600 Group PLC Annual General Meeting 14 September 2011.

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Presentation transcript:

600 Group PLC Annual General Meeting 14 September 2011

Highlights Revenue up by 11% to £50.6M Underlying operating profit £1.2M (£1.1M) Net operating expenses reduced by £7.3M Net pension credit of £2.6M with the change to CPI Good order book and lower breakeven point Acquisition in Poland for production of the Group’s machine tools Successful share placement to finance Poland Change of bank in the UK to Santander Move to AIM completed

Operating Profit Trend

39% of Sales20% of Sales14% of Sales27% of Sales Structure of the Group

Machine Tools (39% sales) Metal turning machines –Conventional (non CNC) –Workshop CNC –Production CNC Brands: Colchester and Clausing Oxford Economics positive market forecast –Double digit growth next 3 years –Pre recession levels by 2012 Increasing vertical integration following acquisition in Poland

Machine Tools New Business Model Poland Production UK Components UK Machines Sales Organisation EMEA Leeds North America Michigan Australia Sydney/Brisbane South Africa Johannesburg Manufacturing Footprint EMEA sales organisation relocated Shorter lead times Increased margins and earnings Higher quality Better market rating as a bona fide engineering operation

Poland Benefits Lower material costs Skilled workers capable of being trained on CNC machines Vertically integrated production with low cost foundries in close proximity Good transport links to main markets plus new highway Low level of corruption Access to other CEE markets Poland latest GDP 4.4%

Precision Engineered Components (20% sales) Spares for installed base of machines Bearings and tool holding equipment High precision tolerances up to 0.5 micron Poland machining capability Good recovery for bearings

Laser Marking (14% sales) Alternative to inkjet marking Global trend towards traceability Proprietary software & laser technology Diverse customer base –Automotive –Aerospace –IT –Solar –Pharmaceutical Pipeline of development projects

Mechanical & Waste Handling (27% sales) Sub Saharan Africa Main drivers : –Infrastructure –Electrification –Mineral extraction Positive GDP growth forecasts Contract with Eskom completed in 2011

Major Issues and Response 2009/11 Too many locations (cost ) Asia outsourcing (quality) Non core activities (margin/working capital) Machine Tool Market (major fall in market value) Difficult lending environment Reduced facilities (£16M overheads out in 2 years) Acquired Poland Nov 2010 (quality improved) Exit of non core (margins improved) Machine Tool Market (recovery in 2010) Supportive lenders in place Increase capacity (lean manufacturing in Poland) (new CNC machinery in Poland) (expansion of bearings) Heckmondwike compression Transfers to Poland Electrox expansion Push into CEE markets

Outlook More flexibility with the move to AIM Poland is a medium term solution to the Group’s long term strategic issue on machine tools –Volume of transferred machines is increasing –Integration costs will reduce towards the end of the year –Margin benefits will be visible towards the end of the year –Upside potential over the next two years The shift from distribution to manufacturing should be well received by the market Good organic prospects offset by the uncertain macroeconomic environment Board changes