Interim Results

600 Group PLC 22 November 2001 22 November 2001 THE 600 GROUP PLC INTERIM RESULTS FOR THE 26 WEEKS TO 29 SEPTEMBER 2001 Chairman's Statement Results The Group's performance during the first half was dominated by increasing uncertainty in our major markets, exacerbated by the impact of the terrorist attack at the end of the period. The USA market for machine tools had dropped by 35% year-on-year prior to 11 September. The UK market declined in the second quarter, offsetting the positive first quarter performance. Our laser marking business was especially affected by major reductions in investment in the telecoms and IT sectors. Despite these adverse market conditions, the Group's first half turnover was down by only 8% from £47.4m to £43.7m, with the reductions limited to our North American operations and those UK businesses with high export volumes. Profit before tax decreased from £2.9m to £1.6m, reflecting the net effect of the reduced turnover, reorganisation costs of £0.3m and cost savings of approximately £0.8m. Profit after tax reflects the adoption of FRS 19 'Deferred Tax'. The impact of this new accounting policy is to reduce profit after tax for the period by £ 0.9m. The Group's planned programme of cost realignment continued to be implemented throughout the period. Headcount was reduced by 9% and a further reduction of 20% was announced at the beginning of October at a cost of approximately £1m, which will be accounted for in the second half. Procurement programmes have been curtailed since the beginning of the second quarter, resulting in a 30% reduction in trade creditors since the year-end. The Group's extensive programme of product development has been maintained, as illustrated by the successful European launch of the new low-cost laser marker and new ranges of lathes at the major international machine tool exhibition in Hanover during September. Net cash reduced by £9.9m to £8.0m. The repayment and cancellation of the preference shares accounted for £2.7m of this movement and the payment of the final dividend on the ordinary shares absorbed another £2.3m. A further £0.6m was spent on the acquisition of the Gamet bearings business in France, whilst the majority of the balance related to an increase in net working capital. Dividend The interim dividend is maintained at 1.5p per share. Outlook Following the events of 11 September, the short-term outlook for most capital goods businesses, including the 600 Group, is very uncertain. We will, however, continue to adjust our cost and asset levels to reflect the evolving trading conditions. We continue to invest in our product and market development programmes and our strong cash position will enable the Group to exploit the opportunities that will arise as markets start to improve. Michael Wright Chairman 22 November 2001 Enquires: Tony Sweeten, Group Chief Executive John Fussey, Group Finance Director Telephone: 0113 277 6100 Nick Lyon, Hudson Sandler Telephone: 020 7796 4133 Consolidated profit and loss account (unaudited) As restated* As restated* 26 weeks to 52 weeks to 30.09.00 31.03.01 26 weeks to 29.09.01 £000 £000 £000 Turnover 43,731 47,430 97,950 Operating profit 1,405 2,833 6,385 Transfer of goodwill previously - (208) (216) written off to reserves Profit on ordinary activities before 1,405 2,625 6,169 interest Net interest receivable 178 266 526 Profit on ordinary activities before 1,583 2,891 6,695 taxation Taxation (735) (1,348) (2,736) Profit for the period 848 1,543 3,959 Dividend - Equity (841) (841) (3,083) - Non-equity (60) (66) (132) Transferred to/(from) reserves (53) 636 744 Goodwill reinstated previously - 208 216 written off Net effect on reserves (53) 844 960 Basic and diluted earnings per share 1.4p 2.6p 6.8p Dividend per ordinary share 1.5p 1.5p 5.5p *As restated for the implementation of FRS 19 'Deferred Tax' (see accounting policies) Notes 1 The charge for corporation tax comprises UK taxation credit of £299,000 (2000:charge £444,000), overseas taxation of £183,000 (2000:£98,000) and deferred taxation of £851,000 (2000:£806,000). 2 The charge for dividends in the period represents preference dividends of £60,000 (2000:£66,000) and the interim dividend of 1.5p per share amounting to £841,000 (2000:1.5p per share amounting to £841,000). 3 The basic earnings per share are based on the profit of £788,000 being the profit for the period after deducting non-equity dividends (2000:£ 1,477,000) and the weighted average number of shares outstanding of 56,049,778 (2000:56,049,237). For diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to 56,560,263 (2000:56,050,570) and assumes conversion of dilutive potential ordinary shares of 510,485 (2000:1,333). 4 The goodwill adjustments relate to the closure of United Machine Tools Inc. Summarised consolidated balance sheet (unaudited) As restated* As restated* At 29.09.01 At 31.03.01 At 30.09.00 £000 £000 £000 Fixed assets 20,511 20,942 22,522 Working capital Stocks 27,690 27,898 26,393 Pension fund prepayment 27,004 24,166 21,535 Debtors 20,076 21,521 21,653 Deferred taxation (8,958) (8,107) (7,414) Other creditors and provisions (15,934) (22,394) (19,650) 49,878 43,084 42,517 Net cash 8,014 17,895 16,674 Capital employed 78,403 81,921 81,713 Capital and reserves Called up share capital 14,012 16,512 16,512 Reserves 64,391 65,409 65,201 78,403 81,921 81,713 * As restated for the implementation of FRS 19 'Deferred Tax' (see accounting policies) Reconciliation of movement in shareholders' funds 26 weeks to 26 weeks to 52 weeks to 29.09.01 30.09.00 31.03.01 £000 £000 £000 Profit for the period 848 1,543 3,959 Dividends (901) (907) (3,215) (53) 636 744 Currency translation differences (727) 355 447 Goodwill reinstated previously - 208 216 written off Repayment and cancellation of (2,738) - - preference shares (3,518) 1,199 1,407 Opening shareholders' funds as 89,958 87,052 87,052 originally stated Prior year adjustment re deferred (8,037) (6,538) (6,538) taxation Opening shareholders' funds as 81,921 80,514 80,514 restated Closing shareholders' funds 78,403 81,713 81,921 Summarised consolidated cash flow statement (unaudited) 26 weeks to 26 weeks to 52 weeks to 29.09.01 30.09.00 31.03.01 £000 £000 £000 Operating profit 1,405 2,833 6,385 Depreciation less profit on sale of fixed 1,177 944 1,965 assets Amortisation of goodwill 93 91 179 Increase in pension prepayment (2,838) (2,685) (5,316) Decrease/(increase) in working capital (3,169) 3,358 2,589 Exchange difference on transactions (375) 159 293 eliminated on consolidation Net cash inflow/(outflow) from operations (3,707) 4,700 6,095 Net interest received 148 174 465 Dividends paid (2,302) (2,308) (3,215) Taxation paid (381) (177) (789) Net (purchase)/sale of tangible fixed (744) (524) 911 assets Acquisitions (597) - - Net cash inflow/(outflow) before use of liquid resources and financing (7,583) 1,865 3,467 Management of liquid resources (8) (1,390) 7,934 Financing Repayment and cancellation of preference (2,738) - - shares Net repayment of external borrowing (258) (592) (723) Net cash outflow from financing (2,996) (592) (723) (Decrease)/increase in cash in the period (10,587) (117) 10,678 Reconciliation of movement in cash flow to movement in net funds 26 weeks to 26 weeks to 52 weeks to 29.09.01 30.09.00 31.03.01 £000 £000 £000 (Decrease)/increase in cash in the (10,587) (117) 10,678 period Net repayment of external borrowing 258 592 723 Cash outflow/(inflow) from management 8 1,390 (7,934) of liquid resources Change in net funds resulting from (10,321) 1,865 3,467 cash flows New finance leases entered into - - (68) Exchange movement on opening net 440 (647) (960) funds Movement in net funds in the period (9,881) 1,218 2,439 Net funds at the beginning of the 17,895 15,456 15,456 period Net funds at the end of the period 8,014 16,674 17,895 Accounting policies Financial Reporting Standard 19 'Deferred Tax' has been adopted for the first time in these financial statements. As required by the Standard, deferred taxation has been calculated using the full provision approach rather than the partial provision approach previously employed. This change has been accounted for as a prior year adjustment and previously reported figures have been restated accordingly. If the previous policy had been adopted in the current period, the impact would have been to increase profit after tax by £851,000. The impact of adopting the new policy for the period to 30 September 2000 has been to reduce profit after tax by £806,000. The impact of adopting the new policy on the period ended 31 March 2001 has been to reduce profit after tax by £1,499,000. The cumulative effect of this change at 31 March 2001 has been to reduce reserves by £8,037,000 of which £7,250,000 relates to the provision for deferred tax on the pension fund prepayment. Notes to the financial information The financial information set out in this interim report does not constitute statutory accounts. Statutory accounts for the period ended 31 March 2001 have been delivered to the Registrar of Companies. KPMG Audit Plc, The 600 Group PLC's auditor, reported on those accounts under section 235 of the Companies Act 1985. Its report was unqualified and did not contain a statement under section 237(2) or (3) of that Act. Copies of the interim report will be sent to all shareholders and will be available to members of the public from the Company's registered office at 600 House, Landmark Court, Revie Road, Leeds, LS11 8JT. The 600 Group PLC is registered in England and Wales No. 196730. Financial Calendar Interim ordinary dividend payable on 10 January 2002 to shareholders on the register at 14 December 2001. Share Price Information Information concerning the day-to-day movement of The 600 Group PLC share price can be found by dialling 0906 003 4031 for the Financial Times share price service. The 600 Group PLC 600 House Landmark Court Revie Road Leeds LS11 8JT Telephone: 44 (0) 113 277 6100 Facsimile: 44 (0) 113 276 5600 www.600group.com

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