets outside of this area, particularly in South East Asia. In addition, over 15% of our total
revenues are derived from the supply of spare parts and services and this revenue stream is not dependent on
achieving new sales but on servicing our existing client base.
Industrial Lasers
The industrial laser systems division now accounts for 49% of the Group’s underlying operating profits (before
special items and head office costs).
The successful integration of TYKMA and Electrox over the last two years has significantly raised the profile of the
industrial laser division in the marketplace and has given the enlarged business increased recognition and credibility
in this highly fragmented industry. As a consequence, it has been able to secure a number of sales in the year to
multi-national corporations and it is pleasing to report that this trend has continued into the current financial year.
The division is constantly developing new products and exploring new opportunities in the rapidly developing laser
market and introduced some of these new products to the market in September last year. These new products have
been extremely well received with a growing level of sales that will help to underpin the current year performance.
The business entered the new financial year with an order book up 50% on the same time last year.
The joint TYKMA Electrox brand now provides laser solutions across a number of industrial laser applications
including marking, engraving and micro-material processing. The markets for these types of laser applications have
shown continued growth for a number of years and industry forecasters continue to predict single digit growth,
despite the slow economic pick -up in activity, as these products replace ink printing and legislation continues to
increase the requirement for traceability of all production items.
Machine Tools
The overall performance of our machine tools division in the period matched their performance of the previous year.
This was a good outcome given the various headwinds we faced through most of the year which created high levels
of instability in the UK, European and US markets. Activity levels have picked up markedly in 2017 and the machine
tools division entered the new financial year with an overall order book 44% up on the same time last year,
increasing further to over 50% currently. This increase has also come from a broad range of industry sectors.
The US machine tool market continued to be weak in the calendar year to December 2016 with uncertainty over the
presidential elections creating a marked slowdown in demand. The Oxford Economics machine tool survey indicated
a 2.1% fall in consumption, with order activity being reported much weaker. Consequently, our USA machine tool
business contracted in local currency terms during the year, nevertheless, producing a small increase in Sterling
terms as a result of its fall against the US dollar.
Since the start of 2017, order activity in the USA has been good and continues to improve with order backlog now
currently 64% up on the same time last year. New product launches are planned for the second half of the year
including more USA - produced machines and an increased sales effort into Mexico and Canada.
In the UK, uncertainty caused by the run up to the Brexit vote adversely impacted order activity and the subsequent
fall in the value of Sterling had the effect of pushing up the cost of imported machine components and squeezing
margins. Consequently, the business, like most of its competitors, was forced to introduce a price increase for new
orders from November 2016 in an effort to restore profitability. At the same time, a number of other management and
cost reduction exercises were undertaken to help deal with the situation. Since the beginning of 2017 the business
has seen an improved market and order backlog going into the new financial year was up 54% on the previous year.
New product launches are planned in the UK and Europe from September onwards to increase the product offering
through existing and new distributor partners as well as through direct sales in the UK.
1
Chairman’s statement
The Australian machine tools business maintained a break even trading position for the period and has secured good
orders since the start of the new financial year including the first orders in Thailand with a new distributor. Work
continues on supporting the expanded distributor network including training and support at trade shows in Vietnam,
Singapore, Malaysia and the Philippines.
The supply and distribution agreement with our Indian partners for the manufacture and supply of machine tools and
their manufacture and distribution under licence is now coming on stream. This will expand our product offering and
increase market coverage of our brands.
Acquisitions
In October 2016 we acquired the Spanish machine tool brand of Kondia and certain assets for a minimal
consideration of 50,000 Euros. Kondia was formerly Spain’s largest manufacturer of milling machines and was
placed into administration in 2015. As a result we now own the Kondia name and all IP in addition to a large
inventory of spare parts.
For over twenty years Clausing, our US machine tool company, has sold Kondia FV, milling machines and
associated spares. It will now start to produce a US- made Kondia milling machine, in addition to providing worldwide
support for the sale of spare parts for the existing installed base of these machines.
Financial Overview
The results for the current year are for the 52 weeks to 1 April 2017 (prior year 53 weeks to 2 April 2016). Revenue
from continuing operations was £47.0m (2016: £45.3m) a 4% increase on the previous year.
After taking account of interest, taxation, pension’s credits and other special items, the Group profit for the financial
year was £2.06m (2016: £1.15m).Underlying profit (before special items) amounted to £2.24m (2016: £1.54m)
resulting in underlying earnings of 2.15p per share (2016: 1.69p) and total earnings were 1.97p per share (2016:
1.26p).
At the end of the financial year, Group net indebtedness stood at £13,66m (2016: £13.89m), with gearing of 27%
(2016:34%). Whilst cash was generated from the sale of the Letchworth property in July 2016 reducing UK
borrowings, currency depreciation increased the Sterling value of the US borrowings. In addition increased working
capital in TYKMA to support the transfer of manufacturing from the UK resulted in increased US borrowings. The net
effect produced little impact on the overall debt at the current year end. At the end of the year the Group had
headroom on the existing borrowing facilities of £3.20m and had complied with all financial covenants throughout the
year.
Facilities
At the beginning of July 2016,we completed the sale of our Letchworth long leasehold site for £2m, with the much
reduced UK laser operation moving to a new leasehold site also in Letchworth. In the USA we expanded our footprint
in the new purpose built leasehold premises in Chillicothe, Ohio to accommodate the transfer of UK laser
manufacturing. This and the new premises for Clausing in Kalamazoo Michigan, which were opened in the previous
year, have improved the working environment for all staff, increased operational efficiency and provided room for
growth.
People
On behalf of the Board, I would like to thank all our employees for their ongoing support, commitment and dedication
to The 600 Group which has been important in improving our businesses in the last year and I look forward to
working with them again in the coming year.
Dividends
The Board continues to believe that the retention of earnings for deployment in the business is the most appropriate
use of financial resources and accordingly they do not recommend the payment of a dividend at the present time.
2
Chairman’s statement
Outlook
Trading in the period since the FY17 financial year end has been in line with the Board’s expectations and order
books in both divisions are much improved. Overall orders now stand 42% up on the same time last year which
provides greater visibility of future trading .We are continuing to leverage our industry - recognised brands through an
increased worldwide distribution network and introducing new products to widen the customer base. Whilst industry
forecasts of growth for both divisions remain at low levels for the coming year, we believe the investment in new
products and new markets will lead to increased market share and position the Group’s businesses well for any
increase in market activity.
Paul Dupee
Executive Chairman
3 July 2017
3
Strategic report
Our businesses
The 600 Group PLC ("the Group") is a leading engineering group with a world class reputation in the design and
distribution of machine tools, precision engineered components and the design, manufacture and distribution of
industrial laser systems. The Group operates these businesses from locations in North America, Europe and
Australia selling into more than 180 countries worldwide.
During the 52 week period ended 1 April 2017 27% of revenues came from the sale of metal turning machine tools,
with a further 19% from other machine tools and 10% from the sale of precision engineered components. Sales of
Industrial laser equipment amounted to 29% of revenues with the remaining 15% of revenues being from after sales
support, spare parts and services from both divisions.
Group businesses serve customers across a broad range of industry sectors, from niche markets for technical
education of young engineering apprentices through to high volume production of automotive, aerospace and
defence equipment. A high proportion of revenue is derived from sales via third party distribution channels, in
respect of which it is more difficult to track the industry dispersion of end-user customers.
The Group benefits from a high degree of loyalty and repeat business via a large number of established distributors
in many countries and territories. In the year ended 1 April 2017 the top 20 customers, of which 17 were distributors,
contributed less than 26% of revenues, the same as the previous year.
By geographical territory of destination
Revenues are generated across many diverse geographical territories, with the principal markets in:
Percentage of worldwide
revenues (by destination)
United States of America
United Kingdom
Europe (excluding UK)
Rest of the World
Total
2017
%
64
15
12
9
100
2016
%
60
19
13
8
100
Macroeconomic and industry trends
Machine tools and precision engineered components
The worldwide machine tool industry was estimated by Oxford Economics at over $75bn in annual sales in its Spring
2017 report. The market is driven by the investment intentions of manufacturers, and is sensitive to changes in the
economic and financial climate. Demand responds to economic trends and typically lags the main cycle of the
economy.
Gardner Research identified the largest five producer countries of machine tools to be China, Japan, Germany, Italy
and South Korea with the largest five countries ranked by consumption as China, USA, Germany, Japan and South
Korea.
The global consumption of machine tools excluding China was reported as being negative at -3% in the latest Oxford
Economics data for the year to December 2016 against a positive 8% in 2015. In our most important markets USA
was negative at –2.1%, Germany positive at 3.9% and the UK negative at -7%.
Industrial laser systems
Industry use of industrial lasers for material processing has continued to expand worldwide. Laser systems have
now become a mainstream manufacturing process covering the areas of laser machining, including cutting and
drilling, marking, ablation and a host of other niche applications.
Industry spending for the entire global industrial laser market is reported to be $3.1bn and growing at between 2%
and 8% each year. The laser marking and micro-materials subset of the overall laser industry continues to grow at
the lower end of these growth forecasts but is supported by enhanced performance in the speed, cost and quality of
the systems being implemented compared to other techniques as well as by legislative changes driving a
requirement for greater traceability.
4
Strategic report
Results
Machine tools and precision engineered components
This division operates from Heckmondwike and Colchester in the UK, Kalamazoo Michigan in the USA, and
Sydney and Brisbane in Australia. It designs and develops metal processing machine tools sold under the brand
names Colchester, Harrison and Clausing and designs and manufactures precision engineering components
under the brand names Pratt Burnerd and Gamet. There are also spares, accessories and service operations
which support the significant number of machines sold over the Group’s long history of supplying quality
equipment. Sales are made worldwide, with direct sales operations and distribution in North America, Europe, and
Australia and a network of distributors in all other key end-user markets.
The financial results of these activities, on a total and underlying basis, were as follows:
2017
£ 000
2016
£ 000
Revenues
Operating profit
Operating margin
Underlying operating profit*
Underlying operating margin*
32,424
32,127
2,750
8.5%
2,059
6.4%
2,355
7.3%
2,073
6.5%
*underlying figures before special items. See note 3 and 34.
Revenues overall increased by 1% in Sterling terms despite a decline in local currency terms of 15% in the USA
and a backdrop of weak customer confidence caused first by the Brexit vote affecting UK and Europe and secondly
the presidential elections in the USA. It was not until the start of the 2017 calendar year that more stable conditions
returned and trading has steadily improved since then.
The Australian operation broke even after a return to full time working and has begun to show signs of further
progress through the new distribution channels it has established in South East Asia which gained some traction in
the early part of the new financial year with the first orders for Thailand being received.
The UK and European operations experienced difficult market conditions following the depreciation of Sterling after
the Brexit vote. This pushed up the costs of imported machines and parts, which are largely US Dollar denominated.
This inevitably reduced margins and consequently the business took the decision, along with most of its competitors,
to increase prices for new orders received after 1 November 2016. Additionally steps were taken during the period to
reduce costs and a number of management changes took place at Heckmondwike.
The Clausing product range of drills, mills, saws and grinders, which were introduced into the product portfolio at the
end of last year, are now becoming a regular feature of the package of products we supply in the UK and Europe.
Additional launches of new products are planned for later this year which will further enhance the product range and
widen the appeal to customers and distributors.
The Clausing range of products has been one of the key reasons behind the growth in the North American
operations in recent years and represents over 33% of their product sales compared to a figure of just 5% for the UK
and European operation.
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Strategic report
Industrial laser systems
The final integration of the combined TYKMA Electrox operations was completed in early FY17 as all manufacturing
operations were consolidated in the Chillicothe, Ohio USA facility. The existing UK factory in Letchworth was sold in
July 2016. The remaining UK operations moved to new leasehold premises in Letchworth and now provide a
customer-focused service operation serving the UK and Europe.
The industrial laser systems division now accounts for 49% of the Group underlying operating profits (before special
items and head office costs).
Results for the financial year, on a total and underlying basis, were as follows:
2017
£ 000
14,608
1,322
9.0%
1,993
13.6%
2016
£ 000
13,142
(2,033)
(15.4)%
1,179
8.9%
Revenues
Operating profit
Operating margin
Underlying operating profit*
Underlying operating margin*
*underlying figures before special items. See note 3 and 34.
Operating efficiencies and savings (including those from supplier consolidation) were successfully achieved and
reflected in the improved margins during the year. Similarly to the machine tools division, revenues were held back
by the major issues of the Brexit vote in the UK and Europe and the presidential elections in the USA. Once again,
however, there has been a steady improvement in trading activity since the start of the 2017 year and order books
are currently 29% up on the same period last year, including a large medical industry order.
The worldwide industrial laser systems business operates under the combined TYKMA Electrox brand. Each end
user or distributor is free to choose among our brands which combined creates an enhanced product portfolio for
solving a larger number of applications. These Industrial laser systems are sold for a variety of applications to
provide solutions which include marking, engraving and micro-material processing. Sales are made to an extensive
range of industries and increasingly to large multi-national corporate customers.
Group revenue
Revenue from continuing operations increased by 4% to £47.0m (2016: £45.3m) which although representing only a
modest increase over last year was achieved despite difficult conditions experienced in a turbulent worldwide
market.
Costs and margins
Gross margins in the industrial laser systems division improved significantly as a result of the business integration.
Margins in machine tools were impacted by Sterling’s weakness after the Brexit vote increasing input prices but as a
result of actions taken in our UK operation these have now been restored.
Profit before taxation
Group profit before tax was £3.23m (2016: £1.01m) and the underlying profit before tax figure before special items
was £2.12m (2016: £1.48m).
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Strategic report
Special items
During the financial year, the Group undertook a number of transactions, which, in the opinion of the directors,
should be reported separately for a better understanding of the underlying trading performance of the Group. These
underlying figures are used by the Board to monitor business performance, form the basis of bonus incentives and
are used for the purposes of the bank covenants.
The current year has an overall net credit before taxation of £1.11m (2016 net charge £0.47m). A credit of £0.65m
(2016: credit of £0.94m) is included as a result of the work by the Trustees of the UK pension scheme and the Group
in reducing pension liabilities. A number of transactions took place over the prior and current year including a
pension increase exchange, commutation of small pensions and other flexible retirement options. These are now an
integral part of the flexible offer to members at retirement. These resulted in actuarial adjustments to the pension
liabilities, which are processed through the Consolidated Income Statement.
In addition, as a result of the pension scheme being in surplus on an accounting basis, a credit of £1.45m (2016:
credit of £1.17m) is recorded in financial income. No cash was paid to or received from the scheme in respect of
these transactions.
Redundancy and restructuring costs were incurred on both the integration of the Electrox and TYKMA businesses
and the overhead and operating cost reduction in head office and UK machine tools business which amounted to
£0.62m (2016 £0.83m) and associated stock write offs of £0.19m (2016 £0.89m). A small profit against the written
down value of the Letchworth property of £0.1m was achieved on the sale in July 2016.
In addition, share option costs, amortisation of intangible assets and amortisation of loan note costs all of which are
non-cash costs to the Group in the year have been included in special items.
Taxation
The current year underlying trading resulted in a small credit of £118k for taxation (2016: credit of £65k). Deferred
taxation is provided on the pension credits of £2.16m at a rate of 35%, being the rate applicable to any refund from a
pension scheme and is included in special items.
The UK businesses continue to benefit from substantial previous tax losses and no taxation is payable in the UK.
The US businesses are subject to taxation on their profits at a rate of 34%.
Net profit and earnings per share
The total profit attributable to equity holders of the parent for the current financial year amounted to £2.06m (2016:
profit of £1.16m) with underlying profit of £2.24m (2016: £1.55m).
Underlying earnings from continuing operations before special items and related taxation were 2.15p per share
(2016: 1.69p) and basic earnings per share were1.97p (2015: 1.26p)
Financial position and utilisation of resources
Cash flow
Cash generated from operations before working capital movements was £3.58m (2016: £3.03m). Working capital
movement was largely due to a reduction in creditors and build up of stocks as a consequence of the transfer of
laser manufacturing operations to the USA. £0.54m was expended on redundancy and restructuring costs which
largely consisted of redundancy payments at Electrox, UK machine tools and head office.
Interest paid was in line with previous years at £0.95m with the largest component being interest on the £8.5m 8%
loan notes.
Capital expenditure largely consisted of demonstration and showroom equipment for the new facility in Chillicothe
and these machines generally turn over regularly.
The net proceeds from the Letchworth property sale were received in July 2016 and were used to pay down UK
bank debt.
Net borrowings
Group net debt at 1 April 2017 was reduced to £13.66m (2016: £13.89m) and comprised net bank and finance lease
indebtedness of £5.79m (2015: £4.0m) and the amount outstanding on the loan notes of £7.87m(2016: £7.70m). The
amount outstanding is net of un-amortised costs and amounts disclosed in equity reserve of £0.6m in the current
financial year(2016: £0.8m).
7
Strategic report
Net debt repayments of £0.8m were made during the year but given a large part of the Group’s working capital
finance is denominated in US Dollars the depreciation of Sterling has had the effect of increasing disclosed debt by
£430k on translation to Sterling at the year end.
New increased banking facilities were agreed with HSBC,in the UK, in August 2016 following the sale of the
Letchworth property. A package of facilities to support the working capital of the UK machine tools business and a
term loan secured on the remaining freehold site in Colchester were put in place totaling £4.95m.
In March 2016,Bank of America supported the acquisition by the Group of the 20% interest in TYKMA not previously
owned with an additional term loan of $1.8m in addition to their existing term and working capital facilities.
The Group has a mixture of term loans and revolving working capital facilities with maturities between 1 and 5 years.
Headroom on bank facilities was £3.2m at the year-end (2016: £3.2m) and all financial covenants in place were met
during the year.
The £8.5m 8% loan notes with a maturity of February 2020 also entitle holders to warrants of equal value to
subscribe for new ordinary shares at 20p.
Gearing amounted to 27% of aggregate net assets (2016: 34%)
Going concern
In accordance with FRC guidelines, the Board has assessed the Group’s funding and liquidity position. 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.
Retirement benefits
The accounting surplus on the UK scheme at 1 April 2017 was £52.50m (2016: £41.97m). This surplus has been
calculated in accordance with the scheme rules and recognised accounting requirements.
As a result of liability reduction exercises undertaken by the UK scheme’s Trustees in conjunction with the company,
a credit has been taken in the period in the Income Statement of £0.65m (2016 £0.94m) to reflect the actuarial
reduction in scheme liabilities.
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 19% rate.
In October 2013 the Company reached agreement with the Trustees of the scheme regarding the funding position
on a more prudent Technical Provisions basis as at 31 March 2013, which indicated a funding deficit of £25.4m at
that date.
It was further agreed that the Technical Provisions deficit would be resolved by an out-performance of the
investment returns on the scheme assets of 1% above the return on UK gilts, and that no cash contributions would
be required until at least the next funding valuation due as at 31 March 2016.
The formal Actuarial Technical Provisions calculation for 31 March 2016 has now been undertaken and the draft
results show that the scheme was in surplus by £2.2m at that time and this surplus has continued to grow since then
and is estimated to be in surplus of £10.8m at 31 March 2017.
The Directors and the Trustees work together on a collaborative basis to continue to monitor investment
performance and market conditions closely and to mitigate the risk of mis-matching assets and liabilities to a
tactically appropriate level.
The US retiree health scheme and pension fund deficits reduced slightly during the year due to changes in actuarial
assumptions to £1.03m (2016: £1.04m.)
8
Strategic report
Key performance indicators (KPI’s)
The Group monitors performance against key financial objectives that the Directors judge to be effective in
measuring the delivery of strategic aims, and managing and controlling the business. These focus at Group level on
underlying profit, together with its associated earnings per share, forward order book and cash generation.
At individual business unit level, KPI’s also include working capital control, and customer- related performance
measures such as on-time delivery, minimisation of warranty concerns, and measured levels of overall customer
satisfaction.
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.
The Group’s recent performance against financial KPI’s is set out as follows:
KPI
Benchmark
Target
2017
2016
2015
2014
2013
Revenue (annual growth rate)
>10%
3.9%
3.4%
Book-to-bill ratio
>110%
109%
107%
Order book (months)
2.0 - 3.0
1.6
1.5
5%
97%
1.4
(0.2)%
11.2%
101.8%
89.4%
1.9
2.0
Gross margin (%of revenue)
EBIT margin (% of revenue)
Working capital (% of
revenue)
Inventory turns
Receivables (days)
All figures are pre special items
>33%
>7.5%
<25%
>3.0 x
< 60
Key business risks
34.9%
34%
32.9%
33.2%
31.7%
6.5%
5.2%
5.6%
5.6%
2.3%
31.3%
25.9%
23.3%
20.0%
21.5%
2.4x
58
2.6x
57
2.7x
58
3.3x
54
2.8x
55
The Board of Directors has identified the main categories of business risk in relation to the implementation of the
Group’s strategic aims and objectives, and has considered reasonable steps to prevent, mitigate or manage these
risks.
The principal areas noted during this review are summarised as follows:
Macro-economic – the Group’s businesses are active in markets which can be cyclical in nature as the overall level
of market demand is dependent upon capital investment intentions. Economic or financial market conditions
determine global demand and could adversely affect our customers, distributors, operations, suppliers, and other
parties with whom we transact. Such factors as the Brexit vote and the presidential elections in the USA during the
current financial year are examples of factors which have resulted in changes in demand. The Directors seek to
ensure that our overall risk is mitigated by avoiding excessive concentration of exposure to any given geographical
or industry segment, or to any individual customer. Market conditions, lead indicators and industry forecasts are
monitored for any early warning signs of changes in overall market demand, and measures to exploit opportunities
or manage elevated risks are taken as appropriate.
Production and supply chain – the continuity of the Group’s business activities is dependent upon the cost effective
supply of products for sale from our own facilities, and those of our key vendors. Supply can be disrupted by a
variety of factors including raw material shortages, labour disputes and unplanned machine down time. In particular,
the Directors are mindful that a small number of key manufacturing outsource partners are located in relatively close
proximity to each other in Taiwan.
Taiwan is ranked by Gardner Research as the seventh largest producer nation of machine tools, with global
production valued at almost US$4 billion. Taiwanese suppliers represent approximately one third of the total cost of
sales for the Group. Group businesses mitigate against such risk by carefully selecting high quality vendors, and
maintaining long term constructive and open relationships. The effectiveness of such mitigation would be limited,
however, in certain catastrophic circumstances (for example, extreme weather or seismic activity in the vicinity),
against which the Group carries appropriate insurance .Additional supply sources in India have been developed as a
consequence and an increasing amount of product is now made in the USA as well.
9
Strategic report
Laws and regulations – Group businesses may unknowingly fail to comply with all relevant laws and regulations in
the countries in which they operate and contract business. There is a risk of breach of legal, safety, environmental
or ethical standards which can be more difficult to identify, comprehend, or monitor in certain territories than others.
The Directors believe that they have taken all reasonable steps to ensure that operations are conducted to high
ethical, environmental and health and safety standards. Controls are in place to keep regulatory and other
requirements under careful review, and scrutinise any identified instances of elevated risk.
Information Technology (“IT”) – Group IT systems and the information they contain are subject to security risks
including the unexpected loss of continuity from virus or other issues, and the deliberate breach of security controls
for commercial gain or mischief. Any such occurrences could have a significant detrimental effect on the Group’s
business activities. These risks are mitigated by the utilisation of physical and embedded security systems, regular
back-ups and comprehensive disaster recovery plans.
Treasury and risk management
Financial risks
The main financial risks faced by the Group are credit risk, foreign currency risk, interest rate risk and liquidity risk.
The Directors regularly review and agree policies for managing these risks.
Credit risk is managed by monitoring limits and payment performance of counterparties. The Directors consider the
level of general credit risk in current market conditions to be higher than normal. Where a customer is deemed to
represent an unacceptable level of credit risk, terms of trade are modified to limit the Group’s exposure.
Foreign currency risk is managed by matching payments and receipts in foreign currency to minimise exposure.
Foreign currency is bought to match liabilities as they fall due where currency receipts are insufficient to match the
liability. The results of 600 Inc, TYKMA Inc. and 600 Australia Pty Limited are reported in United States dollars and
Australian dollars respectively and translated into Sterling, and as a result the Group’s Statement of Financial
Position and trading results can be affected by movements in these currencies. Part of this exposure is naturally
hedged by entering into borrowing facilities denominated in US dollars.
Liquidity risk is managed by the Group maintaining undrawn trade finance facilities in addition to a number of longer
term loans and loan notes 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 and holding loan notes with a fixed interest rate until maturity.
Market risks
The Group’s main exposure to market risk arises from increases in input costs in so far as it is unable to pass them
on to customers through price increases. The Group 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.
Alternative sources of supply in different geographic regions have also been put in place.
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.
10
Strategic report
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 liabilities.
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.
Neil Carrick
Finance Director
3 July 2017
11
Report of the directors
Directors
Paul Dupee
Appointed to the Board as a non-executive Director on 2 February 2011, appointed Chairman on 14 September 2011 and
appointed Executive Chairman on 30 April 2015. A private investor and currently Managing Partner of Haddeo Partners LLP.
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 Cares UK Limited.
Derek Zissman*
Appointed to the Board as a non-executive Director on 2 February 2011. Currently a non-executive director of a number of
companies including Amiad Water Solutions Ltd (AIM Listed), HelloFresh SE and a previous vice-chairman of KPMG LLP.
Stephen Fiamma*
Appointed to the Board as a non-executive Director on 13 May 2015. Until 2014 a partner in the tax practice of Allen & Overy
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
REGISTRAR
Capita Asset Services
34 Beckenham Road
Beckenham
Kent
BR3 4TU
AUDITOR
KPMG LLP
BANKERS
HSBC Bank plc
Bank of America
BROKER
Finncap
NOMINATED ADVISORS
Spark Advisory Partners
12
Report of the directors
The Directors present their report to the members, together with the audited financial statements for the 52 week period ended 1 April
2017, which should be read in conjunction with the Chairman’s Statement on the affairs of the Group (pages 1 to 3), and the Strategic
Report (pages 4 to 11). 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 2017 are for
the 52-week period ended 1 April 2017. The results for 2016 are for the 53-week period ended 2 April 2016.
ACTIVITIES OF THE GROUP
The Group is principally engaged in the manufacture and distribution of machine tools, precision engineered components and industrial
laser systems. 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 21.
BUSINESS REVIEW
A balanced and comprehensive analysis of development and performance of the Group is contained in the Chairman’s Statement and
the Strategic Report on pages 1 to 11. 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.
RESEARCH AND DEVELOPMENT
Group policy is to design and develop products that will enable it to retain and improve its market position.
INTERESTS IN SHARE CAPITAL
At 8 June 2017, 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 LLP
Mr D Grimes
Mr A Perloff and the Maland Pension Fund Trustees
Schroder Investment Management
Percentage
of issued
ordinary
Number
share capital
23,492,535
22.51
7,500,000
6,550,000
3,671,320
7.19
6.28
3.52
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 18 March 2015 shareholders approved the issue of up to 43,950,000 new warrants to subscribe for ordinary shares at a price of
20p per share. Subscribers to the new loan notes issued in February, March and August 2015 were issued with warrants totalling
34,755,000. In addition 9,195,000 new warrants were issued as replacements for the same number of old warrants granted as part of
the old shareholder loan arrangements to those old shareholder loan note holders who agreed to roll over their notes into the new loan
issue.
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 10,435,795 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 29 September 2016. This authority remains valid
until the conclusion of the next Annual General Meeting.
13
Report of the directors
DIRECTORS
Details of the current Directors of the Company are shown on page 12.
The beneficial interests of the directors in the share capital of the Company at 1 April 2017 are shown in the Remuneration Report on
pages 16 to 19.
No Director has a beneficial interest in the shares or debentures of any other Group undertaking.
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.
DIVIDEND
The directors do not recommend the payment of a dividend.
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.
QUALIFYING THIRD PARTY INDEMNITY
The Company has provided an indemnity for the benefit of certain 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
3 JULY 2017
14
Statement of Directors’ responsibilities in respect of the strategic report, the Directors’ report and the
financial statements
The Directors are responsible for preparing the Strategic Report, the Directors’ 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) including FRS101 Reduced Disclosure
Framework.
Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of
the state of affairs of the group and parent company and of their profit or loss for that period. In preparing each of the group and parent
company financial statements, the directors are required to:
•
select suitable accounting policies and then apply them consistently;
• make judgements and estimates that are reasonable and prudent;
•
•
•
for the group financial statements, state whether they have been prepared in accordance with IFRSs as adopted by the EU;
for the parent company financial statements, state whether applicable UK Accounting Standards have been followed, subject to any
material departures disclosed and explained in the financial statements; and
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group and the parent
company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the parent company’s
transactions and disclose with reasonable accuracy at any time the financial position of the parent company and enable them to ensure
that its financial statements comply with the Companies Act 2006. They have general responsibility for taking such steps as are
reasonably open to them to safeguard the assets of the group and to prevent and detect fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the company’s
website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other
jurisdictions.
NEIL CARRICK
DIRECTOR
3 JULY 2017
15
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 Regulations.
The Auditor is not required to report to the shareholders on the remuneration report, but the table of Directors’ emoluments on page 18
and the table of Directors’ share options on page 19 do form part of the audited accounts.
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 E Fiamma (Committee Chairman)
S J Rutherford
D Zissman
The Committee held three meetings during the year. The most significant matters discussed by the Committee at its formal meetings
this year were:
• the design and implementation of a new group wide bonus policy.
• the formal grant of awards under the share plans; and
• a review of 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. 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
No bonuses were paid in the year. A new bonus scheme has been implemented from the start of the financial year ending 31 March
2018 based on financial targets for Executive Directors.
LONG-TERM INCENTIVE PLANS
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 were granted on 19 November 2012 which are exercisable at 10p between three and ten years after grant date and further
options excercisable at 17p were issued on 7 April 2014 and at 18p on 18 August 2015. 500,000 nil cost options were issued under this
scheme on 1 September 2016.
BENEFITS IN KIND
Executive Directors’ benefits include a car allowance and medical insurance for self and family.
16
Remuneration report
SERVICE CONTRACTS
Mr N R Carrick has a service contract dated 27 May 2016 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. In the event of a change of control the notice period will be extended to 24
months, reducing back to 12 months over a 12 month 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 have contracts of service terminable on 3 months’ notice and are not eligible for pension benefits.
TOTAL SHAREHOLDER RETURN
This graph shows the Total Shareholder Return (TSR) of the Company (black line) from 1 April 2013 to 1 April 2017 compared with the
AIM Index (grey line), 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 the most appropriate index against which the TSR of the
Company should be measured.
RELATIVE PERFORMANCE OF FTSE AIM ALL SHARE INDEX TO 600 GROUP APRIL 2013 TO APRIL 2017
17
Remuneration report
DIRECTORS’ INTERESTS IN SHARES
The interests of Directors holding office at 1 April 2017 in the ordinary shares of the Company were as follows:
P R Dupee
S J Rutherford
N R Carrick
D Zissman
At
1 April
2017
Number
At
2 April
2016
Number
23,492,535
23,492,535
20,000
113,404
400,000
20,000
113,404
400,000
P R Dupee’s interest in the 23.5m shares arises from his position as Managing Partner of Haddeo Partners LLP, which owns these
shares.
In addition, Haddeo Partners LLP holds 5,050,000 warrants and N R Carrick 250,000 warrants which can be used to either convert
their loan notes into shares or to purchase shares for a cash consideration.
DIRECTORS’ EMOLUMENTS
Audited
P R Dupee
N R Carrick
D Zissman
S J Rutherford
S E Fiamma
N F Rogers
Total
.
Salary
Fees
Pension
Bonus
in kind
£
£
£
£
£
All
benefits
Total
2017
£
Total
2016
£
250,000
175,000
—
—
—
15,750
—
—
—
—
33,000
33,000
33,000
—
—
—
—
—
425,000
99,000
15,750
—
—
—
—
—
—
—
— 250,000
234,167
18,281 209,031
205,632
—
—
—
—
33,000
33,000
33,000
33,000
33,000
29,171
—
18,294
18,281 558,031
553,264
18
Remuneration report
DIRECTORS’ SHARE OPTIONS
Audited
Details of share options at 1 April 2017 and 2 April 2016 for each Director who held office during the year are as follows:
N Carrick
P Dupee
S Rutherford
D Zissman
S Fiamma
Number of
options at
2 April
2016
Granted
Exercised
3,150,000
1,000,000
500,000
500,000
500,000
—
—
—
—
—
—
—
—
—
—
Number of
options at
1 April
2017
3,150,000
1,000,000
500,000
500,000
500,000
Lapsed/
forfeited
—
—
—
—
—
Options were all granted under the 600 Group PLC Deferred Share Plan and are exercisable between 3 and 10 years from date of
grant.
4,500,000 options with an exercise price of 10p were granted on 19 November 2012 of which 1,750,000 remain outstanding at the
year-end. 5,400,000 options with an exercise price of 17p were granted on 7 April 2014, of which 3,400,000 remain outstanding, and
500,000 options with an exercise price of 18p were granted on 6 August 2015, all of which remain outstanding.
During the prior year, 2,750,000 share options were exercised by N Rogers on 10 July 2015. 2,750,000 new ordinary shares of 1p each
were exercised at 10p generating cash proceeds for the Group of £275,000.
The charge to the Income Statement in respect of share based payments was £68,000 (2016: £64,000).
The share price at 1 April 2017 was 12.625p and the highest and lowest prices during the period were 14.375p and 7.75p respectively.
On behalf of the Board
NEIL CARRICK
DIRECTOR
3 JULY 2017
19
Independent auditor’s report
To the members of The 600 Group PLC
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 period ended 1 April 2017 set out on pages 21 to 77. 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)
including FRS 101 Reduced Disclosure Framework.
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 15, the directors are responsible for the preparation of
the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit, and express an opinion on,
the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards
require us to comply with the Auditing Practices Board’s 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 Financial Reporting Council’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 1 April 2017 and
of the group’s profit for the period 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;
the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
Opinion on other matters prescribed by the Companies Act 2006
In our opinion the information given in the Strategic Report and the Directors’ Report for the financial period is consistent with the financial
statements.
Based solely on the work required to be undertaken in the course of the audit of the financial statements and from reading the Strategic
Report and the Directors’ Report:
• we have not identified material misstatements in those reports; and
•
in our opinion, those reports have been prepared in accordance with the Companies Act 2006.
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.
Nick Plumb (Senior Statutory Auditor)
for and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountants
1 Sovereign Square
Sovereign Street
Leeds
LS1 4DA
3 July 2017
20
Consolidated income statement
For the 52-week period ended 1 April 2017
Continuing
Revenue
Cost of sales
Gross profit/(loss)
Net operating expenses
Operating profit/(loss)
Financial income
Financial expense
Contingent consideration settlement
Profit/(loss) before tax
Income tax (charge)/credit
Profit/(loss) for the period
Notes
1
2,3
3,4
6
6
3
7
Before
Special
Items
After
Before
Special
Special
Special
Special
Items
Items
Items
Items
After
Special
Items
52 weeks
52 weeks
52 weeks
53 weeks
53 weeks
53 weeks
ended
1 April
2017
£000
47,032
(30,602)
16,430
(13,365)
ended
1 April
2017
£000
ended
1 April
2017
£000
ended
2 April
2016
£000
ended
2 April
2016
£000
ended
2 April
2016
£000
-
47,032
45,269
-
45,269
(118)
(118)
(30,720)
(29,899)
16,312
15,370
(894)
(894)
(30,793)
14,476
(53)
(13,418)
(13,014)
(2,626)
(15,640)
3,065
(171)
2,894
2,356
(3,520)
(1,164)
3
(946)
-
1,445
(168)
-
1,448
(1,114)
-
10
(890)
-
1,171
(150)
2,032
1,181
(1,040)
2,032
2,122
1,106
3,228
1,476
(467)
1,009
118
(1,287)
(1,169)
65
72
2,240
(181)
2,059
1,541
(395)
Attributable to equity holders of the parent
2,240
(181)
2,059
Attributable to non controlling interests
-
-
-
2,240
(181)
2,059
1,552
(11)
1,541
(395)
-
(395)
137
1,146
1,157
(11)
1,146
Basic earnings per share
Diluted earnings per share
9
9
2.15p
(0.18)p
1.97p
1.69p
(0.43)p
1.26p
2.14p
(0.18)p
1.96p
1.68p
(0.43)p
1.25p
Company Number 00196730
The accompanying accounting policies and notes on pages 26 to 66 form part of these Financial Statements.
21
Consolidated statement of comprehensive income
for the 52-week period ended 1 April 2017
Profit for the period
Other comprehensive income/(expense)
Items that will not be reclassified to the Income Statement:
Remeasurement of defined benefit asset
Deferred taxation
Total items that will not be reclassified to the Income Statement:
Items that are or may in the future be reclassified to the Income Statement:
Foreign exchange translation differences
Fair valuation of assets held for sale
Fair valuation of investments
Total items that are or may in the future be reclassified to the Income Statement:
Other comprehensive income for the period, net of income tax
Total comprehensive income for the period
Attributable to:
Equity holders of the Parent Company
Non controlling interests
Total recognised income
Notes
30
14
52-week
53-week
period ended
period ended
1 April
2017
£000
2,059
8,367
(2,928)
5,439
705
-
1,157
1,862
7,301
9,360
9,360
-
9,360
2 April
2016
£000
1,146
4,436
(515)
3,921
286
(450)
(29)
(193)
3,728
4,874
4,885
(11)
4,874
The accompanying accounting policies and notes on pages 26 to 66 form part of these Financial Statements.
22
Consolidated statement of financial position
As at 1 April 2017
Company Number 00196730
As at
As at
1 April 2017
2 April 2016
Notes
£000
£000
Non-current assets
Property, plant and equipment
Goodwill
Other Intangible assets
Investments
Deferred tax assets
Employee benefits
Current assets
Inventories
Trade and other receivables
Assets classified as held for sale
Cash and cash equivalents
Total assets
Non-current liabilities
Loans and other borrowings
Deferred tax liabilities
Current liabilities
Trade and other payables
Provisions
Loans and other borrowings
Total liabilities
Net assets
Shareholders’ equity
Called-up share capital
Share premium account
Revaluation reserve
Available for sale reserve
Equity reserve
Translation reserve
Retained earnings
Total equity
11
12
12
13
14
30
15
16
17
18
19
14
20
21
19
23
3,732
7,144
305
1,653
3,486
51,469
67,789
12,737
7,444
-
1,081
21,262
89,051
(9,234)
(18,216)
(27,450)
(5,436)
(389)
(5,508)
(11,333)
(38,783)
50,268
1,044
1,013
637
506
139
2,466
44,463
50,268
3,235
7,144
322
496
3,832
40,937
55,966
11,271
6,771
1,999
765
20,806
76,772
(11,376)
(14,538)
(25,914)
(6,318)
(425)
(3,275)
(10,018)
(35,932)
40,840
1,044
1,013
1,273
(651)
139
1,714
36,308
40,840
The financial statements on pages 21 to 66 were approved by the Board of Directors on 3 July 2017 and were signed on its behalf by:
NEIL CARRICK
GROUP FINANCE DIRECTOR
3 July 2017
23
Consolidated statement of changes in equity
As at 1 April 2017
Company Number 00196730
Ordinary
Share
Available
Non
share
premium Revaluation
for sale Translation
Equity
Retained
Controlling
Total
capital
account
reserve
reserve reserve
reserve
Earnings
Total
Interest
Equity
At 28 March 2015
At 29 March 2015
Profit for the period
Other comprehensive income:
Foreign currency translation
Net defined benefit asset mvmt
Fair valuation of Investments
Fair valuation of assets held for
sale
Transfer on revalued properties
Deferred tax
Total comprehensive income
Transactions with owners:
£000
896
896
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Share capital subscribed for
148
1,013
Equity element of shareholder
loan issued in period
Acquisition of NCI
Credit for share-based payments
Total transactions with owners
At 2 April 2016
At 3 April 2016
Profit for the period
Other comprehensive income:
Foreign currency translation
Net defined benefit asset mvmt
Fair valuation of Investments
Transfer on revalued properties
Deferred tax
Total comprehensive income
Transactions with owners:
Credit for share-based payments
Total transactions with owners
—
—
—
148
1,044
1,044
—
—
—
1,013
1,013
1,013
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
£000
£000
£000
£000
£000
£000
£000
£000
£000
1,494
(622)
1,428
124
31,270 34,590
136 34,726
1,494
(622)
1,428
124
31,270 34,590
136 34,726
—
—
1,157
1,157
(11)
1,146
—
—
—
—
(450)
229
—
—
—
—
(29)
—
—
—
286
—
—
—
—
—
(221)
(29)
286
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
1,273
1,273
(651)
1,714
(651)
1,714
—
75
—
—
(711)
—
—
—
—
1,157
—
—
—
752
—
—
—
—
—
—
—
—
—
—
—
—
15
—
15
139
139
—
—
—
—
—
—
286
—
286
4,436
4,436
— 4,436
—
(29)
—
(450)
(229)
—
—
—
—
(29)
(450)
—
(515)
(515)
— (515)
4,849
4,885
(11)
4,874
— 1,161
— 1,161
15
—
—
—— 125
125
(125)
64
64
—
15
—
64
189
1,365
(125)
1,240
36,308 40,840
— 40,840
36,308 40,840
— 40,840
2,059
2,059
— 2,059
(122)
705
—
705
8,367
8,367
— 8,367
—
1,157
— 1,157
711
—
—
—
— (2,928) (2,928)
— (2,928)
(636)
1,157
752
—
8,087
9,360
— 9,360
—
—
—
—
—
—
—
—
68
68
68
68
—
—
68
68
At 1 April 2017
1,044
1,013
637
506
2,466
139
44,463 50,268
— 50,268
The accompanying accounting policies and notes on pages 26 to 66 form part of these Financial Statements.
24
Consolidated cash flow statement
For the 52-week period ended 1 April 2017
Cash flows from operating activities
Profit for the period
Adjustments for:
Amortisation of development expenditure
Depreciation
Net financial income
Net pension credit
Other Special Items
Equity share option expense
Income tax expense/(credit)
Operating cash flow before changes in working capital and provisions
(Increase)/decrease in trade and other receivables
(Increase)/decrease in inventories
Decrease in trade and other payables
Restructuring and redundancy expenditure
Employee benefits contributions
Cash generated in operations
Interest paid
Income tax received/( paid)
Net cash flows from operating activities
Cash flows from investing activities
Interest received
Proceeds from sale of property, plant and equipment
Purchase of TYKMA Inc.
Purchase of property, plant and equipment
Development and trademarks expenditure capitalised
Net cash flows from investing activities
Cash flows from financing activities
Proceeds from issue of ordinary shares
Proceeds from issue of Loan Notes
Repayment of external borrowing
Proceeds from external borrowing
Net finance lease income/(expenditure)
Net cash flows from financing activities
Net decrease 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
53-week
period ended
period ended
Notes
24
1 April
2017
£000
2,059
58
452
(334)
(647)
750
68
1,169
3,575
(150)
(1,404)
(1,260)
(541)
(120)
100
(946)
88
(758)
3
2,090
—
(490)
(22)
1,581
—
—
(2,513)
2,074
(93)
(532)
291
765
25
18
1,081
2 April
2016
£000
1,146
122
548
(141)
(940)
2,363
64
(137)
3,025
463
106
(1,682)
(807)
(130)
975
(964)
(3)
8
10
—
(1,378)
(1,522)
(297)
(3,187)
275
806
1,883
—
67
3,031
(148)
902
11
765
25
The accompanying accounting policies and notes on pages 26 to 66 form part of these Financial Statements.
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 2017
are for the 52-week period ended 1 April 2017. The results for 2016 are for the 53-week period ended 2 April 2016. 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. The Company has elected to prepare its parent company financial statements in accordance with FRS 101; these
are presented on pages 67 to 77.
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 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.
Under section 408 of the Companies Act 2006 the Company is exempt from the requirement to present its own profit and loss account.
At the date of authorisation of these financial statements, the following Standards and Interpretations which have not been applied in these
financial statements were in issue but not yet effective (and in some cases had not yet been adopted by the EU):
IAS 7 (amendments) Disclosure initiative (effective from 1 January 2017)
IAS 12 (amendments) Recognition of Deferred Tax Assets for Unrealised Losses (effective from 1 January 2017)
IFRS 12 (amendments) Annual Improvements to IFRSs 2014-2016 Cycle (effective from 1 January 2017)
IFRS 9 Financial Instruments (effective from 1 January 2018)
IFRS 15 Revenue from contracts with customers (effective from 1 January 2018)
IFRS 2 (amendments) Classification and Measurement of Share-based Payment Transactions (effective from 1 January 2018)
IFRIC 22 Foreign Currency Transactions and Advance Consideration (effective from 1 January 2018)
IFRS 16 Leases (effective from 1 January 2019)
IFRS 10 and IAS 28 (amendments) Sale or contribution of assets between an investor and its associate or joint venture (effective date
deferred indefinitely)
The directors do not expect that the adoption of the Standards listed above will have a material impact on the financial statements of the
Group in future periods, except that IFRS 9 will impact both the measurement and disclosures of financial instruments, IFRS 15 will have
an impact on revenue recognition and related disclosures, IFRS 16 will have an impact on the recognition of leases and the related
disclosures. Beyond the information above, it is not practicable to provide a reasonable estimate of the effect of IFRS 9, IFRS 15 and IFRS
16 until a detailed review has been completed.
The Group is currently reviewing the potential impact of the above standards. Preliminary indications are that the impact would not be
significant. The same is true of the following new or amended standards:
IFRS 14 Regulatory Deferral Accounts; Accounting for Acquisitions of Interests in Joint Operations (Amendments to IFRS 11);
Clarification of Acceptable Methods of Depreciation and Amortisation (Amendments to IAS 16 and IAS 38); Defined Benefit Plans:
Employee Contributions (Amendments to IAS 19); Annual Improvements to IFRSs 2010-2012 Cycle; and Annual Improvements to
IFRSs 2011-2013 Cycle.
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.
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 and assets held for sale 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 to 3 and the Strategic Report on pages 4 to 11.
26
Group accounting policies
New increased banking facilities were agreed with HSBC in the UK in August 2016 following the sale of the Letchworth property. A
package of facilities to support the working capital of the UK machine tools business and a term loan secured on the remaining freehold
site in Colchester were put in place totaling £4.95m. In the USA Bank of America supported the 20% TYKMA acquisition in March 2016
with an additional term loan of $1.8m in addition to their existing term and working capital facilities. The Group has a mixture of term
loans and revolving working capital facilities with maturities between 1 and 5 years. Headroom on bank facilities was £3.2m at the year-
end (2016: £3.2m) and all financial covenants in place were met during the year. It is expected that the short term facilities in place at
the year-end will be extended on similar terms.
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 reset the translation reserve to £nil. The balance on this
reserve only relates to post transition.
REVENUE
Revenue represents 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 or title passes to customers, depending on the respective terms of sale or when services have been completed in full. No
revenue is recognised if there are significant uncertainties regarding recovery of the consideration due, associated completion costs,
the possible return of goods or continuing management involvement with the goods other than in respect of storage for customers’
goods.
15% of the Group’s revenues arise from after sales support, spare parts and services.
SEGMENT ANALYSIS
The Group has adopted IFRS 8 “Operating segments” which requires operating segments to be identified on the basis of internal
reporting about components of the Group that are regularly reviewed by the chief operating decision maker to allocate resources to the
segments and to assess their performance.
The Executive Directors consider there to be two continuing operating segments being Machine Tools and Precision Engineered
Components and Industrial Laser Systems.
The Executive Directors assess the performance of the operating segments based on a measure of underlying 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.
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 share based payments and amortisation of intangible assets acquired and non cash
pension transactions are separately identified as special items (see note 3).
Special items include acquisition costs, gains and losses on the sale of properties and assets, exceptional costs relating to
reorganisation, redundancy and restructuring, refinancing costs, legal disputes and inventory, asset and intangibles impairments.
27
Group accounting policies
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. Remeasurements 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, on the income statement; 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 net asset or liability of the scheme – calculated by reference to the net scheme asset or liability and discount rate
at the beginning of the period..
WITHIN THE STATEMENT OF COMPREHENSIVE INCOME
• remeasurements arising on the assets and liabilities of the scheme.
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 is not 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 rate used is 20%.
INVESTMENTS
Investments in quoted shares are classified as Available for sale and measured at fair value. Movements in fair value are recorded in
the Available for sale reserve until the shares are sold, in which case the Available for sale reserve is recycled to the income statement.
28
Group accounting policies
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 2015 the Group’s properties were revalued. The valuations were performed by independent
valuers, Sanderson Weatherall, and the valuations were determined by market rate for sale with vacant possession. Revalued amounts
are reflected in the balance sheet with resulting credits taken to revaluation reserve and debits, after reversing previous credits, taken
to the consolidated income statement. 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 when
identified.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents in the balance sheet comprise cash at bank and in hand.
For the purpose of the consolidated cash flow statement, cash and cash equivalents consist of cash and cash equivalents as described
above, net of outstanding bank overdrafts which are repayable on demand and form an integral part of cash management.
COMPOUND FINANCIAL INSTRUMENTS
Compound financial instruments issued by the Group comprise convertible notes that can be converted to share capital at the option of
the holder, when the number of shares to be issued does not vary with changes in their fair value. The liability component of a
compound financial instrument is recognised initially at the fair value of a similar liability that does not have an equity conversion option.
The equity component is recognised initially at the difference between the fair value of the compound financial instrument as a whole
and the fair value of the liability component. Any directly attributable transaction costs are allocated to the liability and equity
components in proportion to their initial carrying amounts.
Subsequent to initial recognition, the liability component of a compound financial instrument is measured at amortised cost using the
effective interest method. The equity component of a compound financial instrument is not remeasured subsequent to initial
recognition.
Interest and gains and losses related to the financial liability are recognised in profit or loss. On conversion, the financial liability is
reclassified to equity; no gain or loss is recognised on conversion.
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.
29
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 purchased
outright and are capitalised and depreciated over the shorter of the estimated useful life of the assets and the period of the leases. The
capital element of future rentals is treated as a liability and the interest element is charged against profits in proportion to the balances
outstanding. Leases where the risk and reward of ownership remain with the lessor are treated as operating leases and the rental costs
are charged against profits on a straight-line basis.
DERIVATIVE FINANCIAL INSTRUMENTS
The Group does not hedge account but uses on occasion derivative financial instruments to hedge its commercial exposure to foreign
exchange arising from operational, financing and investment activities. In accordance with its treasury policy, the Group does not
hold or issue derivative financial instruments for trading purposes. Derivative financial instruments are accounted for as trading
instruments and are recognised initially at cost. Subsequent to initial recognition, derivative financial instruments are stated at fair value
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 recognition,
interest-bearing borrowings are stated at amortised cost with any difference between cost and redemption value being recognised in
the income statement over the period of the borrowings on an effective interest basis.
PROVISIONS
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that
an outflow of resources embodying economic benefit will be required to settle the obligation, although there remains uncertainty over
timing or the amount of the obligation, and a reliable estimate can be made of the amount of the obligation.
IMPAIRMENT
The carrying amount of the Group’s assets, other than inventories and deferred tax assets (see accounting policies above), are
reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the asset’s
recoverable amount is estimated.
For goodwill, the recoverable amount is estimated at each balance sheet date.
An impairment loss is recognised whenever the carrying amount of an asset or cash generating unit exceeds its recoverable amount.
Impairment losses are recognised in the consolidated income statement. Those relating to revalued property are treated in accordance
with IAS 16.
Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill
allocated to cash-generating units (group of units) and then to reduce the carrying amount of the other assets of the unit (group of units)
on a pro rata basis.
ASSETS AND LIABILITIES CLASSIFIED AS 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.
30
Group accounting policies
BUSINESS COMBINATIONS
All business combinations are accounted for by applying the acquisition method. Business combinations are accounted for using the
acquisition method as at the acquisition date, which is the date on which control is transferred to the Group.
Acquisitions on or after 1 January 2010:
For acquisitions on or after 1 January 2010, the Group measures goodwill at the acquisition date as:
the fair value of the consideration transferred; plus
the recognised amount of any non-controlling interests in the acquiree; plus
the fair value of the existing equity interest in the acquiree; less
the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed.
When the excess is negative, a bargain purchase gain is recognised immediately in profit or loss.
Costs related to the acquisition, other than those associated with the issue of debt or equity securities, are expensed as incurred.
Any contingent consideration payable is recognised at fair value at the acquisition date. If the contingent consideration is classified as
equity, it is not remeasured and settlement is accounted for within equity. Otherwise, subsequent changes to the fair value of the
contingent consideration are recognised in profit or loss.
On a transaction-by-transaction basis, the Group elects to measure non-controlling interests, which have both present ownership interests
and are entitled to a proportionate share of net assets of the acquiree in the event of liquidation, either at its fair value or at its proportionate
interest in the recognised amount of the identifiable net assets of the acquiree at the acquisition date. All other non-controlling interests are
measured at their fair value at the acquisition date.
Acquisitions prior to 1 January 2010:
For acquisitions prior to 1 January 2010, goodwill represents the excess of the cost of the acquisition over the Group’s interest in the
recognised amount (generally fair value) of the identifiable assets, liabilities and contingent liabilities of the acquiree. When the excess was
negative, a bargain purchase gain was recognised immediately in profit or loss.
Transaction costs, other than those associated with the issue of debt or equity securities, that the Group incurred in connection with
business combinations were capitalised as part of the cost of the acquisition.
ACQUISTIONS AND DISPOSALS OF NON-CONTROLLING INTERESTS
Acquisitions and disposals of non-controlling interests that do not result in a change of control are accounted for as transactions with
owners in their capacity as owners and therefore no goodwill is recognised as a result of such transactions. The adjustments to non-
controlling interests are based on a proportionate amount of the net assets of the subsidiary. Any difference between the price paid or
received and the amount by which non-controlling interests are adjusted is recognised directly in equity and attributed to the owners of the
parent.
Prior to the adoption of IAS 27 (2008), goodwill was recognised on the acquisition of non-controlling interests in a subsidiary, which
represented the excess of the cost of the additional investment over the carrying amount of the interest in the net assets acquired at the
date of the transaction.
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 24.
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.
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 loan notes which include convertible warrants, the value of which is recognised in
equity.
Available for sale reserve
The available for sale reserve was created for movements in the carrying value of the Group’s investment in ProPhotonix Ltd.
Retained earnings
Retained earnings brought forward from prior periods along with current year result.
31
Notes relating to the consolidated financial statements
For the 52-week period ended 1 April 2017
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.
The Executive Directors consider there to be two continuing operating segments being machine tools and precision engineered
components and industrial laser systems.
The Executive Directors assess the performance of the operating segments based on a measure of underlying 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.
The following is an analysis of the Group’s revenue and results by reportable segment:
52 Weeks ended 1 April 2017
Segmental analysis of revenue
Total revenue
Segmental analysis of operating profit/(loss) before
Special Items
Special Items
Group operating profit/(loss)
Other segmental information:
Reportable segment assets
Reportable segment liabilities
Fixed asset additions
Depreciation and amortisation
Continuing
Machine
tools
& precision
engineered
components
Industrial
laser
systems
Head Office
& unallocated
£000
£000
32,424
14,608
£000
—
2,059
691
2,750
1,993
(671)
1,322
(987)
(191)
(1,178)
Total
£000
47,032
3,065
(171)
2,894
29,120
7,638
(26,538)
(3,772)
52,293
(8,473)
89,051
(38,783)
115
295
397
215
—
—
512
510
32
Notes relating to the consolidated financial statements
For the 52-week period ended 1 April 2017
1. SEGMENT INFORMATION (CONTINUED)
53 Weeks ended 2 April 2016
Segmental analysis of revenue
Total revenue
Segmental analysis of operating profit/(loss) before Special Items
Special Items
Group operating profit/(loss)
Other segmental information:
Reportable segment assets
Reportable segment liabilities
Fixed asset additions
Depreciation and amortisation
Machine
tools
& precision
engineered
components
Industrial
laser
systems
Head Office
& unallocated
£000
£000
32,127
13,142
2,073
1,179
282
(3,212)
£000
—
(896)
(590)
2,355
(2,033)
(1,486)
Total
£000
45,269
2,356
(3,520)
(1,164)
26,630
5,970
(22,078)
(3,048)
605
293
1,214
457
44,172
(10,806)
—
—
76,772
(35,932)
1,819
750
Inter-segment pricing is determined on an arm’s length basis. Segment results, assets and liabilities include items directly attributable
to a segment as well as those that can be allocated on a reasonable basis.
Segment capital expenditure is the total cost incurred during the period to acquire segment assets that are expected to be used for
more than one period.
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
Total Revenue
2017
£000
2016
%
£000
%
11,705
33,354
1,973
47,032
24.9
70.9
4.2
100.0
14,851
28,936
1,482
45,269
32.8
63.9
3.3
100.0
33
Notes relating to the consolidated financial statements
For the 52-week period ended 1 April 2017
1. SEGMENT INFORMATION (CONTINUED)
Segmental analysis by destination:
Gross sales revenue:
UK
Other European
North America
Africa
Australasia
Central America
Middle East
Far East
2017
2016
£000
%
£000
%
7,193
5,783
29,732
141
1,804
140
431
1,808
47,032
15.3
12.3
63.3
0.3
3.8
0.3
0.9
3.8
100.0
8,498
5,905
27,291
162
1,438
163
733
1,079
45,269
18.8
13.0
60.3
0.4
3.2
0.4
1.6
2.3
100.0
There are no customers that represent 10% or more of the Group’s revenues.
2. NET OPERATING EXPENSES
– administration expenses
– distribution costs
Total net operating expenses
2017
£000
10,669
2,749
13,418
2016
£000
13,061
2,579
15,640
34
Notes relating to the consolidated financial statements
For the 52-week period ended 1 April 2017
3. SPECIAL ITEMS
In order for users of the financial statements to better understand the underlying performance of the Group the Board have separately
disclosed transactions which by virtue of their size or incidence, are considered to be one off in nature. In addition the charge for share
based payments, amortisation of intangible assets acquired and non cash pension transactions have also been separately identified.
Special items include
Items included in cost of sales:
Stock write-offs
Items included in operating profit:
Pensions credit
Refinancing costs
Redundancy and reorganisation
Profit on sale of property
Impairment of intangible assets
Acquisition costs
Share option charge
Amortisation of intangible assets acquired
Items included in financial (income)/expense:
Pensions interest on surplus
Amortisation of loan note expenses
Items included in contingent consideration settlement:
TYKMA deferred consideration settlement
Total special items before tax
Income tax credit on special items
Total special items after tax
2017
£000
(118)
(118)
647
(54)
(622)
114
—
(29)
(68)
(41)
(53)
1,445
(168)
1,277
—
—
1,106
(1,287)
(181)
2016
£000
(894)
(894)
940
—
(835)
—
(2,390)
(197)
(64)
(80)
(2,626)
1,171
(150)
1,021
2,032
2,032
(467)
72
(395)
Special items are disclosed separately on the basis that this presentation gives a clearer picture of the underlying performance of the
Group. Special items comprise two elements:
-
-
Items which are expected to be one-off in nature and are considered significant to the result of the group or one of its reporting
segments; and
Non-cash items which, given the scale of our current activities, represent a disproportionate share of the Group’s result.
Examples include the credit arising on the pension surplus share based payments and the amortisation of intangible assets.
During the year the Group incurred further costs with regard to the reorganisation of TYKMA Inc and the integration of the Electrox
Laser marking division. Redundancy exercises were carried out in the UK during the year. Property disposals in the UK also resulted in
the profit of £114k. Costs were also incurred relating to the refinancing carried out in the UK during the year.
Costs were also incurred with regard to the granting of share options.
35
Notes relating to the consolidated financial statements
For the 52-week period ended 1 April 2017
4. OPERATING PROFIT/(LOSS)
Operating profit/(loss) is after charging/(crediting) :
– depreciation of assets held under finance leases
– amortisation of development expenditure and trademarks
– hire of plant
– other operating lease rentals
– profit on sale of property, plant and equipment
2017
£000
23
58
16
352
114
2016
£000
26
202
7
240
-
Special Items
–Acquisition costs, reorganisation and restructuring, inventory and asset impairments, property disposals
and refinancing costs (note 3)
(1,106)
467
Auditor’s remuneration:
– audit of these financial statements
– amounts receivable by auditor and its associates in respect of:
– auditing of accounts of subsidiaries of the company pursuant to legislation (including that of countries and
territories outside of Great Britain)
– other services relating to tax compliance
– other services relating to tax advisory
70
21
7
5
70
27
6
18
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)
2017
£000
7,937
1,073
354
14
68
2016
£000
7,258
983
373
12
64
9,446
8,690
In addition to the above staff costs, redundancy costs of £291,000 were incurred during the year (2016: £586,000). Directors’
emoluments including disclosure of the highest paid director are included in the Directors’ Emoluments table and table of Directors’
share options contained within the Remuneration report (pages 16-19).
36
Notes relating to the consolidated financial statements
For the 52-week period ended 1 April 2017
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
Total
.
6. FINANCIAL INCOME AND EXPENSE
Bank and other interest
Interest on pensions surplus
Financial income
Bank overdraft and loan interest
Other loan interest
Other finance charges
Finance charges on finance leases
Amortisation of shareholder loan expenses
Financial expense
2017
Number
2016
Number
61
79
66
206
2017
£000
3
1,445
1,448
(173)
(761)
-
(12)
(168)
52
98
84
234
2016
£000
10
1,171
1,181
(155)
(721)
(3)
(11)
(150)
(1,114)
(1,040)
37
Notes relating to the consolidated financial statements
For the 52-week period ended 1 April 2017
7. TAXATION
Current tax:
Corporation tax at 20% (2016: 20%):
– current period
Overseas taxation:
– current period
Total current tax charge
Deferred taxation:
– current period
– prior period (adjustments to the capital allowance pools in the UK and overseas)
Total deferred taxation credit/(charge) (Note 14)
Taxation charged to the income statement
2017
£000
—
—
—
(695)
(474)
(1,169)
(1,169)
2016
£000
—
53
53
79
5
84
137
TAX RECONCILIATION
The tax charge assessed for the period is higher than the standard rate of corporation tax in the UK of 20% (2016: lower than standard
rate of 20%). The differences are explained below:
2017
£000
3,228
%
2016
£000
1,009
646
20.0
Profit before tax
Profit before tax multiplied by the standard rate of corporation tax
in the UK of 20% (2016: 20%)
Effects of:
–income not taxable and/or expenses not deductible
(423)
(13.1)
– overseas tax rates
– pension fund surplus taxed at higher rate
– property disposals
– state taxes
– deferred tax prior period adjustment
– tax not recognised on losses/(unrecognised losses utilised)
– impact of rate change
Taxation charged/(credited) to the income statement
Deferred taxation balances are analysed in note 14.
8. DIVIDENDS
No dividend was declared in the period (2016: no dividend paid).
17
129
—
17
474
309
—
1,169
0.5
4.0
—
0.5
14.7
9.6
—
36.2
202
(205)
19
321
(52)
75
(5)
(600)
108
(137)
%
20.0
(20.3)
1.9
31.8
(5.2)
7.4
(0.5)
(59.4)
10.7
(13.6)
38
Notes relating to the consolidated financial statements
For the 52-week period ended 1 April 2017
9. EARNINGS PER SHARE
The calculation of the basic earnings per share of 1.97p (2016: 1.26p) is based on the earnings for the financial period attributable to
the Parent Company’s shareholders of a profit of £2,059,000 (2016: £1,157,000) and on the weighted average number of shares in
issue during the period of 104,357,957 (2016: 91,684,103). At 1 April 2017, there were 6,650,000 (2016: 6,150,000) potentially dilutive
shares on option with a weighted average effect of 303,255 (2016: 583,333) shares giving a diluted earnings per share of 1.96p (2016:
1.25p)
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
Total post tax earnings
Share Option Costs
Pensions Interest
Amortisation of Shareholder loan expenses
Pensions credit
Credit on settling deferred consideration
Impairment of intangible assets
Amortisation of intangible assets acquired
Other special items
Acquisition costs
Associated Taxation
Underlying Earnings after tax
Underlying Earnings before tax
Underlying EPS
2017
2016
104,357,957
89,607,957
—
2,076,146
104,357,957
91,684,103
£000
2,059
68
£000
1,146
64
(1,445)
(1,171)
168
(647)
—
—
41
680
29
1,287
2,240
2,122
2.15p
150
(940)
(2,032)
2,390
80
1,729
197
(72)
1,541
1,476
1.69p
39
Notes relating to the consolidated financial statements
For the 52-week period ended 1 April 2017
10. EMPLOYEE SHARE OPTION SCHEMES
The Group has granted share options to employees under The 600 Group PLC Deferred Share Plan 2011.
Options under the DSP were granted to senior executives and directors on 19 November 2012 at 10p per share, on 7 April 2014 at 17p
per share, on 6 August 2015 at 18p per share and finally additional nil cost options on 1 September 2016. These options are
exercisable between 3 and 10 years from the grant date. The schemes are equity-settled.
SHARE-BASED EXPENSE
The Group recognised a total charge of £68,000 (2016: £64,000) in relation to equity-settled share-based payment transactions.
The number and weighted average exercise prices of share options
Number of options outstanding at beginning of period
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
2017
DSP
2016
DSP
6,150,000
500,000
—
—
6,650,000
1,750,000
9,900,000
1,000,000
(2,000,000)
(2,750,000)
6,150,000
1,750,000
On 19 November 2012 4,500,000 options with an exercise price of 10p were granted, of which 1,750,000 were still outstanding, and on
7 April 2014 5,400,000 options with an exercise price of 17p were granted, of which 3,400,000 were still outstanding. On 6 August 2015
1,000,000 shares with an exercise price of 18p were granted, and on 1 September 2016 500,000 nil cost options were granted, all of
which are still outstanding. All options are exercisable between 3 and 10 years from the date of grant.
On 30 April 2015 Mr N Rogers resigned as a director. 2,750,000 options with an exercise price of 10p were agreed to become
immediately exercisable by Mr N Rogers and 2,000,000 options with an exercisable price of 17p were forfeit.
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 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
2016
Grant
£000
£0.10
£0.10
0p
0%
50%
2015
Grant
£000
£0.04
£0.18
18p
0%
50%
2014
Grant
£000
£0.04
£0.17
17p
0%
25%
2013
Grant
£000
£0.04
£0.10
10p
0%
50%
3.0 years
3.0 years
3.0 years
3.0 years
1.36%
1.36%
4.08%
4.08%
500,000
1,000,000
3,400,000
1,750,000
40
Notes relating to the consolidated financial statements
For the 52-week period ended 1 April 2017
11. PROPERTY, PLANT AND EQUIPMENT
Cost or valuation
At 2 April 2016
Exchange differences
Transfers from/(to) inventory
Additions during period
Disposals during period
At 1 April 2017
At professional valuation
At cost
Depreciation
At 2 April 2016
Exchange differences
Charge for period
Disposals during period
At 1 April 2017
Net book value
At 1 April 2017
At 2 April 2016
Land and buildings
Plant and
Fixtures,
fittings,
tools and
Freehold
Leasehold
machinery
equipment
£000
£000
£000
£000
Total
£000
1,208
389
10,347
2,382
14,326
92
—
2
—
1,302
1,300
2
1,302
34
1
19
—
54
1,248
1,174
52
—
64
(1)
504
440
64
504
6
1
25
(1)
31
473
383
162
348
116
(130)
10,843
—
10,843
10,843
304
(48)
308
(26)
2,920
—
2,920
2,920
610
300
490
(157)
15,569
1,740
13,829
15,569
9,281
1,770
11,091
109
343
(45)
230
65
(1)
341
452
(47)
9,688
2,064
11,837
1,155
1,066
856
612
3,732
3,235
During March 2016 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.
41
Notes relating to the consolidated financial statements
For the 52-week period ended 1 April 2017
11. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
The net book value of property, plant and equipment includes £210,000 (2016: £156,000) of assets held under finance leases. The
depreciation charged in the period against assets held under finance leases was £23,000 (2016: £26,000).
Various properties with a net book value of £1,721,000 (2016: £3,040,000) 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
1,186
2,676
10,994
2,074
Cost or valuation
At 29 March 2015
Exchange differences
Transfer to assets classified as held for resale
Additions during period
Disposals during period
At 2 April 2016
At professional valuation
At cost
Depreciation
At 29 March 2015
Exchange differences
Transfer to assets classified as held for resale
Charge for period
Disposals during period
At 2 April 2016
Net book value
At 2 April 2016
At 28 March 2015
22
—
—
—
1,208
1,208
—
1,208
16
—
—
18
—
34
1,174
1,170
6
(2,556)
383
(120)
389
389
—
389
78
(1)
(107)
61
(25)
6
383
2,598
40
—
758
(1,445)
10,347
—
10,347
10,347
92
—
382
(166)
2,382
—
2,382
2,382
16,930
160
(2,556)
1,523
(1,731)
14,326
1,597
12,729
14,326
10,099
1,578
11,771
36
—
314
(1,168)
9,281
1,066
895
72
—
155
(35)
1,770
612
496
107
(107)
548
(1,228)
11,091
3,235
5,159
42
Notes relating to the consolidated financial statements
For the 52-week period ended 1 April 2017
12. GOODWILL AND OTHER INTANGIBLE ASSETS
Cost
At 2 April 2016
Additions
Disposals
Foreign exchange
At 1 April 2017
Amortisation and impairment
At 2 April 2016
Amortisation
Foreign exchange
At 1 April 2017
Net book value
At 1 April 2017
At 2 April 2016
Goodwill
Trademarks
Expenditure
£000
£000
£000
Development
7,144
—
—
—
7,144
—
—
—
—
7,144
7,144
405
2
(1)
35
441
112
48
15
175
266
293
35
20
—
—
55
6
10
—
16
39
29
Total
£000
7,584
22
(1)
35
7,640
118
58
15
191
7,449
7,466
The additions to Development Expenditure of £20k in the period and £264k in the prior period related primarily to internal development.
The Goodwill related to the acquisition of TYKMA Inc and more details on this can be found in note 32.
Cost
At 28 March 2015
Additions
Disposals
Impairment
Foreign exchange
At 2 April 2016
Amortisation and impairment
At 28 March 2015
Amortisation
Disposals
Impairment
Foreign exchange
At 2 April 2016
Net book value
At 2 April 2016
At 28 March 2015
Goodwill
Trademarks
Expenditure
£000
£000
£000
Development
7,144
—
—
—
—
7,144
—
—
—
—
—
—
7,144
7,144
445
32
(94)
—
22
405
71
92
(60)
—
9
112
293
374
2,271
264
—
(2,500)
—
35
298
110
(292)
(110)
—
6
29
1,973
Total
£000
9,860
296
(94)
(2,500)
22
7,584
369
202
(352)
(110)
9
118
7,466
9,491
Amortisation and impairment charges are recorded in the following line items in the income statement:
Operating expenses
2017
£000
58
2016
£000
202
43
Notes relating to the consolidated financial statements
For the 52-week period ended 1 April 2017
12. GOODWILL AND OTHER INTANGIBLE ASSETS (CONTINUED)
IMPAIRMENT OF GOODWILL
Goodwill of £7.1m arose on the acquisition of TYKMA Inc. and its carrying value has been tested for impairment at the year-end with no
provisions deemed necessary. The Industrial Laser Systems Division is regarded as one cash-generating unit and as such this
supports the carrying value of the goodwill. The impairment review comprised a comparison of the goodwill 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 8%.
Cash flows are extrapolated beyond their term (of between 1 and 4 years) using an estimated growth rate of 3% and are appropriate
because these are long term businesses. The growth rates used are consistent with the long-term average growth rates for the
industries and countries in which the CGUs are located. This has no impact on the Group accounts.
During the prior year, there was a £2.39m impairment of development expenditure with regard to the Industrial Laser Systems Division.
13. INVESTMENTS
Cost:
At 2 April 2016
Fair valuation in the period
Disposals in the period
At 1 April 2017
Provisions:
At 2 April 2016
Write-back in the period
At 1 April 2017
Net book values
At 1 April 2017
At 2 April 2016
Shares
In listed
investments
£000
1,147
506
—
1,653
651
(651)
—
1,653
496
Total
£000
1,147
506
—
1,653
651
(651)
—
1,653
496
On 3 August 2014 the Company acquired 26.3% of the ordinary share capital of ProPhotonix Limited through the issue of ordinary shares
in the Company representing 5.5% of the enlarged share capital of 600 Group Plc.
ProPhotonix Limited is AIM listed, although registered in Delaware, and designs and manufactures LED arrays and laser diode modules in
the UK and Ireland. It has a strong base of technology and applications knowledge, applicable to high growth sectors including niche
industrial, security and medical markets.
Despite the group owning greater than 20% of the share capital of Prophotonix, the directors have accounted for it as an investment as
opposed to an associate. This is because there is no representation from the Group or the Company on the board of Prophotonix and
therefore significant influence may not be exerted over key strategic decisions.
The initial investment of £1.15m was adjusted to a fair value of £1.65m at 1 April 2017 (2016: £0.50m). The £1.16m write up in the period
was taken to the Statement of comprehensive income and expense.
During the prior year 600 Group Inc acquired the remaining 20% of the shares of TYKMA Inc. Further details can be found in note 32.
44
Notes relating to the consolidated financial statements
For the 52-week period ended 1 April 2017
13. INVESTMENTS (CONTINUED)
The principal subsidiary undertakings of The 600 Group PLC and their countries of incorporation are:
ENGLAND & WALES:
600 UK Limited*; The 600 Group (Overseas) Limited*; Electrox Laser Limited; Pratt Burnerd International Limited; Electrox Limited; The
Colchester Lathe Company Limited; Crawford Collets Limited; 600 Machine Tools Limited; 600 Controls Limited; Pratt Gamet Limited;
Gamet Bearings Limited; T S Harrison & Sons Limited; The Richmond Machine Tool Company Limited; 600 Lathes Limited; 600 SPV1
Limited*; 600 SPV2 Limited*; Coborn Insurance Company Limited and The 600 Group Pension Trustees Limited*.
All subsidiary undertakings in England & Wales have their registered offices at 1 Union Works, Union Street, Heckmondwike, West
Yorkshire WF16 0HL except Coborn Insurance Company Limited, whose registered office is PO Box 34, St Martin's House, Le
Bordage, St Peter Port, Guernsey, GY1 4AU.
600 UK Limited’s principal activity is the design and distribution of machine tools and precision engineered components. Electrox Laser
Limited’s principal activity is the design, manufacture and distribution of industrial laser systems. Coborn Insurance Company Limited is
a captive insurance company and all other subsidiary undertakings in England & Wales are dormant or holding companies.
US:
600 Group Inc
Clausing Industrial, Inc
TYKMA Inc
Clausing Industrial, Inc’s principal activity is the design and distribution of machine tools and precision engineered components.
TYKMA Inc’s principal activity is the design, manufacture and distribution of industrial laser systems. 600 Group Inc is a holding
company.
Clausing Industrial, Inc and 600 Group Inc both have a registered office at 3963 Emerald Drive, Kalamazoo, Michigan 49001, US.
TYKMA Inc has a registered office at 370 Gateway Drive, Chillicothe, Ohio 45601, US.
REST OF THE WORLD:
600 Machinery Australia (Pty) – (Australia)
600 Group Equipment Limited - (Canada)
600 Machinery Australia (Pty)’s principal activity is the design and distribution of machine tools and precision engineered
components. 600 Group Equipment Limited is a dormant company.
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.
ProPhotonix Limited’s registered office is Pierce Williams, Sparrow Lane, Hatfield Broad Oak, Bishop's Stortford, Hertfordshire, CM22
7BA with a main office in the US at 13 Red Roof Lane, Suite 200, Salem, New Hampshire 03079.
14. 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
Net tax assets/(liabilities)
Assets
Liabilities
Net
2017
£000
766
280
1,598
842
—
—
2016
£000
1,236
347
1,505
744
—
—
2017
£000
—
—
—
—
2016
£000
—
—
—
—
2017
£000
766
280
1,598
842
2016
£000
1,236
347
1,505
744
(18,025)
(14,296)
(18,025)
(14,296)
(191)
(242)
(191)
(242)
3,486
3,832
(18,216)
(14,538)
(14,730)
(10,706)
45
Notes relating to the consolidated financial statements
For the 52-week period ended 1 April 2017
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
As at
3 April
2016
£000
1,236
347
1,505
744
Statement of
Income
comprehensive
Exchange
statement
income
Fluctuations
£000
(485)
(46)
93
23
£000
—
—
—
—
(14,296)
(242)
(805)
(2,928)
51
—
(10,706)
(1,169)
(2,928)
MOVEMENT IN DEFERRED TAX DURING THE PRIOR PERIOD
As at
Statement of
29 March
Income
comprehensive
Exchange
statement
income
Fluctuations
£000
£000
Accelerated capital allowances
Short-term timing differences
Tax losses
Overseas tax losses
Employee benefits
Revaluations and rolled over gains
Research and development
2015
£000
819
316
1,187
700
(12,013)
(1,246)
(99)
(10,336)
£000
417
19
318
11
—
—
—
—
(796)
(1,503)
16
99
84
988
—
(515)
£000
15
(21)
—
75
4
—
73
—
12
—
33
16
—
—
61
As at
1April
2017
£000
766
280
1,598
842
(18,025)
(191)
(14,730)
As at
2 April
2016
£000
1,236
347
1,505
744
(14,296)
(242)
—
(10,706)
46
Notes relating to the consolidated financial statements
For the 52-week period ended 1 April 2017
14. DEFERRED TAX ASSETS AND LIABILITIES (CONTINUED)
Deferred taxation at 35% is applied to pension assets, being the rate applicable to refunds from a scheme, as opposed to the normal rate
of 19%
The rate of UK corporation tax reduced to 20% in April 2015. Further reductions to 19% (effective from 1 April 2017) and to 17%
(effective from 1 April 2020) were substantially enacted on 26 October 2015. The deferred tax assets and liabilities at the balance sheet
date have been calculated based on these rates.
US deferred tax is provided at 34%.
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.
15. INVENTORIES
Raw materials and consumables
Work in progress
Finished goods and goods for resale
2017
£000
1,670
3,903
2016
£000
1,670
4,626
2016
£000
836
619
11,282
12,737
2016
£000
546
955
9,770
11,271
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.
Inventories included within Cost of Sales amounted to £25.9m (2016: £24.9m)
During the period inventory provisions have increased by £36,000 (2016: increased by £46,000). Following the impairment provisions,
inventories are valued at fair value less costs to sell rather than at historical cost.
47
Notes relating to the consolidated financial statements
For the 52-week period ended 1 April 2017
16. TRADE AND OTHER RECEIVABLES
Trade receivables
Other debtors
Other prepayments and accrued income
The trade receivables disclosed above are shown net of the provisions which are disclosed below.
The movements on the Group’s provisions against trade receivables are as follows:
At start of year
Exchange differences on opening balances
Utilised in the period
Charged in the period
At end of year
The ageing analysis of gross trade receivables, before provisions, is as follows:
Current (not overdue)
Overdue:
– 0–3 months overdue
– 3–6 months overdue
– 6–12 months overdue
– more than 12 months overdue
Total gross trade receivables before provision
2017
£000
5,717
348
1,379
7,444
2017
£000
207
19
(94)
88
220
2017
£000
4,356
1,235
40
110
196
2016
£000
5,534
189
1,048
6,771
2016
£000
135
3
(19)
88
207
2016
£000
4,456
968
208
30
79
5,937
5,741
As at 1 April 2017, 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.
48
Notes relating to the consolidated financial statements
For the 52-week period ended 1 April 2017
17. ASSETS CLASSIFIED AS HELD FOR SALE
Balance brought forward
Transferred from property plant and equipment - cost
Transferred from property plant and equipment - depreciation
Disposed of during the year
Impairment
2017
£000
1,999
—
—
(1,999)
—
—
2016
£000
—
2.556
(107)
—
(450)
1,999
The above leasehold property was written down to its net realisable value at the prior year-end with the £0.45m reduction in its carrying
value taken to the revaluation reserve, removing a previous valuation uplift on the same property.
On 11 July 2016 the sale of the Letchworth property was completed for net proceeds of £2.0m.
18. CASH AND CASH EQUIVALENTS
Cash at bank
Short-term deposits
Cash and cash equivalents per statement of financial position and per cash flow statement
19. LOANS AND OTHER BORROWINGS
CURRENT:
Bank loans
Obligations under finance leases (note 22)
NON-CURRENT:
Bank loans
8% Loan Notes
Obligations under finance leases (note 22)
2017
£000
981
100
1,081
2017
£000
5,427
81
5,508
2017
£000
1,277
7,867
90
9,234
2016
£000
665
100
765
2016
£000
3,114
161
3,275
2016
£000
3,596
7,699
81
11,376
The £8.5m of Loan Notes in place at the year-end were issued in three tranches in February, March and August 2015 with 43.95m
convertible warrants attached to them. 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 £139,000 is shown in equity reserve and the
balance after deduction of associated costs and amortisation of £494,000, is shown in non current borrowings. Costs are amortised to
the income statement over the term of the loan.
During the year a Term Loan of £927,000 included within Bank loans was scheduled to be repaid on a quarterly basis with payments of
£153,846 on 30 June 2016 through to 30 November 2017. A further Term Loan of £612,000, also included within Bank loans, was
scheduled to be repaid on a quarterly basis with payments of £18,000 on 30 June 2016 through to 30 June 2019 and a final payment of
£378,000 on 31 May 2019. £1,300,000 included within non–current borrowings related to a RCF facility with a termination date of 31
May 2017. Following the disposal of the Letchworth property in July 2016 these borrowings with Santander were reduced by the net
proceeds of £2m and on the change of bank to HSBC in August 2016 the balance of all these facilities were repaid and replaced by
facilities from HSBC. These facilities included a £1.6m trade finance facility, of which £1.1m had been utilised at the year-end, and a
mortgage for the Colchester property of £333,000 which will be repaid on a monthly basis through to March 2020.
49
Notes relating to the consolidated financial statements
For the 52-week period ended 1 April 2017
19. LOANS AND OTHER BORROWINGS (CONTINUED)
US Dollar denominated loans of £959,000 and £653,000 are to be repaid on a monthly basis through to March 2019 and April 2021
respectively in equal instalments with an interest rate of 3.35% and 3.85%.
Given the nature of the Group’s financial assets and liabilities, it is the directors’ opinion that there is no material difference between
their reported book values and estimated fair values. The fair value of the Loan Notes is the book value less the debt issue cost and
equity element.
The above loans and borrowings are secured by way of fixed and floating charges over the assets of the Company and its subsidiaries.
20. TRADE AND OTHER PAYABLES
Current liabilities:
Payments received on account
Trade payables
Social security and other taxes
Other creditors
Accruals and deferred income
21. PROVISIONS
Provision carried forward at 3 April 2016
Exchange differences
(Credited)/Charged to income statement
Utilised in the period
Provision carried forward at 1 April 2017
2016
£000
28
3,286
210
1,221
1,573
6,318
2017
£000
38
2,810
618
541
1,429
5,436
Total
£000
425
55
—
(91)
389
Other
Warranties
£000
382
51
—
(91)
342
£000
43
4
—
—
47
The timing of warranty payments are uncertain in nature. The warranty provisions are calculated based on historical experience of
claims received, taking into account recent sales of items which are covered by warranty. The provision relates mainly to products sold
in the last twelve months. The typical warranty period is now twelve months.
Other provisions of £342,000 relate to the provisions associated with the TYKMA Inc acquisition which relate to warranty and
dilapidation provisions.
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
2017
£000
65
113
(7)
171
81
90
171
2016
£000
128
124
(10)
242
161
81
242
50
Notes relating to the consolidated financial statements
For the 52-week period ended 1 April 2017
23. SHARE CAPITAL
Allotted, called-up and fully paid:
Ordinary shares of 1p each
2017
£000
2016
£000
104,357,957 ordinary shares of 1p each on issue at start of the period (2016: 89,607,957 ordinary shares )
1,044
2016 – 2,750,000 ordinary shares of 1p each issued to N Rogers
2016 – 12,000,000 ordinary shares of 1p each issued in acquisition or remaining 20% of TYKMA Inc
104,357,957 ordinary shares of 1p each on issue at end of period (2016: 104,357,957 ordinary shares of 1p)
Total Allotted, called-up and fully paid at the end of period
—
—
1,044
1,044
896
28
120
1,044
1,044
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 prior year 2,750,000 ordinary shares of 1p each
were issued to N Rogers in July 2015 pursuant to the exercise of share options. This resulted in share capital increasing by £27,500
with a corresponding share premium increase of £247,500. In addition, the Company issued 12,000,000 ordinary shares of 1p each as
consideration for the purchase of the remaining 20% of shares in TYKMA Inc.
On 28 August 2015 the Company raised an additional £0.806m through the issue of loan notes. In the prior year on 16 February 2015
and 18 March 2015 the Company raised £6.739m and £0.955m respectively through the issue of loan notes. The loan notes have 5
year maturity and carry a coupon of 8% payable quarterly in arrears. The subscribers for loan notes are also entitled to receive
warrants with an expiry date of 14 February 2020 to subscribe for 43.95m ordinary shares of 1p each in the Company at a price of 20p
per Ordinary Share. The issue of the warrants occurred after approval was granted by the shareholders at a general meeting on 18
March 2015. 43.95m warrants remained outstanding at the year-end.
24. RECONCILIATION OF NET CASH FLOW TO NET DEBT
Increase/(decrease) in cash and cash equivalents
Decrease/(increase) in debt and finance leases
Decrease/(increase) in net debt from cash flows
Net debt at beginning of period
Shareholder loan issue costs amortisation
Exchange effects on net funds
Net debt at end of period
25. ANALYSIS OF NET DEBT
Cash at bank and in hand
Term deposits (included within cash and cash equivalents on the
balance sheet)
Debt due within one year
Debt due after one year
Loan notes due after one year
Finance leases
Total
At
3 April
Exchange
2016
£000
665
100
765
(3,114)
(3,596)
(7,699)
(242)
(13,886)
movement
£000
Other
£000
25
—
25
(239)
(194)
—
(22)
(430)
—
—
—
—
—
(168)
—
(168)
2017
£000
291
532
823
2016
£000
(148)
(2,757)
(2,905)
(13,886)
(10,798)
(168)
(430)
(110)
(73)
(13,661)
(13,886)
At
1 April
2017
£000
981
100
1,081
(5,427)
(1,277)
(7,867)
(171)
Cash flows
£000
291
—
291
(2,074)
2,513
—
93
823
(13,661)
51
Notes relating to the consolidated financial statements
For the 52-week period ended 1 April 2017
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. £8.5m was raised in prior years through the issue of loan notes which
had 43.95m warrants attached to them. These warrants allow the holders to either convert the loan into 20p shares or to purchase 20p
shares for a cash consideration.
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 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.
FAIR VALUE OF FINANCIAL INSTRUMENTS
Non-current asset investments
The fair value of investments is based on management’s assessment of share value where the investment is not a traded security.
Trade and other payables and receivables
The fair value of these items are considered to be their carrying value as the impact of discounting future cash flows has been
assessed as not material.
Cash and cash equivalents
The fair value of cash and cash equivalents is estimated as its carrying value where the cash is repayable on demand. Where it is not
repayable on demand then the fair value is estimated at the present value of future cash flows, discounted at the market rate of interest
at the balance sheet date.
Long-term and short-term borrowings
The fair value of bank loans and other loans is based on the terms the Group has agreed for its variable rate debt.
Short-term deposits
The fair value of short-term deposits is considered to be the carrying value as the balances are held in floating rate accounts where the
interest rate is reset to market rates.
Fair value hierarchy
The following hierarchy classifies each class of financial asset or liability depending on the valuation technique applied in determining
its fair value:-
Level 1: The fair value is calculated based on quoted prices traded in active markets for identical assets or liabilities.
Level 2: The fair value is based on inputs other than quoted prices included within Level 1 that are observable for the asset or liability,
either directly or indirectly. The fair value of forward foreign exchange and commodity contracts is determined using quoted forward
exchange rates and commodity prices at the reported date and yield curves derived from quoted interest rates matching the maturities
of the forward contracts.
Level 3: The fair value is based on inputs for the asset or liability that are not based on observable market data (unobservable inputs).
The shares in the listed investment of Prophotonix plc is a level 1 fair value estimate, based on the quoted price of this AIM company. The
warrants attached to the loan notes are a level 2 fair value estimate. There have been no transfers between categories in the current or
preceding period.
The fair values of all financial instruments, throughout the reporting periods, approximate to their carrying values except for the Loan Notes
which have a carrying value net of issued costs. The fair value is deemed to be the gross loan amount.
52
Notes relating to the consolidated financial statements
For the 52-week period ended 1 April 2017
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
North America
Australasia
2017
£000
5,717
1,081
6,798
2017
£000
1,802
3,724
191
5,717
2016
£000
5,534
765
6,299
2016
£000
2,278
3,012
244
5,534
53
Notes relating to the consolidated financial statements
For the 52-week period ended 1 April 2017
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 short term facilities on demand to at least meet any unexpected operational
expenses; this excludes the potential impact of extreme circumstances that cannot reasonably be predicted, such as natural disasters.
The following are the contractual maturities of financial liabilities:
Trade finance
Bank loan
8% loan notes
Finance lease obligations
Interest bearing financial liabilities
Trade and other payables
Financial liabilities
Trade finance
Bank loan
8% loan notes
Finance lease obligations
Interest bearing financial liabilities
Trade and other payables
Financial liabilities
2017
Carrying
Contractual
Less than
Amount
cash flows
£000
1,107
5,706
10,455
171
17,439
5,436
22,875
£000
1,107
5,597
7,867
171
14,742
5,436
20,178
2016
1 year
£000
1,107
4,376
680
81
6,244
5,436
11,680
1–2 years
2–5 years
£000
—
701
680
61
1,442
—
1,442
£000
—
629
9,095
29
9,753
—
9,753
Carrying
Contractual
Less than
Amount
cash flows
£000
646
6,064
7,699
242
14,651
6,318
20,969
£000
646
6,185
11,135
242
18,208
6,318
24,526
1 year
£000
646
2,517
680
161
4,004
6,318
10,322
1–2 years
2–5 years
£000
—
2,293
680
57
3,030
—
3,030
£000
—
1,375
9,775
24
11,174
—
11,174
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.
54
Notes relating to the consolidated financial statements
For the 52-week period ended 1 April 2017
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
functional currency of the Group, 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
Euro
US Dollar
2017
US Dollars
$000
4,667
(2,039)
2,628
2016
Euro
€000
191
(89)
102
US Dollars
$000
4,312
(1,607)
2,705
Euro
€000
191
(292)
(101)
2017
2016
Average
rate
1.250
1.176
Year end
spot rate
1.251
1.169
Average
rate
1.499
1.360
Year end
spot rate
1.419
1.251
Change if
appreciated/
Depreciated
Net assets
by 25%
in foreign
against local
currency
Currency
4,282
1,079
The Group has operations around the world and is therefore exposed to foreign exchange risk arising from net investments in foreign
operations. Where cost effective, the exposures arising from the translation of the net assets of the Group’s foreign operations are
managed through the use of borrowings or cross-currency swaps in the relevant foreign currency.
Some Group operations on occasion also enter into commercial transactions in currencies other than their functional currencies. Exposures
arising from the translation of foreign currency transactions are continually monitored and material exposures are managed where
necessary through the use of forward contracts or options once cash flows can be identified with sufficient certainty. As at the year-end
there were no forward contracts outstanding (2016: none). Exposures arising from the translation of intra-group lending are managed
through the use of borrowings in the relevant foreign currency.
55
Notes relating to the consolidated financial statements
For the 52-week period ended 1 April 2017
26. FINANCIAL INSTRUMENTS (CONTINUED)
The following table shows the impact (due to the retranslation of non-functional currency monetary assets and liabilities in the Group's
operations) of a, reasonably possible, 10% movement in the Group’s principal foreign currency exchange rates at the year-end date.
1 April 2017
US$
AUD
2 April 2016
US$
AUD
10%
increase
Effect on
profit
before tax
£000
(19)
(8)
(923)
(27)
Effect on
shareholders’
equity
£000
10 %
decrease
Effect on
profit before
tax
£000
Effect on
shareholders’
equity
£000
380
124
441
226
19
8
923
27
(380)
(124)
(441)
(226)
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
Net cash/
Change if
in foreign interest rates
borrowings
in foreign
in foreign
Currency
currency
change by
1%
£’000
£’000
(4,911)
282
(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 1 April 2017, 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 charge of £0.08m (2016: 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.
56
Notes relating to the consolidated financial statements
For the 52-week period ended 1 April 2017
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 1 April 2017 was a liability of £nil (Note 18) (2016: liability of £nil).
FINANCIAL ASSETS
The Group’s financial assets comprise cash and trade receivables. The profile of the financial assets at 1 April 2017 and 2 April 2016
was:
2017
Financial
assets
2016
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
Currency
Sterling
US Dollars
Australian Dollars
Euros
assets
£000
169
640
172
—
981
assets
is earned
£000
100
—
—
—
£000
1,774
3,834
202
127
Total
£000
2,043
4,474
374
127
100
5,937
7,018
£000
484
—
181
—
665
There is no interest received on floating rate financial assets.
The floating rate financial assets comprise other deposits that earn interest based on short-term deposit rates.
The trade receivables are shown gross and do not include bad debt provisions.
£000
100
—
—
—
£000
2,160
3,151
253
177
Total
£000
2,744
3,151
434
177
100
5,741
6,506
57
Notes relating to the consolidated financial statements
For the 52-week period ended 1 April 2017
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 1 April 2017 and 2 April 2016 was:
2017
Financial
liabilities
2016
Financial
liabilities
Floating rate
Fixed rate
on which
Floating rate
Fixed rate
on which
financial
Financial
no interest
financial
financial
no interest
liabilities
Liabilities
£000
2,139
4,565
—
6,704
£000
7,902
49
87
8,038
is paid
£000
2,316
2,917
203
5,436
Total
£000
12,357
7,531
290
liabilities
liabilities
£000
3,485
3,178
47
£000
7,787
70
83
20,178
6,710
7,940
is paid
£000
3,437
2,580
302
6,319
Total
£000
14,709
5,828
432
20,969
Currency
Sterling
US Dollars
Australian Dollars
The floating rate financial liabilities comprise bank borrowings and overdrafts that bear interest rates based on local currency base
interest rates.
BORROWING FACILITIES
At 1 April 2017 and 2 April 2016 the Group had undrawn committed borrowing facilities as follows:
UK
US
Australia
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
2017
‘000
£1,083
$1,948
2016
‘000
£529
$3,365
AUD$500
AUD$500
2017
£000
7,444
1,081
(1,107)
(5,597)
(8,500)
(171)
(5,436)
2016
£000
6,771
765
(646)
(6,063)
(8,500)
(242)
(6,318)
(12,286)
(14,233)
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 excepting the Loan Notes which are shown at their gross value of £8.5m. Their
carrying value in the accounts is shown net of issue costs.
58
Notes relating to the consolidated financial statements
For the 52-week period ended 1 April 2017
27. CONTINGENT LIABILITIES
Third-party guarantees
2017
£000
92
2016
£000
92
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
2017
£000
—
2016
£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
2017
£000
573
2,304
2,609
5,486
11
24
35
2016
£000
237
861
394
1,492
49
60
109
The significant increase in land and buildings commitments is due to the two new leases which were signed during the year for
leasehold premises by Tykma Inc in Chillicothe Ohio and by Clausing Inc in Kalamazoo Michigan.
30. EMPLOYEE BENEFITS
The Group operates a number of defined benefit pension schemes throughout the world. The assets of these schemes are held in
separate trustee-administered funds.
The benefits from these schemes are based upon years of pensionable service and pensionable remuneration of the employee as
defined under the respective scheme provisions. The schemes are funded by contributions from the employee and from the employing
company over the period of the employees’ service. Contributions are determined by independent qualified actuaries based upon
triennial actuarial valuations in the UK and on annual valuations in the US.
UK
In relation to the fund in the UK, the Group’s funding policy is to ensure that assets are sufficient to cover accrued service liabilities.
The most recent triennial full valuation was carried out as at 31 March 2013.
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 31 March 2016. The disclosures for the US schemes that follow refer to the US
defined benefit scheme and the retirement healthcare benefit scheme.
59
Notes relating to the consolidated financial statements
For the 52-week period ended 1 April 2017
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 2017 at age 65 will live on average for a further 21.6 years (2016: 21.6 years) after
retirement if male and for a further 24.0 years (2016: 23.6 years) after retirement if female.
For a member who is currently aged 45 retiring in 2037 at age 65, the assumptions are that they will live on average for a further 22.0
years (2016: 22.7 years) after retirement if they are male and for a further 24.3 years (2016: 24.6 years) after retirement if they are
female.
The mortality rates for the US scheme are based on the RP-2014 Mortality Table for males and females adjusted to 2006 total dataset
with improvement factor scale MP-2016.
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
2017
2016
UK scheme
UK scheme
% p.a.
3.25
2.15
n/a
n/a
3.15
2.15
2.55
% p.a.
2.85
1.85
n/a
n/a
2.80
2.05
3.60
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 1 April 2017 and 2 April 2016 were:
Assets
Liabilities
(Deficit)/surplus
US
schemes
£000
867
2017
UK
scheme
£000
Total
£000
244,500
245,367
US
schemes
£000
808
2016
UK
scheme
£000
Total
£000
219,400
220,208
(1,898)
(192,000)
(193,898)
(1,844)
(177,427)
(179,271)
(1,031)
52,500
51,469
(1,036)
41,973
40,937
60
Notes relating to the consolidated financial statements
For the 52-week period ended 1 April 2017
30. EMPLOYEE BENEFITS (CONTINUED)
Movement in net defined benefit asset
Defined benefit obligation
Fair value of plan assets
Net defined benefit asset
1 April
2017
£000
2 April
2016
£000
1 April
2017
£000
2 April
2016
£000
1 April
2017
£000
2 April
2016
£000
(179,271)
(195,754)
220,208
230,046
40,937
34,292
(14)
647
1,445
—
3,501
(29,727)
5,358
(7,687)
(248)
—
(12)
973
1,112
—
182
7,203
—
(7,331)
(100)
—
12,098
14,456
(193,898)
(179,271)
—
—
30
—
—
26
29,264
(2,941)
—
—
—
7,687
108
120
(12,050)
245,367
—
—
—
7,331
42
120
(14,416)
220,208
(14)
647
1,475
29,264
3,501
(29,727)
5,358
—
(140)
120
48
(12)
973
1,138
(2,941)
182
7,203
—
—
(58)
120
40
51,469
40,937
Opening balance:
Included in profit or loss:
Current service cost
Past service credit
Interest income
Included in OCI:
Remeasurement (loss)/gain
Experience gain/(loss)
Change in assumptions – financial
Change in assumptions – demographic
Interest (cost)/income
Exchange differences
Contributions paid by employer
Benefits paid
Closing balance:
Following a change to UK scheme rules in September 2012 any surplus after all liabilities have been paid is to be repaid to the
Company and consequently the accounting surplus is recognised on the Group balance sheet under IFRIC 14
Long-term
rate of return
expected at
Expected return on assets UK scheme
Long-term
rate of return
Long-term
rate of return
Value at
expected at
Value at
expected at
1 April
2017
% p.a.
2.55
2.55
2.55
2.55
2.55
2.55
2.55
2.55
1 April
2017
£m
8.40
5.00
195.40
0.80
0.50
32.10
2.30
244.50
2 April
2016
% p.a.
3.60
3.60
3.60
3.60
3.60
3.60
3.60
3.60
2 April
2016
£m
52.70
9.80
72.40
n/a
23.20
44.30
17.00
219.40
28 March
2015
% p.a.
3.30
3.30
3.30
3.30
3.30
3.30
3.30
3.30
Value at
28 March
2015
£m
52.80
9.90
83.30
n/a
23.20
44.80
15.20
229.20
Equities
Property
LDI funds
Government bonds
Corporate bonds
Absolute Return
Other
Combined
The LDI funds referred to relate to Liability Driven Investment funds which have been increasingly utilised by the pension scheme. LDI
funds represent investments in a Liability Driven Investment fund via a Pooled Investment Vehicle. With the exception of cash, the
remaining scheme investments comprise of Pooled Investment Vehicles.
Investments are included at fair value as follows:
Pooled Investment Vehicles which are not traded on active markets, but where the investment manager has provided a monthly trading
price, are valued using the last bid price, provided by the investment manager at the year end.
61
Notes relating to the consolidated financial statements
For the 52-week period ended 1 April 2017
30. EMPLOYEE BENEFITS (CONTINUED)
The assumed long-term rate of return on each asset class is equal to the discount rate applied to liabilities. The assets held within the
US scheme amount to £0.867m (2016: £0.808m) and are held mainly in bonds.
Amounts recognised in the income statement in respect of the defined benefit schemes before taxation are as follows:
Included within operating profit:
– current service cost
– past service credit (Special Items)
– settlements (Special Items)
Included within financial income:
–Interest on pension surplus (Special Items)
US
schemes
£000
14
—
—
38
2017
UK
scheme
£000
—
(647)
—
Total
£000
14
(647)
—
(1,513)
(1,475)
US
schemes
£000
12
—
—
33
2016
UK
scheme
£000
—
—
Total
£000
12
—
(973)
(973)
(1,171)
(1,138)
The past service credit of £647,000 recognised in the income statement relates to a liability reduction exercise undertaken by the UK
scheme’s Trustees in conjunction with the Company. A number of transactions took place over the previous and current year including
a pension increase exchange, commutation of small pensions and other flexible retirement options. These are now an integral part of
the flexible offer to members at retirement. These resulted in actuarial adjustments to the pension liabilities, which are processed
through the Consolidated Income Statement.
Amounts recognised in the statement of comprehensive income are as follows:
Return on plan assets
Experience gain/(loss) on liabilities
Change in assumptions - financial
Change in assumptions - demographic
Amounts recognised during the period
Balance brought forward
Balance carried forward
US
schemes
£000
9
140
—
—
149
1,229
1,378
2017
UK
scheme
£000
29,255
3,361
Total
£000
29,264
3,501
(29,727)
(29,727)
5,358
8,247
29,285
37,532
5,358
8,396
30,514
38,910
US
Schemes
£000
(30)
172
—
—
142
1,087
1,229
2016
UK
scheme
£000
Total
£000
(2,909)
(2,939)
—
7,203
—
4,294
24,991
29,285
172
7,203
—
4,436
26,078
30,514
62
Notes relating to the consolidated financial statements
For the 52-week period ended 1 April 2017
30. EMPLOYEE BENEFITS (CONTINUED)
IAS 19 CONTINUED
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
Interest cost
Benefits paid
Settlements
Actuarial (gains)/losses
Closing defined benefit obligations
US
Schemes
£000
1,844
217
14
—
68
2017
UK
scheme
£000
Total
£000
177,427
179,271
—
—
(647)
6,174
217
14
(647)
6,242
(109)
(11,962)
(12,071)
—
(136)
1,898
—
—
21,008
20,872
192,000
193,898
Changes in the fair value of the schemes’ assets before taxation are as follows:
Opening fair value of scheme assets
Exchange differences
Interest income
Return on plan assets
Contributions by employer
Benefits paid
Closing fair value of schemes’ assets
US
schemes
£000
808
108
30
9
—
(88)
867
2017
UK
scheme
£000
Total
£000
219,400
220,208
—
7,687
29,255
120
108
7,717
29,264
120
(11,962)
(12,050)
244,500
245,367
US
schemes
£000
1,969
85
12
—
59
(109)
—
(172)
1,844
US
schemes
£000
846
37
26
(30)
—
(71)
808
The history of the schemes for the current and prior period before taxation is as follows:
2017
US
UK
Schemes
Scheme
£000
£000
Total
£000
US
schemes
£000
2016
UK
scheme
£000
Total
£000
193,785
195,754
—
—
—
85
12
—
6,160
6,219
(14,342)
(14,451)
(973)
(973)
(7,203)
(7,375)
177,427
179,271
2016
UK
scheme
£000
Total
£000
229,200
230,046
—
7,331
(2,909)
120
(14,342)
219,400
2016
UK
scheme
£000
37
7,357
(2,939)
120
(14,413)
220,208
Total
£000
Present value of defined benefit obligation
(1,898)
(192,000)
(193,898)
(1,844)
(177,427)
(179,271)
Fair value of scheme assets
(Deficit)/surplus in the scheme
Experience adjustments on the scheme liabilities
Experience adjustments on scheme assets
Exchange differences
867
244,500
245,367
808
219,400
220,208
(1,031)
52,500
51,469
136
9
(109)
(21,008)
(20,872)
29,255
—
29,264
(109)
(1,036)
(172)
(30)
(48)
41,973
(7,203)
(2,909)
—
40,937
(7,375)
(2,939)
(48)
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.
63
Notes relating to the consolidated financial statements
For the 52-week period ended 1 April 2017
30. EMPLOYEE BENEFITS (CONTINUED)
IAS 19 continuedSensitivity Analysis:
The calculation of the defined benefit obligation is sensitive to the assumptions set out above. The following table summarises how the
impact on the defined benefit obligation at the end of the reporting period would have increased (decreased) as a result of a change in
the respective assumptions by 0.25%.
Discount rate
Future salary increases
RPI inflation assumption
Post-retirement mortality rated down by one year
2017
£000
(3.0)%
-
2.1%
4.0%
2016
£000
(3.2)%
-
1.4%
4.2%
In valuing the liabilities of the pension fund at £193.9m mortality assumptions have been made as indicated above. If life expectancy had
been changed to assume that all members of the fund lived for one year longer, the value of the reported liabilities at 1 April 2017 would
have increased by 4.0% before deferred tax.
The above sensitivities are based on the average duration of the benefit obligation determined at the date of the last full actuarial valuation
at 31 March 2013 and are applied to adjust the defined benefit obligation at the end of the reporting period for the assumptions concerned.
Whilst the analysis does not take account of the full distribution of cash flows expected under the plan, it does provide an approximation to
the sensitivity of the assumptions shown.
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 on pages 26 to 31.
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 14 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.
PROVISIONS
The Directors have reviewed the carrying value of the fair value provision following the acquisition of TYKMA Inc (note 32) and adjusted
it accordingly. Other provisions of £342,000 relate to the fair value provision for the TYKMA Inc acquisition which relate to warranty on
certain products sold prior to acquisition, dilapidation provisions for current and former buildings and debtor recoverability on long-term
overseas debts.
64
Notes relating to the consolidated financial statements
For the 52-week period ended 1 April 2017
32. ACQUISITION
There have been no changes in the year to the fair value of net assets acquired, and therefore no change in the goodwill arising of
£7,144,000.
During the prior year the final 20% of the issued share capital of TYKMA Inc. was acquired. The original acquisition of 80% of the
issued share capital of TYKMA Inc. included put and call options for the remaining 20% between the group and the vendor which had a
value at March 2015 of £4.1m. During the prior year the value was remeasured to £2.1m and was settled at this amount. The
settlement comprised of US$1.8m and the issue of 12m ordinary shares in the Group with a value at that time of £0.9m. The gain of
£2,032,000 was included as a special item given its size and nature.
33. RELATED PARTY TRANSACTIONS
Detailed disclosure of the individual remuneration of Board members is included in the Remuneration report. The Executive Board
members are regarded as the Key Management Personnel of both the Company and the Group.
Mr P Dupee is the managing partner of Haddeo Partners LLP who have received £64,800 in interest payments during the financial year
(2016: £64,800) in respect of their respective holding of the loan notes. At the year-end Haddeo Partners LLP held £810,000 of loan
notes. In addition, the wife of Mr N Carrick, the Group Finance Director, also held £50,000 of loan notes. Further details on the loan
notes can be found in note 19.
Mr D Grimes, the Divisional Managing Director of Industrial Laser Systems, is party to a trust which owns the property rented by
TYKMA Inc. in the US and which received $154,000 rent and associated property costs during the period (2016: $72,000).
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 £120,000 to the UK pension scheme during the current period (2016: £120,000) and no contributions were
overdue at the period-end. The monthly payments of £10,000 were paid by the Group to the UK pension scheme from April 2015
onwards in respect of an augmentation to benefits made in 2008/09 of £510,971. No deficit reduction payments are currently required.
In the US no employer contributions were made to the US pension scheme during the current period (2016:£nil) and no payments were
overdue at the period-end.
34. ALTERNATIVE PERFORMANCE MEASURES
The Directors assess the performance of the Group by a number of measures and frequently present results on an ‘underlying’ basis,
which excludes special items. The Directors believe the use of these ‘non-GAAP measures’ provide a better understanding of
underlying performance of the Group.
In the review of performance refererence is made to ‘underlying profit’ or ‘profit before special items’, and in the Consolidated Income
Statement the Group’s results are analysed between Before Special items and After Special items.
Special items are detailed in note 3, and are disclosed separately on the basis that this presentation gives a clearer picture of the
underlying performance of the group. Special items comprise two elements:
-
-
Items which are expected to be one-off in nature and are considered significant to the result of the group or one of its reporting
segments; and
Non-cash items which, given the scale of our current activities, represent a disproportionate share of the Group’s result.
Examples include the credit arising on the pension surplus share based payments and the amortisation of intangible assets.
These measures are used by the Board to assess performance, form the basis of bonus incentives and are used in the Group’s banking
covenants. In addition the Board makes reference to orders and order book or backlog. This represents orders received from customers for
goods and services and the amount of such orders not yet fulfilled.
65
Notes relating to the consolidated financial statements
For the 52-week period ended 1 April 2017
34. ALTERNATIVE PERFORMANCE MEASURES (CONTINUED)
Underlying operating profit
Operating profit /(loss)
Special items included in cost of sales (see note 3)
Special items included in net operating expenses (see note 3)
Underlying operating profit
Underlying profit / (loss) for the period
Profit for the period
Special items included in cost of sales (see note 3)
Special items included in net operating expenses (see note 3)
Special items included in Financial income
Special items included in Financial expense
Contingent consideration settlement
Special items included in income tax charge /(credit)
Underlying profit for the period
Underlying EPS
A reconciliation of underlying EPS is included in note 9
£000
2,894
118
53
3,065
2,059
118
53
(1,445)
168
-
1,287
2,240
£000
(1,164)
894
2,626
2,356
1,146
894
2,626
(1,171)
150
(2,032)
(72)
1,541
66
Company statement of financial position
As at 1 April 2017
Company Number 00196730
Non-current assets
Investments
Current assets
Trade and other receivables
Assets classified as held for resale
Cash and cash equivalents
Total assets
Current liabilities
Trade and other payables
Non-current liabilities
Trade and other payables
Total liabilities
Net assets
Shareholders’ equity
Called-up share capital
Share premium account
Revaluation reserve
Available for sale reserve
Equity reserve
Profit and loss account
Notes
5
6
7
8
8
9
As at
1 April
2017
£000
10,356
10,356
32,885
—
27
32,912
43,268
(829)
(829)
(7,867)
(7,867)
(8,696)
34,572
1,044
1,013
—
506
139
31,870
34,572
As at
2 April
2016
£000
9,199
9,199
30,772
1,999
252
33,023
42,222
(1,527)
(1,527)
(9,487)
(9,487)
(11,014)
31,208
1,044
1,013
711
(651)
139
28,952
31,208
The financial statements on pages 67 to 77 were approved by the Board of Directors on 3 July 2017 and were signed on its behalf by:
NEIL CARRICK
GROUP FINANCE DIRECTOR
3 JULY2017
REGISTERED OFFICE
1 Union Works
Union Street
Heckmondwike
West Yorkshire
WF16 0HL
67
Company statement of changes in equity
As at 1 April 2017
Company Number 00196730
At 28 March 2015
At 29 March 2015
Profit for the period
Other comprehensive income:
Fair value of Investments
Fair value of assets held for sale
Transfer on revalued properties
Total comprehensive income
Transactions with owners:
Share capital subscribed for
Equity element of shareholder loan issued in
the period
Credit for share-based payments
Total transactions with owners
At 2 April 2016
At 3 April 2016
Profit for the period
Other comprehensive income:
Fair value of Investments
Release of revaluation reserve
Total comprehensive income
Transactions with owners:
Credit for share-based payments
Total transactions with owners
Ordinary
Share
Available
share
premium Revaluation
for sale Equity
Retained
capital
account
reserve
reserve reserve
Earnings
£000
£000
£000
£000
£000
Total
£000
£000
896
896
—
—
—
—
—
—
—
—
—
—
—
—
148
1,013
—
—
148
1,044
1,044
—
—
1,013
1,013
1,013
—
—
—
—
—
—
—
—
—
—
—
—
1,311
(622)
124
21,590 23,299
1,311
—
—
(450)
(150)
(600)
—
—
—
—
711
711
—
(622)
—
(29)
—
—
(29)
—
—
—
—
124
21,590 23,299
—
—
—
—
—
—
15
—
15
7,148
7,148
—
(29)
— (450)
150
—
7,298
6,669
— 1,161
—
64
64
15
64
1,240
(651)
139
28,952 31,208
(651)
139
28,952 31,208
—
2,139
2,139
— 1,157
(711)
(711)
—
1,157
—
—
—
—
—
—
—
—
—
—
—
1,157
711
—
2,850
3,296
68
68
68
68
At 1 April 2017
1,044
1,013
506
139
31,870 34,572
The accompanying accounting policies and notes on pages 67 to 77 form part of these Financial Statements.
68
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 FRS101 “Reduced Disclosure Framework”.
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 financial statements have been prepared in accordance with FRS 101
“Reduced Disclosure Framework”. The accounts are prepared to the Saturday nearest to the Company’s accounting reference date of
31 March. The results for 2017 are for the 52-week period ended 1 April 2017. The results for 2016 are for the 53-week period ended 2
April 2016.
In these financial statements, the Company has applied the exemptions available under FRS 101 in respect of the following
disclosures:
• an Income Statement, Statement of Comprehensive Income and related notes;
• a Cash Flow Statement and related notes;
• Comparative period reconciliations for share capital;
• Disclosures in respect of transactions with wholly owned subsidiaries;
• Disclosures in respect of capital management;
• The effects of new but not yet effective IFRSs;
• Disclosures in respect of the compensation of Key Management Personnel; and
As the consolidated financial statements include the equivalent disclosures, the Company has also taken the exemptions under FRS
101 available in respect of the following disclosures:
• IFRS 2 Share Based Payments in respect of group settled share based payments; and
• Certain disclosures required by IFRS 13 Fair Value Measurement and the disclosures required by IFRS 7 Financial Instrument
Disclosures.
NOTES ON INTERPRETATION OF ACCOUNTING STANDARDS
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 2015.
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.
69
Company accounting policies
TAXATION
Tax on the profit or loss for the year comprises current and deferred tax. Tax is recognised in the profit and loss account except to the
extent that it relates to items recognised directly in equity or other comprehensive income, in which case it is recognised directly in equity or
other comprehensive income.
Current tax is the expected tax payable or receivable on the taxable income or loss 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 on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes
and the amounts used for taxation purposes. The following temporary differences are not provided for: the initial recognition of goodwill; the
initial recognition of assets or liabilities that affect neither accounting nor taxable profit other than in a business combination, and
differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. 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 the
temporary difference can be utilised.
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.
INVESTMENTS
Investments in respect of subsidiaries are stated at cost less any impairment in value. Investments in quoted shares are classified as
Available for sale and measured at fair value. Movements in fair value are recorded in the Available for sale reserve until the shares
are sold, in which case the Available for sale reserve is recycled to the income statement.
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.
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).
70
Notes relating to the company financial statements
1. PERSONNEL EXPENSES
Staff costs:
– wages and salaries
– social security costs
– pension charges
– equity share options expense
2017
£000
677
47
18
68
810
2016
£000
627
48
19
64
758
Included within the £810k is £112k which relates to redundancy costs included within special items.
The average number of employees of the Company (including Executive Directors) during the period was as follows:
Head office function
2017
Number
7
2016
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 16
to 19.
2. EMPLOYEE SHARE OPTION SCHEMES
The Group has granted share options to employees under The 600 Group PLC Deferred Share Plan 2011.
Options under the DSP were granted to senior executives and directors on 19 November 2012 at 10p per share, on 7 April 2014 at 17p
per share, on 6 August 2015 at 18p per share and finally additional nil cost options on 1 September 2016. These options are
exercisable between 3 and 10 years from the grant date. The schemes are equity-settled.
SHARE-BASED EXPENSE
The Group recognised a total charge of £68,000 (2016: £64,000) in relation to equity-settled share-based payment transactions.
The number and weighted average exercise prices of share options
Number of options outstanding at beginning of period
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
2017
DSP
2016
DSP
6,150,000
9,900,000
500,000
1,000,000
— (2,000,000)
— (2,750,000)
6,650,000
6,150,000
1,750,000
1.750.000
On 19 November 2012 4,500,000 options with an exercise price of 10p were granted, of which 1,750,000 were still outstanding, and on
7 April 2014 5,400,000 options with an exercise price of 17p were granted, of which 3,400,000 were still outstanding. On 6 August 2015
1,000,000 shares with an exercise price of 18p were granted, and on 1 September 2016 500,000 nil cost options were granted, all of
which are still outstanding. All options are exercisable between 3 and 10 years from the date of grant.
On 30 April 2015 Mr N Rogers resigned as a director. 2,750,000 options with an exercise price of 10p were agreed to become
immediately exercisable by Mr N Rogers and 2,000,000 options with an exercisable price of 17p were forfeit.
During the current and prior period, the Group has not granted equity as consideration for goods or services received.
71
Notes relating to the company financial statements
2. EMPLOYEE SHARE OPTION SCHEMES (CONTINUED)
THE 600 GROUP PLC 2008 PERFORMANCE SHARE PLAN
The fair values 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
2016
Grant
£000
£0.10
£0.10
0p
0%
50%
2015
Grant
£000
£0.04
£0.18
18p
0%
50%
2014
Grant
£000
£0.04
£0.17
17p
0%
25%
2013
Grant
£000
£0.04
£0.10
10p
0%
50%
3.0 years
3.0 years
3.0 years
3.0 years
1.36%
1.36%
4.08%
4.08%
500,000
1,000,000
3,400,000
1,750,000
3. DIVIDENDS
No dividend was declared in the period (2016: no dividend paid).
4. SPECIAL ITEMS
In order for users of the financial statements to better understand the underlying performance of the Company the Board have
separately disclosed transactions which by virtue of their size or incidence, are considered to be one off in nature.
Special items include exceptional costs relating to reorganisation, redundancy and restructuring, the charge for share based payments
and impairment of investments in fellow subsidiary undertakings.
Items included in operating profit:
Impairment of investments in listed investments
Redundancy and reorganisation
Share option costs
Items included in financial expense:
Amortisation of loan note expenses
2017
£000
-
151
68
219
168
168
2016
£000
29
425
64
518
150
150
72
Notes relating to the company financial statements
5. INVESTMENTS
Cost:
At 2 April 2016
Fair valuation in the period
Disposals in the period
At 1 April 2017
Provisions
At 2 April 2016
Reinstatement in the period
At 1 April 2017
Net book values
At 1 April 2017
At 2 April 2016
Shares
In Listed
Shares
In Group
Investments
Undertakings
£000
£000
Total
£000
1,147
506
—
1,653
651
(651)
—
1,653
496
40,413
41,560
—
—
506
—
40,413
42,066
31,710
—
31,710
8,703
8,703
32,361
(651)
31,710
10,356
9,199
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 8%. Cash flows are
extrapolated beyond their term (of between 1 and 4 years) using an estimated growth rate of 3% 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.
On 3 August 2014 the Company acquired 26.3% of the ordinary share capital of ProPhotonix Limited through the issue of ordinary shares
in the Company representing 5.5% of the enlarged share capital of 600 Group Plc. There is no representation from the company on the
board of Prophotonix and therefore significant influence may not be exerted over key strategic decisions.
ProPhotonix Limited is AIM listed, although registered in Delaware, and designs and manufactures LED arrays and laser diode
modules in the UK and Ireland. It has a strong base of technology and applications knowledge, applicable to high growth sectors
including niche industrial, security and medical markets. The Group has no re
The initial investment of £1.15m was adjusted to a fair value of £1.65m at 1 April 2017 (2016 - £0.50m). The £1.16m write up (2016 -
£0.03m write down) was taken against the Assets held for sale reserve.
73
Notes relating to the company financial statements
5. INVESTMENTS (CONTINUED)
The principal subsidiary undertakings of The 600 Group PLC and their countries of incorporation are:
ENGLAND& WALES:
600 UK Limited*; The 600 Group (Overseas) Limited*; Electrox Laser Limited; Pratt Burnerd International Limited; Electrox Limited; The
Colchester Lathe Company Limited; Crawford Collets Limited; 600 Machine Tools Limited; 600 Controls Limited; Pratt Gamet Limited;
Gamet Bearings Limited; T S Harrison & Sons Limited; The Richmond Machine Tool Company Limited; 600 Lathes Limited; 600 SPV1
Limited*; 600 SPV2 Limited*; Coborn Insurance Company Limited and The 600 Group Pension Trustees Limited*.
All subsidiary undertakings in England & Wales have their registered offices at 1 Union Works, Union Street, Heckmondwike, West
Yorkshire WF16 0HL except Coborn Insurance Company Limited, whose registered office is PO Box 34, St Martin's House, Le
Bordage, St Peter Port, Guernsey, GY1 4AU.
600 UK Limited’s principal activity is the design and distribution of machine tools and precision engineered components. Electrox Laser
Limited’s principal activity is the design, manufacture and distribution of industrial laser systems. Coborn Insurance Company Limited is
a captive insurance company and all other subsidiary undertakings in England & Wales are dormant or holding companies.
US:
600 Group Inc
Clausing Industrial, Inc
TYKMA Inc
Clausing Industrial, Inc’s principal activity is the design and distribution of machine tools and precision engineered components.
TYKMA Inc’s principal activity is the design, manufacture and distribution of industrial laser systems. 600 Group Inc is a holding
company.
Clausing Industrial, Inc and 600 Group Inc both have a registered office at 3963 Emerald Drive, Kalamazoo, Michigan 49001, US.
TYKMA Inc has a registered office at 370 Gateway Drive, Chillicothe, Ohio 45601, US.
REST OF THE WORLD:
600 Machinery Australia (Pty) – (Australia)
600 Group Equipment Limited - (Canada)
600 Machinery Australia (Pty)’s principal activity is the design and distribution of machine tools and precision engineered
components. 600 Group Equipment Limited is a dormant company.
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.
ProPhotonix Limited’s registered office is Pierce Williams, Sparrow Lane, Hatfield Broad Oak, Bishop's Stortford, Hertfordshire, CM22
7BA with a main office in the US at 13 Red Roof Lane, Suite 200, Salem, New Hampshire 03079.
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.
6. TRADE AND OTHER RECEIVABLES
Amounts owed by subsidiary undertakings1
Deferred tax
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.
2017
£000
2016
£000
32,224
29,946
602
59
—
749
77
—
32,885
30,772
74
Notes relating to the company financial statements
7. ASSETS CLASSIFIED AS HELD FOR RESALE
Brought forward
Transferred from property plant and equipment - cost
Transferred from property plant and equipment - depreciation
Disposals
Impairment
2017
£000
1,999
—
—
(1,999)
—
—
2016
£000
—
2,556
(107)
—
(450)
1,999
The above leasehold property was sold on 11 July 2016 with the revaluation reserve of £711k taken to the statement of comprehensive
income and expense. The property had been written down to its net realisable value at the prior year-end with the £0.4m reduction in its
carrying value taken to the revaluation reserve.
8. TRADE AND OTHER PAYABLES
Current liabilities:
Bank loans
Trade payables
Amounts owed to subsidiary undertakings1
Other creditors
Accruals and deferred income
Non-current liabilities:
Shareholder loan
Bank loans
Deferred taxation
2017
£000
—
269
316
29
215
829
2017
£000
7,867
—
—
7,867
2016
£000
615
189
316
137
270
1,527
2016
£000
7,699
1,612
176
9,487
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.
The £8.5m of Loan Notes in place at the year-end were issued in three tranches in February, March and August 2015 with 43.95m
convertible warrants attached to them. 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 £139,000 is shown in equity reserve and the
balance after deduction of associated costs of £494,000, is shown in non current borrowings. Costs are amortised to the income
statement over the term of the loan.
A Term Loan of £927,000 included within Bank loans was scheduled to be repaid on a quarterly basis with payments of £153,846 on 30
June 2016 through to 30 November 2017. A further Term Loan of £612,000, also included within Bank loans, was scheduled to be
repaid on a quarterly basis with payments of £18,000 on 30 June 2016 through to 30 June 2019 and a final payment of £378,000 on 31
May 2019. £1,300,000 included within non–current borrowings related to a RCF facility with a termination date of 31 May
2017.Following the disposal of the Letchworth property in July 2016 these borrowings with Santander were reduced by the net
proceeds of £2m and on the change of bank to HSBC in August 2016 the balance of all these facilities were fully repaid and replaced
by facilities from HSBC.
Given the nature of the Company’s financial assets and liabilities, it is the directors’ opinion that there is no material difference between
their reported book values and estimated fair values.
The above loans and borrowings are secured by way of fixed and floating charges over the assets of the Company and its subsidiaries.
75
Notes relating to the company financial statements
9. SHARE CAPITAL
Allotted, called-up and fully paid:
Ordinary shares of 1p each
2017
£000
2016
£000
104,357,957 ordinary shares of 1p each on issue at start of the period (2016: 89,607,957 ordinary shares )
1,044
2016 – 2,750,000 ordinary shares of 1p each issued to N Rogers
2016 – 12,000,000 ordinary shares of 1p each issued in acquisition of remaining 20% of Tykma Inc
104,357,957 ordinary shares of 1p each on issue at end of period (2016: 104,357,957 ordinary shares of 1p)
Total Allotted, called-up and fully paid at the end of period
—
—
1,044
1,044
896
28
120
1,044
1,044
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 prior year 2,750,000 ordinary shares of 1p each
were issued to N Rogers in July 2015 pursuant to the exercise of share options. This resulted in share capital increasing by £27,500
with a corresponding share premium increase of £247,500. In addition, the Company issued 12,000,000 ordinary shares of 1p each as
consideration for the purchase of the remaining 20% of shares in TYKMA Inc.
On 28 August 2015 the Company raised an additional £0.806m through the issue of loan notes. In the prior year on 16 February 2015
and 18 March 2015 the Company raised £6.739m and £0.955m respectively through the issue of loan notes. The loan notes have 5
year maturity and carry a coupon of 8% payable quarterly in arrears. The subscribers for loan notes are also entitled to receive
warrants with an expiry date of 14 February 2020 to subscribe for 43.95m ordinary shares of 1p each in the Company at a price of 20p
per Ordinary Share. The issue of the warrants occurred after approval was granted by the shareholders at a general meeting on 18
March 2015.
10. RECONCILIATION OF NET CASH FLOW TO NET DEBT
Increase/(decrease) in cash and cash equivalents
Increase in net debt from cash flows
Net debt at beginning of period
Shareholder loan deferred costs
Net debt at end of period
11. ANALYSIS OF NET DEBT
Cash at bank and in hand
Debt due within one year
Debt due after one year
Loan notes due after one year
Total
2017
£000
(225)
2,227
2,002
(9,674)
(168)
(7,840)
At
2 April
Exchange
2016
£000
252
(615)
(1,612)
(7,699)
(9,674)
movement
£000
—
—
—
—
—
Other
£000
—
—
—
(168)
(168)
Cash flows
£000
(225)
615
1,612
—
2,002
2016
£000
460
(1,337)
(877)
(8,687)
(110)
(9,674)
At
1 April
2017
£000
27
—
—
(7,867)
(7,840)
76
Notes relating to the company financial statements
12. CONTINGENT LIABILITIES
Bank guarantees in respect of Group undertakings
13. PENSION
2017
£000
92
2016
£000
92
The Company makes contributions to defined contribution schemes for certain employees. The pension contribution charge for the
Company amounted to £17,000 (2016: £19,000).
14. RELATED PARTY TRANSACTIONS
Detailed disclosure of the individual remuneration of Board members is included in the Remuneration report. The Executive Board
members are regarded as the Key Management Personnel of the Company and the Group.
Mr P Dupee is the managing partner of Haddeo Partners LLP who have received £64,800 in interest payments during the financial year
(2016: £64,800) in respect of their respective holding of the loan notes. At the year-end Haddeo Partners LLP held £810,000 of loan
notes. In addition, the wife of Mr N Carrick, the Group Finance Director, also held £50,000 of loan notes. Further details on the loan
notes can be found in note 19.
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 £120,000 to the UK pension scheme during the current period (2016: £120,000) and no contributions were
overdue at the period-end. The monthly payments of £10,000 were paid by the Group to the UK pension scheme from April 2015
onwards in respect of an augmentation to benefits made in 2008/09 of £510,971. No deficit reduction payments are currently required.
77
169531 600 Group Report & Accounts Cover_169531 600 Group Report & Accounts Cover 25/07/2017 14:24 Page 1
The 600 Group PLC
Union Street
Heckmondwike
West Yorkshire
WF16 0HL
T: +44 (0)1924 415000
W: www.600group.com
ANNUAL REPORT & ACCOUNTS 2017
The 600 Group PLC