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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Carclo Plc | 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 | |
---|---|---|---|---|---|---|---|---|---|---|
-1.30 | -9.85% | 11.90 | 11.00 | 12.80 | 12.00 | 11.70 | 12.00 | 63,570 | 16:35:13 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
Plastics,resins,elastomers | 143.45M | -3.96M | -0.0539 | -2.17 | 8.59M |
TIDMCAR
RNS Number : 8902S
Carclo plc
19 November 2021
Carclo plc
Interim Report and Accounts
Half Year Results for the six months ended 30 September 2021
Carclo plc, a global provider of value-adding engineered solutions for the medical, diagnostics, optical, electronics and aerospace industries, announces its results for the six months to 30 September 2021 ("H1 2022").
The key financial performance measures for H1 2022 are summarised below:
H1 2022 H1 2021 GBP000 GBP000 Revenue from continuing operations 58,672 49,950 Underlying(1) operating profit from continuing operations 3,682 1,529 Underlying(1) profit before tax from continuing operations 2,279 437 Underlying(1) earnings per share from continuing operations 2.5p 0.0p Statutory operating profit from continuing operations 5,769 227 Statutory profit/(loss) before tax from continuing operations 4,366 (865) Statutory profit/(loss) for the period 5,487 (1,321) Basic earnings/(loss) per share 7.5p (1.8p) Net debt excluding lease liabilities 21,613 24,415 Net debt 28,371 29,358 Retirement benefit obligations 33,407 58,121 Revenue from continuing operations Technical Plastics (CTP) 56,583 47,214 Aerospace 2,089 2,736 Total 58,672 49,950 Underlying operating profit from continuing operations (1) Technical Plastics (CTP) 4,784 3,226 Aerospace 227 484 Central (1,329) (2,181) Total 3,682 1,529 Underlying EBITDA from continuing operations (1) 6,863 4,576 ---------------------------------------------------- -------- --------
Highlights
-- Strong trading momentum and operational execution throughout the period delivered significant growth in both revenues and underlying operating margins
-- Total revenues of GBP58.7m, up 17.5% on the prior year (H1 2021: GBP50.0m)
o Technical Plastics ("CTP") total revenues up 19.8% to GBP56.6m, tooling income up 48.2% to GBP9.1m, product sales up 15.6%
o Higher tooling income reflects new business wins, further building the pipeline for future product sales growth
o Aerospace revenue down GBP0.6m (23.6%) against a comparative period which benefited from the fulfilment of a strong pre-Covid order pipeline
-- Underlying Operating Profit more than doubled to GBP3.7m (H1 2021: GBP1.5m) excluding the benefit of GBP2.1m of non-repeating US Covid grant income
-- Statutory operating profit of GBP5.8m (H1 2021: GBP0.2m)
-- Discontinued business income received of GBP0.7m from residual claims on LED Technologies business disposal (H1 2021: GBPnil)
-- Net debt excluding lease liabilities at 30 September 2021 was GBP21.6m, a reduction of GBP2.8m compared to 30 September 2020.
-- Net debt reduced by GBP1.0m to GBP28.4m (H1 2021: GBP29.4m), an increase of GBP0.8m in the six months to 30 September 2021, including GBP3.5m inventory increase mainly to protect materials availability against current supply chain uncertainties
-- IAS19 Retirement Benefit liability down to GBP33.4m, reduced by GBP24.7m since September 2020 (and reduced by GBP3.9m since March 2021) from improved asset returns, additional employer contributions, and initiatives progressed with the Trustees
Notes:
(1) underlying results are those calculated before discontinued operations, separately disclosed items and exceptional items. A reconciliation to statutory figures is set out below.
Reconciliation of non-GAAP financial measures - H1 2022
Exceptional COVID-related GBPm Statutory items Before exceptional US grant Underlying CTP operating profit 6,871 - 6,871 2,087 4,784 Aerospace operating profit 227 - 227 - 227 Central costs (1,329) - (1,329) - (1,329) ----------------------------- ---------- ------------ ------------------- -------------- ----------- Group operating profit from continuing operations 5,769 - 5,769 2,087 3,682 Net finance expense (1,403) - (1,403) - (1,403) ----------------------------- ---------- ------------ ------------------- -------------- ----------- Group profit before taxation 4,366 - 4,366 2,087 2,279 Taxation credit / (expense) 428 893 (465) - (465) ----------------------------- ---------- ------------ ------------------- -------------- ----------- Group profit for the period from continuing operations 4,794 - 3,901 2,087 1,814 Profit on discontinued operations, net of tax 693 693 - - - ----------------------------- ---------- ------------ ------------------- -------------- ----------- Group profit for the period 5,487 1,596 3,901 2,087 1,814 ----------------------------- ---------- ------------ ------------------- -------------- ----------- Basic earnings per share (pence) 7.5p 2.2p 5.3p 2.8p 2.5p ----------------------------- ---------- ------------ ------------------- -------------- -----------
Commenting on the results, Nick Sanders, Executive Chairman, said:
"The Group continued to make good progress in the first half of the financial year. In common with many companies, we experienced significant Covid-related operational headwinds, but despite these delivered a strong set of financial results. Our first half performance is ahead of our expectations even after the impact of one-off benefits is removed.
Our primary focus has been to continue to ensure our employees and communities remain safe, whilst increasing output in line with customer demand. This has been achieved despite the continuing effect of mandatory lockdowns and production restrictions in some countries.
Demand for CTP products in the medical and diagnostic sectors has continued to increase from both existing and new customers and we expect this will continue in the post-pandemic period. Labour shortages and increased labour costs, particularly in the US, increased raw material costs and extended logistic lead times have all presented significant challenges in the first half. We have responded by implementing a range of measures and have been able to mitigate some of the impact of cost pressures by increasing prices.
While maintaining our usual high level of delivery performance has been difficult in recent months, and this situation will take some months yet to fully recover, we nevertheless have been able to strengthen our customer and supply chain relationships in working through these challenges together.
Encouragingly, our CTP businesses in Asia have performed strongly in line with our strategy to grow more rapidly outside of our traditionally strong US and European markets.
We have also benefited from strong demand for tooling with significant orders received for both replacement and new projects. Tooling orders are generally a precursor to production orders which provides us with optimism about future demand.
Our Aerospace division is also showing the early signs of recovery with order intake in the first half exceeding sales. A number of new contracts with existing and some new customers have also been secured. It will however take some time for these orders to feed through into sales and profit.
Central costs have been well managed, and our continued focus of cash management has again delivered good cash headroom and reduced bank debt. The Group has also worked closely with the Pension Trustees to develop enhancements to the pension schemes which improve scheme benefits and reduce the overall deficit.
Subject to there being no significant deterioration in trading conditions as a result of supply chain or Covid-related disruption, the Board expects the positive commercial momentum seen in the first half to continue, with further product sales growth in H2. Trading margins for the second half are expected to be slightly lower than H1, reflecting the current higher cost environment. Nevertheless, the Board currently anticipates full year underlying trading will be slightly ahead of expectations, with the one-off benefits of the Covid-related grant income and contribution from discontinued operations incremental to this.
Enquiries
Carclo plc Nick Sanders - Executive Chairman 01924 268040
FTI Consulting Nick Hasell / Susanne Yule 020 3727 1340
Forward looking statements
Certain statements made in these report & accounts 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.
Alternative performance measures
The alternative performance measures are defined in the financial review of the Annual Report and Accounts (ARA) for the year ended 31 March 2021, with a reconciliation to statutory figures included in this Half Year Report to aid the user of these accounts. The Directors believe that alternative performance measures provide a more useful comparison of business trends and performance. The term 'underlying' is not defined under IFRS and may not be comparable with similarly titled measures used by other companies. Operating profit before exceptional items is not referred to in the ARA for the year ended 31 March 2021.
Overview of Results
The Group delivered a strong trading performance in H1 2022, ahead of the Board's expectations, making progress over the prior year period on all the listed key performance measures. This was achieved despite continuing Covid-related headwinds on the Carclo supply chain, in common with many international businesses.
Comparing all results with H1 2021, Group revenues rose 17.5% to GBP58.7m (H1 2021: GBP50.0m).
Technical Plastics ("CTP") revenues rose 19.8% to GBP56.6m (H1 2021: GBP47.2m), including a 15.6% increase in product sales to GBP47.5m (H1 2021: GBP41.1m) and a 48.2% increase in tooling income to GBP9.1m (H1 2021: GBP6.1m).
The higher proportion of new and existing business converted into tooling income in the period will also help drive on subsequent product sales.
CTP underlying operating profit rose by 48.3% to GBP4.8m (H1 2021: GBP3.2m) as a result of improved tooling and product sales, with an additional GBP2.1m recognised in respect of a Covid-related US government loan which was forgiven and converted into grant income in H1 2022. All other Covid-related costs and credits are also included in operating profit. Other non-US Covid-related credits amounted to GBP0.1m in the period.
As anticipated, Aerospace revenue of GBP2.1m was down GBP0.6m on the previous period which benefited from a high pre-Covid order pipeline. Whilst the aerospace industry remains heavily impacted by the pandemic, the division continued to be profitable with GBP0.2m delivered in the period, a reduction of GBP0.3m. Encouragingly, the division is already seeing orders recover. These have been tracking ahead of revenues for the Aerospace business over recent months and will gradually benefit sales as the orders convert.
On a constant currency basis revenue from continuing operations increased by 23.3%, and underlying operating profit by 149.7%.
Central costs have been well managed, and our continued focus on cash management has again delivered good cash headroom and helped reduce net bank debt to GBP21.6m (H1 2021: GBP24.4m). Central costs including pension administration costs reduced from GBP2.2m to GBP1.3m and finance costs increased from GBP1.1m to GBP1.4m. Finance costs comprise net interest payable on bank loans and leases of GBP1.0m (H1 2021: GBP0.7m) including bank commitment fees, and net interest on the defined benefit pension liability of GBP0.4m (H1 2021: GBP0.4m).
There were no exceptional costs recognised in the period (H1 2021: GBP1.3m). The Board concluded that Covid-related costs and credits, given the indeterminate nature of evaluating the additional costs, should all be included within operating costs.
A further residual GBP0.7m was received following final distribution by administrators of the discontinued LED business exited in December 2019, with the income being shown separately from continuing operations.
The Group statutory profit before tax was GBP4.4m (H1 2021: loss (GBP0.9m)).
Taxation was a credit of GBP0.4m against a statutory profit before tax of GBP4.4m, giving an effective tax credit rate of 8.5% (H1 2021: tax expense GBP0.5m giving a 52.7% effective tax rate on a pre-tax loss of GBP0.9m). The result includes a GBP0.9m credit from renewed deferred tax asset recognition from UK combined businesses which have returned to forecasting taxable profits, providing available tax losses to be set off against future profits. The underlying effective tax rate, after excluding the deferred tax credit of GBP0.9 million, amounts to 20.4% of underlying profit before tax (H1 2021: 104.3%).
Underlying earnings per share from continuing operations for H1 2022 was 2.5 pence (H1 2021: 0.0 pence). The statutory earnings per share for the period, for all operations, was 7.5 pence (H1 2021: loss of 1.8 pence).
Board changes
As reported in our Full Year Results on 30 June 2021, Peter Slabbert and David Toohey stepped down from the Board as Non-Executive Directors on 31 March 2021 and 30 April 2021 respectively.
Eric Hutchinson and Frank Doorenbosch were appointed to the Board as Non-Executive Directors on 7 January 2021 and 1 February 2021 respectively. Eric became Chair of the Audit Committee in March 2021, taking over from Peter Slabbert. Frank took over as Chair of the Remuneration Committee in April 2021 following David Toohey's departure.
Financial Position
Cash generated from continuing operations during the first half was GBP2.0m (H1 2021: GBP0.6m), including increased cash payments (net of administration costs) into the pension scheme of GBP1.8m (H1 2021: GBP1.0m) and a net working capital increase of GBP3.3m (H1 2021: GBP2.3m), of which GBP3.5m related to inventory increases mainly to protect operations amidst post-Covid supply chain disruption.
Gross cash capital expenditure for the period was GBP3.5m (H1 2021: GBP0.8m).
As a result, net debt excluding lease liabilities reduced by GBP2.8m to GBP21.6m (H1 2021: GBP24.4m), and net debt reduced by GBP1.0m to GBP28.4m compared to 30 September 2021.
At 30 September 2021, the Group's total UK bank facilities were GBP33.6m of which GBP30.1m related to a term loan and GBP3.5m to a revolving credit facility.
No additional government COVID-19 support was received in cash during the period (H1 2021: GBP3.9m of which GBP2.6m was presented within interest bearing loans and borrowings).
The Group's IAS 19 pension deficit reduced to GBP33.4m as at 30 September 2021 (30 September 2020: GBP58.1m and 31 March 2021: GBP37.3m) on additional contributions made by the Group, backed by improved asset returns and initiatives progressed with the Trustees. No change was made in the discount rate assumption of 2.0% since March 2021 and no changes were made at this stage in the mortality assessments. No initial data has yet been released on the triennial actuarial valuation of March 2021. Relevant data here will be taken into account to the extent that it is available for IAS19 valuation purposes at the end of the financial year.
In accordance with the recovery plan agreed by the Pensions Regulator and pension scheme trustees, total contributions paid by the Company (for deficit recovery contributions and scheme administration costs) for the six-month period were GBP2.1m (H1 2021: GBP1.1m). Total contributions for the six-month period to 31 March 2022 are expected to be GBP1.8m.
Dividend
Under the terms of its financing agreements the Company is not permitted to make a dividend payment to shareholders up to the period ending in July 2023.
Outlook
Subject to there being no significant deterioration in trading conditions as a result of supply chain or Covid-related disruption, the Board expects the positive commercial momentum seen in the first half to continue, with further product sales growth in H2. Trading margins for the second half are expected to be slightly lower than H1, reflecting the current higher cost environment. Nevertheless, the Board currently anticipates full year underlying trading will be slightly ahead of expectations, with the one-off benefits of the Covid-related grant income and contribution from discontinued operations incremental to this.
Principal Risks and Uncertainties
In the Annual Report for the year ended 31 March 2021 a detailed review of the principal risks faced by the Group, and how these risks were being managed, was provided. We continue to face, and proactively manage, the risks and uncertainties in our business and, whilst the Board considers that these principal risks and uncertainties have not materially changed since the publication of the 2021 Annual Report, it is worth noting that:
-- COVID-19 related uncertainty continues as to the impact on the Group's markets and geographies evolving over time. It is possible that the Group's operations, its supply chains and customer demand could continue to be further impacted, particularly in the US, where labour and material shortage experience has been most acute;
-- the impact of Brexit has to some extent become intertwined with post-Covid impact on labour and materials resource shortages in the supply chain and as such is seen as a lesser but contributory factor in the COVID-19 risks identified above; and
-- during the current period significant new tooling agreements have been either entered into or progressed with new and existing customers. These agreements and pending subsequent agreements for the supply of manufactured product are subject to operational execution risk.
Going Concern
These interim financial statements have been prepared on a going concern basis as detailed in Note 1 to these interim accounts. While headroom against banking covenants has increased significantly over the last 6 months, it should continue to be noted that any material manifestation of the above risks, individually or in combination, could lead to a breach of the Group's banking covenants. Management has considered the impact of potential mitigations including improved trading, cost saving and working capital management initiatives, as well as compensation from customers in respect of delays and it considers that the potential benefits from these give sufficient comfort that the downside risks can be mitigated. If it were not possible to mitigate a potential breach the bank would be approached to request that it considers issuing a waiver for any covenant that may be breached.
Responsibility Statement
We confirm to the best of our knowledge:
(a) the condensed consolidated set of financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting;
(b) the interim management report includes a fair review of the information required by DTR 4.2.7R (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year); and
(c) the interim management report includes a fair review of the information required by DTR 4.2.8R (disclosure of related parties' transactions and changes therein).
By order of the Board,
Nick Sanders Phil White Executive Chairman Chief Financial Officer
18 November 2021
Glossary of Terms
CONSTANT CURRENCY Retranslated at the prior half-year's average exchange rate. Included to explain the effect of changing exchange rates during volatile times to assist the reader's understanding GROUP CAPITAL EXPITURE Non-current asset additions ---------------------------------------- NET BANK INTEREST Interest receivable on cash at bank less interest payable on bank loans and overdrafts. Reported in this manner due to the global nature of the Group and its banking agreements ---------------------------------------- NET DEBT Cash and cash deposits less loans and borrowings. Used to report the overall financial debt of the Group in a manner that is easy to understand ---------------------------------------- NET DEBT EXCLUDING LEASE LIABILITIES Net debt, as defined above, excluding lease liabilities. Used to report the overall non-leasing debt of the Group in a manner that is easy to understand ---------------------------------------- EBITDA Profit before interest, tax, depreciation and amortisation adjusted to exclude all exceptional and separately disclosed items ---------------------------------------- UNDERLYING Adjusted to exclude all exceptional and separately disclosed items ---------------------------------------- UNDERLYING EBITDA Profit before interest, tax, depreciation and amortisation adjusted to exclude all exceptional and separately disclosed items ---------------------------------------- UNDERLYING EARNINGS PER SHARE Earnings per share adjusted to exclude all exceptional and separately disclosed items ---------------------------------------- UNDERLYING OPERATING PROFIT Operating profit adjusted to exclude all exceptional and separately disclosed items ---------------------------------------- UNDERLYING PROFIT BEFORE TAX Profit before tax adjusted to exclude all exceptional and separately disclosed items ---------------------------------------- OPERATING PROFIT BEFORE EXCEPTIONAL Statutory operating profit adjusted ITEMS to exclude all exceptional items ---------------------------------------- Condensed consolidated income statement Six months Six months ended ended Year ended 30 September 30 September 31 March 2021 2020 2021 unaudited unaudited audited Notes GBP000 GBP000 GBP000 -------------- ------ ----- ----- ------- ---------- ------ ------------ --------- ---------- ---------------- ---------------------- Continuing operations: Revenue 4 58,672 49,950 107,564 Underlying operating profit 3,682 1,529 4,840 COVID related US government grant income 7 2,087 - - Operating profit before exceptional items 5,769 1,529 4,840 Exceptional items 6 - (1,302) 4,490 Operating profit 4 5,769 227 9,330 Finance revenue 8 34 57 42 Finance expense 8 (1,437) (1,149) (2,701) Profit / (loss) before tax 4,366 (865) 6,671 Income tax credit / (expense) 9 428 (456) (457) Profit / (loss) after tax but before profit on discontinued operations 4,794 (1,321) 6,214 Discontinued operations: Profit on discontinued operations, net of tax 6 693 - 1,198 Profit / (loss) for the period 5,487 (1,321) 7,412 ========== ================ ====================== Attributable to: Equity holders of the parent company 5,487 (1,321) 7,412 Non-controlling interests - - -
5,487 (1,321) 7,412 ========== ================ ====================== Earnings / (loss) per ordinary share 10 Basic - continuing operations 6.5 p (1.8) p 8.5 p Basic - discontinued operations 0.9 p - p 1.6 p Basic 7.5 p (1.8) p 10.1 p ========== ================ ====================== Diluted - continuing operations 6.5 p (1.8) p 8.5 p Diluted - discontinued operations 0.9 p - p 1.6 p Diluted 7.5 p (1.8) p 10.1 p ========== ================ ====================== Condensed consolidated statement of comprehensive income Six months Six months ended ended Year ended 30 September 30 September 31 March 2021 2020 2021 unaudited unaudited audited GBP000 GBP000 GBP000 -------------- ------ ----- ----- ------- ---------- ------ ------------ --------- ---------- ---------------- ---------------------- Profit / (loss) for the period 5,487 (1,321) 7,412 Other comprehensive income / (expense): Items that will not be reclassified to the income statement Remeasurement gains / (losses) on defined benefit scheme 2,730 (20,714) (6,540) Total items that will not be reclassified to the income statement 2,730 (20,714) (6,540) ---------- ---------------- ---------------------- Items that will or may in the future be classified to the income statement Foreign exchange translation differences 913 (79) (2,939) Net investment hedge (205) (18) 1,084 Deferred tax arising 236 57 137 Total items that will or may in future be classified to the income statement 944 (40) (1,718) ---------- ---------------- ---------------------- Other comprehensive income / (expense), net of income tax 3,674 (20,754) (8,258) Total comprehensive income / (expense) for the period 9,161 (22,075) (846) ========== ================ ====================== Attributable to: Equity holders of the Company 9,161 (22,075) (846) Non-controlling interests - - - Total comprehensive income / (expense) for the period 9,161 (22,075) (846) ========== ================ ====================== Condensed consolidated statement of financial position 30 September 30 September 31 March 2021 2020 2021 unaudited unaudited audited Notes GBP000 GBP000 GBP000 --------------- ------ ----- --------- -------- -------- ------------ --------- ---------- ---------------- ---------------------- Non-current assets Intangible assets 12 22,214 22,863 21,848 Property, plant and equipment 13 43,632 40,127 43,218 Deferred tax assets 1,500 338 384 Trade and other receivables 114 116 112 Total non-current assets 67,460 63,444 65,562 ---------- ---------------- ---------------------- Current assets Inventories 16,355 13,968 12,821 Contract assets 6,131 3,519 2,898 Trade and other receivables 23,172 19,665 19,254 Cash and cash deposits 16 10,394 23,379 15,485 Current tax assets 538 - - Total current assets 56,590 60,531 50,458 Total assets 124,050 123,975 116,020 ---------- ---------------- ---------------------- Non-current liabilities Loans and borrowings 17 36,014 38,738 37,997 Deferred tax liabilities 4,577 4,315 4,393 Contract liabilities - 426 866
Retirement benefit obligations 14 33,407 58,121 37,275 Total non-current liabilities 73,998 101,600 80,531 ---------- ---------------- ---------------------- Current liabilities Loans and borrowings 17 2,751 13,999 5,084 Trade and other payables 21,022 17,174 17,016 Current tax liabilities 534 558 17 Contract liabilities 8,654 3,877 5,461 Provisions - 18 - ---------- ---------------- ---------------------- Total current liabilities 32,961 35,626 27,578 Total liabilities 106,959 137,226 108,109 ---------- ---------------- ---------------------- Net assets / (liabilities) 17,091 (13,251) 7,911 ========== ================ ====================== Equity Ordinary share capital issued 19 3,671 3,671 3,671 Share premium 7,359 7,359 7,359 Translation reserve 6,277 7,011 5,333 Retained earnings (190) (31,266) (8,426) Total equity attributable to equity holders of the Company 17,117 (13,225) 7,937 Non-controlling interests (26) (26) (26) ---------------------- Total equity 17,091 (13,251) 7,911 ========== ================ ====================== Condensed consolidated statement of changes in equity Attributable to equity holders of the Company --------- --------------------------------------------------------------- Share Share Translation Retained Non-controlling Total capital premium reserve earnings Total interests equity GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 --------------- ------ ----- ------------- -------------- -------------------- --------- ---------- ---------------- ---------------------- Current half year period unaudited Balance at 1 April 2021 3,671 7,359 5,333 (8,426) 7,937 (26) 7,911 Profit for the period - - - 5,487 5,487 - 5,487 Other comprehensive income: Foreign exchange translation differences - - 913 - 913 - 913 Net investment hedge - - (205) - (205) - (205) Remeasurement gains on defined benefit scheme - - - 2,730 2,730 - 2,730 Taxation on items above - - 236 - 236 - 236 Total comprehensive income for the period - - 944 8,217 9,161 - 9,161 Transactions with owners recorded directly in equity: Share based payments - - - 19 19 - 19 Balance at 30 September 2021 3,671 7,359 6,277 (190) 17,117 (26) 17,091 ========= ========== ================ ========= ========== ================ ====================== Prior half year period unaudited Balance at 1 April 2020 3,671 7,359 7,051 (9,324) 8,757 (26) 8,731 Loss for the period - - - (1,321) (1,321) - (1,321) Other comprehensive income: Foreign exchange translation differences - - (79) - (79) - (79) Net investment hedge - - (18) - (18) - (18) Remeasurement losses on defined benefit scheme - - - (20,714) (20,714) - (20,714) Taxation on items above - - 57 - 57 - 57 Total comprehensive loss for the period - - (40) (22,035) (22,075) - (22,075) Transactions with owners recorded directly in equity: Share based payments - - - 93 93 - 93 Balance at 30 September 2020 3,671 7,359 7,011 (31,266) (13,225) (26) (13,251) ========= ========== ================ ========= ========== ================ ====================== Attributable to equity holders of the Company --------- --------------------------------------------------------------- Share Share Translation Retained Non-controlling Total capital premium reserve earnings Total interests equity GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 Prior year - audited Balance at 1 April 2020 3,671 7,359 7,051 (9,324) 8,757 (26) 8,731 Profit for the year - - - 7,412 7,412 - 7,412 Other comprehensive (loss) / income: Foreign exchange translation differences - - (2,939) - (2,939) - (2,939) Net investment hedge - - 1,084 - 1,084 - 1,084 Remeasurement losses on
defined benefit scheme - - - (6,540) (6,540) - (6,540) Taxation on items above - - 137 - 137 - 137 Total comprehensive (loss) / income for the period - - (1,718) 872 (846) - (846) Transactions with owners recorded directly in equity: - Share based payments - - - 26 26 - 26 Balance at 31 March 2021 3,671 7,359 5,333 (8,426) 7,937 (26) 7,911 ========= ========== ================ ========= ========== ================ ========================= Condensed consolidated statement of cash flows Six Six months months Year ended ended ended 30 30 September September 31 March 2021 2020 2021 unaudited unaudited audited Notes GBP000 GBP000 GBP000 ---------- ------------- -------- ---- ---- ------ ---------- ---------- ---------- Cash generated from operations 15 2,020 570 11,202 Interest paid (983) (725) (1,782) Tax paid (486) (342) (1,023) Net cash from / (used in) operating activities 551 (497) 8,397 Cash flows from investing activities Proceeds from sale of business, net of cash disposed 693 - 1,250 Proceeds from sale of property, plant and equipment 25 - 21 Interest received 34 57 42 Purchase of property, plant and equipment (3,514) (730) (7,180) Purchase of intangible assets - computer software (15) (80) (139) Net cash used in investing activities (2,777) (753) (6,006) Cash flows from financing activities Drawings on new facilities - 32,221 36,454 Transaction costs associated with the issue of debt - - (380) Repayment of borrowings excluding lease liabilities (2,247) (28,147) (31,666) Receipt of government support loans 7 - 2,589 2,243 Repayment of lease liabilities (866) (905) (1,601) Net cash (used in) / from financing activities (3,113) 5,758 5,050 Net (decrease) / increase in cash and cash equivalents (5,339) 4,508 7,441 Cash and cash equivalents at beginning of period 15,485 8,352 8,352 Effect of exchange rate fluctuations on cash held 248 (153) (308) Cash and cash equivalents at end of period 16 10,394 12,707 15,485 ========== ========== ========== Notes to the accounts Basis of 1. preparation The condensed consolidated half year report for Carclo plc ("Carclo" or "the Group") for the six months ended 30 September 2021 has been prepared on the basis of the accounting policies set out in the audited accounts for the year ended 31 March 2021 and in accordance with the Disclosure and Transparency Rules of the UK Financial Conduct Authority and the requirements of UK adopted International Accounting Standard 34, "Interim Financial Reporting". The financial information is unaudited. The half year report does not constitute financial statements and does not include all 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 2021 which is available either on request from the Company's registered office, Unit 5, Silkwood Court, Ossett, WF5 9TP, or can be downloaded from the corporate website - www.carclo-plc.com. The comparative figures for the financial year ended 31 March 2021 are not the Company's complete 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 18 November 2021. Copies are available from the corporate website. The Group financial statements for the year ended 31 March 2021 were prepared and approved by the Directors in accordance with International Financial Reporting Standards as adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union ("Adopted IFRSs"). Going concern The interim financial statements are prepared on the going concern basis. The Directors have reviewed cash flow and covenant forecasts to cover the twelve-month period from the date of the approval of these condensed interim financial statements considering the Group's available debt facilities and the terms of the arrangements with the Group's bank and the Group pension scheme which were disclosed in Note 1, Basis of Preparation - Going Concern, to the Group's consolidated financial statements for the year ended 31 March 2021. Net debt at 30 September 2021 was GBP28.4 million, rising from GBP27.6 million at 31 March 2021 (30 September 2020: GBP29.4 million) and is forecast to increase over the twelve-month period driven by capital investment and net working capital outflows to support business growth. The Group's financing remains within banking covenants as at 30 September 2021 and the base case forecasts demonstrate that the Group has more than sufficient liquidity and covenant headroom throughout the forecast period. COVID-19 related uncertainty and the resulting supply chain disruption and cost increases continue to impact the Group's markets and geographies and the situation is evolving over time. It is possible that the Group's operations, its supply chains and customer demand could continue to be further impacted, particularly in the US, where labour and material shortage experience has been most acute. Any material manifestation of these or other uncertainties could lead to a breach of the Group's banking covenants. The Directors have reviewed sensitivity testing modelling a range of severe downside scenarios. These sensitivities attempt to incorporate identified risks set out in the Principal Risks and Uncertainties section of this report. Severe downside sensitivities modelled included a range of scenarios modelling the financial effects of loss of business from: discrete sites, an overall fall in gross margin of 1% across the Group, a fall in Group sales of 5% matched by a corresponding fall in cost of sales of the same amount, exchange risk and interest rate risk. These sensitivities attempt to incorporate the risks arising from national and regional impacts of the global pandemic from local lockdowns, impacts on manufacturing and supply chain and other potential increases to direct and indirect costs. The Group has the capacity to take mitigating actions to ensure that the Group remains financially viable, including further reducing operating expenditures as necessary. On this basis, the Directors have determined that it is reasonable to assume that the Group will continue to operate within the facilities available to it and that it will adhere to
the covenant tests to which it is subject throughout the twelve-month period from the date of signing these condensed interim financial statements. As such the Directors have adopted the Going Concern assumption in preparing these interim financial statements. Accounting 2. policies The accounting policies applied in these interim financial statements are the same as those applied in the Group's consolidated financial statements as at, and for the year ended 31 March 2021. Certain new standards, amendments and interpretations to existing standards have been published that are mandatory for the Group's accounting period beginning on 1 April 2021 but they are not expected to have a material effect on the Group's financial statements. Accounting estimates 3. and judgements The preparation of the interim 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 2021 except for the following - Government grants Key judgement At 31 March 2021 management made a key judgement that there was insufficient certainty as to whether conditions attached to the $2.9 million of government loans in support of COVID-19 interruption had been met and therefore the proceeds were presented as loans and borrowings in the consolidated statement of financial position and no associated government grant income was recognised during that period. On 5 May 2021 the Group received confirmation of forgiveness of the loan by the US Small Business Administration, resulting in its conversion from a loan to a grant. Confirmation of forgiveness provides certainty that all conditions attached to the loan have been met. As such, the full GBP2.1 million ($2.9 million) was recognised as income in May 2021. Recognition of deferred tax assets Key judgement Management have exercised judgement over the level of future taxable profits in the UK against which to relieve the Group's deferred tax assets. On this basis management believe it is appropriate to recognise deferred tax assets and at 30 September 2021 UK deferred tax assets of GBP0.9 million have been recognised (31 March 2021: GBPnil). Impairment of assets Key judgement Management have exercised judgement to determine that there are no indicators of impairment for intangible assets at 30 September 2021. 4. Segment reporting The Group is organised into three, separately managed, business segments - Technical Plastics, Aerospace and Central. These are the segments for which summarised management information is presented to the Group's chief operating decision maker (being the Group Executive Committee). The Technical Plastics segment supplies fine tolerance, injection moulded plastic components, which are used in medical, diagnostics, optical and electronic products. This business operates internationally in a fast growing and dynamic market underpinned by rapid technological development. The Aerospace segment supplies systems to the manufacturing and aerospace industries. The Central segment relates to central costs and non-trading companies. The LED Technologies segment presented as a discontinued operation was a leader in the development of high-power LED lighting for the premium automotive industry and was disposed of in the year to 31 March 2020 - see note 5. Transfer pricing between business segments is set on an arm's length basis. Segmental revenues and results shown below are after the elimination of transfers between business segments. Technical Total Plastics Aerospace Central (continuing Discontinued Group (continuing) (continuing) (continuing) operations) operations total GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 ------------------ --- --- ------------ -------- -------- ----- ------------- ------------ ---------- -------------- ------- ---------- ------------- The segment results for the six months ended 30 September 2021 were as follows: Consolidated income statement Total external revenue 56,583 2,089 - 58,672 - 58,672 Expenses (51,799) (1,862) (1,329) (54,990) - (54,990) Underlying operating profit / (loss) 4,784 227 (1,329) 3,682 - 3,682 COVID related US government grant income 2,087 - - 2,087 - 2,087 Operating profit / (loss) before exceptional items 6,871 227 (1,329) 5,769 - 5,769 Exceptional operating items - - - - - - Operating profit / (loss) 6,871 227 (1,329) 5,769 - 5,769 ============ ======== ============= Net finance expense (1,403) - (1,403) Income tax credit 428 - 428 Profit from operating activities after tax 4,794 - 4,794 ========== ======= ============= Profit on disposal of discontinued operations, net of tax - see note 5 - 693 693 Profit for the period 4,794 693 5,487 ========== ======= ============= Technical Total Plastics Aerospace Central (continuing Discontinued Group (continuing) (continuing) (continuing) operations) operations total GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 Consolidated statement of financial position Segment assets 117,433 6,107 510 124,050 - 124,050 Segment liabilities (38,973) (751) (67,235) (106,959) - (106,959) Net assets 78,460 5,356 (66,725) 17,091 - 17,091 ============ ======== ============= ========== ======= ============= Other segmental information Depreciation 2950 114 19 3,083 - 3,083 Amortisation 38 - 60 98 - 98 Disaggregation of revenue Major products/service lines Manufacturing 47,499 2,089 - 49,588 - 49,588
Tooling 9,084 - - 9,084 - 9,084 ------------ 56,583 2,089 - 58,672 - 58,672 ============ ======== ============= ========== ======= ============= Timing of revenue recognition Products transferred at a point in time 47,499 2,089 - 49,588 - 49,588 Products and services transferred over time 9,084 - - 9,084 - 9,084 ------------ 56,583 2,089 - 58,672 - 58,672 ============ ======== ============= ========== ======= ============= Technical Group Plastics Aerospace Central total GBP000 GBP000 GBP000 GBP000 ------------------ --- ------------ -------------- ----- ------------- ------ ---------------- ------ --------------- ------ --------------- The segment results for the six months ended 30 September 2020 were as follows: Consolidated income statement Total external revenue 47,214 2,736 - 49,950 Expenses (43,988) (2,252) (2,181) (48,421) Underlying operating profit / (loss) 3,226 484 (2,181) 1,529 Exceptional operating items (74) (13) (1,216) (1,302) Operating profit / (loss) 3,152 471 (3,397) 227 ============= ================ =============== Net finance expense (1,092) Income tax expense (456) Loss after tax (1,321) =============== Consolidated statement of financial position Segment assets 104,160 6,492 13,323 123,975 Segment liabilities (30,191) (1,049) (105,986) (137,226) Net assets 73,969 5,443 (92,663) (13,251) ============= ================ =============== Other segmental information Depreciation 2,755 133 15 2,903 Amortisation 103 - 41 144 Disaggregation of revenue Major products/service lines Manufacturing 41,086 2,736 - 43,822 Tooling 6,128 - - 6,128 47,214 2,736 - 49,950 ============= ================ =============== =============== Timing of revenue recognition Products transferred at a point in time 41,086 2,736 - 43,822 Products and services transferred over time 6,128 - - 6,128 47,214 2,736 - 49,950 ============= ================ =============== =============== Technical Total Plastics Aerospace Central (continuing Discontinued Group (continuing) (continuing) (continuing) operations) operations total GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 ------------------ ----------------- -------------- ----- ------------- ------ ---------------- ------ --------------- ------ --------------- The segment results for the year ended 31 March 2021 were as follows: Consolidated income statement Total external revenue 102,473 5,091 - 107,564 - 107,564 Expenses (93,256) (4,541) (4,927) (102,724) - (102,724) Underlying operating profit / (loss) 9,217 550 (4,927) 4,840 - 4,840 Exceptional operating Items - - 4,490 4,490 (52) 4,438 Operating profit / (loss) 9,217 550 (437) 9,330 (52) 9,278 ================= ============== ============= Net finance expense (2,659) - (2,659) Income tax expense (457) - (457) Profit from operating activities after tax 6,214 (52) 6,162 Profit on disposal of discontinued operations, net of tax - see note 5 - 1,250 1,250 Profit for the period 6,214 1,198 7,412 ================ =============== =============== Consolidated statement of financial position Segment assets 109,217 6,073 730 116,020 - 116,020 Segment
liabilities (33,951) (832) (73,326) (108,109) - (108,109) Net assets 75,266 5,241 (72,596) 7,911 - 7,911 ================= ============== ============= ================ =============== =============== Other segmental information Depreciation 5,492 250 32 5,774 - 5,774 Amortisation 110 - 96 206 - 206 Disaggregation of revenue Major products/service lines Manufacturing 88,210 5,091 - 93,301 - 93,301 Tooling 14,263 - - 14,263 - 14,263 ----------------- 102,473 5,091 - 107,564 - 107,564 ================= ============== ============= ================ =============== =============== Timing of revenue recognition Products transferred at a point in time 88,210 5,091 - 93,301 - 93,301 Products and services transferred over time 14,263 - - 14,263 - 14,263 ----------------- 102,473 5,091 - 107,564 - 107,564 ================= ============== ============= ================ =============== =============== 5. Discontinued operations Whilst there were no new discontinued operations in the 6 months to 30 September 2021 or in the prior year comparative, on 5 May 2021 and 6 August 2021, proceeds of GBP0.2 million and GBP0.3 million respectively were received from the administrators of Wipac Ltd which was part of the LED Technologies segment that was classified as discontinued in the year to 31 March 2020 (year to 31 March 2021: GBP1.3 million). The proceeds were received by the Group's lending bank, HSBC and used to prepay the Group's term loan. On 28 July 2021, an additional GBP0.2 million was received from the Wipac Ltd administrators in payment of a first and final dividend for the Group's unsecured creditor claim against the company. In accordance with the facility agreement, the first GBP0.1 million was retained by the Group with the balance of GBP0.1 million used to prepay the Group's term loan. No asset was recognised in the results for the year to 31 March 2021 for potential post balance sheet proceeds or dividends, and as such, the full GBP0.7 million has been recognised as exceptional profit on disposal of discontinued operations in the current period . Management does not expect to receive any further proceeds from the administrators of Wipac Ltd. 6. Exceptional items Six months Six months ended ended Year ended 30 September 30 September 31 March 2021 2020 2021 GBP000 GBP000 GBP000 ------------------ --- ------------ -------------- ----- ------------- ------ ---------------- ------ --------------- ------ --------------- Continuing operations Rationalisation costs - (1,302) (1,968) Gain in respect of retirement benefits - - 6,458 Total recognised in operating profit - (1,302) 4,490 Deferred tax credit - see note 9 893 - - 893 (1,302) 4,940 ---------------- --------------- --------------- Discontinued operations Rationalisation costs - - (52) Profit on disposal of discontinued operations - see note 5 693 - 1,250 693 - 1,198 ---------------- --------------- --------------- Exceptional items 693 (1,302) 5,688 ================ =============== =============== There have been no exceptional items recognised in operating profit in the period to 30 September 2021. The turnover and cost impacts of the COVID-19 pandemic are so pervasive and difficult to identify that they cannot be readily separated and quantified from the ongoing trading of the Group. As a result, consistent with the results reported in the financial statements for the year ended 31 March 2021, neither COVID-19 related costs nor credits arising from government assistance have been presented as exceptional items in the condensed consolidated income statement for the six months to 30 September 2021. A GBP0.9 million deferred tax credit upon the re-recognition of UK deferred tax assets has been treated as exceptional. The profit on disposal of discontinued operations of GBP0.7 million comprises proceeds received from the administrators of Wipac Ltd which was part of the LED Technologies segment which was classified as discontinued in the year ended 31 March 2021. The GBP1.3 million received in the year ended 31 March 2021 was all in respect to proceeds. The 31 March 2021 gain in respect to retirement benefits is a past service credit for the impact of introducing a Bridging Pension Option, partly offset by a past service cost relating to GMP equalisation. Government support for 7. COVID-19 During the period the Group has utilised governmental support in its operating locations to mitigate the impact of COVID-19. Support has been in the form of grants, loans and deferral of tax payments. Six months ended Six months ended Year ended 30 September 30 September 31 March 2021 2020 2021 GBP000 GBP000 GBP000 ------------------ --- ------------ -------------- ----- ------------- -------------------- ------------------- ------------------- The governmental support utilised during the period was: Grants - used to offset labour and variable costs, included within operating profit 2,153 615 747 Loans - presented in loans and borrowings - 2,589 2,104
Payment deferrals - presented in trade and other payables - 705 68 In April 2020, the Group received a loan under the Payback Protection Program, underwritten by the US government in support of COVID-19 for $2.9 million, presented as loans and borrowings in the prior period and year end comparatives. On 5 May 2021, notice of forgiveness of the loan was received from the Small Business Administration, resulting in its conversion from a loan to a grant and therefore its release to the condensed consolidated income statement. In the 6 months to 30 September 2021 the full amount has been recognised within operating profit in the income statement as a credit to off-set labour and variable COVID-19 related costs incurred to date. The credit recognised in respect to the COVID-19 related government grant has been presented separately on the face of the condensed consolidated income statement for the 6 months to 30 September 2021 for clarity. Net finance 8. expense Six months ended Six months ended Year ended 30 September 30 September 31 March 2021 2020 2021 GBP000 GBP000 GBP000 ------------------ --- ------------ -------------- ----- ------------- -------------------- ------------------- ------------------- The expense recognised in the condensed consolidated income statement comprises: Interest receivable on cash and cash deposits 34 57 42 Interest payable on bank loans and overdrafts (816) (635) (1,559) Lease interest (165) (89) (210) Other interest (92) (1) (90) Net interest on the net defined benefit liability (364) (424) (842) Net finance expense (1,403) (1,092) (2,659) -------------------- ------------------- ------------------- 9. Income tax expense Six months Six months ended ended Year ended 30 September 30 September 31 March 2021 2020 2021 GBP000 GBP000 GBP000 ------------------- ----------- ----------------------- ------------- ------------- ------ ----------- ---------------- -------------- --------------- --------- -------------------- The credit / (expense) recognised in the condensed consolidated income statement comprises: Continuing operations Current tax expense on ordinary activities (465) (563) (293) Deferred tax credit / (expense) on ordinary activities - 107 (164) Exceptional deferred tax credit - recognition of deferred tax assets 893 - - Total income tax credit / (expense) recognised in the condensed consolidated income statement 428 (456) (457) ---------------- --------------- -------------------- The half year tax credit represents -8.5% of statutory profit before tax (2021: -52.7%) based on the estimated average effective tax rate on ordinary activities for the full year. This rate includes a deferred tax credit of GBP0.9 million which has been recognised in the six months ended 30 September 2021 upon the recognition of GBP0.9 million deferred tax assets in respect of UK losses and capital allowances. The half year underlying effective tax rate, after excluding the deferred tax credit of GBP0.9 million, amounts to 20.4% of underlying profit before tax, exceptional items and COVID related US government grant income (2021: 104.3%). The Group's underlying effective tax rate is higher than the underlying UK tax rate of 19.0% (H1 2021: 19.0%) mainly because the Group is earning a higher proportion of its profits in higher tax jurisdictions. Deferred tax assets and liabilities at 30 September 2021 have been calculated on the rates substantively enacted at the balance sheet date. A change to the main UK corporation tax rate, set out in the Finance Bill 2021 was substantively enacted on 24 May 2021 with the main rate of corporation tax to become 25% from 1 April 2023. 10. Earnings per share The calculation of basic earnings per share is based on the profit / (loss) attributable to equity holders of the parent company divided by the weighted average number of ordinary shares outstanding during the period. The calculation of diluted earnings per share is based on profit / (loss) attributable to equity holders of the parent company divided by the weighted average number of ordinary shares outstanding during the period (adjusted for dilutive options). The following details the result and average number of shares used in calculating the basic and diluted earnings per share: Six months ended Six months ended Year ended 30 September 30 September 31 March 2021 2020 2021 GBP000 GBP000 GBP000 ------------------- ----------- ----------------------- ------------- ------------- ------ ------------------------- ------ ----------------------- --------------------------- Profit / (loss) after tax but before profit on discontinued operations 4,794 (1,321) 6,214 Profit / (loss) attributable to non-controlling interests - - - Profit / (loss) attributable to ordinary shareholders from continuing operations 4,794 (1,321) 6,214 Profit on discontinued operations, net of tax 693 - 1,198 Profit / (loss) after tax, attributable to equity holders of the parent 5,487 (1,321) 7,412
========================= ======================= =========================== Six months ended Six months ended Year ended 30 September 30 September 31 March 2021 2020 2021 Shares Shares Shares ------------------- ----------- ----------------------- ------------- ------------- ------ ------------------------- ------ ----------------------- --------------------------- Weighted average number of ordinary shares in the period 73,419,193 73,419,193 73,419,193 Effect of share options in issue 15,974 15,974 15,974 Weighted average number of ordinary shares (diluted) in the period 73,435,167 73,435,167 73,435,167 ========================= ======================= In addition to the above, the Company also calculates an earnings per share based on underlying profit as the Board believe this provides a more useful comparison of business trends and performance. Underlying profit is defined as profit before impairments, rationalisation costs, one-off retirement benefit effects, exceptional bad debts, business closure costs, litigation costs, other separately disclosed one-off items 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 ended Year ended 30 September 30 September 31 March 2021 2020 2021 GBP000 GBP000 GBP000 ------------------- ----------- ----------------------- ------------- ------------- ------ ------------------------- ------ ----------------------- --------------------------- Profit / (loss) after tax, attributable to equity holders of the parent 5,487 (1,321) 7,412 Continuing operations: Exceptional - rationalisation and restructuring costs, net of tax - 1,302 1,968 Exceptional - gain in respect of retirement benefits, net of tax - - (6,458) COVID related US government grant income, net of tax (2,087) - - Exceptional - recognition of UK deferred tax assets (893) - - Discontinued operations: Exceptional - rationalisation and restructuring costs, net of tax - - 52 Exceptional - gain on disposal of discontinued operations, net of tax (693) - (1,250) Underlying profit / (loss) attributable to equity holders of the parent 1,814 (19) 1,724 ========================= ======================= =========================== Underlying profit / (loss) attributable to equity holders of the parent 1,814 (19) 1,724 COVID related US government grant income, net of tax 2,087 - - Profit / (loss) after tax but before exceptional items, attributable to equity holders of the parent 3,901 (19) 1,724 ========================= ======================= =========================== Underlying operating profit - continuing operations 3,682 1,529 4,840 Finance revenue - continuing operations 34 57 42 Finance expense - continuing operations (1,437) (1,149) (2,701) Income tax credit / (expense) - continuing operations 428 (456) (457) Exceptional recognition of UK deferred tax assets - continuing operations (893) - - Underlying profit / (loss) attributable to equity holders of the parent - continuing operations 1,814 (19) 1,724 ========================= ======================= =========================== Underlying profit / (loss) attributable to equity holders of the parent - continuing operations 1,814 (19) 1,724 COVID related US government grant income, net of tax 2,087 - - Profit / (loss) after tax but before exceptional items - continuing operations 3,901 (19) 1,724 ========================= ======================= =========================== The following table summarises the earnings per share figures based on the above data: Six months ended Six months ended Year ended 30 September 30 September 31 March 2021 2020 2021
Pence Pence Pence ------------------- ----------- ----------------------- ------------- ------------- ------ ------------------------- ------ ----------------------- --------------------------- Basic earnings / (loss) per share - continuing operations 6.5 (1.8) 8.5 Basic earnings / (loss) per share - discontinued operations 0.9 - 1.6 Basic earnings / (loss) per share 7.5 (1.8) 10.1 ------------------------- ----------------------- --------------------------- Diluted earnings / (loss) per share - continuing operations 6.5 (1.8) 8.5 Diluted earnings / (loss) per share - discontinued operations 0.9 - 1.6 Diluted earnings / (loss) per share 7.5 (1.8) 10.1 ------------------------- ----------------------- --------------------------- Underlying earnings / (loss) per share - basic - continuing operations 2.5 (0.0) 2.4 Underlying earnings / (loss) per share - basic - discontinued operations - - - Underlying earnings / (loss) per share - basic 2.5 (0.0) 2.4 ------------------------- ----------------------- --------------------------- Underlying earnings / (loss) per share - diluted - continuing operations 2.5 (0.0) 2.4 Underlying earnings / (loss) per share - diluted - discontinued operations - - - Underlying earnings / (loss) per share - diluted 2.5 (0.0) 2.4 ------------------------- ----------------------- --------------------------- Earnings / (loss) per share before exceptional items - basic - continuing operations 5.3 (0.0) 2.4 Earnings / (loss) per share before exceptional items - basic - discontinued operations - - - Earnings / (loss) per share before exceptional items - basic 5.3 (0.0) 2.4 ------------------------- ----------------------- --------------------------- Earnings / (loss) per share before exceptional items - diluted - continuing operations 5.3 (0.0) 2.4 Earnings / (loss) per share before exceptional items - diluted - discontinued operations - - - Earnings / (loss) per share before exceptional items - diluted 5.3 (0.0) 2.4 ------------------------- ----------------------- --------------------------- 11. Dividends paid and proposed No dividends were paid in the period or the comparative periods. Under the terms of the restructuring agreement, the Group is not permitted to make a dividend payment to shareholders up to the period ending July 2023. 12. Intangible assets The movements in the carrying value of intangible assets are summarised as follows: Six months ended Six months ended Year ended 30 September 30 September 31 March 2021 2020 2021 GBP000 GBP000 GBP000 ------------------------ ------ ----------------------- -------- ------------------ ------ ----------------------------- --------------------------- --------------------------- Net book value at the start of the period 21,848 22,880 22,880 Additions 15 80 139 Disposals - - (5) Amortisation (98) (144) (206) Effect of movements in foreign exchange 449 47 (960) Net book value at the end of the period 22,214 22,863 21,848 ============================= =========================== =========================== Included within intangible assets is goodwill of GBP21.5 million (30 September 2020 - GBP22.0 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 2021, the carrying value of goodwill was supported by value-in-use calculations. There has been no indication of subsequent impairment in the current financial period. Intangible assets also include customer-related intangibles of GBP0.3 million (30 September 2020: GBP0.3 million) and computer software of GBP0.4 million (30 September 2020: GBP0.5 million). Property, plant and 13. equipment The movements in the carrying value of property plant and equipment are summarised as follows: Six months Six months Year ended ended ended 30 31 September 30 September March 2021 2020 2021
GBP000 GBP000 GBP000 -------------- ----- ---- ---- ---- ---------- -------------- ---------- Net book value at the start of the period 43,218 40,395 40,395 Additions 2,952 2,701 10,374 Depreciation (3,083) (2,903) (5,774) Disposals - - (193) Impairment - - 13 Effect of movements in foreign exchange 545 (66) (1,597) Net book value at the end of the period 43,632 40,127 43,218 ========== ============== ========== Right-of-use assets Right-of-use assets related to lease agreements are presented within property, plant and equipment above. The movements are summarised as follows: Six months Six months Year ended ended ended 30 31 September 30 September March 2021 2020 2021 GBP000 GBP000 GBP000 ---------- -------------- ---------- Net book value at the start of the period 6,988 5,119 5,119 Depreciation (823) (741) (1,582) Additions 196 385 3,769 Derecognition of right-of-use assets - - (148) Effect of movements in foreign exchange 90 (9) (170) Net book value at the end of the period 6,451 4,754 6,988 ========== ============== ========== 14. Retirement benefit obligations The Group operates a defined benefit UK pension scheme which provides pensions based on service and final pay. Outside of the UK, retirement benefits are determined according to local practice and funded accordingly. The amounts recognised in the condensed consolidated statement of financial position in respect of the defined benefit scheme were as follows: Six months Six months Year ended ended ended 30 September 30 September 31 March 2021 2020 2021 GBP000 GBP000 GBP000 --------------- -------------------- ----------- --------- Present value of funded obligations (203,198) (237,839) (204,654) Fair value of scheme assets 169,791 179,718 167,379 Recognised liability for defined benefit obligations (33,407) (58,121) (37,275) --------------- -------------------- --------- Six months ended Six months ended Year ended 30 September 30 September 31 March Movement in the net liability for defined benefit obligations recognised in the condensed consolidated statement of financial position: 2021 2020 2021 GBP000 GBP000 GBP000 --------------- -------------------- ----------- --------- Net liability for defined benefit obligations at the start of the period (37,275) (37,620) (37,620) Contributions paid 2,050 1,067 2,834 Net credit / (expense) recognised in the condensed consolidated income statement (939) (424) 4,052 Remeasurement (losses) / gains recognised in other comprehensive income 2,757 (21,144) (6,541) Net liability for defined benefit obligations at the end of the period (33,407) (58,121) (37,275) --------------- -------------------- --------- Six months Year ended Six months ended ended 30 September 30 September 31 March 2021 2020 2021 Movements in the fair value of Scheme assets: GBP000 GBP000 GBP000 --------------- -------------------- ----------- --------- Fair value of Scheme assets at the start of the period 167,379 172,766 172,766 Interest income 1,646 1,957 3,888 Return / (loss) on Scheme assets excluding interest income 4,667 8,285 (988) Contributions by employer 2,050 1,879 2,834 Benefit payments (5,376) (4,357) (9,557) Expenses paid (575) (812) (1,564) Fair value of Scheme assets at the end of the year 169,791 179,718 167,379 --------------- -------------------- --------- Actual return on Scheme assets 6,313 10,242 2,900 --------------- -------------------- --------- Six months ended Six months ended Year ended 30 September 30 September 31 March 2021 2020 2021 Movements in the present value of
defined benefit obligations: GBP000 GBP000 GBP000 --------------- -------------------- ----------- --------- Defined benefit obligation at the start of the period 204,654 210,386 210,386 Interest expense 2,010 2,381 4,730 Actuarial gains due to changes in demographic assumptions - - (6,727) Actuarial losses due to changes in financial assumptions 1,910 29,429 12,280 Benefit payments (5,376) (4,357) (9,557) Past service credit - - (6,458) Defined benefit obligation at the end of the period 203,198 237,839 204,654 --------------- -------------------- --------- 30 September 30 September 31 March 2021 2020 2021 The principal actuarial assumptions at the balance sheet date (expressed as weighted averages) were: Discount rate at period end 2.00% 1.50% 2.00% Inflation (RPI) (non-pensioner) 3.45% 3.10% 3.25% Inflation (CPI) (non-pensioner) 2.95% 2.60% 2.75% Allowance for revaluation of deferred pensions of RPI or 5% p.a. if less 3.45% 3.10% 3.25% Allowance for revaluation of deferred pensions of CPI or 5% p.a. if less 2.95% 2.60% 2.75% Allowance for pension in payment increases of RPI or 5% p.a. if less 3.35% 3.00% 3.15% Allowance for pension in payment increases of CPI or 5% p.a. if less 2.40% 3.00% 2.30% Allowance for pension in payment increases of RPI or 5% p.a. if less, minimum 3% p.a. 3.75% 3.10% 3.65% Allowance for pension in payment increases of RPI or 5% p.a. if less, minimum 4% p.a. 4.25% 4.00% 4.20% Life expectancy years years years Male (current age 45) 19.9 20.6 19.9 Male (current age 65) 19.0 19.6 19.0 Female (current age 45) 22.2 22,6 22.2 Female (current age 65) 21.0 21.3 21.0 --------------- -------------------- ------------------ Cash generated from 15. operations Six months Six months ended ended Year ended 30 30 September September 31 March 2021 2020 2021 GBP000 GBP000 GBP000 ------------------ ---- ---- ---- ----- ---- ----------- --- --------------- ----------- ------- ---------------------- Profit / (loss) for the period - continuing operations 4,794 (1,321) 6,214 Profit for the period - discontinued operations 693 - 1,198 5,487 (1,321) 7,412 Adjustments for - Pension scheme contributions net of administration costs settled by the Company (1,787) (993) (2,179) Pension scheme administration costs settled by the Scheme 285 455 910 Depreciation charge 3,083 2,903 5,774 Amortisation of intangible assets 98 144 206 Exceptional gain in respect of retirement benefits - - (6,458) COVID related US government grant income (2,104) - - (Profit) on business disposal (693) - (1,250) (Profit) / loss on disposal of other plant and equipment (25) - 10 Loss on disposal of intangible assets - - 5 Cash flow relating to provision for site closure costs - (5) (23) Share based payment charge 24 93 1 Financial income (34) (57) (42) Financial expense 1,437 1,149 2,701 Taxation (credit) / expense (428) 456 457 Operating cash flow before changes in working capital 5,343 2,824 7,524 Changes in working capital (Increase) / decrease in inventories (3,534) 233 768 Increase in contract assets (3,233) (2,095) (1,492) (Increase) / decrease in trade and other receivables (3,920) 107 (308) Increase / (decrease) in trade and other payables 5,037 (3,195) 864 Increase in contract liabilities 2,327 2,696 3,846 --------------- ----------- ---------------------- Cash generated from operations 2,020 570 11,202 =============== =========== ====================== Cash and cash 16. deposits
As at As at As at 30 30 September September 31 March 2021 2020 2021 GBP000 GBP000 GBP000 ------------------ ---- ---- ---- ----- ---- ----------- --- --------------- ----------- ------- ---------------------- Cash and cash deposits 10,394 23,379 15,485 Bank overdrafts - (10,672) - 10,394 12,707 15,485 =============== =========== ====================== The Group has a net UK multi-currency overdraft facility with a GBPnil net limit and a GBP12.5 million gross limit agreed as part of the refinancing arrangement signed 14 August 2020. At 30 September 2021, Carclo plc's overdraft of GBP3.9 million (31 March 2021: GBP4.6 million) has been recognised within cash and cash deposits when consolidated. 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 ended ended Year ended 30 30 September September 31 March 2021 2020 2021 GBP000 GBP000 GBP000 ------------------ ---- ---- ---- ----- ---- ----------- --- --------------- ----------- ------- ---------------------- Net (decrease) / increase in cash and cash equivalents (5,339) 4,508 7,441 Net repayment of / (drawings on) term loans and other loans 2,247 (4,074) (4,492) Net forgiveness / (receipt) of government support loans 2,104 (2,589) (2,243) Net repayment of / (drawing on) lease liabilities 670 905 (2,020) (318) (1,250) (1,314) Effect of exchange rate fluctuations on net debt (457) (751) 1,075 (775) (2,001) (239) Net debt at start of period (27,596) (27,357) (27,357) Net debt at end of period (28,371) (29,358) (27,596) =============== =========== Net debt comprises - As at As at As at 30 30 September September 31 March 2021 2020 2021 GBP000 GBP000 GBP000 ------------------ ---- ---- ---- ----- ---- ----------- --- --------------- ----------- ------- ---------------------- Cash and cash deposits 10,394 23,379 15,485 Bank overdrafts - (10,672) - Term loan (29,893) - (31,812) Government COVID-19 support loans - (2,589) (2,104) Revolving credit facility (2,000) (34,504) (2,000) Lease liabilities (6,758) (4,943) (7,055) Other loans (114) (29) (110) Net debt (28,371) (29,358) (27,596) =============== =========== On 14 August 2020 the Group concluded a restructuring with the Company's bank, HSBC. The debt facilities currently available to the Group comprise a term loan of GBP30.1 million (31 March 2021: GBP32.1 million), of which a further GBP1.4 million (31 March 2021: GBP3.0 million) will be amortised by 30 September 2022 and a GBP3.5m revolving credit facility maturing on 31 July 2023. 18. Financial instruments The fair value 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 Number of shares GBP000 ------------------ ---- ---- ---- ----- ---- ----------- --- --------------- ----------- ------- ---------------------- Ordinary shares of 5 pence each Issued and fully paid at 30 September 2020, 31 March 2021 and 30 September 2021 73,419,193 3,671 =========== ====================== 20. Related parties Identity of related parties The Company has a related party relationship with its subsidiaries, its Directors and executive officers and the Group pension scheme. There are no transactions that are required to be disclosed in relation to the Group's 60% dormant subsidiary Platform Diagnostics Limited. There have been no changes in related parties in the period to 30th September 2021. Transactions with key management personnel Key management personnel are considered to be the executive directors of the Group. Full details of directors' remuneration are disclosed in the Group's annual report. In the six months ended 30 September 2021, remuneration to current and former directors amounted to GBP0.219 million (six months ended 30 September 2020 - GBP0.350 million). On 5 August 2021 P White, the Group's Chief Financial Officer was granted 386,778 share options under the terms of the Carclo plc 2017 Performance Share Plan. The options will vest at the end of a three-year period depending on the achievement of performance targets set out in the LTIP and are then subject to a further two-year holding period. The awards take the form of nil cost options, being an option under the LTIP with a nil exercise price. Share price at date of award was 41.6 pence and fair value at date of award totalled GBP0.118 million. On 30 June 2021, N Sanders the Group's Chief Executive Officer and P White purchased 95,656 and 19,136 shares respectively in Carclo plc at market price of 51.8 pence per share. Group pension scheme A third-party professional firm is engaged to administer the Group pension scheme (the Carclo
Group Pension Scheme). The associated investment costs are borne by the scheme in full. It has been agreed with the trustees of the pension scheme that, under the terms of the recovery plan, the scheme would bear its own administration costs. Contributions of GBP0.292 million per month have been made during the six months to 30 September 2021, incorporating both deficit recovery contributions and scheme expenses including PPF levy. A further payment of GBP0.3 million has also been made during the period being part of the GBP0.750 million agreed as payable between 30 June 2021 and September 2022 under the schedule of contributions. Carclo incurred administration costs of GBP0.575 million during the period which has been charged to the consolidated income statement, GBPnil have been presented as exceptional, (six months to 30 September 2020: GBP0.8 million, of which GBP0.3 million was presented as exceptional). Of the administration costs, GBP0.285 million was paid directly by the scheme (six months to 30 September 2020: GBP0.455 million). The total deficit reduction contributions and administration costs paid during the period was GBP2.1 million (six months to 30 September 2020: GBP1.4 million). Post balance sheet 21. events There are no events that have occurred since the period end that require disclosure in the report. 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. Independent review report
Introduction
We have been engaged by Carclo plc ("the Company") to review the financial information for the six months ended 30 September 2021 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 consolidated cash flow statement and related notes. We have read the other information contained in the interim report and considered whether it contains any apparent misstatements or material inconsistencies with the financial information.
This report is made solely to the Company in accordance with International Standard on Review Engagements (UK and Ireland) 2410 issued by the Auditing Practices Board and our Engagement Letter. Our work has been undertaken so that we might state to the Company those matters we are required to state to them in an independent review 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 formed.
Respective responsibilities of directors and auditor
The interim report, including the financial information contained therein, is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the interim report in accordance with UK adopted International Accounting Standard 34, 'Interim Financial Reporting' and the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority.
Our responsibility is to express to the Company a conclusion on the consolidated financial information in the interim 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 United Kingdom. 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 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 consolidated financial information in the interim report does not give a true and fair view of the financial position of the Company as at 30 September 2021 and of its financial performance and its cash flows for the six months then ended, in accordance with UK adopted International Accounting Standard 34, 'Interim Financial Reporting' and the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority.
Signed:
Mazars LLP
Chartered Accountants
Tower Bridge House
St Katharine's Way
London
E1W 1DD
Date: 18 November 2021
Notes:
(a) The maintenance and integrity of the Carclo plc web site is the responsibility of the directors; the work carried out by us does not involve consideration of these matters and, accordingly, we accept no responsibility for any changes that may have occurred to the interim report since it was initially presented on the web site.
(b) Legislation in the United Kingdom governing the preparation and dissemination of financial information may differ from legislation in other jurisdictions.
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