600 Group on hunt for acquisitions as order book grows

The Heckmondwike-based group yesterday reported six months of growing revenues and a return to profit.

The group, which is emerging from a tough spell when it had to cut hundreds of jobs as demand for its products slumped, said its order book is up 33 per cent on a year ago.

It reported pre-tax profits of 1.5m for the 26 weeks to the start of October, compared with 5.8m losses a year earlier. Sales from continuing operations were up 13 per cent at 22.9m.

600 last month bought a machine tool manufacturing facility in Tarnow, Poland, for 1m euros. Chief executive David Norman said this will allow it to manufacture about 90 per cent of its own products, compared with the 40 per cent level it had fallen to.

"The first thing was to fix the organisation and we're well on track to do that," said Mr Norman. "Poland allows us to fix the issues (around machine tools)."

He said 600 had moved "too far towards distribution rather than manufacturing of machines".

"This will allow us a high level of vertical integration – from components to the finished product."

Shares in the group surged 13.6 per cent to 18.75p.

Earlier this year the group raised 2m after expenses through a loan from its biggest shareholder, Haddeo Partners, to expand the group.

The investment effectively gave Haddeo and its affiliates 36 per cent of the group, and needed shareholder approval.

Mr Norman said Haddeo, which is backed by US investor Paul Dupee and Rupert Hambro of the Hambro banking dynasty, plans to use 600 to consolidate the industry.

"We think there are some undervalued companies out there," he said. "A lot will depend on the feasibility of future financing models. They (Haddeo) want to use 600 Group to put together with other industrial companies within the small cap sector and to grow a bigger group."

He added Haddeo does not plan an outright acquisition of 600, and said he believes its interests are aligned with those of its other shareholders.

"Haddeo are looking at it more holistically," he said. "They see the potential for 600 to revive its share price and improve its rating."

It does not plan to pay a dividend.