Revenues and order book up for 600 Group, but special items hit bottom line

However, the company, which boasts Colchester-Harrison, Pratt Burnerd and Electrox amongst its brands, says that, due to "special items", the business posted a £6.4 million pre-tax loss, compared with profits of £1.5 million a year earlier. Special items totalled £6.9 million, of which the major elements are non-cash in nature, says the company. David Norman, chief executive of The 600 Group PLC said: "The principal factors affecting our first half performance were outlined in our trading statement on 4 November. The national strike which affected our South African business was settled in August. The remedial actions in the US to counter higher input costs have started to feed through with improving margins and Poland is beginning to produce more revenue following the transfer into production of higher value machines. Given our current order book, but taking into account also the worsening economic sentiment in Europe, we remain cautiously optimistic with regard to the second half." Reorganisation and restructuring costs of £3.6 million were incurred, including the move of machine tool manufacturing to Poland and a reduction of head office costs. As a result of the manufacturing transfers, stock levels were reviewed for obsolescence and age and a further write down of £1.4 million has been made. Within the laser marking business, there has been a sales trend towards the most recent technological ranges, it is said, with the result that the "carrying value of the development expenditure and related stock of older generation products has resulted in an impairment of intangibles and a stock write down of £1.9 million". Regarding its machine tools (Colchester-Harrison and, in the US, Clausing) and precision engineered components (Pratt Burnerd [chucks], Gamet [bearings], machine tool spares), which account for 41 % and 26% of its business respectively, the release says that these activities have seen a significant amount of restructuring in Europe, but are now seeing an increase in production of previously outsourced machines. The delay in the Poland transition project "is essentially a timing issue with the main area of focus being the operational improvement of component output on recently transferred CNC production machines". The North American market "suffered from increased cost prices on outsourced machines, however, remedial pricing action was taken during the second quarter to deal with this issue". Revenue of £15.3 million is up on the previous year's £13.9 million, with operating profit before special items of £305,000, compared to £300,000 in prior year. As to its laser marking business, Electrox, which is 15% of its sales, revenue improved to £3.6 million from £3.1 million in the previous year and operating profit before special items was £341,000, compared to prior year's £354,000. The business is performing well, says the release, and is developing the next generation of proprietary technology and software.