Half Yearly Report

RNS Number : 5068R

Carclo plc

20 November 2012

 



20 November 2012

Carclo plc

("Carclo" or "the group")

Half year results for the six months ended 30 September 2012

Carclo plc, the technology led plastics group, today announces a solid first half performance in line with the board's expectations.

Highlights

·       Conductive Inkjet Technology ("CIT") has made its first production shipment for touch sensors for a low volume smartphone and is in the final stages of production validation for a high volume tablet computer

·      Technical Plastics had lower turnover of £26.4 million (2011 - £28.3 million) as expected due to timing delays on the recognition of sub contract tooling revenues. Underlying operating profits reduced to £1.3 million (2011 - £1.9 million). The second half of the year is expected to be much stronger than the first half of this year

·      LED Technologies benefited from growth in its supercar lighting business and improved manufacturing efficiencies which together resulted in underlying operating profits improving to £0.9 million (2011 - £0.7 million). Turnover of £11.5 million (2011 - £16.3 million) was lower due to the exit from the automotive communication business in 2011

·       Precision Engineering had a strong first half generating underlying operating profits of £0.7 million (2011 - £0.6 million)

·      Carclo Diagnostic Solutions ("CDS") has continued to make good technical progress and there is now significant external interest in the formation of commercial partnerships to exploit this technology

·       July's equity placing raised £12.6 million for the group to use for investment in technology and debt reduction

·       Profit before tax of £1.9 million (2011 - £1.3 million)

·       Basic earnings per share increased to 2.3 pence (2011 - 1.6 pence)

·       Interim dividend increased to 0.80 pence per share (2011 - 0.75 pence)

Commenting on the results, Michael Derbyshire, chairman, said -

"Our businesses continue to win new contracts despite the uncertain global economic environment. We expect a stronger second half trading performance and our core operations remain on track to deliver a satisfactory year. Contract awards throughout our businesses, coupled with further capital investment in infrastructure and technology support our confidence in the future growth of the group.

We are now starting to see the first substantial rewards from the significant investment in CIT and anticipate a good maiden contribution from CIT's touchscreen business in the final quarter and rapid growth thereafter. Our CDS business has also made considerable progress and has attracted a high level of interest from a wide range of potential partners.

The balance sheet has been strengthened by the equity fund-raising and our financing is secure."

Enquiries

Carclo plc	020 7067 0700 (today)
Ian Williamson, chief executive	01924 268040 (thereafter)
Robert Brooksbank, finance director
Weber Shandwick Financial	020 7067 0700
Nick Oborne
Stephanie Badjonat
Robert Cook

A presentation for analysts will be held at 9.30 a.m. on 20 November 2012 at the offices of Weber Shandwick Financial, 2 Waterhouse Square, 140 Holborn, London EC1N 2AE.

Notes to editors

About Carclo

Carclo plc is a technology led plastics group. It is a public company whose shares are quoted on the London Stock Exchange.

Approximately three fifths of revenues are derived from the supply of fine tolerance, injection moulded plastic components, which are used in medical, optical and electronics products. This business, Carclo Technical Plastics, operates internationally in a fast growing and dynamic market underpinned by rapid technological development.

Approximately two fifths of revenues are derived from the supply of specialised precision components to the premium automotive and aerospace industries and LED optics for a wide range of end applications. Carclo is a leader in the development of high power LED lighting for supercars.

Carclo's strategy is to develop new technologies and products to drive future growth. Its investment in Conductive Inkjet Technology is at the heart of the newly emerging market for very low cost printed electronics.

Forward looking statements

Certain statements made in this announcement are forward looking statements. Such statements are based on current expectations and are subject to a number of risks and uncertainties that could cause actual events to differ materially from any expected future events or results referred to in these forward looking statements.

Chairman's statement

Overview                                                                              

Carclo has continued to trade in line with the board's expectations in the first half of the current financial year and the group is expected to generate a stronger second half performance . Conductive Inkjet Technology made the first production shipments for touch sensors in September and is in the final stages of production validation for a high volume tablet computer with volume shipments before the end of the calendar year that will trigger the $10.0 million prepayment from our commercial partner.

In our newly created LED Technologies division the benefits of withdrawing from the volume automotive communications market can be seen in increased margins with further growth in our supercar lighting business. In Precision Engineering our aerospace businesses continue to perform well. Technical Plastics continues to develop its strongposition in the medical diagnostics and electronics sectors. Carclo Diagnostic Solutions continues to make excellent technical and commercial progress.  

Underlying operating profits of £2.2 million were marginally down on the prior year with better performances by LED Technologies and Precision Engineering offsetting an expected reduction in operating profits in Technical Plastics.

The net finance charge of £0.3 million (2011 - net credit of £0.3 million) reflects the reduction in the net IAS 19 pensions financing credit.

The group generated a profit before tax in the six months to 30 September 2012 of £1.9 million (2011 - £1.3 million), with the better result largely due to the £1.2 million charge taken in 2011 in respect of the costs of exiting the volume automotive communication business offset by the reduction in the IAS 19 financing credit. Consequently, basic earnings per ordinary share increased by 43.8% to 2.3 pence.

Financial position

In July we completed an equity placing raising £12.6 million net of costs, and as a result net debt at 30 September was £11.4 million, well below the year-end net debt of £18.0 million and the net debt of £19.0 million a year ago. This represents gearing on assets (excluding the net pension deficit) of 15.2% (2011 - 31.3%). Cash generated from operations was £1.6 million (2011 - £4.9 million) with working capital increasing by £2.2 million (2011 - reduction of £1.0 million) reflecting the build-up of development and tooling work-in-progress. Capital expenditure in the six months to 30 September 2012 increased to £3.8 million (2011 - £1.9 million) as we invested in the new Cambridge facility for CIT and purchased the Technical Plastics facility in Bangalore. Investment in new technologies continued at a high level with £1.7 million (2011 - £1.0 million) invested in development costs at CIT and CDS.

As at 30 September 2012 the total drawings on the group's £20.0 million medium term loan facilities were £17.5 million. These committed facilities run until November 2015. The facilities are competitively priced in the current market, and the group has significant levels of headroom on its main banking covenants. The group also has available overdraft facilities totalling £11.5 million.

The board has declared an increased interim dividend of 0.80 pence per ordinary share. The dividend will be paid on 9 April 2013 to shareholders on the register on 1 March 2013. The shares will trade ex-dividend from 27 February 2013.

Operating review

Technical Plastics

Technical Plastics reported revenues of £26.4 million, down 6.7% on the same period last year. Operating profits, before rationalisation costs, reduced by £0.5 million to £1.3 million. This is mainly due to the timing of profit recognition on new customer funded tooling and development projects and consequently this situation is expected to reverse in the second half.

New business awards, both from existing and new customers, have been better than expected and this provides a driver for future growth in this business. In particular, we expect significant levels of growth to come from our US operations.

We have continued to invest to support the growth of our medical and electronics businesses and have brought forward the planned capacity expansion in the US to accommodate the new contract awards. This will involve a substantial redevelopment of our Latrobe facility in 2013. During the first half of the year we acquired the land and buildings occupied by our operations in Bangalore. This has provided the necessary footprint to service increasing manufacturing volumes today, and an ability to expand further as demand increases.

The effect of some customer specific weakness in schedules should be compensated by new business awards and the profit from development and tooling projects in the second half of the financial year.

LED Technologies

In this financial year we have formed an LED Technologies division to increase our focus on this growing market. This new division combines the LED Optics business previously reported within Technical Plastics and the Wipac supercar lighting business previously reported within Precision Products.

The LED Technologies division generated sales of £11.5 million and operating profits of £0.9 million. Sales in the prior year of £16.3 million and operating profits of £0.7 million are not directly comparable as they include Wipac's high volume automotive communication business which we withdrew from in March 2011. However, the improvement in profitability reflects the success of Wipac's LED based supercar lighting business coupled with the benefits of exiting the lower margin automotive communication business. Wipac has continued to win new supercar lighting programmes and these will generate significant design, development and tooling revenues over the next two years. The LED Optics business has benefited from the change in management and sales have started to increase in the latter part of the period.

Precision Engineering

The aerospace businesses showed good growth over the prior year with turnover of £4.0 million (2011 - £3.6 million) and operating profits of £0.7 million (2011 - £0.6 million). These businesses continue to achieve strong margins and cash generation.

Conductive Inkjet Technology ("CIT")

At CIT there has been an intense focus on the commercialisation of our Fine Line Technology for touch screen applications. The Cambridge pilot line achieved full production validation from our partner in early September, and the first production shipment for a low volume smartphone was achieved at the end of September. Further shipments are underway for this programme. We are in the final stages of production validation for a high volume tablet computer with a major tier 1 customer. A large pre-production batch is in build at the end customer and our schedules show volume shipments commencing before the end of the calendar year. The first production shipment on this programme will trigger the $10.0 million prepayment from our commercial partner.

This is a high volume programme and it will take most of the initial capacity on the Cambridge pilot line. The Colorado production line operated by our partner is expected to achieve full production validation before the end of the year which will immediately double available capacity. In a change of approach by our partner, the Cambridge and Colorado lines will be expanded in tandem. The capacity of the Cambridge line will be increased three-fold by April 2013.

Planning of the new production facility in Cambridge is well underway. The new high speed coating line will be operational early in the new financial year. A second high speed coating line (to be operated as a 'hot' second source by CIT) will be installed in Colorado soon after. This will increase the surge capacity on coated film to 1 billion 3.1" screen equivalents. Further equipment is on order to increase the finished sensor production capacity at Colorado through the balance of 2013.

Engagement with customers is at a high level which gives us confidence that our increasing capacity will be utilised in full. Technical progress throughout the year has enabled CIT touch sensors to have optical performance at least equivalent to Indium Tin Oxide ("ITO") and CIT expects to benefit from significant customer take-up due to its compelling technical advantages; which include edgeless borders, curved surfaces, greater linearity, thinner materials and in the case of larger screens, savings on component cost due to our greater electrical performance.

CIT's other core technologies have continued to progress well and CIT will soon be expanding its product offering within its Printed Electronics business with the addition of further capabilities which will facilitate a more rapid commercialisation of its unique interconnect technology. Our projects on electrodes for Organic Photovoltaics and Organic Lighting have continued and we expect these projects to complete successfully in 2013.

Carclo Diagnostic Solutions ("CDS")

Carclo Diagnostic Solutions was formed to retain and develop ownership of the patents related to the hardware developments made by Carclo in support of Platform Diagnostics Limited. We have continued to make excellent technical progress and have proof of concept devices for the three micropoc families - lite, cat and pro. We are well advanced in discussions with a commercial partner which will see micropoc products launched commercially towards the end of 2013. Further information on these developments will be released upon their completion.

Risks and uncertainties

In the annual report to shareholders in June 2012 we provided a detailed review of the risks faced by the group and how these risks are managed. We continue to face, and proactively manage, the risks and uncertainties in our business and there has been no significant change in the risks faced by the group.

Outlook

Our businesses continue to win new contracts despite the uncertain global economic environment. We expect a stronger second half trading performance and our core operations remain on track to deliver a satisfactory year. Contract awards throughout our businesses, coupled with further capital investment in infrastructure and technology, support our confidence in the future growth of the group.

We are now starting to see the first substantial rewards from the significant investment in CIT and anticipate a good maiden contribution from CIT's touchscreen business in the final quarter and rapid growth thereafter. Our CDS business has also made considerable progress and has attracted a high level of interest from a wide range of potential partners.

The balance sheet has been strengthened by the equity fund-raising and our financing is secure.

Michael Derbyshire

Chairman

Condensed consolidated income statement 

	Six months ended 30 September  2012 unaudited		Six months ended 30 September 2011  unaudited			Year ended  31 March 2012 audited
	Notes	£000		£000		£000
Revenue	4	40,030		46,997		93,267
Underlying operating profit
Operating profit before exceptional items		2,201		2,280		6,645
- rationalisation costs	5	-		(155)		(528)
- exit of Ford volume automotive communication business	5	-		(1,180)		(1,560)
- exceptional credit in respect of retirement benefits		-		-		300
After exceptional items		2,201		945		4,857
Operating profit	4	2,201		945		4,857
Finance revenue	6	4,179		4,932		9,855
Finance expense	6	(4,477)		(4,597)		(9,214)
Profit before tax		1,903		1,280		5,498
Income tax expense	7	(419)		(269)		(856)
Profit after tax but before loss on discontinued operations		1,484		1,011		4,642
Loss on discontinued operations, net of tax	8	(14)		(26)		(19)
Profit after tax		1,470		985		4,623
Attributable to -
Equity holders of the parent		1,471		985		4,637
Non-controlling interests		(1)		-		(14)
		1,470		985		4,623
Earnings per ordinary share	9
Basic - continuing operations		2.3 p		1.6 p		7.5 p
Basic - discontinued operations		0.0 p		0.0 p		0.0 p
Basic - total		2.3 p		1.6 p		7.5 p
Diluted - continuing operations		2.3 p		1.6 p		7.5 p
Diluted - discontinued operations		0.0 p		0.0 p		0.0 p
Diluted - total		2.3 p		1.6 p		7.5 p

Condensed consolidated statement of comprehensive income

	Six months ended 30 September 2012 unaudited		Six months ended 30 September 2011 unaudited			Year ended 31 March 2012 audited
		£000		£000		£000
Profit for the period		1,470		985		4,623
Other comprehensive income -
Foreign exchange translation differences		(845)		151		(546)
Actuarial losses on defined benefit scheme		(1,750)		(12,975)		(16,700)
Taxation on items taken directly to equity		450		3,244		3,459
Other comprehensive income, net of income tax		(2,145)		(9,580)		(13,787)
Total comprehensive income for the period		(675)		(8,595)		(9,164)
Attributable to -
Equity holders of the parent		(674)		(8,595)		(9,150)
Non-controlling interests		(1)		-		(14)
		(675)		(8,595)		(9,164)

Condensed consolidated statement of financial position

	30 September 2012 unaudited							30 September 2011 unaudited		31 March 2012 audited
	Notes					£000		£000		£000
Assets
Intangible assets		11				41,853		37,180		40,827
Property, plant and equipment		12				29,929		29,328		27,983
Investments						6		1,002		6
Deferred tax assets						11,266		9,878		10,818
Total non current assets						83,054		77,388		79,634
Inventories						12,244		12,140		11,704
Trade and other receivables						17,110		17,638		16,754
Cash and cash deposits						10,610		8,491		9,485
Non current assets classified as held for sale				13		350		215		350
Total current assets						40,314		38,484		38,293
Total assets						123,368		115,872		117,927
Liabilities
Interest bearing loans and borrowings						17,539		-		19,135
Deferred tax liabilities						5,948		5,139		5,922
Retirement benefit obligations		14				24,055		21,186		22,597
Total non current liabilities						47,542		26,325		47,654
Trade and other payables						12,955		15,092		14,335
Current tax liabilities						2,138		1,910		2,208
Provisions						-		200		130
Interest bearing loans and borrowings						4,441		27,468		8,326
Total current liabilities						19,534		44,670		24,999
Total liabilities						67,076		70,995		72,653
Net assets						56,292		44,877		45,274
Equity
Ordinary share capital issued					18	3,245		3,089		3,090
Share premium						20,807		8,668		8,296
Other reserves						3,584		3,584		3,584
Translation reserve						3,343		4,885		4,188
Retained earnings						24,206		24,651		25,008
Total equity attributable to equity holders of the parent						55,185		44,877		44,166
Non-controlling interests						1,107		-		1,108
Total equity						56,292		44,877		45,274

Condensed consolidated statement of changes in equity

Attributable to equity holders of the company

								Non-
	Share	Share	Translation	Other		Retained		controlling		Total
	capital	premium	reserve	reserves		earnings	Total	interests		equity
	£000	£000	£000	£000		£000	£000	£000		£000
Current half year period - unaudited
Balance at 1 April 2012	3,090	8,296	4,188		3,584	25,008	44,166		1,108	45,274
Profit for the period	-	-	-	-		1,471	1,471	(1)		1,470
Other comprehensive income -
Foreign exchange translation differences	-	-	(845)	-		-	(845)	-		(845)
Actuarial losses on defined benefit scheme	-	-	-	-		(1,750)	(1,750)	-		(1,750)
Taxation on items above	-	-	-	-		450	450	-		450
Transactions with owners recorded directly in equity -
Share based payments	-	-	-	-		91	91	-		91
Dividends to shareholders	-	-	-	-		(1,070)	(1,070)	-		(1,070)
Exercise of share options	1	19	-	-		-	20	-		20
Issue of shares net of costs	154	12,492	-	-		-	12,646	-		12,646
Proceeds from sale of own shares	-	-	-	-		6	6	-		6
Balance at 30 September 2012	3,245	20,807	3,343	3,584		24,206	55,185	1,107		56,292
Prior half year period - unaudited
Balance at 1 April 2011	3,078	8,189	4,734	3,584		34,746	54,331	-		54,331
Profit for the period	-	-	-	-		985	985	-		985
Other comprehensive income -
Foreign exchange translation differences	-	-	151	-		-	151	-		151
Actuarial losses on defined benefit scheme	-	-	-	-		(12,975)	(12,975)	-		(12,975)
Taxation on items above	-	-	-	-		3,244	3,244	-		3,244
Transactions with owners recorded directly in equity -
Share based payments	-	-	-	-		89	89	-		89
Dividends to shareholders	-	-	-	-		(926)	(926)	-		(926)
Exercise of share options	11	479	-	-		-	490	-		490
Proceeds from sale of own shares	-	-	-	-		19	19	-		19
Performance share plan awards	-	-	-	-		(531)	(531)	-		(531)
Balance at 30 September 2011	3,089	8,668	4,885	3,584		24,651	44,877	-		44,877
Prior year period - audited
Balance at 1 April 2011	3,078	8,189	4,734	3,584		34,746	54,331	-		54,331
										-
Profit for the period	-	-	-	-		4,637	4,637	(14)		4,623
Other comprehensive income -
Foreign exchange translation differences	-	-	(546)	-		-	(546)	-		(546)
Actuarial losses on defined benefit scheme	-	-	-	-		(16,700)	(16,700)	-		(16,700)
Taxation on items above to equity	-	-	-	-		3,459	3,459	-		3,459
Transactions with owners recorded directly in equity -
Share based payments	-	-	-	-		183	183	-		183
Dividends to shareholders	-	-	-	-		(1,390)	(1,390)	-		(1,390)
Exercise of share options	3	41	-	-		-	44	-		44
Proceeds from sale of own shares	-	-	-	-		19	19	-		19
Performance share plan awards	9	66	-	-		(187)	(112)	-		(112)
Acquisition of subsidiary with non-controlling interests	-	-	-	-		-	-	1,122		1,122
Taxation on items recorded directly in equity	-	-	-	-		241	241	-		241
Balance at 31 March 2012	3,090	8,296	4,188	3,584		25,008	44,166	1,108		45,274

Condensed consolidated statement of cash flows

	Six months ended 30 September 2012 unaudited			Six months ended 30 September 2011 unaudited			Year ended 31 March 2012 audited
	Notes		£000	£000			£000
Cash generated from operations		15	1,578		4,864		10,417
Interest paid			(430)		(315)		(620)
Tax paid			(460)		(301)		(734)
Net cash from operating activities			688		4,248		9,063
Cash flows from investing activities
Proceeds from sale of property, plant and equipment			36		46		405
Interest received			11		11		13
Cash flows on discontinued operations			(14)		(26)		(70)
Acquisition of business undertaking, net of cash acquired			-		-		(239)
Acquisition of property, plant and equipment			(3,833)		(1,857)		(4,120)
Acquisition of intangible assets - computer software			(21)		(9)		(66)
Investment in Platform Diagnostics Limited, whilst an associate			-		(12)		(250)
Development expenditure			(1,671)		(987)		(2,567)
Net cash from investing activities			(5,492)		(2,834)		(6,894)
Cash flows from financing activities
Proceeds from issue of share capital net of costs			12,646		-		-
Proceeds from exercise of share options			20		490		44
Proceeds from sale of own shares			6		19		19
Drawings on term loan facilities			350		-		500
Repayment of borrowings			(1,600)		-		-
Cash outflow in respect of performance share plan awards			-		(531)		(112)
Dividends paid			(1,533)		(1,358)		(1,358)
Net cash from financing activities			9,889		(1,380)		(907)
Net increase in cash and cash equivalents			5,085		34		1,262
Cash and cash equivalents at beginning of period			1,159		(100)		(100)
Effect of exchange rate fluctuations on cash held			(75)		103		(3)
Cash and cash equivalents at end of period		16	6,169		37		1,159

Notes on the accounts

1.       Basis of preparation

The condensed consolidated half year report for Carclo plc ("Carclo" or "the group") for the six months ended 30 September 2012 has been prepared on the basis of the accounting policies set out in the audited accounts for the year ended 31 March 2012 and in accordance with the Disclosure and Transparency Rules of the UK Financial Services Authority and the requirements of IAS 34 "Interim Financial Reporting" as adopted by the EU.

The financial information is unaudited, but has been reviewed by the auditors and their report to the company is set out on page 21.

The half year report does not constitute financial statements and does not include all of the information and disclosures required for full annual statements. It should be read in conjunction with the annual report and financial statements for the year ended 31 March 2012 which is available either on request from the company's registered office, Springstone House, PO Box 88, 27 Dewsbury Road, Ossett, WF5 9WS, or can be downloaded from the corporate website - www.carclo-plc.com. 

The comparative figures for the financial year ended 31 March 2012 are not the company's statutory accounts for that financial year.  Those accounts have been reported on by the company's auditors and delivered to the Registrar of Companies.  The report of the auditors was (i) unqualified, (ii) did not include a reference to any matters which the auditors drew attention by way of emphasis without qualifying their report and (iii) did not contain statements under Section 498 (2) of the Companies Act 2006.

The half year report was approved by the board of directors on 20 November 2012 and is being sent to shareholders on 30 November 2012.  Copies are available from the company's registered office and can also be downloaded from the corporate website. 

The group financial statements have been prepared and approved by the directors in accordance with International Financial Reporting Standards as adopted by the EU ("Adopted IFRSs"). 

The group meets its day-to-day working capital requirements through its banking facilities. The group's business activities and financial position, the factors likely to affect its future development and performance, and its objectives and policies in managing financial risks to which it is exposed are disclosed in the group's 2012 Annual Report and Accounts. After making enquiries, the directors have a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future. The group therefore continues to adopt the going concern basis in preparing its condensed interim financial statements.

2.       Accounting policies

The accounting policies, methods of computation and presentation applied by the group in this condensed consolidated half year report are the same as those applied by the group in its annual report and financial statements for the year ended 31 March 2012.

There have been no new standards, amendments or interpretations that have impacted Carclo during the current financial year.

3.       Accounting estimates

The preparation of the half year financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses. In preparing these half year financial statements, the significant judgements made by management in applying the group's accounting policies and the key source of estimation uncertainty were the same as those applied to the audited consolidated financial statements as at, and for the year ended, 31 March 2012.

4.       Segment reporting

At 30 September 2012, the group was organised into four, separately managed, business segments - Technical Plastics, LED Technologies, Precision Engineering and Conductive Inkjet Technology.  These are the segments for which summarised management information is presented to the group's chief operating decision maker (comprising the main board and general executive committee).

Formerly the group reported three business segments, Technical Plastics, Precision Products and Conductive Inkjet Technology. Following the combination of the LED optics business previously contained within Technical Plastics and the Wipac supercar lighting business previously contained within Precision Products to form LED Technologies, the directors receive and report results over the four segments detailed above. Consequently the group has restated the previous segmental reporting to provide comparatives under the new segmentation.

The Technical Plastics segment supplies fine tolerance, injection moulded plastic components, which are used in medical, optical and electronics products.  This business operates internationally in a fast growing and dynamic market underpinned by rapid technological development.

The LED Technologies segment develops innovative solutions in LED lighting, and is a leader in the development of high power LED lighting for supercars.

The Precision Engineering segment supplies systems to the manufacturing and aerospace industries

The Conductive Inkjet Technology segment undertakes applied research into the digital printing of conductive metals onto plastic substrates.

Transfer pricing between business segments is set on an arm's length basis. Segmental revenues and results include transfers between business segments. Those transfers are eliminated on consolidation.

The segment results for the six months ended 30 September 2012 were as follows -

	Technical  Plastics	LED Technologies	Precision Engineering	Conductive Inkjet Technology	Unallocated	Eliminations	Group total
	£000	£000	£000	£000	£000	£000	£000
Consolidated income statement
Total revenue	26,430	11,540	4,024	267	-	(2,231)	40,030
Less inter-segment revenue	(2,231)	-	-	-	-	2,231	-
Total external revenue	24,199	11,540	4,024	267	-	-	40,030
Expenses	(22,852)	(10,673)	(3,345)	(281)	(678)	-	(37,829)
Underlying operating profit	1,347	867	679	(14)	(678)	-	2,201
Rationalisation costs	-	-	-	-	-	-	-
Operating profit	1,347	867	679	(14)	(678)	-	2,201
Net finance charge							(298)
Income tax expense							(419)
Loss on discontinued operations, net of tax							(14)
Profit after tax							1,470
Consolidated statement of financial position
Segment assets	62,459	17,034	6,274	22,058	15,543	-	123,368
Segment liabilities	(13,122)	(3,550)	(1,410)	(837)	(48,157)	-	(67,076)
Net assets	49,337	13,484	4,864	21,221	(32,614)	-	56,292

The segment results for the six months ended 30 September 2011 following restatement as a result of a change in operating segments in the period were as follows -

	Technical  Plastics	LED Technologies	Precision Engineering	Conductive Inkjet Technology	Unallocated	Eliminations	Group total
	£000	£000	£000	£000	£000	£000	£000
Consolidated income statement
Total revenue	28,327	16,275	3,551	37	-	(1,193)	46,997
Less inter-segment revenue	(1,193)	-	-	-	-	1,193	-
Total external revenue	27,134	16,275	3,551	37	-	-	46,997
Expenses	(25,248)	(15,593)	(2,999)	(182)	(695)	-	(44,717)
Underlying operating profit	1,886	682	552	(145)	(695)	-	2,280
Rationalisation costs	(100)	(24)	-	-	(31)	-	(155)
Exit of Ford volume automotive     communication  business	-	(1,180)	-	-	-	-	(1,180)
Operating profit	1,786	(522)	552	(145)	(726)	-	945
Net finance income							335
Income tax expense							(269)
Loss on discontinued operations, net of tax							(26)
Profit after tax							985
Consolidated statement of financial position
Segment assets	58,793	19,658	6,642	18,471	12,308	-	115,872
Segment liabilities	(8,411)	(6,527)	(2,011)	(2,099)	(51,947)	-	(70,995)
Net assets	50,382	13,131	4,631	16,372	(39,639)	-	44,877

The segment results for the year ended 31 March 2012 following restatement as a result of a change in operating segments in the period were as follows -

	Technical  Plastics	LED Technologies	Precision Engineering	Conductive Inkjet Technology	Unallocated	Eliminations	Group total
	£000	£000	£000	£000	£000	£000	£000
Consolidated income statement
Total revenue	57,696	30,907	7,516	296	-	(3,148)	93,267
Less inter-segment revenue	(3,148)	-	-	-	-	3,148	-
Total external revenue	54,548	30,907	7,516	296	-	-	93,267
Expenses	(49,906)	(28,739)	(6,310)	(493)	(1,174)	-	(86,622)
Underlying operating profit	4,642	2,168	1,206	(197)	(1,174)	-	6,645
Rationalisation costs	(326)	(159)	-	-	(43)	-	(528)
Exit of Ford volume automotive     communication business	-	(1,560)	-	-	-	-	(1,560)
Exceptional credit in respect of retirement benefits	-	-	-	-	300	-	300
Operating profit	4,316	449	1,206	(197)	(917)	-	4,857
Net finance income							641
Income tax expense							(856)
Loss on discontinued operations, net of tax							(19)
Profit after tax							4,623
Consolidated statement of financial position
Segment assets	57,992	17,327	7,177	19,416	16,015	-	117,927
Segment liabilities	(9,448)	(4,105)	(2,175)	(742)	(56,183)	-	(72,653)
Net assets	48,544	13,222	5,002	18,674	(40,168)	-	45,274

5.          Rationalisation costs

	Six months ended 30 September 2012		Six months ended 30 September 2011		Year ended 31 March 2012
		£000		£000		£000
Redundancy costs		-		(124)		(342)
Other operating expenses		-		(31)		(186)
		-		(155)		(528)
Exit of Ford volume automotive communication business		-		(1,180)		(1,560)
Total		-		(1,335)		(2,088)
All rationalisation costs relate to the group's UK operations

6.         Net finance (charge) / income

	Six months ended 30 September 2012		Six months ended 30 September 2011		Year ended 31 March 2012
		£000		£000		£000
Finance revenue		11		11		13
Finance expense		(352)		(315)		(651)
Other finance revenue - retirement benefits		4,168		4,921		9,842
Other finance expense - retirement benefits		(4,125)		(4,282)		(8,563)
Total		(298)		335		641

7.         Income tax expense

The half year accounts include a tax charge of 22.0% of profit before tax (2011 - 21.0%) based on the estimated average effective income tax rate for the full year. The group's effective tax rate continues to run at a lower level than the underlying UK tax rate of 24.0% (2011 - 26.0%) as the group continues to benefit from previously unrecognised prior period tax losses and tax planning initiatives. 

8.         Loss on discontinued operations, net of tax

	Six months ended 30 September 2012		Six months ended 30 September 2011		Year ended 31 March 2012
		£000		£000		£000
Costs incurred in relation to non current assets held for sale		-		(26)		(70)
(Loss) / profit on disposal of surplus property		(14)		-		51
Total		(14)		(32)		(19)

9.         Earnings per share

The calculation of basic earnings per share is based on the profit attributable to ordinary shareholders of the company divided by the weighted average number of ordinary shares outstanding during the period.

The calculation of diluted earnings per share is based on profit attributable to ordinary shareholders of the company divided by the weighted average number of ordinary shares outstanding during the period (adjusted for dilutive options).

The following details the profit and average number of shares used in calculating the basic and diluted earnings per share -

Six months ended		Six months ended			Year ended
30 September		30 September			31 March
	2012		2011		2012
	£000		£000		£000
Profit after tax from continuing operations	1,484		1,011		4,642
Loss attributable to non-controlling interests	1		-		14
Profit attributable to ordinary shareholders from continuing operations	1,485		1,011		4,656
Loss on discontinued operations net of tax	(14)		(26)		(19)
Profit after tax attributable to ordinary shareholders of the parent	1,471		985		4,637
Six months ended		Six months ended			Year ended
30 September		30 September			31 March
	2012		2011		2012
	Shares		Shares		Shares
Weighted average number of ordinary shares in issue in the period	63,199,731		61,649,931		61,715,997
Effect of share options in issue	343,839		315,035		336,894
Weighted average number of ordinary shares (diluted) in the period	63,543,570		61,964,966		62,052,891

The following table summarises the earnings per share figures based on the above data -

Six months ended		Six months ended			Year ended
30 September		30 September			31 March
	2012		2011		2012
	Pence		Pence		Pence
Basic - continuing operations	2.3		1.6		7.5
Basic - discontinued operations	-		-		-
Basic - total	2.3		1.6		7.5
Diluted - continuing operations	2.3		1.6		7.5
Diluted - discontinued operations	-		-		-
Diluted - total	2.3		1.6		7.5

10.       Dividends paid and proposed

 Ordinary dividends per 5 pence share declared in the period comprised -

Six months ended		Six months ended		Year ended
30 September		30 September			31 March
	2012		2011		2012
	£000		£000		£000
Final dividend for 2010/11 (1.50 pence per share)	-		926		926
Interim dividend for 2011/12 (0.75 pence per share)	-		-		464
Final dividend for 2011/12 (1.65 pence per share)	1,071		-		-
	1,071		926		1,390

The directors are proposing an interim dividend of 0.80 pence per ordinary share for the half year ended 30 September 2012. The dividend payment totalling £0.519 million will be paid on 9 April 2013 to shareholders on the share register at close of business on 1 March 2013.  The proposed dividend has not been provided in the half year accounts.

11.       Intangible assets

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

Six months ended		Six months ended		Year ended
30 September		30 September			31 March
	2012		2011		2012
	£000		£000		£000
Net book value at the start of the period	40,827		36,406		36,406
Additions	1,692		996		2,632
Acquired through business combinations	-		-		2,649
Amortisation	(181)		(199)		(395)
Effect of movements in foreign exchange	(485)		(23)		(465)
Net book value at the end of the period	41,853		37,180		40,827

Included within intangible assets is goodwill of £20.9 million (2011 - £21.2 million). The carrying value of goodwill is subject to annual impairment tests by reviewing detailed projections of the recoverable amounts from the underlying cash generating units. At 31 March 2012, the carrying value of goodwill was supported by such value in use calculations. There has been no indication of subsequent impairment in the current financial year.

12.       Property, plant and equipment

The movements in the carrying value of property, plant and equipment are summarised as follows -

Six months ended		Six months ended		Year ended
30 September		30 September			31 March
	2012		2011		2012
	£000		£000		£000
Net book value at the start of the period	27,983		29,950		29,950
Additions	3,951		2,033		3,734
Depreciation	(1,708)		(1,707)		(3,321)
Disposals	-		(23)		(41)
Transfer to non current assets held for sale	-		-		(350)
Impairment arising on site rationalisation	-		(980)		(1,701)
Effect of movements in foreign exchange	(297)		55		(288)
Net book value at the end of the period	29,929		29,328		27,983

13.      Non current assets classified as held for sale

As at		As at		As at
30 September		30 September			31 March
	2012		2011		2012
	£000		£000		£000
Surplus land and buildings	-		215		-
Plant and equipment held for sale	350		-		350
Net book value at the end of the period	350		215		350

At 30 September 2012, surplus machinery with a net book value of £0.350 million has been reclassified as held for sale. This machinery, which relates to the assets held in respect of the exit from the Ford volume automotive communication business, continues to be actively marketed.

14.       Retirement benefit obligations

At 31 March 2012, the group had a retirement benefit liability, as calculated under the provisions of IAS 19  "Employee Benefits", of £22.597 million. Since the start of the current financial year, equity markets have risen which has resulted in the scheme's assets increasing in value by £5.153 million to £155.317 million. However, a reduction in the discount rate used to evaluate the scheme's liabilities, from 4.9% at the start of the period to 4.3%, has resulted in the value of the liabilities increasing by £6.611 million to £179.372 million. As a consequence the scheme deficit, on an IAS 19 basis, has increased from £22.597 million at 31 March 2012 to £24.055 million at 30 September 2012.

15.       Cash generated from operations

	Six months ended		Six months ended				Year ended
	30 September		30 September				31 March
		2012		2011			2012
		£000		£000			£000
Operating profit		2,201		945			4,857
Adjustments for -
Pension fund contributions in excess of service costs		(249)		(217)			(1,591)
Depreciation charge		1,708		1,707			3,321
Amortisation of intangible assets		181		199			395
Share of losses in associated company		-		7			13
Exceptional tangible fixed asset write down, arising on rationalisation of business		-		1,180			1,701
Provision for site closure		(130)		-			130
Profit on business disposal		-		-			(2)
Profit on disposal of other plant and equipment		(36)		(23)			(30)
Exceptional credit in respect of retirement benefits		-		-			(300)
Share based payment charge		91		89			183
Operating cash flow before changes in working capital		3,766		3,887			8,677
Changes in working capital
(Increase) / decrease in inventories		(658)		269			572
(Increase) / decrease in trade and other receivables		(515)		1,192			1,939
Decrease in trade and other payables		(1,015)		(484)			(771)
Cash generated from operations		1,578		4,864			10,417

16.       Cash and cash equivalents

		As at		As at			As at
	30 September		30 September				31 March
		2012			2011		2012
		£000			£000		£000
Cash and cash deposits		10,610			8,491		9,485
Bank overdrafts		(4,441)			(8,454)		(8,326)
		6,169			37		1,159

17.       Net debt

The net movement in cash and cash equivalents can be reconciled to the change in net debt in the period as follows -

		Six months ended		Six months ended			Year ended
	30 September			30 September			31 March
			2012		2011		2012
			£000		£000		£000
Net increase in cash and cash equivalents			5,085		34		1,262
Net repayments of term loan borrowings			1,250		-		-
			6,335		34		1,262
Effect of exchange rate fluctuations on net debt			271		91		(136)
			6,606		125		1,126
Net debt at start of period			(17,976)		(19,102)		(19,102)
Net debt at end of period			(11,370)		(18,977)		(17,976)

18.       Ordinary share capital

Ordinary shares of 5 pence each -

				Number of shares			£000
Authorised at 30 September 2011, 31 March 2012 and 30 September 2012					80,000,000		4,000
Issued and fully paid at 31 March 2011					61,561,702		3,078
Shares issued on exercise of share options					221,500		11
Issued and fully paid at 30 September 2011					61,783,202		3,089
Shares issued on exercise of share options					13,500		1
Issued and fully paid at 31 March 2012					61,796,702		3,090
Shares issued on placing of shares for cash					3,078,240		154
Shares issued on exercise of share options					23,500		1
Issued and fully paid at 30 September 2012					64,898,442		3,245

On 9 July 2012, Carclo issued 3,078,240 new shares for cash at a price of 431.0 pence per share. The share placing raised £12.646 million after associated costs. The shares are fully paid.

In the six months ended 30 September 2012, options over 23,500 ordinary shares were exercised at an average exercise price of 83.7 pence per share. The shares are fully paid.

19.       Related parties

Identity of related parties

The group has a related party relationship with its subsidiaries, its directors and executive officers and the group pension schemes.

Transactions with key management personnel

Full details of directors' remuneration are disclosed in the group's annual report.  In the six months ended 30 September 2012, the directors' remuneration amounted to £0.323 million (2011 - £0.263 million).

Ian Williamson is a non executive director of Suprajit Engineering Limited ("Suprajit"), a manufacturer of automotive components based in Bangalore, India. Suprajit has provided assistance in the establishment of Carclo's Technical Plastics facility in India including the lease of a manufacturing and storage facility in Bangalore. Payments totalling £0.004 million have been made to Suprajit for these services in the six months to 30 September 2012 (2011 - £0.023 million). Additionally during the period the group paid £0.804 million to purchase the freehold land and buildings of said manufacturing and storage facility.

Group pension scheme

Carclo manages a pensions department which administers the group pension scheme. The associated investment costs are recharged to the schemes in full. The costs in the six months ended 30 September 2012 amounted to £0.198 million (2011 - £0.196 million). From 1 April 2007, it has been agreed with the trustees of the pension scheme that, under the terms of the recovery plan, Carclo would bear the scheme's administration costs whilst ever the scheme was in deficit, as calculated at the triennial valuation. Carclo incurred an administration cost of £0.233 million which has been charged against the IAS 19 pension scheme deficit (2011 - £0.217 million).

20.      Post balance sheet events

In October 2012, the group injected £0.980 million in cash into the group pension scheme in accordance with the agreed funding plan.

21.      Seasonality

There are no specific seasonal factors which impact on the demand for products and services supplied by the group, other than for the timing of holidays and customer shutdowns. These tend to fall predominantly in the first half of Carclo's financial year and, as a result, revenues and profits are usually higher in the second half of the financial year compared to the first half.

22.       Responsibility statement

We confirm that to the best of our knowledge -

•        the condensed set of financial statements has been prepared in accordance with IAS 34 "Interim Financial Reporting" as adopted by the EU;

•        the interim management report includes a fair review of the information required by -

(a)     DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and

(b)     DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so.

By order of the board

Ian Williamson - chief executive

Robert Brooksbank - finance director

20 November 2012

Independent review report to Carclo plc

Introduction

We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 September 2012 which comprises the condensed consolidated income statement, the condensed consolidated statement of comprehensive income, the condensed consolidated statement of financial position, the condensed consolidated statement of changes in equity, the condensed consolidated statement of cash flows and the related explanatory notes. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the company in accordance with the terms of our engagement to assist the company in meeting the requirements of the Disclosure and Transparency Rules ("the DTR") of the UK's Financial Services Authority ("the UK FSA"). Our review has been undertaken so that we might state to the company those matters we are required to state to it in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company for our review work, for this report, or for the conclusions we have reached.

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the DTR of the UK FSA.

The annual financial statements of the group are prepared in accordance with IFRSs as adopted by the EU. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU.

Our responsibility

Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for use in the UK. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 September 2012 is not prepared, in all material respects, in accordance with IAS 34 as adopted by the EU and the DTR of the UK FSA.

Mike Barradell

Audit director

For and on behalf of KPMG Audit Plc

Leeds

20 November 2012

 

END

 

 

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