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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Carclo plc | AQSE:CAR.GB | Aquis Stock Exchange | Ordinary Share | GB0001751915 | Ordinary Shares 5p |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 11.00 | 4.00 | 18.00 | 11.00 | 11.00 | 11.00 | 0.00 | 06:56:52 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
0 | 0 | N/A | 0 |
TIDMCAR
RNS Number : 1469P
Carclo plc
15 November 2016
Carclo plc
("Carclo" or "the Group")
Half year results for the six months ended 30 September 2016
Strong profit growth across the business
Carclo plc, the global manufacturing group, announces a strong trading performance across its divisions in the first half of the financial year, with all businesses trading in line with the board's expectations.
Financial Highlights -------------------------------- ---------------- -------------- Six months Six months ended ended 30 September 30 September 2016 2015 -------------------------------- ---------------- -------------- GBP000 GBP000 -------------------------------- ---------------- -------------- Revenue -------------------------------- ---------------- -------------- Technical Plastics 39,240 31,468 ------------------------------------ ---------------- -------------- LED Technologies 20,559 21,172 ------------------------------------ ---------------- -------------- Aerospace 3,485 3,063 ------------------------------------ ---------------- -------------- CIT Technology - 1,483 ------------------------------------ Total 63,284 57,186 ------------------------------------ ---------------- -------------- Operating profit before exceptional items ------------------------------------------- --------- -------------- Technical Plastics 3,450 2,523 ------------------------------------ ---------------- -------------- LED Technologies 2,913 2,763 ------------------------------------ ---------------- -------------- Aerospace 715 632 ------------------------------------ ---------------- -------------- CIT Technology - 2 ------------------------------------ ---------------- -------------- Unallocated (1,503) (1,237) ------------------------------------ ---------------- -------------- Total 5,575 4,683 ------------------------------------ ---------------- -------------- Exceptional items (18) 17 ------------------------------------ ---------------- -------------- Operating profit 5,557 4,700 ------------------------------------ ---------------- -------------- Underlying* profit before tax 4,848 4,076 ------------------------------------ ---------------- -------------- Profit before tax 4,830 4,093 ------------------------------------ ---------------- -------------- Basic earnings per share 5.6p 4.5p ------------------------------------ ---------------- -------------- Underlying* earnings per share 5.6p 4.5p ------------------------------------ ---------------- -------------- Net debt 27,551 27,276 ------------------------------------ ---------------- --------------
* underlying is defined as before all exceptional items
-- Group revenue increased by 10.7% to GBP63.3 million (2015 - GBP57.2 million)
-- Operating profit before exceptional items increased by 19.0% to GBP5.6 million (2015 - GBP4.7 million), with underlying operating margin increasing by 62 basis points to 8.8% (2015 - 8.2%)
-- Earnings per share increased by 24.4% to 5.6p (2015 - 4.5p)
-- Increased profitability driven by strong performances from the Technical Plastics and LED Technologies divisions
-- As anticipated net debt rose to GBP27.6 million at the half year (31 March 2016 - GBP24.8 million), due partly to the impact of currency movements on the retranslation of the Group's US dollar and Euro denominated medium term loans; the Group's financing remains secure and well within covenant requirements
-- IAS 19 retirement benefit liability net of deferred tax increased to GBP42.6 million from GBP18.9 million at the previous year end; a long term pension deficit funding agreement with the trustees is in place with the next triennial valuation at 31 March 2018
Operational Highlights
-- In Technical Plastics divisional operating margin increased to 8.8% (2015 - 8.0%) and we have commenced the expansion of our Bangalore, India facility that will double its overall capacity
-- Following the period end we have completed the acquisition of Precision Tool & Molding, LLC, trading as Precision Tool & Die, which will bring significant new capabilities to Technical Plastics and broaden the division's offering to its customers and also completed a new share placing to repay the short-term debt facility used to fund the initial consideration for the acquisition and to reduce medium term debt
-- In LED Technologies, all of Wipac's current design, development and tooling projects, including its new medium volume lighting project, are on plan
-- The Aerospace division has benefited from stable demand in the first half of the financial year
Commenting on the results, Michael Derbyshire, Chairman said -
"The Group has enjoyed a strong first half trading performance with all divisions performing well and showing solid progress over the comparative period last year.
In particular, our strategy to invest in increased capacity in our Technical Plastics division is continuing to facilitate strong growth in revenues which is resulting in good margin appreciation. The exciting acquisition of Precision Tool & Die provides further capabilities and opportunities for this division and its customer base has been enthusiastic about the combination of our businesses leading to an enhanced offering.
In LED Technologies, our Wipac luxury and supercar lighting business has continued to perform well, benefiting from good product demand and its continuing ability to win new customer programmes and it is expected to deliver significant growth into the future.
The board confirms that the Group is trading in line with its expectations for the full year and expects the Group to have a stronger second half of the financial year, benefiting additionally from the anticipated contribution from the Precision Tool & Die acquisition."
Enquiries
Carclo plc 020 7067 0700 (today)
Chris Malley, chief executive 01924 268040 (thereafter)
Robert Brooksbank, finance director
Weber Shandwick Financial 020 7067 0700
Nick Oborne / Tom Jenkins
A presentation for analysts will be held at 9.00 a.m. on 15 November 2016 at the offices of Weber Shandwick Financial, 2 Waterhouse Square, 140 Holborn, London EC1N 2AE.
Notes to editors
About Carclo
Carclo plc is a public company whose shares are quoted on the Main Market of the London Stock Exchange.
Carclo's strategy is to develop and expand its key manufacturing assets in markets where there are significant further opportunities to drive shareholder value. To enhance profit margins and support its customers, the group has been investing across its global footprint.
Approximately three fifths of group revenues are generated from the supply of fine tolerance, injection moulded plastic components, mainly for medical products. The balance of group revenue is derived mainly from the design and supply of specialised injection moulded LED based lighting systems to the premium automotive industry.
Forward looking statements
Certain statements made in this announcement are forward looking statements. Such statements are based on current expectations and are subject to a number of risks and uncertainties that could cause actual events to differ materially from any expected future events or results referred to in these forward looking statements.
Group Interim Results
Overview
Carclo has traded strongly in the first half of the financial year, with good revenue and profit progression in Technical Plastics, good progress in LED Technologies and with the Group delivering an overall performance in line with the board's expectations.
Group revenues increased by 10.7% to GBP63.3 million (2015 - GBP57.2 million). Group underlying operating profits of GBP5.6 million were significantly higher than those for the comparative period last year (2015 - GBP4.7 million). This was driven by excellent performances in Technical Plastics and LED Technologies, with the performance of Aerospace broadly consistent with the comparative period last year.
Unallocated costs were a little higher than the comparative period last year at GBP1.5 million (2015 - GBP1.2 million) but in line with the previous half year period. The IAS 19 pension finance charge at GBP0.4 million (2015 - GBP0.2 million) was also higher than in the comparative period last year. Underlying profit before tax increased 18.9% to GBP4.8 million (2015 - GBP4.1 million).
The Group generated profit before tax in the six months to 30 September 2016 of GBP4.8 million (2015 - GBP4.1 million). As a result, earnings per share for the six months to 30 September 2016 increased 24.4% to 5.6p (2015 - 4.5p).
The board expects the Group to have a stronger second half performance reflecting in particular further growth in its Technical Plastics division which will benefit additionally from the integration of and profits generated by Precision Tool & Die.
Operating review
Technical Plastics
The Group's Technical Plastics business reported revenues of GBP39.2 million (2015 - GBP31.5 million), an increase of 24.7% on the comparative period last year. Divisional operating profits increased by 36.7% to GBP3.5 million (2015 - GBP2.5 million). The divisional operating margin increased from 8.0% to 8.8% and we expect this margin to increase further in the second half of the year towards our medium-term target of 10% for this division.
Our UK business has outperformed expectations in the first half of the financial year with good product demand from many of its customers and strong sub contract tooling activity.
Our US business has continued to trade well benefiting from good customer demand and cost management. The expansion of our Tucson, Arizona facility has now been completed and the integration of Precision Tool & Die is underway and this business is expected to contribute sales and profits in the second half of the financial year.
We have commenced the expansion of our Bangalore, India facility on our land adjacent to the existing facility. This investment should double the capacity of this business by the summer of 2017. Our new facility in Taicang, China is operating well, and supporting the growth of its main medical customer and is now beginning to secure new opportunities from both new and existing customers.
This division derives the majority of its revenues from outside the UK and, therefore, movements in foreign exchange rates do affect its financial results with sales in the first half around GBP2 million higher than at the previous year's rates. Whilst foreign exchange contracts that we put in place prior to the EU Referendum have limited the net benefit on profit from foreign exchange rates in the first half of the financial year, we expect to benefit from the retranslation of overseas profits during the second half of the financial year should sterling rates remain broadly at current levels.
LED Technologies
The Group's LED Technologies division is made up of our Wipac luxury car and supercar lighting business, based in Buckingham, UK and our LED Optics and aftermarket business, based in Aylesbury UK.
Performance in the division during the first half of the year was ahead of the comparative period last year despite slightly lower turnover of GBP20.6 million (2015 - GBP21.2 million) mainly due to the phasing of design, development and tooling contracts. Divisional operating profit increased by 5.4% to GBP2.9 million (2015 - GBP2.8 million).
Lighting product sales have been in line with targets due to good demand across a range of customers. Design, development and sub contract tooling revenues, which in aggregate made up just over half of Wipac's sales, were slightly ahead of expectations and this has driven an improved profits performance by the division for the period. All of Wipac's current design, development and tooling projects, including its new medium volume lighting project, are on plan. The market for low and medium volume lighting projects has remained strong and we continue to see good growth in this sector with Wipac well placed to deliver significant growth into the future.
Our LED Optics business enjoyed a strong first half, benefiting especially from strong demand for custom optics. We are commencing the process of consolidating some of our LED Optics manufacturing business in our Technical Plastics facility in Brno, Czech Republic and this should enable the business to benefit from both additional production space and the lower cost base.
Aerospace
The Group's aerospace business enjoyed a good first half performance, with sales of GBP3.5 million (2015 - GBP3.1 million) and divisional operating profits of GBP0.7 million (2015 - GBP0.6 million). We are planning to target more OEM work in our machined components business which has traditionally been focussed on the spares market.
This business continues to be both very profitable and cash generative for the Group, with little ongoing investment required.
Carclo Diagnostic Solutions
The closure of Carclo Diagnostic Solutions ("CDS"), which was announced in our statement of 16 May 2016, will be completed by the end of the calendar year.
Acquisition of Precision Tool & Die ("PTD") and associated Equity Fund Raising
On 14 October 2016 the Group announced that its US subsidiary, CTP Carrera Inc., had acquired Precision Tool & Molding, LLC, trading as Precision Tool & Die, for an initial consideration of US$5.5 million (approximately GBP4.5 million) in cash plus further deferred consideration of up to US$1.0 million (approximately GBP0.8 million) in cash, subject to the satisfaction of certain performance criteria. The completion consideration was also subject to a working capital adjustment of up to US$750,000 (approximately GBP615,000) of which an initial payment of US$256,397 (approximately GBP210,000) was paid on completion of the acquisition. The total working capital adjustment will be determined shortly. The acquisition was funded by an additional short term debt facility which has been repaid using the proceeds of a placing of approximately 6.6 million new ordinary shares at a price of 120 pence, raising net proceeds of approximately GBP7.7 million after costs.
Financial position
Net debt has risen since the last financial year-end to GBP27.6 million (31 March 2016 - GBP24.8 million). Debt was expected to rise slightly due to the high level of ongoing capital expenditure and an increase in working capital to support growth in our businesses, and additionally reflects the negative impact of weaker sterling on the re-translation of the Group's foreign currency denominated borrowings.
The Group generated cash from operations of GBP3.2 million (2015 - GBP2.5 million) with working capital increasing by GBP4.5 million (2015 - GBP6.4 million) due mainly to a significant increase in trade debtors resulting from the invoicing of a large tooling contract in our UK Technical Plastics business just prior to the half year end. Capital expenditure in the six months to 30 September 2016 on a cash basis was GBP3.6 million (2015 - GBP3.2 million) the majority of which relates to investment in additional capacity in our US and UK Technical Plastics businesses. The retranslation of the Group's Euro and US dollar denominated medium term loans resulted in an increase in the sterling value of the Group's net debt of GBP1.3 million since the previous financial year end.
Since the half year end the Group announced the placing of approximately 6.6 million new shares at 120 pence per share raising net proceeds of GBP7.7 million, of which approximately GBP4.7 million was used to repay the short-term debt facility used to fund the initial consideration for the acquisition of Precision Tool & Die. The additional funds raised have mainly been utilised to repay part of the Group's medium term loan facility and this will result in a reduction in the Group's net debt at the financial year end. The Group's balance sheet remains strong and its financing is well within its two main banking covenant limits.
The Group's pension deficit net of applicable deferred tax under IAS19 "Employee Benefits" as at 30 September 2016 has increased to GBP42.6 million from GBP18.9 million at 31 March 2016.
Although the Pension Scheme's assets have increased in value by GBP5.5 million, the Pension Scheme liability has increased by GBP33.6 million since 31 March 2016. This increased liability has mainly resulted from the significant reduction in the corporate bond yield (from 3.5% to 2.3%) during the period. As reported in our trading update of 14 October 2016, the material increase in the IAS19 pension deficit has extinguished Carclo plc's distributable reserves and so the Group was unable to pay the recommended final dividend of 1.95 pence per share which was referred to in the results announcement made on 7 June 2016. As a consequence, the Group has not declared an interim dividend.
The cash cost of the pension scheme has, however, remained at similar levels and the annual recovery plan payment of GBP1.2 million was made subsequent to the 30 September 2016 period end. The Group's next triennial valuation is expected to be as at 31 March 2018.
Risks and uncertainties
In the annual report to shareholders in June 2016 we provided a detailed review of the risks faced by the Group and how these risks are managed. We continue to face, and proactively manage, the risks and uncertainties in our business and, while recognising some increased economic uncertainty post the EU referendum and the US elections, the board does not consider that the principal risks and uncertainties have changed since the publication of the Annual Report for the year ended 31 March 2016.
Outlook
The Group has enjoyed a strong first half trading performance with all divisions performing well and showing solid progress over the comparative period last year.
In particular, our strategy to invest in increased capacity in our Technical Plastics division is continuing to facilitate strong growth in revenues which is resulting in good margin appreciation. The exciting acquisition of Precision Tool & Die provides further capabilities and opportunities for this division and its customer base has been enthusiastic about the combination of our businesses leading to an enhanced offering.
In LED Technologies, our Wipac luxury and supercar lighting business has continued to perform well, benefiting from good product demand and its continuing ability to win new customer programmes and it is expected to deliver significant growth into the future.
The board confirms that the Group is trading in line with its expectations for the full year and expects the Group to have a stronger second half of the financial year, benefiting additionally from the anticipated contribution from the Precision Tool & Die acquisition.
Condensed consolidated income statement
Six months ended Six months Year ended 30 September ended 30 31 March 2016 September 2016 unaudited 2015 unaudited audited Notes GBP000 GBP000 GBP000 --------------------------------------- ---------- -------- ------------- ---------- Revenue 4 63,284 57,186 118,974 -------- ------------- ---------- Underlying operating profit Operating profit before exceptional items 5,575 4,683 10,034 - rationalisation costs 5 31 77 65 - litigation costs 5 (49) (60) (64) - impairment of Carclo Diagnostic Solutions 5 - - (4,858) After exceptional items 5,557 4,700 5,177 Operating profit 4 5,557 4,700 5,177 Finance revenue 6 59 13 17 Finance expense 6 (786) (620) (1,299) Profit before tax 4,830 4,093 3,895 Income tax expense 7 (1,151) (1,146) (1,708) Profit after tax 3,679 2,947 2,187 ======== ============= ========== Attributable to - Equity holders of the parent 3,688 2,957 2,200 Non-controlling interests (9) (10) (13) -------- ------------- ---------- 3,679 2,947 2,187 ======== ============= ========== Earnings per ordinary share 8 Basic 5.6 p 4.5 p 3.3 p Diluted 5.6 p 4.5 p 3.3 p ======== ============= ==========
Condensed consolidated statement of comprehensive income
Six months Six months ended ended Year ended 30 September 30 September 31 March 2016 2015 2016 unaudited unaudited audited GBP000 GBP000 GBP000 ------------------------------------------- ------------------- -------------- ---------------- Profit for the period 3,679 2,947 2,187 Other comprehensive income - Items that will not be reclassified to the income statement Remeasurement losses on defined benefit scheme (27,736) (6,413) (11,846) Deferred tax arising 4,137 1,535 1,647 Total items that will not be reclassified to the income statement (23,599) (4,878) (10,199) ------------------- -------------- ---------------- Items that are or may in the future be classified to the income statement Foreign exchange translation differences 4,523 (1,007) 1,489 Deferred taxation arising - - (924) Total items that are or may in future be classified to the income statement 4,523 (1,007) 565 Other comprehensive income, net of income tax (19,076) (5,885) (9,634) Total comprehensive income for the period (15,397) (2,938) (7,447) =================== ============== ================ Attributable to - Equity holders of the parent (15,388) (2,928) (7,434) Non-controlling interests (9) (10) (13) ------------------- -------------- ---------------- (15,397) (2,938) (7,447) =================== ============== ================
Condensed consolidated statement of financial position
30 September 30 September 31 March 2016 2015 2016 unaudited unaudited audited Notes GBP000 GBP000 GBP000 ----------------- Assets Intangible assets 10 21,704 23,599 20,257 Property, plant and equipment 11 40,014 32,968 36,597 Investments 7 7 7 Deferred tax assets 14,132 9,219 9,799 Total non current assets 75,857 65,793 66,660 ------------------- ------------------- ----------------- Inventories 16,896 15,305 15,596 Trade and other receivables 32,614 33,535 26,647 Cash and cash deposits 19,462 11,111 16,692 Non current assets classified as held for sale 12 200 700 700 Total current assets 69,172 60,651 59,635 Total assets 145,029 126,444 126,295 ------------------- ------------------- ----------------- Liabilities Interest bearing loans and borrowings 31,698 29,523 30,746 Deferred tax liabilities 5,636 4,768 6,038 Retirement benefit obligations 13 51,347 18,737 23,216 Total non current liabilities 88,681 53,028 60,000 ------------------- ------------------- ----------------- Trade and other payables 21,019 23,799 20,192 Current tax liabilities 2,755 2,553 1,920 Provisions 178 1,389 620 Interest bearing loans and borrowings 15,315 8,864 10,696 Total current liabilities 39,267 36,605 33,428 Total liabilities 127,948 89,633 93,428 ------------------- ------------------- ----------------- Net assets 17,081 36,811 32,867 =================== =================== ================= Equity Ordinary share capital issued 18 3,319 3,311 3,311
Share premium 410 18 18 Other reserves 2,254 2,254 2,254 Translation reserve 8,355 2,260 3,832 Retained earnings 2,765 28,978 23,465 Total equity attributable to equity holders of the parent 17,103 36,821 32,880 Non-controlling interests (22) (10) (13) ------------------- ------------------- ----------------- Total equity 17,081 36,811 32,867 =================== =================== =================
Condensed consolidated statement of changes in equity
Attributable to equity holders of the company
Non- Share Share Translation Other Retained controlling Total capital premium reserve reserves earnings Total interests equity GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 ------- ------- ----------- -------- -------- -------- ----------- -------- Current half year period - unaudited Balance at 1 April 2016 3,311 18 3,832 2,254 23,465 32,880 (13) 32,867 Profit for the period - - - - 3,688 3,688 (9) 3,679 Other comprehensive income - Foreign exchange translation differences - - 4,523 - - 4,523 - 4,523 Remeasurement losses on defined benefit scheme - - - - (27,736) (27,736) - (27,736) Taxation on items above - - - - 4,137 4,137 - 4,137 Transactions with owners recorded directly in equity - Share based payments 5 346 - - (193) 158 - 158 Dividends to shareholders - - - - (596) (596) - (596) Exercise of share options 3 46 - - - 49 - 49 Balance at 30 September 2016 3,319 410 8,355 2,254 2,765 17,103 (22) 17,081 ======= ======= =========== ======== ======== ======== =========== ======== Prior half year period - unaudited Balance at 1 April 2015 3,310 - 3,267 2,254 32,522 41,353 - 41,353 Profit for the period - - - - 2,957 2,957 (10) 2,947 Other comprehensive income - Foreign exchange translation differences - - (1,007) - - (1,007) - (1,007) Remeasurement losses on defined benefit scheme - - - - (6,413) (6,413) - (6,413) Taxation on items above - - - - 1,535 1,535 - 1,535 Transactions with owners recorded directly in equity - Share based payments - - - - 198 198 - 198 Dividends to shareholders - - - - (1,821) (1,821) - (1,821) Exercise of share options 1 18 - - - 19 - 19 Balance at 30 September 2015 3,311 18 2,260 2,254 28,978 36,821 (10) 36,811 ======= ======= =========== ======== ======== ======== =========== ======== Prior year period - audited Balance at 1 April 2015 3,310 - 3,267 2,254 32,522 41,353 - 41,353 - Profit for the period - - - - 2,200 2,200 (13) 2,187 Other comprehensive income - Foreign exchange translation differences - - 1,489 - - 1,489 - 1,489 Remeasurement losses on defined benefit scheme - - - - (11,846) (11,846) - (11,846) Taxation on items above - - (924) - 1,647 723 - 723 Transactions with owners recorded directly in equity - Share based payments - - - - 471 471 - 471 Dividends to shareholders - - - - (1,821) (1,821) - (1,821) Exercise of share options 1 18 - - - 19 - 19 Taxation on items recorded directly in equity - - - - 292 292 - 292 Balance at 31 March 2016 3,311 18 3,832 2,254 23,465 32,880 (13) 32,867 ======= ======= =========== ======== ======== ======== =========== ========
Condensed consolidated statement of cash flows
Six months ended Six months Year ended 30 September ended 31 March 2016 30 September 2016 unaudited 2015 audited unaudited Notes GBP000 GBP000 GBP000 --------------- ---------------------- ------- -------------- ----------- Cash generated from operations 14 3,215 2,499 13,933 Interest paid (396) (377) (877) Tax paid (949) (321) (1,253) Net cash from operating activities 1,870 1,801 11,803 Cash flows from investing activities Proceeds from sale of property, plant and equipment 526 21 207 Interest received 59 13 16 Acquisition of property, plant and equipment (3,607) (3,180) (8,274) Acquisition of intangible assets - computer software (119) (52) (140) Development expenditure (9) (768) (1,386) Net cash from investing activities (3,150) (3,966) (9,577) Cash flows from financing activities Proceeds from exercise of share options 49 19 20 Drawings on term loan facilities - - 400 Repayment of term loan facilities (400) - - Cash outflow in respect of performance share plan awards (59) - - Dividends paid (596) (563) (1,821) Net cash from financing activities (1,006) (544) (1,401) Net (decrease) / increase in cash and cash equivalents (2,286) (2,709) 825 Cash and cash equivalents at beginning of period 5,996 5,142 5,142 Effect of exchange rate fluctuations on cash held 437 (186) 29 Cash and cash equivalents at end of period 15 4,147 2,247 5,996 ======== ======== ========
Notes on the accounts
1. Basis of preparation
Except as outlined below, the condensed consolidated half year report for Carclo plc ("Carclo" or "the Group") for the six months ended 30 September 2016 has been prepared on the basis of the accounting policies set out in the audited accounts for the year ended 31 March 2016 and in accordance with the Disclosure and Transparency Rules of the UK Financial Conduct Authority and the requirements of IAS 34 "Interim Financial Reporting" as adopted by the EU.
The financial information is unaudited, but has been reviewed by the auditors and their report to the company is set out below.
The half year report does not constitute financial statements and does not include all of the information and disclosures required for full annual statements. It should be read in conjunction with the annual report and financial statements for the year ended 31 March 2016 which is available either on request from the company's registered office, Springstone House, PO Box 88, 27 Dewsbury Road, Ossett, WF5 9WS, or can be downloaded from the corporate website - www.carclo-plc.com.
The comparative figures for the financial year ended 31 March 2016 are not the company's statutory accounts for that financial year. Those accounts have been reported on by the company's auditors and delivered to the Registrar of Companies. The report of the auditors was (i) unqualified, (ii) did not include a reference to any matters which the auditors drew attention by way of emphasis without qualifying their report and (iii) did not contain statements under Section 498 (2) of the Companies Act 2006.
The half year report was approved by the board of directors on 15 November 2016 and is being sent to shareholders on 25 November 2016. Copies are available from the company's registered office and can also be downloaded from the corporate website.
The Group financial statements have been prepared and approved by the directors in accordance with International Financial Reporting Standards as adopted by the EU ("Adopted IFRSs").
The Group meets its day-to-day working capital requirements through its banking facilities. The Group's business activities and financial position, the factors likely to affect its future development and performance, and its objectives and policies in managing financial risks to which it is exposed are disclosed in the Group's 2016 Annual Report and Accounts. After making enquiries, the directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. The Group therefore continues to adopt the going concern basis in preparing its condensed interim financial statements.
2. Accounting policies
The accounting policies, methods of computation and presentation applied by the Group in this condensed consolidated half year report are the same as those applied by the Group in its annual report and financial statements for the year ended 31 March 2016.
Certain new standards, amendments and interpretations to existing standards have been published that are mandatory for the Group's accounting period beginning on or after 1 April 2016. The following new standards and amendments to standards are mandatory for the first time for the financial year beginning 1 April 2016:
Accounting for Acquisitions of Interests in Joint Operations (Amendments to IFRS 11);
Clarification of Acceptable Methods of Depreciation and Amortisation (Amendments to IAS 16 and IAS 38);
Equity Method in Separate Financial Statements (Amendments to IAS 27);
Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (Amendments to IFRS 10 and IAS 28);
Annual Improvements to IFRSs 2012 - 2014 Cycle; and
Disclosure Initiative (Amendments to IAS 1).
The above standards are not expected to have a material impact on the Consolidated Financial Statements.
IFRS 15 - "Revenue From Contracts With Customers" has been published which will be mandatory for the Group's accounting period beginning on or after 1 April 2018. The Group is still considering the impact of this standard however it is anticipated the impact on the financial position and performance of the Group will not be material.
IFRS 16 - "Leases" has been published which will be mandatory for the Group's accounting period beginning on or after 1 April 2019. The Group is still considering the impact of this standard however it is anticipated the impact on the financial position and performance of the Group will not be material.
3. Accounting estimates
The preparation of the half year financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses. In preparing these half year financial statements, the significant judgements made by management in applying the Group's accounting policies and the key source of estimation uncertainty were the same as those applied to the audited consolidated financial statements as at, and for the year ended, 31 March 2016.
4. Segment reporting
The Group is organised into four, separately managed, business segments - Technical Plastics, LED Technologies, Aerospace and CIT Technology. These are the segments for which summarised management information is presented to the Group's chief operating decision maker (comprising the main board and group executive committee).
The Technical Plastics segment supplies fine tolerance, injection moulded plastic components, which are used in medical, optical and electronics products. This business operates internationally in a fast growing and dynamic market underpinned by rapid technological development.
The LED Technologies segment develops innovative solutions in LED lighting, and is a leader in the development of high power LED lighting for luxury cars and supercars.
The Aerospace segment supplies systems to the manufacturing and aerospace industries.
The CIT Technology segment manages its portfolio of IP over the digital printing of conductive metals onto plastic substrates.
The Unallocated segment also includes the Group's development companies, Platform Diagnostics Limited and Carclo Diagnostic Solutions.
Transfer pricing between business segments is set on an arm's length basis. Segmental revenues and results include transfers between business segments. Those transfers are eliminated on consolidation.
The segment results for the six months ended 30 September 2016 were as follows -
Technical LED Group Plastics Technologies Aerospace CIT Technology Unallocated Eliminations total GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 -------------------- ---------- -------------- ---------- --------------- ------------ ------------- ---------- Consolidated income statement Total revenue 39,864 20,665 3,485 - - (730) 63,284 Less inter-segment revenue (624) (106) - - - 730 - Total external revenue 39,240 20,559 3,485 - - - 63,284 Expenses (35,790) (17,646) (2,770) - (1,503) - (57,709) Underlying operating profit 3,450 2,913 715 - (1,503) - 5,575 Exceptional costs (43) - - 471 (446) - (18) Operating profit 3,407 2,913 715 471 (1,949) - 5,557 ========== ============== ========== =============== ============ ============= Net finance expense (727) Income tax expense (1,151) Profit after tax 3,679 ========== Consolidated statement of financial position Segment assets 93,148 31,425 7,474 1,664 11,318 - 145,029 Segment liabilities (18,188) (4,620) (819) (313) (104,008) - (127,948) Net assets 74,960 26,805 6,655 1,351 (92,690) - 17,081 ========== ============== ========== =============== ============ =============
The segment results for the six months ended 30 September 2015 were as follows -
Technical LED Group Plastics Technologies Aerospace CIT Technology Unallocated Eliminations total GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 --------------------- ---------- -------------- ---------- --------------- ------------ ------------- --------- Consolidated income statement Total revenue 32,243 21,185 3,063 1,483 - (788) 57,186 Less inter-segment revenue (775) (13) - - - 788 - Total external revenue 31,468 21,172 3,063 1,483 - - 57,186 Expenses (28,945) (18,409) (2,431) (1,481) (1,237) - (52,503) Underlying operating profit 2,523 2,763 632 2 (1,237) - 4,683 Exceptional costs (98) - - 175 (60) - 17 Operating profit 2,425 2,763 632 177 (1,297) - 4,700 ========== ============== ========== =============== ============ ============= Net finance expense (607) Income tax expense (1,146) Profit after tax 2,947
========= Consolidated statement of financial position Segment assets 75,547 27,333 6,463 2,220 14,881 - 126,444 Segment liabilities (12,984) (6,713) (889) (1,214) (67,833) - (89,633) Net assets 62,563 20,620 5,574 1,006 (52,952) - 36,811 ========== ============== ========== =============== ============ =============
The segment results for the year ended 31 March 2016 were as follows -
Technical LED Group Plastics Technologies Aerospace CIT Technology Unallocated Eliminations total GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 -------------------- ---------- -------------- ---------- --------------- ------------ ------------- ---------- Consolidated income statement Total revenue 71,953 40,483 6,386 1,647 - (1,495) 118,974 Less inter-segment revenue (1,480) (15) - - - 1,495 - Total external revenue 70,473 40,468 6,386 1,647 - - 118,974 Expenses (64,281) (35,104) (5,057) (1,760) (2,738) - (108,940) Underlying operating profit 6,192 5,364 1,329 (113) (2,738) - 10,034 Exceptional costs (412) - - 477 (4,922) - (4,857) Operating profit 5,780 5,364 1,329 364 (7,660) - 5,177 ========== ============== ========== =============== ============ ============= Net finance expense (1,282) Income tax expense (1,708) Profit after tax 2,187 ========== Consolidated statement of financial position Segment assets 80,509 30,300 6,645 1,588 7,253 - 126,295 Segment liabilities (13,655) (6,746) (820) (935) (71,272) - (93,428) Net assets 66,854 23,554 5,825 653 (64,019) - 32,867 ========== ============== ========== =============== ============ ============= ========== 5. Exceptional costs Six months Six months ended ended Year ended 30 September 30 September 31 March 2016 2015 2016 GBP000 GBP000 GBP000 ----------------------------- ------------------ -------------- --------------- Litigation costs (49) (60) (64) Net rationalisation costs 31 77 65 Impairment review of Carclo Diagnostic Solutions - - (4,858) Total (18) 17 (4,857) ================== ============== ===============
All rationalisation costs relate to the Group's UK operations.
6. Net finance expense Six months Six months ended ended Year ended 30 September 30 September 31 March 2016 2015 2016 GBP000 GBP000 GBP000 --------------------------------- ------------------ -------------- --------------- Finance revenue 59 13 17 Finance expense (391) (427) (928) Net interest on the net defined benefit obligations (395) (193) (371) (727) (607) (1,282) ================== ============== =============== 7. Income tax expense Six months Six months ended ended Year ended 30 September 30 September 31 March 2016 2015 2016 GBP000 GBP000 GBP000 ------------------------------------- ------------------ -------------- -------------------- The expense recognised in the condensed consolidated income statement comprises - Tax expense arising on ordinary activities (1,155) (1,142) (2,073) Deferred tax (expense) / credit arising on exceptional items - (22) 365 Current tax credit arising on exceptional items 4 18 - Total income tax expense recognised in the condensed consolidated income statement (1,151) (1,146) (1,708) ================== ============== ====================
The half year accounts include a tax charge of 23.8% of profit before tax (2015 - 28.0%) based on the estimated average effective income tax rate on ordinary activities for the full year. The Group's effective tax rate on ordinary activities is at a higher level than the underlying UK tax rate of 20.0% (2015 - 20.0%) as the Group is earning a higher proportion of its profits in higher tax jurisdictions.
During the six months ended 30 September 2016 a GBP4.137 million credit was recognised in other comprehensive income in respect of deferred tax arising on remeasurement losses on the defined benefit obligations.
Deferred tax assets and liabilities at 30 September 2016 have been calculated on the rates substantively enacted at the balance sheet date. The UK Finance Bill 2016 provides for reductions in the UK corporation tax rate from 20% to 19% in the year commencing 1 April 2017 and then reducing to 17% from 1 April 2020. These rates became substantively enacted on 26 October 2015 and 6 September 2016 respectively. This will reduce the company's future current tax charge accordingly. The deferred tax asset at 30 September 2016 has been calculated based on the rate of 17% substantively enacted at the balance sheet date.
8. Earnings per share
The calculation of basic earnings per share is based on the profit attributable to equity holders of the parent divided by the weighted average number of ordinary shares outstanding during the period.
The calculation of diluted earnings per share is based on profit attributable to equity holders of the parent divided by the weighted average number of ordinary shares outstanding during the period (adjusted for dilutive options).
The following details the profit and average number of shares used in calculating the basic and diluted earnings per share -
Six months ended Six months Year ended ended 30 September 30 September 31 March 2016 2015 2016 GBP000 GBP000 GBP000 -------------------------------------- ----------- ------------- ----------- Profit after tax from continuing operations 3,679 2,947 2,187 Loss attributable to non-controlling interests 9 10 13 Profit after tax, attributable to equity holders of the parent 3,688 2,957 2,200 =========== ============= =========== Six months ended Six months Year ended ended 30 September 30 September 31 March 2016 2015 2016 Shares Shares Shares -------------------------------------- ----------- ------------- ----------- Weighted average number of ordinary shares in the period 66,285,508 66,202,185 66,204,557
Effect of share options in issue 1,184 34,751 36,413 Weighted average number of ordinary shares (diluted) in the period 66,286,692 66,236,936 66,240,970 =========== ============= ===========
In addition to the above, the company also calculates an earnings per share based on underlying profit as the board believe this to be a better yardstick against which to judge the progress of the Group. Underlying profit is defined as profit before impairments, rationalisation costs, one-off retirement benefit effects, exceptional bad debts, business closure costs, litigation costs and the impact of property and business disposals, net of attributable taxes.
The following table reconciles the Group's profit to underlying profit used in the numerator in calculating underlying earnings per share -
Six months ended Six months Year ended ended 30 September 30 September 31 March 2016 2015 2016 GBP000 GBP000 GBP000 ---------------------------------------- ------- ------------- ----------- Profit after tax, attributable to equity holders of the parent 3,688 2,957 2,200 Rationalisation costs, net of tax (25) (62) (77) Litigation costs, net of tax 39 48 51 Impairment review of Carclo Diagnostic Solutions, net of tax - - 4,518 Underlying profit attributable to equity holders of the parent 3,702 2,943 6,692 ======= ============= ===========
The following table summarises the earnings per share figures based on the above data -
Six months ended Six months Year ended ended 30 September 30 September 31 March 2016 2015 2016 Pence Pence Pence ----------------------------------------- ------ ------------- ----------- Basic 5.6 4.5 3.3 ====== ============= =========== Diluted 5.6 4.5 3.3 ====== ============= =========== Underlying earnings per share - basic 5.6 4.4 10.1 ====== ============= =========== Underlying earnings per share - diluted 5.6 4.4 10.1 ====== ============= =========== 9. Dividends paid and proposed
Ordinary dividends per 5 pence share paid in the period comprised -
Six months ended Six months Year ended ended 30 September 30 September 31 March 2016 2015 2016 GBP000 GBP000 GBP000 ------------------------------------ ------- ------------- ----------- Interim dividend for 2014/15 (0.85 - 563 - pence per share) Final dividend for 2014/15 (1.90 pence per share) - 1,258 1,258 Interim dividend for 2015/16 (0.90 pence per share) 596 - 596 596 1,821 1,854 ======= ============= ===========
As outlined in our trading update of 14 October 2016, the Group's IAS 19 pension deficit increased significantly due to the material decrease in the corporate bond yield used to discount the pension liability. As expected, due to the materially increased IAS19 pension deficit extinguishing the Company's distributable reserves, the Group did not pay the recommended final dividend of 1.95 pence per share which was referred to in the results announcement made on 7 June 2016 and the directors are not proposing an interim dividend for 2016/17.
10. Intangible assets
The movements in the carrying value of intangible assets are summarised as follows -
Six months ended Six months Year ended ended 30 September 30 September 31 March 2016 2015 2016 GBP000 GBP000 GBP000 ----------------------------------------- ------- ------------- ----------- Net book value at the start of the period 20,257 26,000 26,000 Additions 128 821 1,527 Impairment arising on review of CIT Technology (16) (2,968) (2,968) Impairment arising on review of Carclo Diagnostic Solutions - - (4,858) Amortisation (63) (79) (168) Effect of movements in foreign exchange 1,398 (175) 724 Net book value at the end of the period 21,704 23,599 20,257 ======= ============= ===========
Included within intangible assets is goodwill of GBP21.2 million (2015 - GBP18.9 million). The carrying value of goodwill is subject to annual impairment tests by reviewing detailed projections of the recoverable amounts from the underlying cash generating units. At 31 March 2016, the carrying value of goodwill was supported by such value in use calculations. There has been no indication of subsequent impairment in the current financial year.
11. Property, plant and equipment
The movements in the carrying value of property, plant and equipment are summarised as follows -
Six months ended Six months Year ended ended 30 September 30 September 31 March 2016 2015 2016 GBP000 GBP000 GBP000 Net book value at the start of the period 36,597 31,721 31,721 Additions 3,585 3,400 8,236 Depreciation (2,344) (1,765) (3,806) Disposals (29) (6) (275) Effect of movements in foreign exchange 2,205 (382) 721 Net book value at the end of the period 40,014 32,968 36,597 ======== ============= =========== 12. Non current assets classified as held for sale As at As at As at 30 September 30 September 31 March 2016 2015 2016 GBP000 GBP000 GBP000 ---------------------------------- ------- ------------- --------- Surplus land and buildings 200 700 700 Net book value at the end of the period 200 700 700 ======= ============= =========
At the period end surplus property with a written down value of GBP0.200 million (2015 - GBP0.700 million) has been reclassified as being held for sale. This relates to the properties at the recently closed Harthill site. During the period one of the properties was sold for GBP0.500 million net of costs.
The remaining property is being actively marketed with an expectation that it will be sold within the next year.
13. Retirement benefit obligations
At 31 March 2016, the Group had a retirement benefit liability, as calculated under the provisions of IAS 19 "Employee Benefits", of GBP23.216 million. Since the start of the current financial year, equity markets have strengthened which has resulted in the scheme's assets increasing in value by GBP5.497 million to GBP179.206 million. However, a decrease in the discount rate used to evaluate the scheme's liabilities, from 3.5% at the start of the period to 2.3% has contributed to the value of the liabilities increasing by GBP33.628 million to GBP230.553 million. As a consequence the scheme, on an IAS 19 basis, has increased from a GBP23.216 million liability at 31 March 2016 to a GBP51.347 million liability at 30 September 2016.
14. Cash generated from operations Six months Six months Year ended ended ended 30 September 30 September 31 March 2016 2015 2016 GBP000 GBP000 GBP000
----------------------------------------- ------ -------- ----------- ----------- Operating profit 5,557 4,700 5,177 Adjustments for - Pension fund contributions in excess of service costs - - (1,068) Depreciation charge 2,344 1,765 3,806 Amortisation of intangible assets 63 79 168 Exceptional impairment of intangible assets, arising on rationalisation of business 16 2,968 7,826 Provisions utilised in respect of rationalisation (442) (814) (1,583) Loss / (profit) on disposal of other plant and equipment 3 (15) 68 Share based payment charge 216 198 471 Operating cash flow before changes in working capital 7,757 8,881 14,865 Changes in working capital Increase in inventories (507) (2,039) (1,939) Increase in trade and other receivables (4,937) (9,474) (1,919) Increase in trade and other payables 902 5,131 2,926 Cash generated from operations 3,215 2,499 13,933 ======== =========== =========== 15. Cash and cash equivalents As at As at As at 30 September 30 September 31 March 2016 2015 2016 GBP000 GBP000 GBP000 ------------------------- ----------- --------- --- ---------- --------- Cash and cash deposits 19,462 11,111 16,692 Bank overdrafts (15,315) (8,864) (10,696) 4,147 2,247 5,996 ========= ========== ========= 16. Net debt
The net movement in cash and cash equivalents can be reconciled to the change in net debt in the period as follows -
Six months Six months Year ended ended ended 30 September 30 September 31 March 2016 2015 2016 GBP000 GBP000 GBP000 -------------------------------------- ------------- ------------- ----------- Net (decrease) / increase in cash and cash equivalents (2,286) (2,709) 854 Net repayment / (drawings) of term loan borrowings 400 - (400) (1,886) (2,709) 454 Effect of exchange rate fluctuations on net debt (915) (49) (686) (2,801) (2,758) (232) Net debt at start of period (24,750) (24,518) (24,518) Net debt at end of period (27,551) (27,276) (24,750) ============= ============= =========== 17. Financial instruments
The fair values of financial assets and liabilities are not materially different from their carrying value.
There are no material items as required to be disclosed under the fair value hierarchy.
18. Ordinary share capital
Ordinary shares of 5 pence each -
Number of shares GBP000 ----------------------------- ---------- ---------- -------------------- ------- Issued and fully paid at 31 March 2015 66,189,142 3,310 Shares issued on exercise of share options 24,000 1 Issued and fully paid at 30 September 2015 66,213,142 3,311 Shares issued on exercise of share options - - Issued and fully paid at 31 March 2016 66,213,142 3,311 Shares issued on exercise of share options 163,500 8 Issued and fully paid at 30 September 2016 66,376,642 3,319 ============ =======
In the six months ended 30 September 2016, options over 163,500 ordinary shares were exercised at an average exercise price of 30.0 pence per share. The shares are fully paid.
19. Related parties
Identity of related parties
The Group has a related party relationship with its subsidiaries, its directors and executive officers and the Group pension schemes.
Transactions with key management personnel
Full details of directors' remuneration are disclosed in the Group's annual report. In the six months ended 30 September 2016, the directors' remuneration amounted to GBP0.476 million (2015 - GBP0.666 million).
Group pension scheme
Carclo employs a third party professional firm to administer the Group pension scheme. The associated investment costs are borne by the scheme in full. From 1 April 2007, it has been agreed with the trustees of the pension scheme that, under the terms of the recovery plan, Carclo would bear the scheme's administration costs whilst ever the scheme was in deficit, as calculated at the triennial valuation. Carclo incurred an administration cost of GBP0.319 million which has been charged against other operating expenses (2015 - GBP0.377 million).
20. Post balance sheet events
In October 2016, the Group injected GBP1.169 million in cash into the Group pension scheme in accordance with the agreed funding plan.
On 14 October 2016 Carclo announced that its US subsidiary, CTP Carrera Inc., had acquired Precision Tool & Molding, LLC, trading as Precision Tool & Die, for an initial consideration of $5.5 million (approximately GBP4.5 million) in cash plus further deferred consideration of up to $1.0 million (approximately GBP0.8 million) in cash, subject to the satisfaction of certain performance criteria. The completion consideration is subject to a working capital adjustment of up to US$750,000 (approximately GBP615,000), of which, an initial payment of $256,397 (approximately GBP210,000) was paid upon completion of the acquisition. The total working capital adjustment will be determined subsequent to the completion of the acquisition.
On 14 October 2016 Carclo also announced a placing of approximately 6.6 million new ordinary shares at a price of 120 pence, raising net proceeds of approximately GBP7.7 million after costs.
21. Seasonality
There are no specific seasonal factors which impact on the demand for products and services supplied by the Group, other than for the timing of holidays and customer shutdowns. These tend to fall predominantly in the first half of Carclo's financial year and, as a result, revenues and profits are usually higher in the second half of the financial year compared to the first half.
22. Responsibility statement
We confirm that to the best of our knowledge -
-- the condensed set of financial statements has been prepared in accordance with IAS 34 "Interim Financial Reporting" as adopted by the EU;
-- the interim management report includes a fair review of the information required by -
(a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and
(b) DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so.
By order of the Board
Chris Malley- chief executive
Robert Brooksbank - finance director
15 November 2016
Independent review report to Carclo plc
Introduction
We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 September 2016 which comprises the Condensed consolidated income statement, the Condensed consolidated statement of comprehensive income, the Condensed consolidated statement of financial position, the Condensed consolidated statement of changes in equity, the Condensed consolidated statement of cash flows and the related explanatory notes. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
This report is made solely to the company in accordance with the terms of our engagement to assist the company in meeting the requirements of the Disclosure and Transparency Rules ("the DTR") of the UK's Financial Conduct Authority ("the UK FCA"). Our review has been undertaken so that we might state to the company those matters we are required to state to it in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company for our review work, for this report, or for the conclusions we have reached.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the DTR of the UK FCA.
As disclosed in note 1, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the EU. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU.
Our responsibility
Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for use in the UK. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 September 2016 is not prepared, in all material respects, in accordance with IAS 34 as adopted by the EU and the DTR of the UK FCA.
John Pass
For and on behalf of
KPMG LLP
Chartered Accountants
1 Sovereign Square
Sovereign Street
Leeds LS1 4DA
15 November 2016
This information is provided by RNS
The company news service from the London Stock Exchange
END
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November 15, 2016 02:00 ET (07:00 GMT)
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