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. This information is provided by RNS The company news service from the London Stock Exchange

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Carclo (CAR)
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