Interim Results
Carclo PLC
6 December 1999
Carclo plc
Interim Results for the Six Months ended 30 September 1999
Highlights
* Returning to growth and benefiting from focus on
technical plastics.
* Sales increased by 15% to £98.8m (1998: £86.2m).
* Operating profit before goodwill amortisation rose 41% to
£7.2m (1998: £5.1m).
* Strong contribution from CTP Carrera and UK technical
plastics.
* Underlying earnings per share increased by 15% to 6.8p
(1998: 5.9p).
* Sale of Lee Steel Strip now completed.
* Name of company changed to 'Carclo plc'.
Commenting on the results, George Kennedy, Chairman, said:
'Carclo has now been transformed into a group focused on
technical plastics and specialist wire. Within technical
plastics our operations serve markets which are growing
strongly such as automotive electronics, mobile telephones
and data communications. New contracts and new products
underpin our prospects for medium and long term growth and
translate into a positive outlook for the group.
'Overall we are confident that the group is better placed
than it has ever been for continuing growth in the future.'
For further information please contact:
Carclo plc
Ian Williamson, Chief Executive On 6 December: 0171 253 2252
Chris Mawe, Finance Director Thereafter: 0114 256 2162
Ludgate Communications
Richard Hews 0171 253 2252
Leone Lewis
Chairman's Statement
Overview
I am pleased to report that your company is returning to
growth and benefiting from the focus on technical plastics.
Sales were £98.8m compared to £86.2m in the same period
last year. CTP Carrera, acquired in April 1999,
contributed £11.0m of these increased sales, with sales
from ongoing operations increasing by 3.1%. Sales in our
specialist wire and precision engineering companies were
lower than the prior period, principally due to continued
rationalisation of the product range.
The operating profit before goodwill amortisation of £7.2m
was 41% up on the prior year, boosted by a strong
contribution from CTP Carrera and growth in UK technical
plastics.
Underlying earnings per ordinary share increased by 15% to
6.8p, whilst basic earnings per ordinary share showed a
slight fall to 5.9p.
On 30 September we announced the conditional sale of Lee
Steel Strip to Avesta Sheffield (Holdings) Ltd. Approval
was received from the relevant competition authorities and
completion of the sale was announced on 16 November.
Accordingly, the operating profit of £1.0m for Lee Steel
Strip has been separately disclosed.
Following approval of shareholders, received at the
Extraordinary General Meeting held on 8 November 1999, the
name of your company has now been changed to 'Carclo plc'.
This reflects the change in focus within the group over the
last three years and the concentration upon technical
plastics rather than more traditional engineering
activities.
Financial Position
Net debt at 30 September 1999 was £53.0m compared with
£31.7m at 31 March 1999. This debt represented gearing of
76% with underlying interest cover of 4.4 times. The
increase in debt reflects the acquisition of CTP Carrera on
12 April 1999, and the payment of both an interim and final
dividend in the six months to 30 September 1999.
The sale of Lee Steel Strip in November reduced the net
debt by £22.4m representing proforma gearing of 41%. Cash
and unutilised medium term facilities following the Lee
Steel Strip disposal stand at over £70m providing more than
adequate resources for the ongoing development of the
group.
Capital expenditure at £6.5m was ahead of the depreciation
charge of £5.1m. Some £2.5m of capital expenditure related
to the purchase of land and buildings previously leased by
CTP Carrera.
Dividend
Your Board has declared a maintained interim dividend of
3.44p per share. Dividend warrants will be posted on 6
April 2000 to shareholders on the register on 3 March 2000.
Board changes
As indicated in the Annual Report, Henry Mutkin will be
retiring from the Board in January 2000. He will be
replaced as a non executive director by Barbara Richmond
who is Finance Director of Croda International PLC.
We are delighted to welcome Barbara, who will take over the
Chair of the Audit Committee. I wish to thank Henry for his
excellent stewardship and unfailing support over the years
he has been a member of the Boards of Arthur Lee & Sons plc
and Carclo plc.
I would also like to welcome Chris Mawe who joined us as
Group Finance Director on 3 September 1999. Chris was
previously Finance Director of the IMI Yorkshire Fittings
and Heimeier Group. He is already making a full
contribution to the Carclo team.
Operating Review
Our technical plastics operations have proved resilient
through a difficult trading period. The automotive
operations continue to make good progress with increased
sales and profits ahead by 34%. The profit performance has
been driven by a strong recovery at CTP Wipac which was
heavily loss making when acquired in May 1998. We now
expect to achieve divisional average margins at CTP Wipac
this year, which is well ahead of our plan at the time of
acquisition. CTP Gills Cables has continued to win
contracts for its newly developed Electronic Throttle
Control and on current trends over half of the business
will move from mechanical to electronic controls in the
next three years.
The teletronics operations have continued to benefit from
rapid growth in mobile telecoms, data communications and
office equipment. However, demand in consumer related
products has remained poor so that overall sales and
profits fell relative to the first half of last year.
Demand in consumer related products appear now to have
stabilised and with strong growth in mobile telecoms and
further new contract awards coming on stream, we expect
this sector to return to growth in the second half.
CTP Coil, which was loss making when acquired in December
1998, made a good recovery in the early part of this year
as operations and confidence stabilised after the extended
sale process. That recovery has not been sustained and
trading in September, October and November has been weak.
CTP Coil was profitable in the first half and is capable of
a much improved performance. The business is being held
back by its unsuitable premises. We are finalising plans
to move the business within the Slough area to a modern,
positive air pressure facility which will allow CTP Coil to
achieve world class quality standards.
CTP Carrera which was acquired in April 1999, has benefited
from strong demand in the US automotive sector. Since
acquisition new records have been achieved in terms of
daily sales and capacity utilisation thus delivering strong
profit growth and cash generation. We have learned a great
deal from the CTP Carrera business model and are adopting
some of the operational techniques within our UK
operations. We are also encouraged by the major production
programmes which are already moving from the UK to the USA
and vice versa in support of multinational customers which
confirms the strategic importance of the acquisition of a
US base for technical plastics.
Sales and profits in specialist wire and precision
engineering were below the comparable period but showed an
improved performance over the second half of last year.
Overall profitability in card clothing operations is
unacceptable but continued management action on costs
ensures that even small improvements in sales will produce
a significant profits recovery. We are seeing good
recovery in products for non-woven applications, but
activity in cotton markets remains depressed with a slow
recovery in the Far East being offset by a continuing
decline in more developed markets.
The remaining specialist wire operations did well to hold
operating margins at close to 10% despite a fall in sales,
reflecting our continuing rationalisation of these
businesses. Following the disposal of Lee Steel Strip, the
smaller precision engineering businesses have been reported
as part of the specialist wire division. Performance was
down on the prior period due to poor results at Fairbank
Brearley, which manufactures machinery for the vehicle
springs industry. With no immediate prospects of recovery
in this market, we have decided to close the operation and
have licensed the product range to a privately owned
machine tool manufacturer.
Outlook
Carclo has now been transformed into a group focused on
technical plastics and specialist wire. Within technical
plastics our operations serve markets which are growing
strongly such as automotive electronics, mobile telephones
and data communications. New contracts and new products
underpin our prospects for medium and long term growth and
translate into a positive outlook for the group.
Trading for the balance of this year will continue the
trend established in this first half. In the USA, demand
at CTP Carrera remains strong and we are increasing
capacity to sustain this growth. In the UK, new contracts
in automotive and mobile telecoms will come onstream during
the second half and will underpin growth into 2000 and
beyond. Trading at CTP Coil in the second half will be
poor, and we will incur some reorganisation costs in
preparation for the move of the operations next year. We
are not yet seeing a sustained recovery in the textile
markets served by the specialist wire division but the
benefits of prior year cost reductions are now evident.
Overall we are confident that the group is better placed
than it has ever been for continuing growth in the future.
George Kennedy
Chairman
Consolidated profit and loss account (unaudited)
Half year ended Half year ended Year ended
30 September 30 September 31 March
1999 1998 1999
-----------------------------------------------------------
Turnover
Continuing operations
- ongoing 74,650 72,392 150,162
- acquisition 11,007 - -
Lee Steel Strip Ltd 13,164 13,769 27,391
-------- -------- --------
98,821 86,161 177,553
-------- -------- --------
Operating profit
Continuing operations
- ongoing 4,175 4,025 7,728
- acquisition 2,049 - -
Lee Steel Strip Ltd 1,014 1,110 1,941
-------- -------- --------
7,238 5,135 9,669
Goodwill amortisation (363) - (103)
-------- -------- --------
Operating profit 6,875 5,135 9,566
Loss on termination
of operations (251) - (4,044)
Profit on sale of
properties - 1,324 1,812
-------- -------- --------
Profit before interest 6,624 6,459 7,334
Net interest payable 1,686 777 1,962
-------- -------- --------
Profit on ordinary
activities before
taxation 4,938 5,682 5,372
Taxation 1,580 1,477 1,269
-------- -------- --------
Profit on ordinary
activities after
taxation 3,358 4,205 4,103
Preference dividends
(non equity) 32 32 64
-------- -------- --------
Profit attributable to
ordinary shareholders 3,326 4,173 4,039
Ordinary dividends 1,928 2,009 6,181
-------- -------- --------
Retained profit/
(deficit) for the period 1,398 2,164 (2,142)
-------- -------- --------
Earnings per ordinary share
Basic 5.9p 6.8p 6.9p
Underlying 6.8p 5.9p 11.0p
-------- -------- --------
Dividend per ordinary
share 3.44p 3.44p 11.00p
-------- -------- --------
Statement of total recognised gains and losses
Profit on ordinary
activities after taxation 3,358 4,205 4,103
Exchange losses on the
translation of overseas
assets (42) (179) (106)
Unrealised gain on
revaluation of properties - - 214
-------- -------- --------
Total gains and losses
recognised since last
annual report 3,316 4,026 4,211
-------- -------- --------
Notes:
1. The financial information in this document has been
prepared on the basis of the accounting policies set out in
the audited accounts for the year ended 31 March 1999. This
financial information was approved by the directors on 6
December 1999.
2. The financial information is unaudited but has been
reviewed by the auditors and their report to the company is
set out below.
3. The results for the year ended 31 March 1999 are an
abridged version of the company's full accounts which have
been filed with the Registrar of Companies, on which the
company's auditors reported without qualification.
4. The amount shown for estimated taxation for the half year
ended 30 September 1999 represents 32% of the profit on
ordinary activities before taxation (30 September 1998 - 26%).
5. Earnings per ordinary share for the six months ended 30
September 1999 have been calculated by dividing the profit
attributable to ordinary shareholders of £3,326,000 by the
weighted average number of ordinary shares in issue of
56,766,977.
6. Copies of the Interim Report will be posted to
shareholders on 10 December 1999 and are available from the
company's registered office, Carclo House, P.O. Box 224, Fife
Street, Sheffield, S9 1YX, South Yorkshire.
Consolidated balance sheet (unaudited)
30 September 1999
£'000 £'000
-----------------------------------------------------------
Fixed assets
Intangible assets 19,517
Tangible assets 69,610
Investments 169
89,296
Current assets
Stocks 24,653
Debtors 45,212
Pensions prepayment due after
more than one year 11,059
Cash at bank and in hand 5,601
--------
86,525
--------
Creditors-amounts falling due
within one year
Bank loans and overdrafts 13,244
Trade and other creditors 34,698
Taxation 1,892
Dividends 1,980
--------
51,814
--------
Net current assets 34,711
--------
Total assets less current liabilities 124,007
Creditors - amounts falling due
after more than one year 47,337
Provisions for liabilities and charges 7,086
--------
Total net assets 69,584
--------
Capital and reserves
Called up share capital 2,838
Share premium 41,722
Revaluation reserve 2,195
Other reserves 1,084
Profit and loss account 21,745
--------
Shareholders' funds 69,584
--------
Equity interests 69,584
Non equity interests -
Ordinary shareholders' funds per share 123p
30 September 1998 31 March 1999
£'000 £'000 £'000 £'000
Fixed assets
Intangible assets - 5,837
Tangible assets 65,574 63,898
Investments 207 187
-------- --------
65,781 69,922
Current assets
Stocks 26,786 23,918
Debtors 38,419 39,193
Pensions prepayment
due after more than
one year 10,893 10,947
Cash at bank and in
hand 22,890 11,529
-------- --------
98,988 85,587
-------- --------
Creditors-amounts falling
due within one year
Bank loans and
overdrafts 22,472 14,795
Trade and other
creditors 31,821 31,144
Taxation 5,529 1,023
Dividends 2,042 6,214
-------- --------
61,864 53,176
-------- --------
Net current assets 37,124 32,411
-------- --------
Total assets less current
liabilities 102,905 102,333
Creditors - amounts falling
due after more than one year 21,838 27,584
Provisions for liabilities
and charges 6,345 7,465
-------- --------
Total net assets 74,722 67,284
-------- --------
Capital and reserves
Called up share capital 3,538 3,380
Share premium 36,608 40,236
Revaluation reserve 2,300 2,215
Other reserves 168 476
Profit and loss account 32,108 20,977
-------- --------
Shareholders' funds 74,722 67,284
-------- --------
Equity interests 74,114 66,676
Non equity interests 608 608
Ordinary shareholders' funds
per share 126p 120p
Cash flow statement
Half year ended Half year ended Year ended
30 September 30 September 31 March
1999 1998 1999
£'000 £'000 £'000
-----------------------------------------------------------
Cashflow from operating
activities 7,705 7,311 18,692
Returns on investments
and servicing of
finance (1,701) (665) (1,670)
Taxation (880) (879) (4,168)
Capital expenditure
and financial
investment (6,467) (998) (4,609)
Acquisitions and
disposals (11,035) (1,954) (10,272)
Equity dividends
paid (6,163) (4,654) (4,655)
-------- -------- --------
Cash outflow before use
of liquid resources
and funding (18,541) (1,839) (6,682)
Financing
Issue of shares - 22 22
Repurchase of own
shares (608) (3,778) (7,197)
Increase in debt 15,203 4,217 8,320
Capital element of
finance lease rentals (480) (234) (715)
-------- -------- --------
Decrease in cash in
period (4,426) (1,612) (6,252)
======== ======== ========
Half year ended Half year ended Year ended
30 September 30 September 31 March
1999 1998 1999
£'000 £'000 £'000
-----------------------------------------------------------
Reconciliation of net cash
flow to movement in net debt
Decrease in cash in
period (4,426) (1,612) (6,252)
Cash inflow from
increase in debt and
lease financing (14,723) (3,983) (7,605)
-------- -------- --------
Change in net debt
resulting from cash
flows (19,149) (5,595) (13,857)
Exchange movement 236 31 103
Loans and finance
leases acquired
with subsidiary
undertaking (2,317) - (1,695)
-------- -------- --------
Movement in net debt
in period (21,230) (5,564) (15,449)
Net debt at
beginning of period(31,749) (16,300) (16,300)
-------- -------- --------
Net debt at end
of period (52,979) (21,864) (31,749)
======== ======== ========
Half year ended Half year ended Year ended
30 September 30 September 31 March
1999 1998 1999
£'000 £'000 £'000
-----------------------------------------------------------
Reconciliation of operating
profit to operating cash
flows
Operating profit 6,875 5,135 9,566
Goodwill amortisation 363 - 103
Depreciation charges 5,106 4,224 8,918
Release of onerous
contract provision (213) - (104)
Amortisation of own shares 18 17 36
Profit on sale of tangible
fixed assets (166) (53) (79)
Cash outflow relating to
termination of operations(251) - (1,788)
Decrease/(increase) in
stocks 224 (947) 2,760
(Increase)/decrease
in debtors (3,337) 1,833 5,682
Decrease in creditors (914) (2,898) (6,402)
-------- -------- --------
Net cash inflow from
operating activities 7,705 7,311 18,692
======== ======== ========
Group turnover and operating profit
Half year ended
30 September 1999
Operating
Turnover profit
£'000 £'000
-----------------------------------------------------------
Class of business
Continuing operations
Ongoing
Technical plastics division 45,182 3,302
Specialist wire division 29,468 1,611
-------- --------
74,650 4,913
Rationalisation costs (143)
-------- --------
74,650 4,770
Acquisition - CTP Carrera
(Note 1) 11,007 2,049
Lee Steel Strip Ltd. 13,164 1,014
--------
98,821
-------- --------
Divisional operating profit 7,833
Central administration costs (575)
Pension cost:-
- regular cost (1,340)
- credit in respect of surplus 1,320
Goodwill amortisation (note 2) (363)
--------
Group operating profit 6,875
--------
Geographical segment - by destination
United Kingdom 50,992
Rest of Europe 18,182
Rest of World 29,647
--------
98,821
--------
Half year ended Year ended
30 September 1998 31 March 1999
Operating Operating
Turnover profit Turnover profit
£'000 £'000 £'000 £'000
-----------------------------------------------------------
Class of business
Continuing operations
Ongoing
Technical plastics
division 40,118 3,121 86,617 6,559
Specialist wire
division 32,274 2,121 63,545 3,586
-------- -------- -------- --------
72,392 5,242 150,162 10,145
Rationalisation
costs (590) (1,161)
-------- -------- -------- --------
72,392 4,652 150,162 8,984
Acquisition - CTP
Carrera (Note 1) - - - -
Lee Steel Strip
Ltd. 13,769 1,110 27,391 1,941
-------- --------
86,161 177,553
-------- -------- -------- --------
Divisional operating
profit 5,762 10,925
Central administration
costs (612) (1,226)
Pension cost:-
- regular cost (1,281) (2,562)
- credit in respect
of surplus 1,266 2,532
Goodwill amortisation
(note 2) - (103)
-------- --------
Group operating profit 5,135 9,566
-------- --------
Geographical segment
- by destination
United Kingdom 53,267 107,233
Rest of Europe 16,303 36,110
Rest of World 16,591 34,210
-------- --------
86,161 177,553
-------- --------
Notes:
1. CTP Carrera was acquired by the technical plastics
division
on 12 April 1999.
2. Goodwill amortisation relates to the technical plastics
division.
Reconciliation of movements in shareholders' funds
Profit on ordinary activities after taxation for
Half year ended Half year ended Year ended
30 September 30 September 31 March
1999 1998 1999
£'000 £'000 £'000
-----------------------------------------------------------
Profit on ordinary
activities after
taxation for the
period 3,358 4,205 4,103
Dividends 1,960 2,041 6,245
-------- -------- --------
1,398 2,164 (2,142)
Other recognised
(losses)/gains
relating to the
period (net) (42) (179) 108
New share capital 1,552 22 22
Goodwill reinstated - 675 675
Share buy back (608) (3,778) (7,197)
-------- -------- --------
2,300 (1,096) (8,534)
Opening shareholders'
funds 67,284 75,818 75,818
-------- -------- --------
Closing shareholders'
funds 69,584 74,722 67,284
-------- -------- --------
Report of the auditors
To Carclo plc
Introduction
We have been instructed by the company to review the
financial information set out below and we have read the
other information contained in the interim report and
considered whether it contains any apparent misstatements
or material inconsistencies with the financial information.
Directors' responsibilities
The interim report, including the financial information
contained therein, is the responsibility of, and has been
approved by the directors. The Listing Rules of the London
Stock Exchange require that the accounting policies and
presentation applied to the interim figures should be
consistent with those applied in preparing the preceding
annual accounts except where any changes, and the reasons
for them, are disclosed.
Review work performed
We conducted our review in accordance with guidance
contained in Bulletin 1999/4 issued by the Auditing
Practices Board. A review consists principally of making
enquiries of management and applying analytical procedures
to the financial information and underlying financial data
and based thereon, assessing whether the accounting
policies and presentation have been consistently applied
unless otherwise disclosed. A review excludes audit
procedures such as tests of controls and verification of
assets, liabilities and transactions. It is substantially
less in scope than an audit performed in accordance with
Auditing Standards and therefore provides a lower level of
assurance than an audit. Accordingly we do not express an
audit opinion on the financial information.
Review conclusion
On the basis of our review we are not aware of any material
modifications that should be made to the financial
information as presented for the six months ended 30
September 1999.
Ernst & Young
Chartered Accountants
Leeds
Financial Calendar
Interim ordinary dividend for 2000 payable
To members on the register on 3 March 2000 6 April 2000
Ex-dividend date 28 February 2000
Preliminary announcement of the results for
The year ending 31 March 2000 19 June 2000
Registered office:
Carclo House
P O Box 224
SHEFFIELD
S9 1YX
Telephone: 0114 256 2162
Fax: 0114 261 9686
Web site: www.carclo.co.uk
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