Share Name Share Symbol Market Type Share ISIN Share Description
Carclo LSE:CAR London Ordinary Share GB0001751915 ORD 5P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  -3.25p -2.64% 120.00p 118.00p 122.00p 124.50p 120.00p 121.50p 86,636 15:29:21
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Chemicals 138.3 10.5 11.5 10.4 87.94

Carclo plc Half-year Report

14/11/2017 7:00am

UK Regulatory (RNS & others)


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Carclo plc

14 November 2017

Carclo plc

("Carclo" or the "Group")

Half year results for the six months ended 30 September 2017

"Solid first half performance"

Carclo plc, the global manufacturing group, is pleased to announce its interim results for the six months ended 30 September 2017.

 
 
 
   Highlights 
 
                                    H1 2017     H1 2016 
------------------------------   ----------  ---------- 
                                     GBP000      GBP000 
------------------------------   ----------  ---------- 
 Revenue 
------------------------------   ----------  ---------- 
 Technical Plastics                  43,748      39,240 
-------------------------------  ----------  ---------- 
 LED Technologies                    25,571      20,559 
-------------------------------  ----------  ---------- 
 Aerospace                            2,859       3,485 
-------------------------------  ----------  ---------- 
 Total                               72,178      63,284 
-------------------------------  ----------  ---------- 
 
 Underlying* operating profit 
-------------------------------  ----------  ---------- 
 Technical Plastics                   3,243       3,450 
-------------------------------  ----------  ---------- 
 LED Technologies                     3,385       2,913 
-------------------------------  ----------  ---------- 
 Aerospace                              359         715 
-------------------------------  ----------  ---------- 
                                      6,987       7,078 
 ------------------------------  ----------  ---------- 
 Unallocated                        (1,583)     (1,503) 
-------------------------------  ----------  ---------- 
 Total                                5,404       5,575 
-------------------------------  ----------  ---------- 
 
 Underlying* profit before 
  tax                                 4,550       4,848 
-------------------------------  ----------  ---------- 
 
 Profit before tax                    4,550       4,830 
-------------------------------  ----------  ---------- 
 
   Underlying* earnings per 
   share                               4.5p        5.6p 
-------------------------------  ----------  ---------- 
 

* underlying is defined as before all exceptional items

-- Solid first half trading overall with, as previously highlighted, an outperformance by LED Technologies offsetting a weaker performance by Technical Plastics

   --       Technical Plastics underlying operating profit decreased by 6% to GBP3.2 million 

The division had a challenging start to the financial year with some key new programmes delayed into the second half and some operational issues that have now been largely resolved. The Board expects the division's performance to be significantly better in the second half

-- LED Technologies performed very strongly and ahead of the Board's expectations, with revenues up 24% to GBP25.6 million and underlying operating profit up 16% to GBP3.4 million

The division saw solid product sales in its supercar lighting business alongside strong design, development and tooling activity and new customer programme wins

-- As anticipated, net debt rose to GBP29.6 million at the half year (31 March 2017 - GBP26.0 million), reflecting the timing of capital investment and the payment profile of ongoing design, development and tooling programmes. The Group's financing remains robust and well within banking covenants

-- The Board anticipates full year trading will be in line with its expectations and the Group remains on track to grow substantially over the medium term

Commenting on the results, Michael Derbyshire, Chairman said -

"The operational issues experienced within the first half of the year within Technical Plastics are now largely resolved and as a result the division's operating margins are expected to improve significantly in the second half, boosted by tooling and programme profitability. We have expanded the footprint of the division with the new factory build in India and the redevelopment of Mitcham and these actions will support our growth aspirations over the next few years.

In LED Technologies, Wipac has continued to perform well, with strong design, development and tooling activity and continued success in winning new customer programmes. There are several supercar pre-development programmes underway which will, once confirmed as full programmes, contribute to a stronger second half. We have completed a warehousing expansion at the Buckingham facility and this, along with the successful relocation of LED manufacturing to the CTP facility in Czech Republic, will provide capacity to continue to deliver our growth plan over the years to come.

The Board anticipates that the Group will trade in line with its expectations for the full year, with all three divisions set to have a stronger second half performance, and the Group remains on track to grow substantially over the medium term."

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 14 November 2017 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 remain 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 traded solidly overall in the first half of the financial year with, as previously highlighted, an outperformance by the LED Technologies division offsetting the weaker than previously anticipated performances of the other divisions.

Group revenues increased by 14.1% to GBP72.2 million (2016 - GBP63.3 million). This includes a positive currency effect of approximately GBP2.2 million versus the comparative period last year and the inclusion of approximately GBP2.6 million of revenue generated by PTD. Group underlying operating profits of GBP5.4 million were slightly lower than for the comparative period last year (2016 - GBP5.6 million).

Unallocated costs were marginally higher than the comparative period last year at GBP1.6 million (2016 - GBP1.5 million). The IAS 19 pension finance charge at GBP0.4 million (2016 - GBP0.4 million) was broadly in line with the comparative period last year. Underlying profit before tax decreased 6.1% to GBP4.6 million (2016 - GBP4.8 million).

The Group generated profit before tax in the six months to 30 September 2017 of GBP4.6 million (2016 - GBP4.8 million). Reported earnings per share for the six months to 30 September 2017 was 4.5p (2016 - 5.6p).

The Board expects the Group to have a stronger performance in the second half of the financial year. This reflects the improved operational performance within Technical Plastics and a greater proportion of the year's design and tooling profits falling into the remainder of the year.

Operating review

Technical Plastics ("CTP")

The Group's Technical Plastics business reported revenues of GBP43.7 million (2016 - GBP39.2 million), an increase of 11.5% on the comparative period last year, due wholly to currency (which had a positive impact of approximately GBP2.2 million) and the inclusion of GBP2.6 million of revenue in respect of PTD. Divisional operating profits were GBP3.2 million (2016 - GBP3.5 million). The divisional operating margin was 7.4% (2016 - 8.8%); we expect this margin to improve in the second half of the year as operational improvements take effect and as tooling and project profits are recognised.

Our US and Czech businesses had a difficult start to the financial year due to some operational challenges. These centred on direct labour shortages in both regions and the delay in the commencement of some key new programmes late into the second half of the year. In addition there were significant raw material price increases in the US, which have now been passed onto customers under contractual agreements. These issues have now been largely resolved, helping to drive higher profitability in the remainder of the year.

Demand from our Medical customers has continued to be strong and predictable. We have seen some weaker demand from non-Medical customers over recent months, although forward schedules continue to support our forecasts. The variability of demand outside of our Medical customers supports our strategy to continue to grow the proportion of Medical work within the division. The first half of this year has seen significant momentum in our efforts to both enhance our technical and validation skills for Medical production and to implement facility improvements in our Czech site; this has been supported by a more focused and integrated marketing drive. These actions have directly led to our first major Medical project being secured at the Czech facility for production in late 2018.

The expansion of our Bangalore, India facility on our land adjacent to the existing facility is now complete and this will create opportunities to develop new customers for the business as well as provide capacity to meet demand from existing customers. The Medical facility in Taicang, China is supporting the growth of its main Medical customer as well as continuing to attract new programmes from both new and existing Group customers.

As would normally be the case we have several new and replacement tooling and automation programmes anticipated to be awarded towards the end of the financial year and these will, once awarded and commenced contribute to current year profitability.

LED Technologies

The Group's LED Technologies division is made up of our Wipac premium automotive lighting business, based in Buckingham, UK and our LED Optics and aftermarket business, based in Aylesbury UK.

The performance of the division during the first half of the year was ahead of the comparative period last year with a 24.4% increase in turnover to GBP25.6 million (2016 - GBP20.6 million) as further programmes move into the manufacturing phase. Divisional operating profit increased by 16.2% to GBP3.4 million (2016 - GBP2.9 million).

Design, development and sub contract tooling revenues, which in aggregate made up over half of Wipac's sales, were ahead of expectations and this has driven an improved profit performance by the division for the period. Lighting product sales were slightly behind our target due to delayed production ramp ups on two new car launches. All of Wipac's current design, development and tooling projects are on plan and we are working on several pre-development programmes which, once confirmed as project awards, are anticipated to make a strong contribution to our second half profits. The market for low and medium volume lighting projects remains strong and we continue to be confident in achieving good growth in this sector with Wipac well placed to deliver significant growth into the future.

We have completed the building of an additional warehouse space at our Buckingham facility which, alongside relocating the LED Optics manufacturing to the Technical Plastics facility in Brno, Czech Republic, has released further manufacturing space. Further warehousing and office space is under negotiation within the Buckingham locality to free up further space.

The Aylesbury based LED Optics business continued to generate strong sales and profits, in particular from strong demand for custom optics.

Aerospace

The Group's Aerospace business had a weak first half performance, with sales of GBP2.9 million (2016 - GBP3.5 million) and divisional operating profits of GBP0.4 million (2016 - GBP0.7 million) due to a number of one-off machining contracts coming to an end as well as a generally weak spares demand. The second half is expected to benefit from a strengthening in spares demand, which is already being seen, as well as some new programmes moving to serial production.

This business continues to be both very profitable and cash generative for the Group, with little ongoing investment required.

Financial position

Net debt has risen since the last financial year-end to GBP29.6 million (31 March 2017 - GBP26.0 million). Debt was expected to rise due to the timing of capital investment and an increase in working capital due to the investment and payment profile of ongoing design, development and tooling programmes. Net debt also reflects the continuing negative impact of weaker sterling on the re-translation of the Group's foreign currency denominated borrowings.

The Group generated cash from operations of GBP3.5 million (2016 - GBP3.2 million) with working capital increasing by GBP4.4 million (2016 - GBP4.5 million) due mainly to increased sub contract tooling activity. Capital expenditure in the six months to 30 September 2017 on a cash basis was GBP5.7 million (2016 - GBP3.6 million), the majority of which relates to investment in additional capacity in our UK and India Technical Plastics businesses and production machinery in Wipac.

The Group's pension deficit, net of applicable deferred tax under IAS19 "Employee Benefits", has decreased to GBP24.8 million as at 30 September 2017 from GBP27.0 million at 31 March 2017. This was mainly due to a slightly higher discount rate based on increased corporate bond yields. The cash cost of the pension scheme has remained at similar levels and the annual recovery plan payment of GBP1.2 million was made subsequent to the 30 September 2017 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 2017 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 the economic uncertainty around Brexit, 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 2017.

Outlook

The operational issues experienced in the first half of the year within Technical Plastics are now largely resolved and the division's operational margins are expected to improve significantly in the second half. Several new and replacement tooling and automation programmes are anticipated to commence towards the end of the financial year and contribute towards the division's profitability. The expansion of the division with the new factory build in India and the redevelopment of Mitcham, together with our strategy of increasing the proportion of Medical work, will help to drive the business forward over the years to come.

In LED Technologies, Wipac has continued to perform well, with strong design, development and tooling activity and continued success in winning new customer programmes. Several pre-development programmes are underway which will, once confirmed as full programmes, contribute to the expected stronger second half. We have completed a warehousing expansion at the Buckingham facility and this, along with the successful relocation of LED manufacturing to the CTP facility in Brno, Czech Republic, will provide capacity to continue to deliver our growth plan over the years to come.

The Board anticipates that the Group will trade in line with its expectations for the full year, with all three divisions set to have a stronger second half performance, and the Group remains on track to grow substantially over the medium term.

Condensed consolidated income statement

 
                                          Six months ended       Six months  Year ended 
                                              30 September         ended 30    31 March 
                                                      2017        September        2017 
                                                 unaudited   2016 unaudited     audited 
 
                                           Notes    GBP000           GBP000      GBP000 
-----------------------------------------  -----  --------  ---------------  ---------- 
 
 Revenue                                       5    72,178           63,284     138,282 
                                                  --------  ---------------  ---------- 
Underlying operating profit 
 Operating profit before exceptional 
  items                                              5,404            5,575      12,498 
    - rationalisation costs                    6      (50)               31       (233) 
    - litigation costs                         6      (21)             (49)        (60) 
    - credit / (costs) arising on 
     the disposal of surplus properties        6        71                -       (658) 
    - credit in respect of retirement 
     benefits                                  6         -                -         410 
 
After exceptional items                              5,404            5,557      11,957 
 
Operating profit                               5     5,404            5,557      11,957 
 
Finance revenue                                7        57               59         170 
Finance expense                                7     (911)            (786)     (1,649) 
 
Profit before tax                                    4,550            4,830      10,478 
 
Income tax expense                             8   (1,253)          (1,151)     (2,496) 
 
Profit after tax                                     3,297            3,679       7,982 
                                                  ========  ===============  ========== 
 
Attributable to - 
 
Equity holders of the parent                         3,297            3,688       7,995 
Non-controlling interests                                -              (9)        (13) 
                                                  --------  ---------------  ---------- 
                                                     3,297            3,679       7,982 
                                                  ========  ===============  ========== 
 
 
Earnings per ordinary share                    9 
  Basic                                              4.5 p            5.6 p      11.5 p 
  Diluted                                            4.5 p            5.6 p      11.5 p 
                                                  ========  ===============  ========== 
 
 
 
 
 

Condensed consolidated statement of comprehensive income

 
                                                                       Six months 
                                                 Six months ended           ended        Year ended 
                                                     30 September    30 September          31 March 
                                                             2017            2016              2017 
                                                        unaudited       unaudited           audited 
                                                           GBP000          GBP000            GBP000 
--------------------------------------------  -------------------  --------------  ---------------- 
 
 Profit for the period                                      3,297           3,679             7,982 
 
 Other comprehensive income - 
 
   Items that will not be reclassified to 
   the income statement 
 
 Remeasurement gains / (losses) on defined 
 benefit scheme                                             3,004        (27,736)          (10,074) 
 Deferred tax arising                                       (422)           4,137             1,364 
 
 Total items that will not be reclassified 
 to the income statement                                    2,582        (23,599)           (8,710) 
                                              -------------------  --------------  ---------------- 
 
 Items that are or may in the future be 
  classified to the income statement 
 Foreign exchange translation differences                 (1,119)           4,523             5,271 
 Deferred taxation arising                                      -               -             (769) 
 
 Total items that are or may in future 
  be classified to the income statement                   (1,119)           4,523             4,502 
 
 Other comprehensive income, net of income 
 tax                                                        1,463        (19,076)           (4,208) 
 
 Total comprehensive income for the period                  4,760        (15,397)             3,774 
                                              ===================  ==============  ================ 
 
 Attributable to - 
 
 Equity holders of the parent                               4,760        (15,388)             3,787 
 Non-controlling interests                                      -             (9)              (13) 
                                              -------------------  --------------  ---------------- 
 Total comprehensive income for the period                  4,760        (15,397)             3,774 
                                              ===================  ==============  ================ 
 
 
 
 

Condensed consolidated statement of financial position

 
 
                                                                                                                      Restated 
                                                                          30 September         30 September           31 March 
                                                                                  2017                 2016               2017 
                                                                             unaudited            unaudited           audited* 
                                                            Notes               GBP000               GBP000             GBP000 
                                                                                                             ----------------- 
 Assets 
 Intangible assets                                             11               25,456               21,704             25,702 
 Property, plant 
  and equipment                                                12               45,848               40,014             43,423 
 Investments                                                                         7                    7                  7 
 Deferred tax assets                                                            10,344               14,132             10,332 
 
 Total non current 
  assets                                                                        81,655               75,857             79,464 
                                                                   -------------------  -------------------  ----------------- 
 
 Inventories                                                                    19,176               16,896             19,250 
 Trade and other 
  receivables                                                                   38,559               32,614             38,468 
 Cash and cash deposits                                                         19,271               19,462             22,269 
 Non current assets classified 
  as held for sale                                             13                  200                  200                200 
 
 Total current assets                                                           77,206               69,172             80,187 
 
 Total assets                                                                  158,861              145,029            159,651 
                                                                   -------------------  -------------------  ----------------- 
 
 Liabilities 
 Interest bearing loans 
  and borrowings                                                                29,820               31,698             29,406 
 Deferred tax liabilities                                                        5,862                5,636              6,140 
 Provisions                                                                          -                    -                440 
 Trade and other payables                                                          101                    -                  - 
 Retirement benefit 
  obligations                                                  14               29,838               51,347             32,503 
 
 Total non current liabilities                                                  65,621               88,681             68,489 
                                                                   -------------------  -------------------  ----------------- 
 
 Trade and other payables                                                       21,764               21,019             25,687 
 Current tax liabilities                                                         2,866                2,755              2,056 
 Provisions                                                                        494                  178                253 
 Interest bearing loans and borrowings                                          19,077               15,315             18,888 
 
 Total current liabilities                                                      44,201               39,267             46,884 
 
 Total liabilities                                                             109,822              127,948            115,373 
                                                                   -------------------  -------------------  ----------------- 
 
 Net assets                                                                     49,039               17,081             44,278 
                                                                   ===================  ===================  ================= 
 
 
 Equity 
    Ordinary share capital issued                              19                3,664                3,319              3,650 
    Share premium                                                                7,359                  410              7,359 
    Other reserves                                                               2,254                2,254              2,254 
    Translation reserve                                                          7,230                8,355              8,349 
   Retained earnings                                                            28,558                2,765             22,692 
 
 Total equity attributable to equity holders 
  of the parent                                                                 49,065               17,103             44,304 
 Non-controlling interests                                                        (26)                 (22)               (26) 
                                                                   -------------------  -------------------  ----------------- 
 Total equity                                                                   49,039               17,081             44,278 
                                                                   ===================  ===================  ================= 
 
 
 

* Figures are audited excluding the impact of restatement to intangible assets, non current trade and other payables and translation reserve. Note 4 provides further details.

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 2017         3,650    7,359        8,349     2,254    22,692    44,304         (26)    44,278 
 
Profit for the period               -        -            -         -     3,297     3,297            -     3,297 
 
Other comprehensive income - 
Foreign exchange translation 
 differences                        -        -      (1,119)         -         -   (1,119)            -   (1,119) 
Remeasurement gains on 
 defined benefit scheme             -        -            -         -     3,004     3,004            -     3,004 
Taxation on items above             -        -            -         -     (422)     (422)            -     (422) 
Transactions with owners 
recorded directly in equity 
- 
Share based payments               14        -            -         -      (13)         1            -         1 
Balance at 30 September 2017    3,664    7,359        7,230     2,254    28,558    49,065         (26)    49,039 
                              =======  =======  ===========  ========  ========  ========  ===========  ======== 
 
Prior 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 year period - audited* 
 
Balance at 1 April 2016         3,311       18        3,832     2,254    23,465    32,880         (13)    32,867 
                                                                                                               - 
Profit for the period               -        -            -         -     7,995     7,995         (13)     7,982 
 
Other comprehensive income - 
Foreign exchange translation 
 differences                        -        -        5,286         -         -     5,286            -     5,286 
Remeasurement losses on 
 defined benefit scheme             -        -            -         -  (10,074)  (10,074)            -  (10,074) 
Taxation on items above             -        -        (769)         -     1,364       595            -       595 
Transactions with owners 
recorded directly in equity 
- 
Share based payments                -        -            -         -       451       451            -       451 
Dividends to shareholders           -        -            -         -     (596)     (596)            -     (596) 
Exercise of share options           8       46            -         -      (62)       (8)            -       (8) 
Issue of share capital, net 
 of costs                         331    7,295            -         -         -     7,626            -     7,626 
Taxation on items recorded 
 directly in equity                 -        -            -         -       149       149            -       149 
 
Balance at 31 March 2017        3,650    7,359        8,349     2,254    22,692    44,304         (26)    44,278 
                              =======  =======  ===========  ========  ========  ========  ===========  ======== 
 
 

* Figures are audited excluding the impact of restatement to foreign exchange translation differences in the period. Note 4 provides further details.

Condensed consolidated statement of cash flows

 
     Six months ended      Six months     Year ended 
         30 September           ended       31 March 
                 2017    30 September           2017 
            unaudited            2016        audited 
                            unaudited 
     Notes     GBP000          GBP000         GBP000 
  --------  ---------  --------------    ----------- 
 
 
 
 Cash generated from operations              15     3,545     3,215      8,916 
 
 Interest paid                                      (507)     (396)      (932) 
 Tax paid                                           (642)     (949)    (2,086) 
 
 Net cash from operating activities                 2,396     1,870      5,898 
 
 Cash flows from investing activities 
 Proceeds from sale of property, plant and 
  equipment                                            54       526        551 
 Interest received                                     57        59        170 
 Acquisition of subsidiaries, net of cash 
  acquired                                              -         -    (5,672) 
 Acquisition of property, plant 
  and equipment                                   (5,745)   (3,607)    (7,860) 
 Acquisition of intangible assets - computer 
  software                                           (63)     (119)      (272) 
 Capitalised development expenditure                    -       (9)      (102) 
 
 Net cash from investing activities               (5,697)   (3,150)   (13,185) 
 
 Cash flows from financing activities 
 Proceeds from issue of share capital, net 
  of costs                                              -         -      7,675 
 Proceeds from exercise of share options                -        49          - 
 Drawings on term loan facilities                     750         -          - 
 Repayment of term loan facilities                      -     (400)    (2,900) 
 Cash outflow in respect of performance 
  share plan awards                                 (248)      (59)       (59) 
 Dividends paid                                         -     (596)      (596) 
 
 Net cash from financing activities                   502   (1,006)      4,120 
 
 Net decrease in cash and cash equivalents        (2,799)   (2,286)    (3,167) 
 Cash and cash equivalents at beginning 
  of period                                         3,381     5,996      5,996 
 Effect of exchange rate fluctuations on 
  cash held                                         (388)       437        552 
 
 Cash and cash equivalents at 
  end of period                              16       194     4,147      3,381 
                                                 ========  ========  ========= 
 
 

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 2017 has been prepared on the basis of the accounting policies set out in the audited accounts for the year ended 31 March 2017 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 2017 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 2017 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 14 November 2017 and is being sent to shareholders on 24 November 2017. 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 2017 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 2017.

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 2017. The following new standards and amendments to standards are mandatory for the first time for the financial year beginning 1 April 2017:

Amendments to IAS 12: Recognition of Deferred Tax Assets for Unrealised Losses; and

Annual Improvements to IFRS standards 2014-2016 cycle.

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 although certain leases will be reclassified with the financial impact yet to be fully determined.

   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 2017. Note 4 details changes in the assumptions of fair values of net assets acquired, including intangible assets and goodwill, and over the fair value of consideration payable in respect of acquisitions of subsidiaries during the year ended 31 March 2017.

   4.         Adjustment to comparative figures 

The comparative figures for the year ended 31 March 2017 are restated after an adjustment of GBP636,000 to intangible assets and non current trade and other payables relating to the re-measurement of goodwill and deferred contingent consideration arising on the acquisition of PTD on 13 October 2016.

   5.         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 the premium automotive industry.

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 2017 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           44,635          25,698       2,859                -             -        (1,014)      72,178 
  Less inter-segment 
   revenue                 (887)           (127)           -                -             -          1,014           - 
 
  Total external 
   revenue                43,748          25,571       2,859                -             -              -      72,178 
 
  Expenses              (40,505)        (22,186)     (2,500)                -       (1,583)              -    (66,774) 
 
  Underlying 
   operating 
   profit                  3,243           3,385         359                -       (1,583)              -       5,404 
 
  Exceptional costs          178               -           -             (26)         (152)              -           - 
 
  Operating profit         3,421           3,385         359             (26)       (1,735)              -       5,404 
                      ==========  ==============  ==========  ===============  ============  ============= 
 
  Net finance 
   expense                                                                                                       (854) 
  Income tax expense                                                                                           (1,253) 
 
 Profit after tax                                                                                                3,297 
                                                                                                            ========== 
 
 Consolidated statement of 
  financial position 
 
   Segment assets         96,032          43,574       6,473            1,297        11,485              -     158,861 
   Segment 
    liabilities         (17,069)         (8,084)       (654)             (46)      (83,969)              -   (109,822) 
 
 Net assets               78,963          35,490       5,819            1,251      (72,484)              -      49,039 
                      ==========  ==============  ==========  ===============  ============  ============= 
 
 

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 year ended 31 March 2017 as restated 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           89,428          43,628       7,049                -             -        (1,823)     138,282 
  Less inter-segment 
   revenue               (1,614)           (209)           -                -             -          1,823           - 
 
  Total external 
   revenue                87,814          43,419       7,049                -             -              -     138,282 
 
  Expenses              (79,107)        (37,534)     (5,746)                -       (3,397)              -   (125,784) 
 
  Underlying 
   operating 
   profit                  8,707           5,885       1,303                -       (3,397)              -      12,498 
 
  Exceptional costs      (1,012)               -           -              640         (169)              -       (541) 
 
   Operating profit        7,695           5,885       1,303              640       (3,566)              -      11,957 
                      ==========  ==============  ==========  ===============  ============  ============= 
 
   Net finance 
    expense                                                                                                    (1,479) 
   Income tax 
    expense                                                                                                    (2,496) 
 
   Profit after tax                                                                                              7,982 
                                                                                                            ========== 
 
 Consolidated statement of 
 financial 
 position 
 
   Segment assets        103,658          38,182       6,505            1,364         9,942              -     159,651 
   Segment 
    liabilities         (23,723)         (6,160)       (753)             (86)      (84,651)              -   (115,373) 
 
   Net assets             79,935          32,022       5,752            1,278      (74,709)              -      44,278 
                      ==========  ==============  ==========  ===============  ============  =============  ========== 
 

The Technical Plastics segment's assets and liabilities have been reduced by GBP621,000 and GBP636,000 respectively. Note 4 provides further details.

   6.          Exceptional costs 
 
                                                            Six months 
                                      Six months ended           ended       Year ended 
                                          30 September    30 September         31 March 
                                                  2017            2016             2017 
                                                GBP000          GBP000           GBP000 
----------------------------------  ------------------  --------------  --------------- 
 
 Litigation costs                                 (21)            (49)             (60) 
 Net rationalisation costs                        (50)              31            (233) 
 Credit / (costs) arising on the 
 disposal of surplus properties                     71               -            (658) 
 Credit in respect of retirement 
 benefits                                            -               -              410 
 Total                                               -            (18)            (541) 
                                    ==================  ==============  =============== 
 
 
 
   7.         Net finance expense 
 
                                                                Six months 
                                          Six months ended           ended       Year ended 
                                              30 September    30 September         31 March 
                                                      2017            2016             2017 
                                                    GBP000          GBP000           GBP000 
--------------------------------------  ------------------  --------------  --------------- 
 
 Interest receivable on cash at bank                    57              59              170 
 Interest payable on bank loans and 
  overdrafts                                         (490)           (391)            (842) 
 Losses on financial liabilities 
  designated as fair value through 
  profit or loss                                         -               -             (15) 
 Net interest on the net defined 
  benefit liability                                  (421)           (395)            (792) 
 
                                                     (854)           (727)          (1,479) 
                                        ==================  ==============  =============== 
 
 
   8.         Income tax expense 
 
                                                                       Six months 
                                                 Six months ended           ended            Year ended 
                                                     30 September    30 September              31 March 
                                                             2017            2016                  2017 
                                                           GBP000          GBP000                GBP000 
---------------------------------------------  ------------------  --------------  -------------------- 
 
 The expense recognised in the condensed consolidated 
  income statement comprises - 
 
 Tax expense arising on ordinary 
  activities                                              (1,253)         (1,155)               (2,614) 
 Deferred tax credit arising on exceptional 
 items                                                          -               -                   104 
 Current tax credit arising on exceptional 
  items                                                         -               4                    14 
 
 Total income tax expense recognised 
  in the condensed consolidated income 
  statement                                               (1,253)         (1,151)               (2,496) 
                                               ==================  ==============  ==================== 
 
 

The half year accounts include a tax charge of 27.5% of profit before tax (2016 - 23.8%) 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 19.0% (2016 - 20.0%) as the Group is earning a higher proportion of its profits in higher tax jurisdictions.

During the six months ended 30 September 2017 a GBP0.422 million debit was recognised in other comprehensive income in respect of deferred tax arising on remeasurement gains on the defined benefit obligations.

Deferred tax assets and liabilities at 30 September 2017 have been calculated on the rates substantively enacted at the balance sheet date. The UK Finance Bill 2016 provides for a reduction in the UK corporation tax rate from 19% to 17% from 1 April 2020. This rate became substantively enacted on 6 September 2016. This will reduce the UK companies' future current tax charge accordingly. The deferred tax asset at 30 September 2017 has been calculated based on the rate of 17% substantively enacted at the balance sheet date.

   9.         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 
                                               2017           2016         2017 
                                             GBP000         GBP000       GBP000 
--------------------------------------  -----------  -------------  ----------- 
 
 Profit after tax from continuing 
  operations                                  3,297          3,679        7,982 
 
 Loss attributable to non-controlling 
  interests                                       -              9           13 
 
 Profit after tax, attributable to 
  equity holders of the parent                3,297          3,688        7,995 
                                        ===========  =============  =========== 
 
                                   Six months ended     Six months   Year ended 
                                                             ended 
                                       30 September   30 September     31 March 
                                               2017           2016         2017 
                                             Shares         Shares       Shares 
--------------------------------------  -----------  -------------  ----------- 
 
 Weighted average number of ordinary 
  shares in the period                   73,416,599     66,285,508   69,381,504 
 
 Effect of share options in issue             1,120          1,184        1,250 
 
 Weighted average number of ordinary 
  shares (diluted) in the period         73,417,719     66,286,692   69,382,754 
                                        ===========  =============  =========== 
 

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 
                                                2017           2016         2017 
                                              GBP000         GBP000       GBP000 
-------------------------------------------  -------  -------------  ----------- 
 
 Profit after tax, attributable to 
  equity holders of the parent                 3,297          3,688        7,995 
 
 Rationalisation costs, net of tax                41           (25)          169 
 
 Litigation costs, net of tax                     17             39           48 
 
 Costs arising on the disposal of 
  surplus properties, net of tax                (58)              -          546 
 
 Credit in respect of retirement benefits, 
  net of tax                                       -              -        (340) 
 
 Underlying profit attributable to 
  equity holders of the parent                 3,297          3,702        8,418 
                                             =======  =============  =========== 
 

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 
                                             2017           2016         2017 
                                            Pence          Pence        Pence 
-----------------------------------------  ------  -------------  ----------- 
 
 Basic                                        4.5            5.6         11.5 
                                           ======  =============  =========== 
 
 Diluted                                      4.5            5.6         11.5 
                                           ======  =============  =========== 
 
 Underlying earnings per share - basic        4.5            5.6         12.1 
                                           ======  =============  =========== 
 
 Underlying earnings per share - diluted      4.5            5.6         12.1 
                                           ======  =============  =========== 
 
   10.       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 
                                        2017             2016           2017 
                                      GBP000           GBP000         GBP000 
-----------------------------------  -------    -------------    ----------- 
 
 Interim dividend for 2015/16 (0.90        -              596              - 
  pence per share) 
 
                                           -              596              - 
                                     =======    =============    =========== 
 

As outlined in the annual report 2017 the directors are not proposing an interim dividend for 2017/18.

   11.       Intangible assets 

The movements in the carrying value of intangible assets are summarised as follows -

 
                                                                        Restated* 
                                     Six months ended     Six months   year ended 
                                                               ended 
                                         30 September   30 September     31 March 
                                                 2017           2016         2017 
                                               GBP000         GBP000       GBP000 
--------------------------------------------  -------  -------------  ----------- 
 
 Net book value at the start of the 
  period                                       25,702         20,257       20,257 
 
 Additions                                         62            128          370 
 Acquisitions through business combinations         -              -        3,739 
 Impairment arising on review of CIT 
  Technology                                        -           (16)            - 
 Amortisation                                   (139)           (63)        (149) 
 Effect of movements in foreign exchange        (169)          1,398        1,485 
 
 Net book value at the end of the 
  period                                       25,456         21,704       25,702 
                                              =======  =============  =========== 
 

Included within intangible assets is goodwill of GBP24.1 million (2016 - GBP21.2 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 2017, 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.

* Acquisitions through business combinations in the year ended 31 March 2017 have been restated as detailed in note 4.

   12.       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 
                                                  2017           2016         2017 
                                                GBP000         GBP000       GBP000 
 
 Net book value at the start of the 
  period                                        43,423         36,597       36,597 
 
 Additions                                       5,745          3,585        8,182 
 Acquisitions through business combinations          -              -          495 
 Depreciation                                  (2,369)        (2,344)      (4,535) 
 Disposals                                        (61)           (29)         (88) 
 Effect of movements in foreign exchange         (890)          2,205        2,772 
 
 Net book value at the end of the 
  period                                        45,848         40,014       43,423 
                                              ========  =============  =========== 
 
   13.      Non current assets classified as held for sale 
 
                                      As at          As at      As at 
                               30 September   30 September   31 March 
                                       2017           2016       2017 
                                     GBP000         GBP000     GBP000 
----------------------------------  -------  -------------  --------- 
 
 Surplus land and buildings             200            200        200 
 
 Net book value at the end of the 
  period                                200            200        200 
                                    =======  =============  ========= 
 

At the period end surplus property with a written down value of GBP0.200 million (2016 - GBP0.200 million) has been reclassified as being held for sale. This relates to the remaining property at the closed Harthill site. It is being actively marketed with an expectation that it will be sold within the next year.

   14.       Retirement benefit obligations 

At 31 March 2017 the Group had a retirement benefit liability, as calculated under the provisions of IAS 19 "Employee Benefits", of GBP32.503 million. Since the start of the current financial year, positive asset returns of GBP2.539 million have been offset by GBP6.443 million of benefit payments which has resulted in the scheme's assets decreasing in value by GBP3.904 million to GBP173.041 million. However, the impact of an increase in the discount rate used to evaluate the scheme's liabilities, from 2.6% at the start of the period to 2.7% has offset the interest expense arising on the liabilities which, combined with the benefit payments, has resulted in the value of the liabilities decreasing by GBP6.569 million to GBP202.879 million. As a consequence the scheme, on an IAS 19 basis, has decreased from a GBP32.503 million liability at 31 March 2017 to a GBP29.838 million liability at 30 September 2017.

   15.       Cash generated from operations 
 
                                               Six months     Six months       Year ended 
                                                    ended          ended 
                                             30 September   30 September         31 March 
                                                     2017           2016             2016 
                                                   GBP000         GBP000           GBP000 
-----------------------------------------   -------------  -------------      ----------- 
 
 Operating profit                                   5,404          5,557           11,957 
 
 Adjustments for - 
 Pension fund contributions in 
  excess of service costs                               -              -          (1,169) 
 Depreciation charge                                2,369          2,344            4,535 
 Amortisation of intangible assets                    139             63              149 
 Exceptional impairment of intangible 
  assets, arising on rationalisation 
  of business                                           -             16                - 
 Loss on disposal of other plant 
  and equipment                                         7              3               37 
 Exceptional credit in respect 
  of retirement benefits                                -              -            (410) 
 Provisions charged in respect 
  of exit of Harthill operation                         -              -              685 
 Cash flow relating to provision 
  for site closure costs                            (201)          (442)            (612) 
 Share based payment charge                           249            216              452 
 
 Operating cash flow before changes 
  in working capital                                7,967          7,757           15,624 
 
 Changes in working capital 
 
 Increase in inventories                            (327)          (507)          (2,044) 
 Increase in trade and other receivables            (442)        (4,937)          (9,225) 
 (Decrease) / increase in trade and 
  other payables                                  (3,653)            902            4,561 
 
 Cash generated from operations                     3,545          3,215            8,916 
                                            =============  =============      =========== 
 
 
   16.       Cash and cash equivalents 
 
                                   As at              As at      As at 
                            30 September       30 September   31 March 
                                    2017               2016       2017 
                                  GBP000             GBP000     GBP000 
------------------------   -------------      -------------  --------- 
 
 Cash and cash deposits           19,271             19,462     22,269 
 Bank overdrafts                (19,077)           (15,315)   (18,888) 
 
                                     194              4,147      3,381 
                           =============      =============  ========= 
 
 
   17.       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 
                                                            2017           2016         2017 
                                                          GBP000         GBP000       GBP000 
-------------------------------------------  ----  -------------  -------------  ----------- 
 
 Net decrease in cash and cash equivalents               (2,799)        (2,286)      (3,167) 
 Net (drawings) / repayment of term 
  loan borrowings                                          (750)            400        2,900 
 
                                                         (3,549)        (1,886)        (267) 
 
 Effect of exchange rate 
  fluctuations on net debt                                  (52)          (915)      (1,008) 
 
                                                         (3,601)        (2,801)      (1,275) 
 
 Net debt at start of period                            (26,025)       (24,750)     (24,750) 
 
 Net debt at end of period                              (29,626)       (27,551)     (26,025) 
                                                   =============  =============  =========== 
 
 
   18.       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.

   19.       Ordinary share capital 

Ordinary shares of 5 pence each -

 
                                                       Number of shares   GBP000 
----   --------------------------------------------  ------------------  ------- 
 
 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 
 
 Shares issued on placing of shares for 
  cash                                                        6,631,026      331 
 
 Issued and fully paid at 31 March 2017                      73,007,668    3,650 
 
 Shares issued on exercise of share options                     279,250       14 
 
 Issued and fully paid at 30 September 
  2017                                                       73,286,918    3,664 
                                                      =================  ======= 
 
 
 

In the six months ended 30 September 2017, nil-cost options over 279,250 ordinary shares were exercised under a long term incentive plan at an average exercise price of 0.0 pence per share. The shares are fully paid.

   20.       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 2017, the directors' remuneration amounted to GBP1.063 million (2016 - GBP0.476 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 GBP0.265 million which has been charged against other operating expenses (2016 - GBP0.319 million).

   21.      Post balance sheet events 

In October 2017, the Group injected GBP1.203 million in cash into the Group pension scheme in accordance with the agreed funding plan.

   22.       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.

   23.       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

14 November 2017

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 2017 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 2017 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

14 November 2017

This information is provided by RNS

The company news service from the London Stock Exchange

END

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