The 600 Group PLC, a diversified engineering company that includes Colchester-Harrison machine tools, Electrox laser markers, Gamet Bearings and Pratt Burnerd workholding within its stable, has returned to profit and is on its way to achieving "a new business model", in terms of its machine tool production activities.
The company issued its full year results to 2 April, highlighting that underlying profit* from operations was now £1.2 million, having moved from a negative figure of -£1.1 million in the preceding year, with profit from operations put at £2.5 million, against a loss of £6.8 million in 2009/2010. Revenue was up 11% to £50.6 million. Operating expenses have been reduced from £21.4 million to £14.1 million, which equates to an improvement of £15.8 million in two years.
The release adds that the integration of its Polish machine tool facility, acquired in November last year for €1 million, is progressing well and that the US market for machine tools and precision engineered products is recovering. (The company also operates a mechanical and waste handling division in South Africa, whose performance is also said to be much improved).
The Polish machining facility, in Tarnow, is highlighted as a key element in changing the business model for machine tool production - machine tools represent 41% of the Groups turnover. "Since the acquisition, we have progressively transferred production of machines which were previously outsourced to Asia," explained Martin Temple, CBE, chairman. "We are in the process of introducing lean manufacturing methods along with additional CNC equipment in order to increase capacity and future output. Our new manufacturing company in Poland will allow us to transition to a new business model for machine tools.
"Our intention is to manufacture most of the Group's requirements in Poland and Heckmondwike for sale to customers through our international sales organisation. The integration of our new factory in Poland in conjunction with an increase in machine output will be key elements of our immediate strategy, the execution of which is a key task for the executive management."
Mr Temple continued, highlighting the Group's strategy and underlining further the importance of the Polish facility within it. "Following the completion of its turnaround programme, the Group is positioned to grow organically and by selective acquisition, consistent with its positioning as a diversified industrial engineering group. As part of this strategy, the acquisition of the machine tool facility in Poland should prove to be transformational for the Group and enable it to reduce delivery times and improve its working capital performance. These benefits are likely to be more visible during the second half of the new financial year, although the Group is expected to continue to trade profitably in the first half of the year, whilst the machine tools division executes the agreed strategy."
David Norman, chief executive of The 600 Group PLC, added: "The Group is now well positioned with a much lower breakeven point and a strong order book at the end of the period compared to the same time last year," said " The successful integration of FMT Colchester in Poland, introduction of lean manufacturing techniques and capacity improvements throughout our European factories will be the basis for further profitable development of the Group, which should provide a sound platform for future growth."
During the year, the Group moved from the main stock market to the AIM market, with trading commencing on 14 July this year. "We believe that AIM is a market more appropriate for a Group of our size and offers greater flexibility and reduced costs, particularly with regard to corporate transactions," said the chairman.
Mr Temple will step down as chairman and will be succeeded by Paul Dupee, who joined the board as a non-executive director in February. Paul Dupee is an American national and said to be an experienced private equity investor. He is currently managing partner of Haddeo Partners LLP and also a substantial shareholder in The 600 Group.
* Underlying operating profit refers to profit or loss from operations before restructuring costs, charge for share-based payments, net pension credit and impairment of intangible assets on the face of the Consolidated income statement.