Final Results
Carclo plc
12 June 2007
For immediate release 12 June 2007
Carclo plc
('Carclo')
The financial highlights for the year to 31 March 2007 are summarised below:
• Underlying operating profits from continuing operations, before
rationalisation and exceptional bad debt charges, increased to
£4.8 million (2006 - £4.5 million).
• Profit before tax was £7.2 million (2006 - £1.7 million) with earnings per
share of 12.1 pence compared to 1.2 pence per share last year.
• Recommended final dividend increased by 50% to 1.2 pence per share.
• Conductive Inkjet Technology continues to make progress and has recently
won its first firm orders.
• Business mix continues to improve with further growth in the medical and
specialist sectors.
• Cash generation was excellent with debt reducing by £8.0 million to £12.8
million in the period.
• Four year pension funding plan agreed with the schemes' trustees.
• New five year bank facilities agreed.
Commenting on the results, Christopher Ross, chairman said:
'We have seen an encouraging start to the new financial year and trading is in
line with the board's expectations.
The performance of the group in the year just ended confirms that our strategy
is clearly working and the increase in the final dividend reflects the board's
confidence that this progress is set to continue. We expect to see further
growth in our medical and optical operations and to make further advances
towards achieving our margin targets in Technical Plastics.
The group's much stronger balance sheet, its new medium term loan facilities and
the reduced burden of pensions funding enables the group to continue its
strategy of investing in new technology together with exciting opportunities in
the medical and diagnostic field.'
Enquiries:
Carclo plc
Ian Williamson, Chief Executive
Robert Brooksbank, Finance Director 01924 268040
Weber Shandwick Financial 020 7067 0700
Richard Hews
James White
Georgia Dempsey
Notes to editors
• Carclo plc is a global supplier of technical plastic components. It is a
public company whose shares are quoted on the London Stock Exchange.
• 75% of sales are derived from the supply of fine tolerance, injection moulded
plastic components, which are used in medical, automotive, telecom and
electronics products. This business, Carclo Technical Plastics, operates
internationally in a fast growing and dynamic market underpinned by rapid
technological development.
• 25% of sales are derived from the supply of manufactured systems to the
automotive and aerospace industries.
• Carclo's strategy is to grow the specialist businesses, expand in low cost
regions and to invest in new technologies and proprietary know-how.
Chairman's statement
Overview
The year to 31 March 2007 was one of excellent progress for Carclo:
• Underlying operating profits from continuing operations improved, led by
strong growth in Techinical plastics
• Business mix continues to improve with further growth in the medical and
specialist sectors
• Cash generation was excellent
• Investment in new technologies continues with Conductive Inkjet Technology,
in particular, winning its first firm orders
• Four year pension funding plan agreed with the trustees
• New bank facilities agreed
• Final dividend increased by 50% to 1.2 pence per share
Underlying operating profits from continuing operations, before exceptional
charges, increased by 5.6% to £4.8 million. The Technical Plastics division
performed well, increasing its profits by 38.6% on sales up 8.0% at £58.7
million. This reflects the benefit of excellent growth in the medical and
specialist markets coupled with good cost control within the division.
Precision Products, as expected, performed less well with profits falling to
£2.3 million (2006 -
£3.0 million) on reduced sales.
In aggregate, profits before tax benefited from net exceptional gains of £2.6
million (2006 - a net exceptional charge of £2.4 million). As a consequence,
profits before tax were up sharply at £7.2 million (2006 - £1.7 million).
Earnings per ordinary share increased to 12.1 pence (2006 - 1.2 pence).
Cash flow and funding
The group has transformed its balance sheet over the past four years with
significant proceeds from business and property disposals helping to reduce debt
by £22.1 million to £12.8 million at 31 March 2007. This has been achieved
whilst continuing to invest in our existing businesses and new technologies.
The group's net assets have doubled since 31 March 2003 to £38.4 million,
allowing for changes in pension accounting during the period.
We now have very good visibility of our financial position going forward with
new five year bank facilities and a four year group pension recovery plan agreed
with the schemes' trustees.
Dividend
Having achieved greater surety of the group's financial position, the board is
now pleased to be in a position to recommend a 50% increase in the final
dividend to 1.2 pence per share (2006 - 0.8 pence per share). This gives a total
dividend for the year of 1.6 pence per share (2006 - 1.2 pence per share).
Subject to shareholder approval, dividend payments will be posted on 13
September 2007 to shareholders on the register at close of business on 10 August
2007. The shares will be traded excluding the right to the dividend from 8
August 2007.
Employees
Employee numbers reduced by 167 in the year to 1,072. This was mainly due to the
disposal of CTP Gills Cables Limited in May 2006 which caused 141 employees to
leave the group.
I would like to thank all those employed by us in the year under review for
their significant contribution.
Outlook
We have seen an encouraging start to the new financial year and trading is in
line with the board's expectations.
The performance of the group in the year just ended confirms that our strategy
is clearly working and the increase in the final dividend reflects the board's
confidence that this progress is set to continue. We expect to see further
growth in our medical and optical operations and to make further advances
towards achieving our margin targets in Technical Plastics.
The group's much stronger balance sheet, its new medium term loan facilities and
the reduced burden of pensions funding enables the group to continue its
strategy of investing in new technology together with exciting opportunities in
the medical and diagnostic field.
Christopher Ross
12 June 2007
Chief executive's review
Strategic overview
For over two years either the chairman's statement or my review has included the
words 'our strategy is clear and it is working'.
Our strategy is:
• to grow our specialist businesses including medical plastics and LED optics
Medical diagnostics continues to be the fastest growing part of our global
plastics business. Our specialist optics business continues to benefit from the
growth of LED lighting and this year we have refocused our automotive lighting
business in this high technology area. As expected, medical and optical sales
were almost half of Carclo Technical Plastics sales in 2006/07.
• to continue our expansion in low cost regions
We continued to benefit from sales growth in the Czech Republic and China. A new
clean assembly facility is being commissioned in China and we have acquired
additional land adjacent to our Czech Republic factory for a medical clean room
facility. We continue to review our options for investment in India.
• to increase our investment in new technologies and proprietary know-how
The commercialisation of Conductive Inkjet Technology ('CIT') continues to gain
momentum. A number of MetalJet systems have now been sold which will generate
increasing revenues from the sale of inks and consumables. CIT is being applied
across an increasingly broad range of applications. We have increased our
investment in microfluidics and surface coatings and are working with a number
of customers in the medical diagnostics field. We have also invested, alongside
BBI Holdings Plc, in Platform Diagnostics Limited which has novel technology
directly relevant to our core manufacturing competency.
The success of this strategy can be measured in increased profits, improving
operating margins and a strengthened balance sheet. The results for the year
just ended illustrate this progress as discussed in the operating review below
and in the finance director's review. I am very confident that there is more to
come from this strategy.
Operating review
+----------------------+-----------------------+-----------------------+
| |Carclo Technical |Carclo Precision |
| |Plastics |Products |
| | 2007 2006 | 2007 2006 |
+----------------------+--------------+--------+------------+----------+
|Turnover - continuing | | | | |
| operations | £58.7m| £54.3m| £19.6m| £22.6m|
| | | | | |
|Underlying operating | | | | |
| profit * | £3.5m| £2.6 | £2.3m| £3.0m|
| | | | | |
|Net assets | £44.5m| £42.9m| £7.6m| £6.7m|
| | | | | |
|Underlying operating | | | | |
| margin | 6.0%| 4.7%| 11.6%| 13.2%|
| | | | | |
|Return on capital | | | | |
| employed * | 8.0%| 6.0%| 29.8%| 44.7%|
| | | | | |
|Average number of | | | | |
| employees | 877| 929| 198| 227|
+----------------------+--------------+--------+------------+----------+
* before rationalisation costs and exceptional bad debts
Carclo Technical Plastics
Underlying operating profits in Carclo Technical Plastics increased by 38.6% to
£3.5 million on sales of £58.7 million (2006 - £54.3 million). The underlying
operating margin increased from 4.7% last year to 6.0%. These results were
achieved in the face of adverse movements in currency, particularly the US
dollar/sterling exchange rate. After a number of years of declining sales
revenue the return to sales growth was particularly pleasing. All of our global
operations delivered good sales growth in the second half of the year.
Our sales to medical and optical markets continued to increase and are
approaching half of the divisional turnover. Combined with continuing good
control of costs and capacity, the higher value added associated with the
medical business delivered much improved operating margins. This better mix of
business has further to go and will continue to deliver improved margins in line
with our clearly stated objective of returning the division to double-digit
operating margins.
A number of new medical programmes have been won during the year which will
continue to drive the growth of the division. We also enjoyed another year of
very strong growth in our LED optics business. This is a proprietary range of
optics, sold under the COIL brand, which are used in a myriad of applications to
adapt and direct the light output of high power LEDs.
We continue to upgrade our global manufacturing facilities with a particular
emphasis on clean room moulding. Three of our five sites in the USA and two of
our four UK sites now operate in clean environments. In China, we are just
commissioning a new clean room assembly area in the existing facility, while our
adjacent facility is being prepared for further expansion. The first programme
in this facility will be respiratory products for a USA based medical customer.
We have purchased land adjacent to our Czech Republic factory to develop a clean
room facility for a European based medical customer.
We have established a subsidiary in India. This company will, in the first
instance, provide technical and procurement support for our Technical Plastics
operations. Our plans to invest in an Indian manufacturing facility remain under
review.
Carclo Precision Products
Underlying operating profits at Carclo Precision Products declined by 23.8% to
£2.3 million on sales down from £22.6 million to £19.6 million. The decline was
all within the automotive business.
Sales and profits at the smaller aerospace and engineering businesses within
Precision Products were ahead of the prior year and aerospace, in particular,
benefited from good demand and promising new contract wins.
We expected automotive sales to reduce in the year as certain high value
lighting contracts reached the end of model life. What was unexpected was a mix
shift in its communication business away from high value multiband antennas to
simpler radio only antennas. First half performance was disappointing. We have
reduced costs in the business and have focused our technical resources on LED
lighting, both for the supercar OEM market and, under the WIPAC brand, for the
aftermarket. Operating margins recovered well in the second half and we are
confident of a much better performance from automotive in the current year. We
are seeing a significant inflow of new lighting contracts, almost all based on
state of the art LED technology.
Technology investments
We continue to apply our research and development resources in areas of
technology where we can improve our added value and, where possible, obtain a
proprietary position in a process or product.
Some of our earlier investments are now delivering tangible sales success. The
proprietary range of COIL branded LED optics is a good example. We are in the
process of commissioning our first proprietary inkjet coating technology cell to
hard coat the tachometer lens for a premium automotive application in
partnership with a first tier automotive supplier. Production quality parts for
full quality approval and production sign off are scheduled to be submitted
during June. The development is underpinned by a three year supply agreement
covering both moulding and coating aspects of the project.
The joint project with Stanelco PLC to develop injection moulded capsules for
controlled drug release is making slower progress. Our partners have some
further work to do on material formulation before we can obtain the final
regulatory approval for the application in veterinary markets.
An interesting new development, which we have just patented, is an adaptation of
our thick film coating technology to apply dessicants to the surface of
injection moulded components. Dessicants keep drugs and reagents dry in medical
devices.
For the coming year, the main thrust of our technology investment will be
focused around two development companies, CIT and Platform Diagnostics Limited.
Conductive Inkjet Technology ('CIT')
CIT has made good progress in commercialising its innovative printing
technologies. The first MetalJet 5000 has been installed at Carclo's Slough
facility for the production of a range of security sensors. This facility will
also be used for further production contracts for a novel pressure sensitive
dressing and for a touch sensitive keypad. Two MetalJet 4000 machines have been
sold, one into the aerospace industry for production of shielding materials and
a second into Asia for development of manufacturing processes for flat screen
displays. The very high volume MetalJet 6000 system continues to attract a lot
of interest from customers active in the development of RFID tags. We are in the
process of producing production volume samples to three of the leading players
in this emerging market and working to optimise the quality and yield of the CIT
process in this application.
Excellent technical progress has been achieved on two new high volume
applications for the CIT process. With Cambridge Display Technology Limited
('CDT') (Nasdaq: OLED) we have produced a full size flexible backplane
demonstrator based on CDT's pOLED colour display design. Line widths of five
microns have been demonstrated. We are also working with a manufacturer of touch
sensitive screens to apply this invisible line technology.
We have developed a capability to print directly onto the surface of silicon and
to plate the silicon with silver and nickel. This has opened up an exciting
opportunity in photovoltaics where, potentially, the CIT process could both
improve the efficiency of the solar cell and permit thinner wafers to be
manufactured. For this application to succeed we need to achieve a good ohmic
contact between the surface metal laid down by CIT and the semiconductor
junction. Independent of this development, a MetalJet 2000 pilot system has been
sold to one of Europe's leading solar cell producers for solar cell research and
development.
There have been a number of developments within the field of medical sensors.
The furthest advanced has come out of a collaboration with Capsant
Neurotechnologies Limited where prototype manufacturing of electrode arrays as
bio-sensors or bio-electronic interfaces for recording neural or cardiac
electrophysiological activities has been undertaken.
In the last year, Carclo invested £1.2 million in further developing CIT's
technology and at the end of the year we owned 72% of the company.
Platform Diagnostics Limited ('Platform')
A key capability of Carclo Technical Plastics is very fine tolerance injection
moulding combined with control of surface properties. We have been working on a
number of projects with customers and with collaborators aimed at the emerging
technology for 'lab on a chip' Point Of Care ('POC') diagnostic devices. In most
cases we are unable to disclose the customers or describe the devices which are
under development on grounds of confidentiality.
We are therefore pleased with the opportunity to invest alongside BBI Holdings
Plc ('BBI') in Platform. This opportunity combines our expertise in
microfluidics, surface coating and optics with BBI's reagent capability to bring
to market a new generation of low cost, rapid POC diagnostic tests. Platform's
unique intellectual property is called Capillary Agglutination Technology, and
is based on particle immunoagglutination in the presence of analyte affecting
the flow of liquid within a microcapillary. In simple terms, a very fine channel
is moulded on the surface of a plastic slide and reagents are incorporated
within the channel. When blood flows through the channel then, if a particular
condition is present, the flow is slowed down. The delay is measured, for
example optically, and gives a quantitative diagnosis.
Over the next two years, Carclo and BBI will develop the Platform technologies.
Carclo has preferential manufacturing rights and BBI has preferential marketing
rights for any devices which are developed. Carclo is expecting to invest a
total of £0.5 million for a 25% stake in Platform. BBI will invest on equivalent
terms.
This area of POC diagnostic testing is forecast to show dramatic growth over the
next few years and our investment in Platform will help position Carclo to
participate fully in this growth opportunity.
Ian Williamson
12 June 2007
Finance director's review
Financial strategy
The group's balance sheet has strengthened considerably over the last four years
benefiting from business and property disposals which helped reduce debt by
£22.1 million over that period. Over the same period the group has comfortably
met its capital expenditure requirements and has made significant investments in
new technology and also paid £8.4 million of additional pension contributions.
The gross pension deficit has reduced by approximately £23.0 million to £12.1
million since 31 March 2003 due in part to the additional contributions made by
the group. Group net assets are £38.4 million, double their level at 31 March
2003 on an equivalent basis.
The recent group re-financing will provide assured medium term loan facilities
of £20 million for the next five years. The funding plan agreed with the pension
scheme trustees, and subject to Pension Regulator approval, will provide
certainty as to the cash flow impact of the schemes deficit on the group over
the next four years. The improved financial position has enabled the group to
re-base its dividend to be more in line with underlying earnings whilst
providing scope for a more progressive dividend policy. The stronger group
balance sheet will also enable the group to invest more in two main areas.
Firstly, additional capital expenditure can be focused on the expansion of our
medical business and on increasing moulding capacity in low cost regions.
Secondly, the group is able to continue investing in new technology and new
investment opportunities in the medical and diagnostic markets.
Financial summary
2007 2006
£million £million
---------------------------------------------------------------------------
Turnover - continuing 78.0 76.6
---------------------
Divisional operating profit 5.8 5.5
Central costs (1.0) (1.0)
---------------------
Underlying operating profit from continuing
operations 4.8 4.5
Underlying operating profit from discontinued
operations - 0.5
Exceptional items 2.6 (2.4)
Net interest (0.2) (0.9)
----------------------
Profit before tax 7.2 1.7
Taxation (0.7) -
Profit / (loss) on disposal of discontinued
operations 0.2 (1.1)
----------------------
Profit attributable to ordinary shareholders 6.7 0.6
Ordinary dividend (0.7) (0.7)
----------------------
Surplus / (deficit) for the year 6.0 (0.1)
----------------------
Divisional operating margin from continuing
operations 7.4% 7.2%
Basic earnings per share 12.1p 1.2p
Underlying earnings per share 7.6p 7.8p
Turnover from continuing operations increased to £78.0 million (2006 - £76.6
million). An encouraging increase in business in the group's medical and optical
operations more than offset the lower volumes in its UK automotive business and
a £0.3 million impact of the weaker US dollar on its reported turnover in its US
operations. The group generated underlying operating profit from continuing
operations of £4.8 million (2006 - £4.5 million) of which 61.0% (2006 - 46.2%)
was generated by its Technical Plastics division before central costs.
Profit before tax was £7.2 million (2006 - £1.7 million). This includes a profit
of £3.7 million (2006 - loss of £0.2 million) from the disposal of surplus group
properties as well as a £1.1 million (2006 - £0.5 million) pensions financing
net credit based on the provisions of IAS19 'Employee Benefits'. Rationalisation
and site closure costs amounted to £1.2 million (2006 - £1.8 million).
The financial results of the group's discontinued operations have been disclosed
separately in the consolidated income statement. These results reflect six weeks
of trading by the group's CTP Gills Cables Limited business, the disposal of
which was completed on 12 May 2006.
At the year end group net debt was £12.8 million (2006 - £20.8 million). The
significant reduction in debt was due primarily to the receipt of £7.2 million,
net of costs, from the disposal of three surplus properties during the year. Net
bank interest payable was £1.3 million (2006 - £1.4 million), with the higher
bank interest rates offsetting the benefit of reduced levels of borrowing.
Financing costs are expected to reduce during the 2007/08 financial year.
The group tax charge for the year is £0.7 million (2006 - nil) representing a
9.9% tax charge, although no UK tax payments have been made during the year. The
group continues to benefit from prior year tax losses and group tax planning and
it is likely to be quite a number of years before the group faces a full tax
charge.
The profit attributable to ordinary shareholders was £6.7 million (2006 - £0.6
million). The board is recommending an increased final dividend for the year of
1.2 pence per ordinary share.
Exceptional items
During the year the group disposed of three group properties with a combined net
book value of £3.5 million which were surplus to requirements. In aggregate
these disposals have generated proceeds of £7.2 million, net of costs, and a
book profit of £3.7 million. The group's Plover Mills site at Huddersfield,
which was retained on the disposal of its ECC Card Clothing business, was sold
for £5.1 million, realising a profit of £3.6 million. The group's Sandy Lane
site at Worksop was sold for £1.5 million, the site's book value, after the
tenants exercised their option to purchase. Finally, the group's factory site at
Eaglescliffe, Stockton on Tees was disposed of for £0.6 million realising a
profit of £0.1 million after costs. The remaining surplus property portfolio has
a net book value of £1.3 million of which the £0.8 million property retained
following the disposal of CTP Gills Cables Limited is being actively marketed.
Rationalisation costs for the year totalled £0.6 million and these relate mainly
to the re-organisation of our UK automotive business which was undertaken in
order to match the cost base to the reduced demand experienced during the year.
Site closure costs in relation to continuing operations amounted to £0.6
million. These costs were incurred on the closure of our small general moulding
plant located at Horsham.
Net debt and gearing
2007 2006
£million £million
-----------------------------------------------------------------------
Underlying cash flow 6.0 9.9
Interest and tax (1.5) (1.4)
Capital expenditure (2.3) (2.3)
--------------------
Free cash flow 2.2 6.2
Pension payments above regular cost (2.0) (3.4)
Other non recurring 6.2 (0.8)
Issue of share capital 0.3 3.0
Equity dividends (0.7) (0.6)
---------------------
Cash flow available for corporate
activities 6.0 4.4
Development expenditure (1.2) (0.9)
Acquisitions and disposals 2.1 2.7
Exchange movement 1.1 (1.1)
---------------------
Decrease in net debt in year 8.0 5.1
---------------------
Net debt comprises interest bearing loans and borrowings less cash and cash
deposits.
Net borrowings reduced by £8.0 million in the year to £12.8 million (2006 -
£20.8 million). This represents gearing of 27.3% (2006 - 48.4%) and is after
excluding the pension deficit, net of attributable deferred tax, of £8.4 million
in determining the group's net assets.
Underlying cash flow from operations was £6.0 million (2006 - £9.9 million).
This reduction in underlying cash flow is mainly due to an increase in group
working capital of £2.1 million which reflects the step up in business activity
particularly during the latter part of the financial year. Group capital
expenditure was £2.3 million (2006 - £2.4 million) and this represented 78.8% of
the total group depreciation charge (2006 - 63.3%). Free cash flow was
£2.2 million (2006 - £6.2 million). Pension contributions of £2.0 million
(2006 - £3.4 million) in addition to the regular cash contributions of
£0.6 million (2006 - £0.8 million) were made during the year.
Other non recurring cash flows of £6.2 million included the proceeds from the
sale of three group properties offset by the cash cost of the re-organisation of
the group's automotive business and the closure cost of the group's Horsham
plant.
Development expenditure of £1.2 million was incurred during the year (2006 -
£0.9 million) and this amount, which was capitalised, related to the continued
funding of Conductive Inkjet Technology.
Proceeds from the disposal of businesses were £2.1 million (2006 - £2.7
million).
The re-translation of the group's US dollar denominated borrowings resulted in a
£1.1 million reduction in net debt due to the weakening of US dollar during the
financial year.
Financing
Towards the end of the financial year the group agreed new medium term loan
facilities totalling £20.0 million with two of its leading banks on terms
comparable with those of its expiring facilities. In addition to the five year
multi currency revolving credit facilities, the banks have agreed to extend total
overdraft facilities of £7.0 million as well as other ancillaries. The group
achieved the bank security release criteria in respect of the previous bank
facilities as at 31 March 2007. As part of the new refinancing the group has
agreed to provide the banks with new security in the form of a fixed charge over
the trade debtor book and a floating charge over the other current assets of its
three main UK trading companies. This represents a significant reduction in the
amount of security held by the lending banks over the assets of the group.
Pensions
Under IAS19 'Employee Benefits' the operating charge to income for the year was
£0.6 million (2006 - £0.8 million). The IAS19 financing credit, which reflects
the excess of the expected return on scheme assets over the interest charge on
the pension scheme liability, was £1.1 million (2006 - £0.5 million). An
additional pension curtailment charge of £0.5 million has been charged against
the profit on disposal of discontinued operations. This charge represents the
additional pensions liability incurred as a result of CTP Gills Cables Limited
ceasing to participate in the group pension schemes.
Under IAS19 the aggregate pension scheme deficit must be reflected in the group
balance sheet. As at 31 March 2007 the IAS 19 deficit was £8.4 million, net of
deferred tax (2006 - £15.7 million). The significant reduction in the schemes'
deficit has been achieved despite a further tightening of the schemes' mortality
assumptions.
The actual cash contributions into the schemes amounted to £2.6 million (2006 -
£4.1 million). As well as the regular cash contributions of £0.6 million, an MFR
deficit correction payment of £1.6 million was made to the schemes. In addition,
an extra contribution of £0.4 million was made into the schemes on the disposal
of CTP Gills Cables Limited.
During the year the group requested the trustees to advance the triennial
valuation of the main scheme so that the group was in a position to negotiate a
new funding plan with the trustees based on the most up to date actuarial
valuation. The group has now agreed a four year funding plan with the trustees,
which has been submitted to the Pensions Regulator. Under this plan additional
annual contributions of £0.9 million will be paid into the main scheme for the
next four years. In addition, the group has agreed to provide the main scheme
with security over the majority of its UK property assets which are estimated to
have a market value of approximately £10 million.
Conductive Inkjet Technology ('CIT')
The total investment by CIT during the year was £1.2 million (2006 - £1.3
million) and these development costs have been capitalised on the group balance
sheet. The intangible assets in the group balance sheet which relate to CIT now
total £10.2 million, represented by £0.9 million of goodwill and £9.3 million
reflecting the fair value of patents and development costs. These development
costs will be amortised under the group's policy once the various projects to
which the development costs relate achieve commercial fruition.
During the year, £0.6 million was raised by CIT from the group via an issue of
additional equity in which the minority shareholder did not participate.
Consequently, the group has increased its equity holding in CIT to 72%.
Business disposals
On 12 May 2006 the group completed its disposal of the business and assets of
CTP Gills Cables Limited, its UK control cable manufacturing business. The group
also sold its 50% shareholding in its Indian joint venture, CTP Suprajit
Automotive Private Ltd. Consideration of £1.3 million, net of costs, was
received on completion and the group also benefited from a £0.4 million loan
repayment. The trade debtor book of the business was retained and an additional
£1.2 million was realised in cash. The group anticipates receiving further
deferred consideration of up to £0.2 million in May 2008. The payment of this
deferred consideration will depend on the performance of the UK business during
the two years from the date of completion to 31 March 2008. A profit of £0.3
million on disposal of discontinued operations has been booked in respect of the
sale of these businesses and this profit is net of transaction costs and a £0.5
million pensions curtailment charge.
The first tranche of deferred consideration of £0.6 million was received from
the prior year disposal of the group's ECC Card Clothing business. The group
expects to receive a further £1.0 million during the current financial year.
Group reporting
In order to comply with the provisions of the EU Transparency Directive, the
group will revise this year's reporting timetable and the half year report for
the six months ending 30 September 2007 will be published on 27 November 2007.
The group will also be publishing Interim Management Statements in line with the
new requirements. As a consequence the group will no longer be issuing a trading
statement at the annual general meeting.
This new Directive permits companies to cease issuing a preliminary announcement
of the group's full year results and also allows companies to discontinue
posting copies of the half year results to shareholders. This is counter to
Carclo's stated policy of keeping shareholders promptly appraised of the group's
performance. Accordingly we will continue to issue a preliminary announcement
and post copies of the half year results to shareholders.
Robert Brooksbank
12 June 2007
Consolidated income statement
year ended 31 March
2007 2006
--------------------------------------- --------------------------------
Continuing Discontinued Continuing Discontinued
operations operations Total operations operations Total
£000 £000 £000 £000 £000 £000
----------------------------------------------------------- --------------------------------
Revenue 78,030 1,025 79,055 76,617 11,389 88,006
----------------------------------------------------------------------------------------------
Underlying operating profit
Operating profit
before exceptional
costs 4,797 22 4,819 4,542 478 5,020
- rationalisation
costs (593) - (593) (799) (165) (964)
- exceptional bad
debts - - - (375) - (375)
----------------------------------------------------------------
After exceptional
costs 4,204 22 4,226 3,368 313 3,681
----------------------------------------------------------------
Operating profit 4,204 22 4,226 3,368 313 3,681
Site closure costs (561) - (561) (615) (254) (869)
Profit / (loss) on
sale of properties 3,722 - 3,722 (237) - (237)
------------------------------ ----------------------------
Profit before 7,365 22 7,387 2,516 59 2,575
financing costs
Finance revenue 355 7 362 383 - 383
Finance expense (1,691) - (1,691) (1,728) (50) (1,778)
Other finance revenue
- retirement benefits 9,996 - 9,996 9,041 - 9,041
Other finance expense
- retirement benefits (8,865) - (8,865) (8,522) - (8,522)
------------------------------ ----------------------------
Profit before tax 7,160 29 7,189 1,690 9 1,699
Income tax expense (713) (2) (715) - - -
------------------------------ ---------------------------
Profit after tax but
before profit / (loss)
on discontinued operations 6,447 27 6,474 1,690 9 1,699
Profit on disposal of
discontinued operation,
net of tax - 342 342 - - -
(Loss) on disposal of
discontinued operation,
net of tax - (173) (173) - (1,082) (1,082)
------------------------------ ----------------------------
Profit / (loss) after tax 6,447 196 6,643 1,690 (1,073) 617
------------------------------ ----------------------------
Attributable to:
Equity holders of the parent 6,504 196 6,700 1,725 (1,073) 652
Minority interest (57) - (57) (35) - (35)
-------------------------------- ----------------------------
Profit / (loss) for the
period 6,447 196 6,643 1,690 (1,073) 617
-------------------------------- ----------------------------
Earnings per ordinary
share
Basic 11.7 p 0.4 p 12.1 p 3.2 p (2.0) p 1.2 p
Diluted 11.5 p 0.3 p 11.8 p 3.2 p (2.0) p 1.2 p
Dividend per ordinary
share
Arising in respect of
the year 1.6 p 1.2 p
Paid in the year 1.2 p 1.2 p
Consolidated statement of recognised income and expense
year ended 31 March
2007 2006
£000 £000
Foreign exchange translation differences (643) 749
Net gain / (loss) on hedge of net investment in foreign
subsidiary 22 (16)
Actuarial gains on defined benefit schemes 7,651 593
Taxation on items taken directly to equity (2,296) (178)
---------------------
Income and expense recognised directly in equity 4,734 1,148
Profit for the period 6,643 617
---------------------
Total recognised income and expense for the period 11,377 1,765
---------------------
Attributable to:
Equity holders of the parent 11,434 1,800
Minority interest (57) (35)
---------------------
Total recognised income and expense for the period 11,377 1,765
---------------------
Consolidated balance sheet
as at 31 March
2007 2006
£000 £000
---------------------------------------------------------------------------------------
Assets
Intangible assets 25,365 24,868
Property, plant and equipment 24,585 29,899
Investments 52 11
Investment in jointly controlled entities - -
Deferred tax assets 5,092 8,681
Other receivables 150 1,100
---------------------------
Total non current assets 55,244 64,559
---------------------------
Inventories 8,227 7,634
Trade and other receivables 18,243 16,736
Cash and cash deposits 2,875 11,258
Assets classified as held for sale 842 2,078
---------------------------
Total current assets 30,187 37,706
---------------------------
Total assets 85,431 102,265
---------------------------
Liabilities
Interest bearing loans and borrowings 4,877 26,765
Deferred tax liabilities 3,642 3,851
Retirement benefit obligations 12,061 22,383
---------------------------
Total non current liabilities 20,580 52,999
---------------------------
Trade and other payables 13,691 13,027
Current tax liabilities 1,694 2,353
Dividends payable 222 220
Interest bearing loans and borrowings 10,803 5,249
Liabilities associated with assets classified as held for
sale - 1,223
---------------------------
Total current liabilities 26,410 22,072
---------------------------
---------------------------
Total liabilities 46,990 75,071
---------------------------
---------------------------
Net assets 38,441 27,194
---------------------------
---------------------------
Equity
Ordinary share capital issued 2,815 2,789
Share premium 3,002 2,768
Other reserves 3,670 4,160
Translation reserve 858 1,479
Retained earnings 26,900 14,833
Total equity attributable to equity holders of the parent 37,245 26,029
Minority interest 1,196 1,165
---------------------------
Total equity 38,441 27,194
---------------------------
---------------------------
Consolidated statement of cash flows
year ended 31 March
2007 2006
£000 £000
Cash flows from operating activities
Profit before financing costs and
taxation 7,387 2,575
Adjustments for:
Pension fund contributions in excess of
service costs (1,990) (3,364)
Depreciation charge 2,977 3,734
Amortisation of intangible assets 103 63
Exceptional bad debt provision - 375
(Profit) / loss on disposal of property (3,722) 237
(Profit) / loss on disposal of other
plant and equipment (94) 32
Impairment of assets on site closures - 124
Cash flows on closures less than / (in
excess of) charge in the income
statement 127 (190)
Share based payment charge / (credit) 196 (6)
Operating profit before changes in ---------------------------
working capital 4,984 3,580
Changes in working capital (excluding the effects of
acquisition and disposal of subsidiaries)
(Increase) / decrease in inventories (744) 898
(Increase) / decrease in trade and
other receivables (1,859) 3,121
Increase / (decrease) in trade and
other payables 552 (2,932)
---------------------------
Cash generated from operations 2,933 4,667
Interest paid (1,728) (1,766)
Tax paid (154) -
---------------------------
Net cash from operating activities 1,051 2,901
Cash flows from investing activities
Proceeds from sale of property, plant
and equipment 7,314 1,073
Interest received 370 395
Disposal of subsidiary, net of cash
disposed of 1,261 5,201
Proceeds from sale of investments 2 -
Receipt of deferred consideration, net
of related costs 403 -
Acquisition of subsidiary, net of cash
acquired - (1,503)
Acquisition of share in jointly
controlled entities - (129)
Acquisition of property, plant and
equipment (2,283) (2,271)
Acquisition of intangible assets -
computer software (42) (64)
Acquisition of trade investment (43) (1)
Development expenditure (1,180) (861)
Repayment of loan by / (loan to)
jointly controlled entities 390 (833)
---------------------------
Net cash from investing activities 6,192 1,007
Cash flows from financing activities
Proceeds from the issue of share
capital 260 2,963
Repayment of borrowings (12,395) (4,548)
Payment of finance lease liabilities (8) (17)
Dividends paid (661) (644)
---------------------------
Net cash from financing activities (12,804) (2,246)
Net (decrease) / increase in cash and
cash equivalents (5,561) 1,662
Cash and cash equivalents at beginning
of period 6,734 5,014
Effect of exchange rate fluctuations on
cash held (182) 58
Cash and cash equivalents at end of ---------------------------
period 991 6,734
---------------------------
---------------------------
Cash and cash equivalents comprise:
Cash and cash deposits 2,875 11,258
Bank overdrafts (1,884) (4,524)
---------------------------
991 6,734
---------------------------
---------------------------
Notes
Segment reporting
At 31 March 2007, the group is organised into two main business segments:
Technical Plastics and Precision Products.
The primary segment reporting format is determined to be business segments as
the group's risks and returns are affected predominantly by differences in the
products and services provided. Secondary information is reported
geographically. The operating business segments are organised and managed
separately.
The Technical Plastics segment supplies fine tolerance, injection moulded
plastic components, which are used in medical, telecom and electronics products.
This business operates internationally in a fast growing and dynamic market
underpinned by rapid technological development.
The Precision Products segment supplies systems to the automotive and aerospace
industries.
Discontinued operations relate to the disposal of the group's automotive control
cables business on 12 May 2006 and the ECC Card Clothing business on 22 June
2005.
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 group's geographical segments are based on the location of the group's
assets. Sales to external customers disclosed in geographical segments are based
on the geographical location of its customers.
Analysis by business segment
The segment results for the year ended 31 March 2007 were as follows:
Technical Precision Unallocated Continuing Group
Plastics Products expenses Eliminations total Discontinued total
£000 £000 £000 £000 £000 £000 £000
--------------------------------------------------------------------------------------------------
Income statement
Total revenue 58,664 19,595 - (229) 78,030 1,025 79,055
Less inter-segment
revenue (201) (28) - 229 - - -
-----------------------------------------------------------------------------
Total external
revenue 58,463 19,567 - - 78,030 1,025 79,055
Expenses (54,922) (17,300) (1,011) - (73,233) (1,003) (74,236)
-----------------------------------------------------------------------------
Underlying operating
profit 3,541 2,267 (1,011) - 4,797 22 4,819
Rationalisation
costs (153) (239) (201) - (593) - (593)
-----------------------------------------------------------------------------
Operating profit 3,388 2,028 (1,212) - 4,204 22 4,226
Site closure costs (561) - - - (561) - (561)
Profit on sale of
properties - - 3,722 - 3,722 - 3,722
-----------------------------------------------------------------------------
Profit before
financing costs 2,827 2,028 2,510 - 7,365 22 7,387
--------------------------------------------
Net finance costs (205) 7 (198)
Tax (713) (2) (715)
---------------------------------
Profit for the
period 6,447 27 6,474
---------------------------------
Balance sheet
Investments - - 52 - 52 - 52
Property, plant and
equipment 18,526 5,396 663 - 24,585 - 24,585
Intangible assets 15,061 21 10,283 - 25,365 - 25,365
Other segment assets 18,228 5,975 7,557 (48) 31,712 - 31,712
Assets classified as
held for sale - - 842 - 842 - 842
Cash and cash
deposits 2,425 22 428 - 2,875 - 2,875
--------------------------------------------------------------------------
Total assets 54,240 11,414 19,825 (48) 85,431 - 85,431
Trade and other
payables 8,974 3,141 1,624 (48) 13,691 - 13,691
Dividends payable - - 222 - 222 - 222
Tax liabilities (1,496) 21 6,811 - 5,336 - 5,336
Interest bearing
loans and borrowings 2,242 639 12,799 - 15,680 - 15,680
Retirement benefit
obligations - - 12,061 - 12,061 - 12,061
---------------------------------------------------------------------------
Total liabilities 9,720 3,801 33,517 (48) 46,990 - 46,990
---------------------------------------------------------------------------
Net assets 44,520 7,613 (13,692) - 38,441 - 38,441
---------------------------------------------------------------------------
Other segmental
information
Capital expenditure
on property, plant
and equipment 1,766 460 119 - 2,345 - 2,345
Capital expenditure
on computer software 27 10 5 - 42 - 42
Depreciation 2,390 462 92 - 2,944 33 2,977
Amortisation of
computer software 62 11 30 - 103 - 103
Analysis by business segment
The segment results for the year ended 31 March 2006 were as follows:
Technical Precision Unallocated Continuing Group
Plastics Products expenses Eliminations total Discontinued total
£000 £000 £000 £000 £000 £000 £000
---------------------------------------------------------------------------------------------------
Income statement
Total revenue 54,328 22,586 - (297) 76,617 11,389 88,006
Less inter-segment
revenue (297) - - 297 - - -
-----------------------------------------------------------------------------
Total external
revenue 54,031 22,586 - - 76,617 11,389 88,006
Expenses (51,477) (19,609) (989) - (72,075) (10,911) (82,986)
-----------------------------------------------------------------------------
Underlying operating
profit 2,554 2,977 (989) - 4,542 478 5,020
Rationalisation costs (538) (144) (117) - (799) (165) (964)
Exceptional bad debts (375) - - - (375) - (375)
-----------------------------------------------------------------------------
Operating profit 1,641 2,833 (1,106) - 3,368 313 3,681
Site closure costs (615) - - - (615) (254) (869)
Loss on sale of
properties - - (237) - (237) - (237)
-----------------------------------------------------------------------------
Profit before
financing costs 1,026 2,833 (1,343) - 2,516 59 2,575
--------------------------------------------
Net finance costs (826) (50) (876)
Tax - - -
-----------------------------
Profit for the period 1,690 9 1,699
-----------------------------
Balance sheet
Investments - - 11 - 11 - 11
Property, plant and
equipment 20,188 5,340 4,371 - 29,899 - 29,899
Intangible assets 15,807 23 9,038 - 24,868 - 24,868
Other segment assets 18,965 5,453 9,733 - 34,151 - 34,151
Assets classified as
held for sale - - 447 - 447 1,631 2,078
Cash and cash
deposits 2,588 667 8,003 - 11,258 - 11,258
------------------------------------------------------------------------------
Total assets 57,548 11,483 31,603 - 100,634 1,631 102,265
Trade and other
payables 7,784 4,136 1,107 - 13,027 - 13,027
Dividends payable - - 220 - 220 - 220
Tax liabilities 1,191 238 4,775 - 6,204 - 6,204
Interest bearing
loans and borrowings 5,675 443 25,896 - 32,014 - 32,014
Retirement benefit
obligations - - 22,383 - 22,383 - 22,383
Liabilities in
respect of assets
held for sale - - - - - 1,223 1,223
------------------------------------------------------------------------------
Total liabilities 14,650 4,817 54,381 - 73,848 1,223 75,071
------------------------------------------------------------------------------
Net assets 42,898 6,666 (22,778) - 26,786 408 27,194
------------------------------------------------------------------------------
Other segmental
information
Capital expenditure
on property, plant
and equipment 1,836 338 105 - 2,279 85 2,364
Capital expenditure
on computer software 16 25 23 - 64 - 64
Depreciation 2,517 566 117 - 3,200 534 3,734
Amortisation of
computer software 58 2 3 - 63 - 63
Analysis by geographical segment by destination
The analysis of revenue by geographical destination for the year ended 31 March
2007 was as follows:
United North Rest of Group
Kingdom America world total
£000 £000 £000 £000
-----------------------------------------------------------------------------------------
Total external revenue 34,000 17,990 27,065 79,055
Less revenue attributable to
discontinued operations (477) (96) (452) (1,025)
--------------------------------------
Revenue from continuing operations 33,523 17,894 26,613 78,030
--------------------------------------
The analysis of revenue by geographical destination for the year ended 31 March
2006 was as follows:
United North Rest of Group
Kingdom America world total
£000 £000 £000 £000
-----------------------------------------------------------------------------------------
Total external revenue 38,214 17,761 32,031 88,006
Less revenue attributable to
discontinued operations (3,950) (1,439) (6,000) (11,389)
--------------------------------------
Revenue from continuing operations 34,264 16,322 26,031 76,617
--------------------------------------
Analysis by geographical segment by origin
The business operates in three main geographical regions - the United Kingdom,
North America and in lower cost regions such as the Czech Republic and China.
The analysis of results by geographical origin for the year ended 31 March 2007
was as follows:
United North Rest of Group
Kingdom America world total
£000 £000 £000 £000
---------------------------------------------------------------------------------------
Revenue
Total external revenue 58,719 14,667 5,669 79,055
Less revenue attributable to discontinued
operations (1,025) - - (1,025)
--------------------------------------
Revenue from continuing operations 57,694 14,667 5,669 78,030
--------------------------------------
Other segment information
Segment assets 29,371 11,109 11,653 52,133
Unallocated assets (13,692) - - (13,692)
--------------------------------------
Net assets 15,679 11,109 11,653 38,441
--------------------------------------
Capital expenditure on property, plant and
equipment 1,567 497 281 2,345
Capital expenditure on computer software 14 28 - 42
Depreciation 2,158 491 328 2,977
Amortisation of computer software 41 62 - 103
The analysis of results by geographical origin for the year ended 31 March 2006
was as follows:
United North Rest of Group
Kingdom America world total
£000 £000 £000 £000
--------------------------------------------------------------------------------------
Revenue
Total external revenue 67,646 14,565 5,795 88,006
Less revenue attributable to discontinued
operations (9,773) (692) (924) (11,389)
------------------------------------
Revenue from continuing operations 57,873 13,873 4,871 76,617
------------------------------------
Other segment information
Segment assets 28,440 9,810 11,722 49,972
Unallocated assets (22,778) - - (22,778)
------------------------------------
Net assets 5,662 9,810 11,722 27,194
------------------------------------
Capital expenditure on property, plant and
equipment 1,537 515 312 2,364
Capital expenditure on computer software 48 16 - 64
Depreciation 2,711 540 483 3,734
Amortisation of computer software 5 58 - 63
Notes
1. The financial statements set out above do not constitute the company's
statutory accounts for the years ended 31 March 2007 and 31 March 2006, but are
derived from those accounts. Statutory accounts for the year ended 31 March 2006
have been delivered to the Registrar of Companies and those for the year ended
31 March 2007 will be delivered following the company's annual general meeting.
2. The auditors have reported on those accounts; thier report was (i)
unqualified, (ii) did not include a reference to any matters to which the
auditors drew attention by way of emphasis without qualifying their report and
(iii) did not contain a statement under S 237 (2) or S 237 (3) of the Companies
Act 1985.
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