Interim Results

Carclo plc 27 November 2007 Carclo plc Interim Results for the six months ended 30 September 2007 Key Points • Profit before tax up 37.1% at £2.3 million • Technical Plastics has seen good sales growth led by its medical diagnostics business • Precision Products delivered an excellent performance • LED optics business growing rapidly • Conductive Inkjet Technology ('CIT') has now started to generate revenues and is making good progress across a broad range of applications • Minority interest in CIT acquired which will ensure the full value of this investment is delivered to shareholders • Interim dividend increased by 50% to 0.6 pence in line with the increase in last year's final dividend • New £20.0 million five year assured bank facilities and four year pensions funding plan agreed in the period Commenting on the results, Christopher Ross, chairman, said - 'Profit progression for the group overall is in line with our expectations. The mix of our business continues to swing in our favour with strong growth in the specialist medical diagnostics and LED optics and lighting businesses underpinning further profit progression. In the second half we expect margin improvement in Technical Plastics and another good performance from Precision Products. The group strategy continues to deliver and the board's confidence is demonstrated by the resumption of acquisitions, increased capital investment and the increase in the interim dividend.' -ends- For further information please contact: Carclo plc Ian Williamson, chief executive On 27 November 2007: 020 7067 0700 Robert Brooksbank, finance director Thereafter: 01924 268040 Weber Shandwick Financial Richard Hews 020 7067 0700 James White A presentation for analysts will be held at 9.30 am, on 27 November 2007, at the offices of Weber Shandwick Financial, Fox Court, 14 Gray's Inn Road, London WC1X 8WS 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 rapidly in low cost manufacturing regions and to develop new technologies and products to underpin future growth. CHAIRMAN'S STATEMENT Overview The group has continued to make good progress in the six months ended 30 September 2007 with profit before tax up 37.1% at £2.3 million. This has been driven primarily by a very strong first half in Precision Products. In Technical Plastics we have seen good sales growth led by our medical diagnostics business, although margin progression has been temporarily impacted by integration costs associated with new and transferring programmes. Conductive Inkjet Technology ('CIT') has now started to generate revenues and we have recently acquired the remaining minority interest in order to deliver the full value of this investment to our shareholders. The board has declared a dividend of 0.6 pence per share, representing a 50% increase on last year's interim dividend and in line with the increase in last year's final dividend. The dividend will be paid on 7 April 2008 to shareholders on the register on 29 February 2008. The shares will be traded excluding the right to the dividend from 27 February 2008. Financial position In the first six months of the financial year, the group replaced its existing bank term loan facilities with new £20.0 million five year facilities on broadly comparable terms. These new facilities, coupled with the agreement of a new four year pension funding plan, provide the group with certainty for ongoing investment in the growth areas of medical diagnostics, Light Emitting Diode ('LED') optics and new technologies such as CIT. Net debt at 30 September 2007 was £13.6 million, representing gearing on assets, excluding the net pension deficit, of 29.4% (2006 - 42.6%). On a year on year basis, net debt has reduced by £5.2 million. There was a small increase of £0.8 million in net debt since the start of the financial year due to increased investment in fixed and working capital. The group benefited in the half year from the receipt of £1.0 million deferred consideration from the ECC Card Clothing disposal. Group strategy Over the last few years we have consistently invested in new technology and in our specialist medical and optical businesses. We have been aiming to increase the intellectual property owned by the group and to increase the proprietary content of our business. This strategy is now delivering improving profitability and increasing margins. There are three areas of business within Carclo which the board believes offer substantial growth opportunities. These are: • Medical diagnostics - we have a significant position in the supply of single-use components for diagnostic testing of blood. The leading player in the laboratory test market uses Carclo as sole source and we supply other players in this market. We also manufacture the cartridges of the Axis-Shield Afinion instrument which has taken a market leading position in Point-Of-Care testing. Finally, through our collaboration with BBI Holdings PLC ('BBI') in Platform Diagnostics Limited and our development work for other major medical companies, we have developed a leading position in the device technologies for low-cost, mass-market diagnostic tests. • LED optics and lighting - high power LEDs are set to replace traditional lighting in a whole range of markets. Carclo is one of the leading players in the supply of collimator optics which allow high power LED's to be applied in real-world applications. This business is growing rapidly and Carclo is driving innovation and product development in the market. We were the first company to have optics for the Luxeon Rebel range of LED's and we are first to market with a new range of 10mm optics matched to Rebel LED's. In the OEM market, we are leading the way with high technology automotive lighting with the Lamborghini Reventon showcasing our unique engineering skills. The Wipac brand is being used to take this technology into the aftermarket and we have today announced the acquisition of the leading distributor of LED automotive lighting to accelerate our growth in this area. • CIT is at the core of exciting developments in printed electronics. Our innovative technology changes the economics of a wide range of devices and systems including RFID tags, sensors, organic LED displays and solar cells. CIT is now earning revenues from inks, equipment and licences. We expect this revenue to grow strongly into 2009 and beyond. Operating review Technical Plastics The Technical Plastics division delivered sales growth of 3.1% to £28.7 million despite the adverse impact of the US dollar exchange rate. Sales growth in medical and optical was particularly encouraging. Operating profits were down slightly at £1.5 million (2006 - £1.6 million). Profit progression in our European businesses was affected by transitional costs associated with the integration of new programmes and by the Slough reorganisation programme which involved the transfer of its high volume programmes to lower cost facilities within the group. During the first half, our largest customer in the medical diagnostics market elected to sole source all of its single-use components from Carclo. This was a tremendous vote of confidence in our global business strategy. Our Chinese business is also growing very strongly with new business increasingly focussed on medical and specialist markets. We expect an improved second half in our European plastics operations as the business integration issues are addressed and the programme transfers are completed. We also anticipate further strong growth in the medical content of our US and China businesses. Precision Products The Precision Products division delivered an excellent performance in the first half of the financial year with operating profits up 88.1% at £1.7 million on sales of £10.2 million (2006 - £10.0 million). In part, this increase in profits was due to a temporary surge in demand for the technically more sophisticated Multiband antennas supplied by the automotive business. Profits were also boosted by growth in new business for state-of-the-art LED lighting for supercars. An excellent example is the Lamborghini Reventon, a limited edition of 20 supercars, for which Wipac provided the LED lighting. We have few competitors in this field who can match our capability to engineer and deliver low volume, high value, bespoke lighting based on the very latest LED technology. We have won a number of major prestige contracts in this market and are set to enjoy a period of robust growth from the next financial year onwards. We are making this technology available in the aftermarket under the Wipac brand. In November we launched the first automotive spotlight based on high power LED's. This product showcases Carclo's proprietary brand of LED optics. Further products are due for launch in 2008. The other smaller precision engineering businesses in this division delivered another good performance. Ultra acquisition In order to accelerate our growth strategy in the automotive lighting aftermarket, we have recently agreed to acquire the assets of Ultra, the leading UK distributor of largely LED based automotive lights. Ultra is being acquired for a cash consideration of £1.1 million with a further potential payment of up to £0.25 million dependent upon the performance of the business over the next 18 months. Conductive Inkjet Technology ('CIT') Progress at CIT has been good across a broad range of applications. A detailed review of technical and commercial progress was provided on 1 October 2007 when we announced that we had acquired 100% control of CIT. We are now participating in two collaborative programmes using CIT's fine line technology to produce backplanes for organic LED displays and lighting. The first programme will be led by Cambridge Display Technology Limited and will continue the DTI funded development using fine conductive lines suitable for a range of organic electronic applications such as low cost, passive matrix displays and lighting. The second programme is led by Epigem Ltd and is also targeted at developing new processes and materials for the fabrication of transparent conducting films on plastic substrates. We have also achieved some encouraging results with a new form of ink which etches the surface of silicon solar cells to deliver improved efficiency. Early next year the first high volume MetalJet production line will be commissioned. This is expected to generate significant ink revenues. The board's confidence in this business was demonstrated on 30 September 2007 when the minority shareholding in CIT was acquired. The total consideration payable to Xennia Technology Limited ('Xennia') for its 25.6% minority stake is a maximum of £2.07 million. The initial consideration of £1.07 million was satisfied in October with the issue of 869,565 Carclo ordinary shares and a cash payment of £0.1 million. A further cash payment of £0.25 million was also made in October to Xennia for transitional technical support and the release of certain intellectual property rights. The balance of the consideration of £0.75 million, payable in cash, is conditional upon the performance of CIT in the period to 31 March 2010. Carclo now owns 100% of CIT which will ensure that the full benefit from the growth opportunities provided by CIT accrue to the group's shareholders. Platform Diagnostics Limited ('Platform') The main thrust of our investment in new technologies this financial year is in CIT and Platform. Investment in Platform in the first half was focussed on establishing the necessary technical teams within Carclo and BBI to develop proof of concept versions of Platform's innovative Point-Of-Care technology. The investment in Platform was increased by 2.5% to a 5.0% stake at a cost of £50,000. A step up in progress is expected in the second half of the year, the collaboration with BBI is working very well and may generate further collaborative opportunities in the future. Risks and uncertainties We are obliged by the Disclosure and Transparency Rules to comment on the principal risks and uncertainties faced by the group in the remainder of the financial year. In our annual report sent to shareholders in June 2007 we provided a detailed commentary on the risks faced by the group and the measures put in place to monitor and actively manage these risks. It is the nature of our businesses that the risk profile does not change significantly between reporting periods. In general, also, our businesses do not experience significant short term changes in demand or seasonality. Since June, we have seen increasing upwards pressure on polymer prices and the US dollar has further weakened against the euro and the pound. It is our firm commercial policy to pass through the increase in material costs to our customers. The weakening US dollar principally affects the translation of our US dollar earnings. The group's exposure to the transactional effect of changing exchange rates is modest. Outlook Profit progression for the group overall is in line with our expectations. The mix of our business continues to swing in our favour with strong growth in the specialist medical diagnostics and LED optics and lighting businesses underpinning further profit progression. In the second half we expect margin improvement in Technical Plastics and another good performance from Precision Products. The group strategy continues to deliver and the board's confidence is demonstrated by the resumption of acquisitions, increased capital investment and the increase in the interim dividend. Christopher Ross 27 November 2007 Consolidated income statement Year Six months ended Six months ended ended 31 30 September 30 September March 2007 2006 2007 unaudited unaudited audited --------------------------------------------------------------------------- Continuing Discontinued Continuing Discontinued operations operations Total operations operations Total £000 £000 £000 £000 £000 £000 £000 -------------------------------------------------------------------------------------------------------------------- Revenue 38,755 - 38,755 37,731 1,025 38,756 79,055 -------------------------------------------------------------------------------------------------------------------- Underlying operating profit Operating profit before exceptional costs 2,636 - 2,636 2,148 84 2,232 4,819 - rationalisation costs (388) - (388) (291) (62) (353) (593) -------------------------------------------------------------------------- After exceptional costs 2,248 - 2,248 1,857 22 1,879 4,226 -------------------------------------------------------------------------------------------------------------------- Operating profit 2,248 - 2,248 1,857 22 1,879 4,226 Site closure costs - - - (77) - (77) (561) Profit on sale of properties - - - - - - 3,722 -------------------------------------------------------------------------- Profit before financing costs 2,248 - 2,248 1,780 22 1,802 7,387 Finance revenue 158 - 158 194 7 201 362 Finance expense (637) (637) (856) - (856) (1,691) Other finance revenue - retirement benefits 5,193 - 5,193 4,999 - 4,999 9,996 Other finance expense - retirement benefits (4,613) - (4,613) (4,433) - (4,433) (8,865) -------------------------------------------------------------------------- Profit before tax 2,349 - 2,349 1,684 29 1,713 7,189 Income tax expense (235) - (235) (169) (2) (171) (715) -------------------------------------------------------------------------- Profit after tax but before profit / (loss) on discontinued operations 2,114 - 2,114 1,515 27 1,542 6,474 Profit on disposal of discontinued operations, net of tax - - - - 679 679 342 Loss on disposal of discontinued operations, net of tax - - - - (150) (150) (173) -------------------------------------------------------------------------- Profit after tax 2,114 - 2,114 1,515 556 2,071 6,643 ========================================================================== Attributable to: Equity holders of the parent 2,155 - 2,155 1,553 556 2,109 6,700 Minority interest (41) - (41) (38) - (38) (57) -------------------------------------------------------------------------- Profit for the period 2,114 - 2,114 1,515 556 2,071 6,643 ========================================================================== Earnings per ordinary share Basic 3.9 p - p 3.9 p 2.8 p 1.0 p 3.8 p 12.1 p Diluted 3.8 p - p 3.8 p 2.8 p 1.0 p 3.8 p 11.8 p Dividend per ordinary share Arising in respect of the period 0.6 p 0.4 p 1.6 p Paid in the period 1.6 p 1.2 p 1.2 p Consolidated statement of recognised income and expense Six months Six months Year ended ended ended 30 September 30 September 31 March 2007 2006 2007 unaudited unaudited audited £000 £000 £000 -------------------------------------------------------------------------------------------------------------------- Foreign exchange translation differences 287 (436) (643) Net (loss) / gain on hedge of net investment in foreign subsidiary - (28) 22 Actuarial gains on defined benefit schemes - - 7,651 Taxation on items taken directly to equity (406) - (2,296) ------------------------------------------- Income and expense recognised directly in equity (119) (464) 4,734 Profit for the period 2,114 2,071 6,643 ------------------------------------------- Total recognised income and expense for the period 1,995 1,607 11,377 =========================================== Attributable to: Equity holders of the parent 2,036 1,645 11,434 Minority interest (41) (38) (57) ------------------------------------------- Total recognised income and expense for the period 1,995 1,607 11,377 =========================================== Consolidated balance sheet 30 September 30 September 31 March 2007 2007 2007 unaudited unaudited audited £000 £000 £000 -------------------------------------------------------------------------------------------------------------------- Assets Intangible assets 26,122 24,992 25,365 Property, plant & equipment 25,035 25,953 24,585 Investments 105 10 52 Deferred tax assets 4,639 9,133 5,092 Other receivables - 400 150 ------------ ------------ ----------- Total non current assets 55,901 60,488 55,244 Inventories 8,981 7,954 8,227 Trade and other receivables 16,906 16,580 18,243 Cash and cash deposits 5,995 678 2,875 Assets classified as held for sale 842 3,451 842 ------------ ------------ ----------- Total current assets 32,724 28,663 30,187 ------------ ------------ ----------- Total assets 88,625 89,151 85,431 ------------ ------------ ----------- Liabilities Interest bearing loans and borrowings 12,287 7,347 4,877 Deferred tax liabilities 3,628 4,158 3,642 Retirement benefit obligations 11,314 22,277 12,061 Other payables 750 - - ------------ ------------ ----------- Total non current liabilities 27,979 33,782 20,580 Trade and other payables 13,494 12,251 13,691 Current tax liabilities 1,873 2,507 1,694 Dividends payable - - 222 Interest bearing loans and liabilities 7,285 12,105 10,803 ------------ ------------ ----------- Total current liabilities 22,652 26,863 26,410 ------------ ------------ ----------- Total liabilities 50,631 60,645 46,990 ------------ ------------ ----------- ------------ ------------ ----------- Net assets 37,994 28,506 38,441 ============ ============ =========== Equity Ordinary share capital issued 2,815 2,789 2,815 Share premium 3,002 2,768 3,002 Other reserves 3,670 4,160 3,670 Translation reserve 1,145 1,015 858 Retained earnings 27,362 16,647 26,900 ------------ ------------ ----------- Total equity attributable to equity holders of the parent 37,994 27,379 37,245 ------------ ------------ ----------- Minority interest - 1,127 1,196 ------------ ------------ ----------- Total equity 37,994 28,506 38,441 ============ ============ =========== Consolidated statement of cash flows Six months Six months Year ended ended ended 30 September 30 September 31 March 2007 2007 2007 unaudited unaudited audited £000 £000 £000 -------------------------------------------------------------------------------------------------------------------- Cash flows from operating activities Profit before financing costs 2,248 1,802 7,387 Adjustments for: Pension fund contributions in excess of service costs (167) 12 (1,990) Depreciation charge 1,469 1,489 2,977 Amortisation of intangible assets 28 52 103 Profit on disposal of properties - - (3,722) Profit on disposal of other plant and equipment (7) (11) (94) Cash flows on closures charged in prior year - - 127 Share based payment charge 45 143 196 ------------ ------------ ----------- Operating cash flow before changes in working capital 3,616 3,487 4,984 Changes in working capital (excluding the effects of acquisition and disposal of subsidiaries) Increase in inventories (753) (422) (744) Decrease / (increase) in trade and other receivables 474 (58) (1,859) (Decrease) / Increase in trade and other payables (1,485) (889) 552 ------------ ------------ ----------- Cash generated from operations 1,852 2,118 2,933 Interest paid (613) (893) (1,728) Tax - - (154) ------------ ------------ ----------- Net cash from operating activities 1,239 1,225 1,051 Cash flows from investing activities Proceeds from sale of property, plant and equipment 11 14 7,314 Interest received 121 177 370 Disposal of subsidiary, net of cash disposed of - 1,811 1,261 Receipt of deferred consideration, net of related costs 969 - 403 Proceeds from sale of investments - 1 2 Acquisition of property, plant and equipment (2,052) (968) (2,283) Acquisition of intangible assets - computer software (129) (10) (42) Acquisition of trade investment (53) - (43) Development expenditure (359) (670) (1,180) Repayment of loan by joint venture - 390 390 ------------ ------------ ----------- Net cash from investing activities (1,492) 745 6,192 Cash flows from financing activities Proceeds from the issue of share capital - - 260 Drawings on term loan facilities 6,627 - - Repayment of borrowings (7,565) (11,437) (12,395) Payment of finance lease liabilities (1) (4) (8) Dividends paid (889) (661) (661) ------------ ------------ ----------- Net cash from financing activities (1,828) (12,102) (12,804) Net decrease in cash and cash equivalents (2,081) (10,132) (5,561) Cash and cash equivalents at beginning of period 991 6,734 6,734 Effect of exchange rate fluctuations on cash held (4) (117) (182) ------------ ------------ ----------- Cash and cash equivalents at end of period (1,094) (3,515) 991 ============ ============ =========== Cash and cash equivalents comprise: Cash at bank and in hand 5,995 678 2,875 Bank overdrafts (7,089) (4,193) (1,884) ------------ ------------ ----------- (1,094) (3,515) 991 ============ ============ =========== Notes on the accounts 1. Basis of preparation The condensed half year report has been prepared on the basis of the accounting policies set out in the audited accounts for the year ended 31 March 2007 and in accordance with IAS34: 'Interim Financial Reporting' as adopted by the EU. In the current financial year the group will adopt IFRS 7 'Financial Instruments' for the first time. This standard relates to the disclosure of information and does not impact on the financial performance of the group. The financial information is unaudited, but has been reviewed by the auditors and their report to the company is set out on page 16. The comparative figures for the financial year ended 31 March 2007 are not the company's statutory accounts for that financial year but they have been extracted from the report and accounts for that 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 237 (2) or (3) of the Companies Act 1985. The half year report was approved by the board of directors on 27 November 2007 and is being sent to shareholders on 7 December 2007. Copies are available from the company's registered office, Springstone House, PO Box 88, 27 Dewsbury Road, Ossett, WF5 9WS and can also be downloaded from the corporate website: www.carclo-plc.com. 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'). 2. 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 2007. 3. Segment reporting At 30 September 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 supply 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 supply systems to the automotive and aerospace industries. 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 six months ended 30 September 2007 were as follows - Technical Precision Continuing Group Plastics Products Unallocated Eliminations total Discontinued total £000 £000 £000 £000 £000 £000 £000 ----------------------------------------------------------------------------------------------------------------------- Income Statement Total revenue 28,745 10,150 52 (192) 38,755 - 38,755 Less inter-segment revenue (192) - - 192 - - - ------------------------------------------------------------------------------------- Total external revenue 28,553 10,150 52 - 38,755 - 38,755 Expenses (27,090) (8,461) (568) - (36,119) - (36,119) -------------------------------------------------------------------------------------- Underlying operating profit 1,463 1,689 (516) - 2,636 - 2,636 Rationalisation costs (366) - (22) - (388) - (388) -------------------------------------------------------------------------------------- Operating profit 1,097 1,689 (538) - 2,248 - 2,248 =================================================== Net finance costs 101 - 101 Tax (235) - (235) --------------------------------- Profit for the period 2,114 - 2,114 ================================= The segment results for the six months ended 30 September 2006 were as follows - Technical Precision Continuing Group Plastics Products Unallocated Eliminations total Discontinued total £000 £000 £000 £000 £000 £000 £000 ----------------------------------------------------------------------------------------------------------------------- Income Statement Total revenue 27,876 9,953 - (98) 37,731 1,025 38,756 Less inter-segment revenue (98) - - 98 - - - ------------------------------------------------------------------------------------- Total external revenue 27,778 9,953 - - 37,731 1,025 38,756 Expenses (26,181) (8,942) (460) - (35,583) (941) (36,524) -------------------------------------------------------------------------------------- Underlying operating profit 1,597 1,011 (460) - 2,148 84 2,232 Rationalisation costs (49) (113) (129) - (291) (62) (353) -------------------------------------------------------------------------------------- Operating profit 1,548 898 (589) - 1,857 22 1,879 Site closure costs (77) - - - (77) - (77) -------------------------------------------------------------------------------------- Profit before financing costs 1,471 898 (589) - 1,780 22 1,802 ==================================================== Net finance costs (96) 7 (89) Tax (169) (2) (171) Net profit on disposal of discontinued operations - 529 529 --------------------------------- Profit for the period 1,515 556 2,071 ================================= The segment results for the year ended 31 March 2007 were as follows - Technical Precision Continuing Group Plastics Products Unallocated 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) Net profit on disposal of discontinued operations - 169 169 --------------------------------- Profit for the period 6,447 196 6,643 ================================= Analysis by geographical segment by destination United North Rest of Group Kingdom America World total £000 £000 £000 £000 The analysis of revenue by geographic destination for the six months ended 30 September 2007 was as follows - Revenue Total external revenue 16,229 8,564 13,962 38,755 ==================================================== The analysis of revenue by geographic destination for the six months ended 30 September 2006 was as follows - Revenue Total external revenue 16,831 8,746 13,179 38,756 Less revenue attributable to discontinued operations (477) (96) (452) (1,025) ---------------------------------------------------- Revenue from continuing operations 16,354 8,650 12,727 37,731 ==================================================== The analysis of revenue by geographic destination for the year ended 31 March 2007 was as follows - Revenue 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 ==================================================== 4. Income tax The half year accounts include a tax charge of 10.0% of profit before tax (2006 - 10.0%) 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 30% as the group continues to benefit from prior period tax losses and tax planning initiatives. In addition, the tax charge has benefited from the revaluation of certain of the deferred tax balances which are now considered likely to crystallise at a rate of 28.0%. 5. 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 Six months Year ended ended ended 30 September 30 September 31 March 2007 2006 2007 £000 £000 £000 --------------------------------------------------------------------------------------------------------------- Profit from continuing operations 2,114 1,515 6,447 Minority interest 41 38 57 ---------------------------------------- Profit attributable to ordinary shareholders from continuing operations 2,155 1,553 6,504 Profit from discontinued operations - 556 196 ---------------------------------------- Profit attributable to ordinary shareholders 2,155 2,109 6,700 ======================================== 30 September 30 September 31 March 2007 2006 2007 Shares Shares Shares --------------------------------------------------------------------------------------------------------------- Issued ordinary shares at end of the period 56,307,137 55,786,137 56,307,137 Effect of own shares held (683,077) (750,259) (705,471) Effect of share options exercised in the period - - (406,250) ---------------------------------------- Weighted average number of ordinary shares in the period 55,624,060 55,035,878 55,195,416 Effect of share options in issue 617,316 600,000 1,560,640 ---------------------------------------- Weighted average number of ordinary shares (diluted) in the period 56,241,376 55,635,878 56,756,056 ======================================== The following table summarises the earnings per share figures based on the above data - Six months Six months Year ended ended ended 30 September 30 September 31 March 2007 2006 2007 pence pence pence --------------------------------------------------------------------------------------------------------------- Basic - continuing operations 3.9 2.8 11.7 Basic - discontinued operations - 1.0 0.4 ---------------------------------------- Basic - total 3.9 3.8 12.1 ======================================== Diluted - continuing operations 3.8 2.8 11.5 Diluted - discontinued operations - 1.0 0.3 ---------------------------------------- Diluted - total 3.8 3.8 11.8 ======================================== 6. Dividends paid and proposed Ordinary dividends per 5 pence share declared in the period comprised - Six months Six months Year ended ended ended 30 September 30 September 31 March 2007 2006 2007 £000 £000 £000 --------------------------------------------------------------------------------------------------------------- Final dividend for 2005/06 (0.8 pence per share) - 441 441 Interim dividend for 2006/07 (0.4 pence per share) - - 222 Final dividend for 2006/07 (1.2 pence per share) 667 - - ---------------------------------------- 667 441 663 ======================================== The directors are proposing an interim dividend of 0.6 pence per ordinary share for the half year ended 30 September 2007. The dividend payment totalling £0.339 million will be paid on 7 April 2008 to shareholders on the share register at close of business on 29 February 2008. 7. Investment in subsidiary On 14 May 2007, Conductive Inkjet Technology Limited ('CIT') issued 18,383 shares which were acquired by Carclo plc for the sum of £0.6 million, increasing the group's stake from 72.1% to 74.4%. On 30 September 2007, Carclo plc entered into an unconditional contract to acquire the remaining shares of CIT from the former joint venture partner, Xennia Technology Limited, for a consideration of up to £2.07 million. The initial consideration was satisfied in October 2007 by the issue of 869,565 Carclo plc ordinary shares, which had a value of £0.97 million, together with £0.1 million in cash. In addition £0.15 million in cash was paid to Xennia to terminate its rights in CIT's intellectual property and £0.1 million was paid in respect of ongoing technical support. The balance of up to £0.75 million, payable in cash, is contingent upon the achievement of specific sales and profits in the period to 31 March 2010. The difference between the cost of the additional investments and the fair value of the net assets acquired has been taken to reserves. 8. Interest bearing loans In the half year under review, term loan facilities totalling £28.3 million with three UK banks were renegotiated. The group secured £20.0 million multi currency revolving five year terms loans with two major UK banks. The loan facilities are secured by a floating charge over the group's UK trade receivables and inventories. 9. Ordinary share capital Ordinary shares of 5 pence each - Number of shares £000 --------------------------------------------------------------------------------------------------------------- Authorised at 30 September 2006, 31 March 2007 and 30 September 2007 80,000,000 4,000 ========================= Issued and fully paid at 30 September 2006 55,786,137 2,789 Shares issued on exercise of share options for cash 521,000 26 ------------------------- Issued and fully paid at 31 March 2007 and 30 September 2007 56,307,137 2,815 ========================= 10. Statement of changes in shareholder's equity Attributable to equity holders of the company ------------------------------------------------------------ Share Share premium Translation Other Retained Minority Total capital account reserve reserves earnings Total interest equity £000 £000 £000 £000 £000 £000 £000 £000 -------------------------------------------------------------------------------- Current half year period Balance at 1 April 2007 2,815 3,002 858 3,670 26,900 37,245 1,196 38,441 Total recognised income and expense - - 287 - 1,749 2,036 (41) 1,995 Share based payments - - - - 45 45 - 45 Dividends to shareholders - - - - (667) (667) - (667) Acquisition of minority interest - - - - (665) (665) (1,155) (1,820) -------------------------------------------------------------------------------- Balance at 30 September 2007 2,815 3,002 1,145 3,670 27,362 37,994 - 37,994 ================================================================================ Prior half year period Balance at 1 April 2006 2,789 2,768 1,479 4,160 14,833 26,029 1,165 27,194 Total recognised income and expense - - (464) - 2,109 1,645 (38) 1,607 Share based payments - - - - 146 146 - 146 Dividends to shareholders - - - - (441) (441) - (441) -------------------------------------------------------------------------------- Balance at 30 September 2006 2,789 2,768 1,015 4,160 16,647 27,379 1,127 28,506 ================================================================================ Prior year period Balance at 1 April 2006 2,789 2,768 1,479 4,160 14,833 26,029 1,165 27,194 Total recognised income and expense - - (621) - 12,055 11,434 (57) 11,377 Transfer in respect of depreciation - - - (490) 490 - - - Share based payments - - - - 196 196 - 196 Deferred tax on share based payments - - - - (11) (11) - (11) Dividends to shareholders - - - - (663) (663) - (663) Issue of share capital 26 234 - - - 260 - 260 Acquisition of minority interest - - - - - - 88 88 -------------------------------------------------------------------------------- Balance at 31 March 2007 2,815 3,002 858 3,670 26,900 37,245 1,196 38,441 ================================================================================ 11. 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 Details of directors remuneration are disclosed in the group's annual report. Group pension schemes Carclo plc manages a pensions department which administers the two group pension schemes. The associated investment costs are recharged to the schemes in full. The costs in the six months ended 30 September 2007 amounted to £139,000. Other pension department costs have been recharged to the pension schemes. However, from 1 April 2007, it has been agreed with the trustees of the larger pension scheme that, under the terms of the recovery plan, Carclo plc would bear the scheme's administration costs whilst the scheme was in deficit. Carclo plc incurred an administration cost of £167,000 for that scheme which has been charged against the IAS 19 pension scheme deficit. 12. Post balance sheet events In the period from 1 October 2007 to 27 November 2007, the group has entered into the following significant transactions: • In October 2007, the group injected £0.9 million in cash into the main group pension scheme in accordance with the agreed funding plan. • In November 2007, agreement was reached to acquire the business and assets of the specialist aftermarket lighting business trading as Ultra Auto Cosmetics, for a cash consideration of £1.1 million with a further payment of up to £0.25 million payable dependent upon the performance of the business in the 18 month period following acquisition. 13. Responsibility statement We confirm that to the best of our knowledge: a) The condensed set of half year financial statements has been prepared in accordance with IAS 34 as adopted by the EU; and b) The half year report includes a fair review of the information required by the Disclosure and Transparency Rules (DTR) 4.2.7R indication of important events during the first six months and their impact on the financial statements and description of principal risks and uncertainties for the remaining six months of the year); and c) The half year report includes a fair review of the information required by DTR 4.2.8R (disclosure of related party transactions and changes therein). By order of the board Ian Williamson - chief executive Robert Brooksbank - finance director 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 2007 which comprises the consolidated income statement, the consolidated statement of recognised income and expense, the consolidated balance sheet, the consolidated statement of cash flows and the related explanatory notes. We have read the other information contained in the half yearly financial report 2007/08 and considered whether it contains any apparent mis-statements 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. As disclosed in note 1, 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 2007/08 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 2007 is not prepared, in all material respects, in accordance with IAS 34 as adopted by the EU and the DTR of the UK FSA. KPMG Audit Plc Chartered Accountants 1 The Embankment Neville Street Leeds LS1 4DW 27 November 2007 This information is provided by RNS The company news service from the London Stock Exchange

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