Final Results

RNS Number : 2065J

Carclo plc

10 June 2014

 



For immediate release                                                                                                10 June 2014

Carclo plc

("Carclo" or "the group")

Carclo plc, the technology led plastics group, today announces its full year results for the year ended 31 March 2014.

Financial Highlights
		Year ended 31 March  2014		Year ended 31 March 2013	Increase
		£000		£000	%
Revenue
Technical Plastics		58,080		55,335	5.0
LED Technologies		28,160		23,013	22.4
Precision Engineering		7,776		7,505	3.6
Conductive Inkjet Technology		3,251		661	391.8
Total		97,267		86,514	12.4
Operating profit before exceptional items			6,551	5,585	17.3
Operating profit		6,031		4,915	22.7
Profit before tax		4,771		3,217	48.3
Basic earnings per share		5.5p		4.3p	27.9
Total dividend per share		2.65p		2.55p	3.9
Net debt		17,680		9,178	92.6
The comparatives have been restated in respect of the revisions to IAS 19 - "Employee Benefits"

·     Revenue increased by 12.4% to £97.3 million reflecting strong sales in our traditional divisions alongside increasing sales at Conductive Inkjet Technology ("CIT")

·     Divisional underlying operating profit was £8.6 million (2013 - £7.7 million) and underlying operating profit from continuing operations was in line with expectations at £6.6 million (2013 - £5.6 million)

·     Total dividend increased by 3.9% to 2.65 pence per share

·     Conductive Inkjet Technology ("CIT") coating line operating well and at high yields

·     Increased investment in Carclo Diagnostic Solutions ("CDS") underpinned by technological and commercial developments

·     Strong performance by LED Technologies, driven by Wipac supercar lighting business

·     Technical Plastics well placed to enjoy period of high growth and margin improvement

Commenting on the results, Michael Derbyshire, chairman said -

"The group is poised for further growth both in its traditional areas and in its new technology ventures. It has the resources, bank facilities and business prospects to drive this growth over the coming years and generate shareholder value." 

Enquiries

Carclo plc                                                                                          020 7067 0700 (today)

Chris Malley, chief executive                                                             01924 268040 (thereafter)

Robert Brooksbank, finance director                                                

Weber Shandwick Financial                                                              020 7067 0700

Nick Oborne

Stephanie Badjonat

A presentation for analysts will be held at 9.00 a.m. on 10 June 2014 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 group. It is a public company whose shares are quoted on the London Stock Exchange.

Carclo's strategy has been to develop new technologies and products to drive future growth. Its investment in CIT has led to the introduction of a new material for use in Capacitive Touch Screens. Further investment has been made in Carclo Diagnostic Solutions, where a novel Point-of-Care hardware platform has been developed.

Approximately three fifths of revenues are currently 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 LED based systems to the premium automotive industry, as well as key control systems for the aerospace industry.

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 produced a solid financial performance and continued to make encouraging strategic progress during the year ended 31 March 2014, notwithstanding the difficulties in building volumes in Conductive Inkjet Technology's ("CIT's") touch sensor business. Group revenues and profits benefitted from a strong second half as expected and all divisions reported increased sales relative to the prior year. These results take account of the changes made following the revisions to IAS 19 - "Employee Benefits" and these changes have also been applied to the comparatives. The highlights for the year were -

Financial highlights

·     Revenue increased by 12.4% to £97.3 million reflecting good sales growth from traditional divisions alongside increasing sales from CIT

·     Divisional underlying operating profit was £8.6 million (2013 - £7.7 million) and underlying operating profit from continuing operations £6.6 million (2013 - £5.6 million)

·     Exceptional charge of £0.5 million (2013 - £0.7 million) was due mainly to £0.4 million of litigation costs (2013 - £0.4 million) in respect of our claim against Uni-Pixel Inc. which has now been settled

·     Profit before tax increased by 48.3% to £4.8 million (2013 - £3.2 million)      

·     Basic earnings per share increased from 4.3 pence to 5.5 pence

·     Group capital expenditure was £7.2 million (2013 - £8.7 million) continuing our significant investment in our growth businesses

·     Due to the high capital expenditure incurred, the cash cost of developing our technology businesses and the utilisation of the Atmel Corporation ("Atmel") prepayment, net debt increased from £9.2 million to £17.7 million in the year

·     Committed debt facilities increased to £26.0 million

·     Total dividend increased by 3.9% to 2.65 pence per share

Strategic and Operational highlights

·     Conductive Inkjet Technology ("CIT") commenced volume sales of coated film to our partner Atmel in the year and, despite more challenging commercial conditions, it is well positioned to build a significant business to supply its innovative products within this large and growing market. We have now created a standalone business within CIT tasked with commercialising our Printed Electronics technology and are working on a number of new projects

·     Carclo Diagnostic Solutions ("CDS") has continued to develop its disposable Point-of-Care platforms and has now supplied functioning devices to EKF Diagnostics plc for testing with its pi-GST kidney marker. A full independent review has been undertaken of the market opportunities and this identified several additional product application areas, the most suitable of which have been integrated into the development plan

·     In Technical Plastics, turnover, operating profits and margins increased compared to the prior year. Business development has been extremely successful in the year and this will support strong growth in future revenue. We have reviewed our manufacturing structure which will result in the expansion of our Czech facility  and the closure of one of our UK plants

·     LED Technologies had an excellent year and overall underlying operating profit moved ahead by £0.4 million to £2.6 million.  Our Wipac supercar lighting business has benefitted from significant design wins from new and existing customers which will drive several years of double digit growth. The LED Optics business has gained new OEM program wins and is now also in a good growth phase

·     Precision Engineering has continued to generate good profits. In March 2014, the group disposed of the Birkett Cutmaster bandsaw business for £0.3 million. This will have minimal effect on the division's future profitability

Dividend

The proposed final dividend of 1.80 pence per share brings the total dividend for the year to 2.65 pence per share (2013 - 2.55 pence). This represents an increase of 3.9% and further emphasises the solid financial performance for the year and the board's confidence in the group's prospects.

 

Employees

I would like to thank all those employed by Carclo in the year under review for their continuing substantial contribution. 

 

Outlook

Whilst the touch screen market has become significantly more competitive we are well positioned for our touch business to grow. Our partnership with Atmel Corporation remains strong and we are both committed to growing the XSense™ business. We are continuing to enhance our product offering and we believe our technical solution remains very attractive to potential customers. We are now investing further in our Printed Electronics business where we believe we have developed a strong product offering.

Following the commercial review of CDS we have prepared an aggressive development plan to drive the technology forward for use in several high value application areas where the overall market size is an estimated £2.5 billion.

Technical Plastics continues to win new business and, following a reorganisation of our manufacturing resources, we are now well positioned to drive efficiencies and increase our net operating margins towards our medium term target of 10%.

Our LED Technologies division, including Wipac our niche supercar lighting business, has now succeeded in launching its LED dip beam light into the supercar segment and this continues to create additional opportunities. We are currently improving and expanding our manufacturing capabilities to cope with the large influx of new work. A marketing emphasis on optics clusters within LED Optics has been successful and further design enhancements for our optics range have recently been concluded to support future growth.

Precision Engineering, which now consists of our aerospace businesses, remains both profitable and cash generative.

In summary, the group is poised for further growth both in its traditional areas and in its new technology ventures. It has the resources, bank facilities and business prospects to drive this growth over the coming years and generate shareholder value.

Michael Derbyshire

10 June 2014

Chief executive's review

Strategy

The commercialisation of Conductive Inkjet Technology's ("CIT's") touch sensor business continues to have a very high focus for the group.  The year ended 31 March 2014 saw a significant increase in revenue over the previous year, albeit market conditions have been more challenging than initially anticipated, hindering our ability to predict adoption and subsequent revenue growth with any accuracy. Whilst progress in commercialising our touch sensor technology has not been at the expected pace, our commercial partner Atmel Corporation ("Atmel") has, so far, announced three design wins with HP, a testament to the potential of this technology. Looking forward we believe that the success of our touch business is now more dependent on the ability of the whole supply chain to be price competitive than on the actual technology itself. We are working closely with Atmel in this area. Our coating line in Cambridge is operating well and at high yields and we have significant available capacity to support a future ramp up in demand for XSense™.

As discussed last year CIT has now created a separate Printed Electronics business, focused on commercialising and further developing our novel low cost printed electronic circuits. The addition of a pilot plant for component assembly was completed on schedule and a strategy has been developed to enable a significant push of this technology area throughout the new financial year. Our major focus will be the integration of circuitry into medical devices, however there are several other programs in addition to this that are providing an interesting pipeline of potential products.

There were significant business wins for our largest operating divisions, Technical Plastics and LED Technologies, and we exited the year with a record value of new enquiries. We are confident that we are entering a strong and sustainable phase of growth in these businesses.

Our expanded Technical Plastics operation, in Latrobe, USA, is now operational and this has been the catalyst for winning several new medical programs from new and existing customers. In addition we are finalising a lease for a further factory in the Czech Republic, adjacent to our existing facility, in order to support new business wins from a range of global customers in both the medical and other technical plastic markets. As well as our USA and Czech expansions, we expect to initiate additional manufacturing capacity in our facilities in Mitcham, Shanghai and Bangalore during this current year as we see customer demand increase for those locations. We recently announced the closure of our loss making Harthill, UK operation in early May 2014 and we expect to complete our exit from this facility by the end of the year, with several of the existing programs planned to move to our other manufacturing locations.

We have now created an aggressive business plan for Carclo Diagnostic Solutions ("CDS") focused on the development of a further two programs in addition to the pi-GST kidney marker device test which we are developing in co-operation with EKF Diagnostics plc ("EKF") and our whole blood coagulation device. The further programs are for a cardiac marker device ("Troponin-l") and an infectious disease device ("CRP") and these are both substantial potential markets. In order to support this new business plan we are increasing our investment through the creation of a Cambridge based life sciences group located in our CIT facility to work alongside the existing Daresbury based team.

Our LED Technologies businesses are enjoying growth both in Wipac's supercar lighting sector as well as the smaller LED Optics area. Within the supercar segment we have secured multiple new programs and we are in the final stages of negotiations for several others. The program awards will result in significant design and tooling activity over the next three years leading to over five years of subsequent manufacture. We are increasing our research investment into next generation lighting technologies as we enter long-term development partnerships with several of our customers in order to drive further growth in this business.

We divested our small bandsaw business at year end leaving our Precision Engineering business solely consisting of our UK and French aerospace component manufacturers. Whilst a large proportion of our business is related to current aircraft build programs, we also supply the aerospace spares market.

 

Business in detail

Conductive Inkjet Technology (Touch)

CIT commissioned its coating manufacturing facility on time early in the financial year and all coated film manufacturing was successfully migrated from the original pilot line to the new high-speed line ahead of schedule. Annual sales of coated film amounted to £3.3 million during the year, being a mix of sales for our partner's production qualification and sales for end customer products. Two program wins were announced during the financial year (HP Omni 10™ and the HP EliteBook Revolve 810 G2™) and one was subsequently announced soon after (HP ElitePad 1000 G2™). All three program wins were for HP products with screen sizes in the range of 10.1" to 11.6".

During the financial year there were significant changes within the touch industry as a result of new competitors entering the market and latterly as a result of ITO vendors both lowering ITO prices and also improving electrical performance of these materials. It has been widely reported that there are over 20 companies now claiming to have metal mesh technologies. In practice competition has come mainly from a Japanese and a Chinese metal mesh manufacturer. In order to gain market share our competitors have priced aggressively against ITO based touch sensors, in particular the single layer One Glass Solution ("OGS") and the more mature Glass Film Film ("GFF") versions.

A combination of lower pricing and an aggressive purchasing stance from the OEMs, who are looking to include touch functionality as a standard content into the portable computer segment, has reduced the effective price of touch sensors by around half during the last twelve months. Premiums that were available for larger sensors, (i.e. those over 10"), due to the historical difficulty in manufacturing at these sizes with ITO, are no longer available. The touch sensor market remains an enormous market and manufacturers including HP, ASUS, Lenovo, Dell and a number of Chinese white box manufacturers are all believed to be using metal mesh solutions, from various suppliers, in several of their products and the adoption of metal mesh remains a key strategic objective of the major OEMs.

CIT has continued to evolve its metal mesh technology with a focus on manufacturing efficiency increases, line width reductions and substrate agnosticism. The key developments during the year in these areas are either in evaluation trials with our partner or in the final stages of scaled up testing within our Cambridge facility. We are well resourced to scale coated film output from our Cambridge operation to support growth in sales of touch sensor materials. There are now limited needs for additional capital expenditure in our operation. During the year our manufacturing effort has been focused on continuing to drive our technology to improve both output yields and cost efficiency. We are working closely with our partner in order to support the cost competitiveness of our product and assist them to increase market take-up.

Carclo Technical Plastics

Sales increased from £55.3 million to £58.1 million and underlying operating profit increased from £4.0 million to £4.6 million. The sales increase came predominantly from growth in key medical accounts. Operating margins improved from 7.1% to 7.9% consistent with our target of achieving 10% margins in the medium term.

Our operations are located in the USA, UK, Czech Republic, China and India. Our focus on new business development has been very high and we have won significant new work for our USA and Czech facilities which both performed strongly in the 2013/14 financial year. For the USA this new work is centred on our newly expanded Latrobe factory. The increase in Czech activity has resulted in a need for further manufacturing capacity, and therefore we are in the final stages of concluding a lease for an additional 2,800 SQM of manufacturing space in Brno immediately adjacent to our existing building and expect this facility to be active by the autumn of this year. This additional space will enable a significant growth in our Czech plant's revenues over the coming years.

Our Indian facility has also performed well and continues to service a major global ATM customer. We are now actively pursuing other work from global organisations operating within India and believe that this market will be strong for us in future years.

As a result of our efforts, we expect to see significant improvements in plant utilisation over the next two years. We believe that the new programs we have secured will contribute to performance in the new financial year with the full effect being seen in 2015/16 as new programs tend to only hit efficiency targets after several months of manufacturing.

Our Chinese operation had a more difficult year with reduced schedules from its major customer.  As part of our business development efforts we have now focused our Chinese plant on targeting programs for international companies serving the local domestic markets. We are currently planning for the introduction of class 8 cleanrooms in our Chinese factory and we believe that this improved facility, together with our leading global quality procedures, will be a major growth driver for this operation. Growth in the UK medical device market has been strong and we have secured several new programs which will deliver growth into our Mitcham facility.

In order to improve our utilisation and cost effectiveness we recently announced the closure of our smaller non-medical operation in Harthill, UK. This business had been loss making for several years despite our best efforts and those of our dedicated workforce. These losses were partly attributable to the small size of this plant versus the overhead structure required to manage such a facility. This closure will enable our exit from lower margin work and will also allow a reallocation of the higher margin and more sustainable programs to our other plants.

We are now very well placed to enjoy an extended period of high growth and margin enhancement across all of our remaining facilities over the coming years.

LED Technologies

Sales in LED Technologies increased from £23.0 to £28.2 million, operating profit was up from £2.2 to £2.6 million. 80.8% of our sales (2013 - 81.1%) came from our Wipac supercar lighting business with the balance from LED optics.

Wipac has now secured new lighting programs for a number of leading global supercar brands. During the financial year we were awarded design and manufacture contracts for six new vehicles. We are also in the final stages of negotiation for lighting contracts for several other vehicles. To put this into perspective, we would normally have anticipated winning two or three lighting contracts per year. These new programs are now in the design phase and will flow through into manufacturing in around two to three years. These new contracts represent a significant step forward for our Wipac business, as whilst the vehicle production numbers are modest across this segment (normally lower than 10,000 vehicles per annum per model), the number of models that we will be manufacturing represents a step change on any previous levels. We are therefore investing approximately £4.0 million over the next two years into our facilities to ensure that we have the manufacturing and efficiency capabilities to meet our customers' highly demanding expectations.

We aim to have a truly world class manufacturing operation as we believe that we can continue to grow strongly within this segment. We now service most of the leading iconic automotive brands and have focused heavily during the year on building more strategic relationships with our key customers to ensure our own lighting research and development activities and theirs are well aligned. Revenue on new programs is recognised throughout the design and manufacturing start-up phase before moving to more traditional piece part pricing and as such we have good visibility over the coming years of how this business is likely to grow.

 

The strategy of our Carclo Optics operation has been realigned to provide a greater focus on developing and supplying bespoke 'cluster' optics for major OEMs rather than smaller individual optics. This strategy has been successful and a number of OEM programs have been brought to market using Carclo Optics during the year. The business increased its turnover by 34.3% in 2013/14. We have completed the lease on a larger facility in Aylesbury to relocate from our existing facility in Slough upon the expiry of the lease for that building. This move will combine the Optics design and distribution business with that of our Wipac aftermarket distribution business to free up space in Wipac's Buckingham UK facility. In order to continue to drive momentum into the growth of our optics business, we will move a large proportion of our manufacturing of the Optics from our Technical Plastics business to within our LED Technologies division to simplify customer interaction and increase management focus. We are also investing in new ranges of innovative optics enabling both a class leading performance as well as the ability to create custom light clusters which utilise these optics in a low cost modular format.

We expect our LED Technologies division to maintain double digit revenue growth for the coming years and this will drive year on year growth in margins.

Precision Engineering

Sales increased from £7.5 to £7.8 million and operating profits remained at £1.5 million. The year was aided by a one-time contract for remedial machining of a Tier 1 supplier's parts for a major OEM. Adjusted for this one-off revenue the underlying financial performance was lower year on year and reflected a reduction in volumes at our French operations due to a combination of lower build rates for a key helicopter customer and lower cable assembly spares for older aircraft.

This business will remain profitable and we will continue to focus the business towards OEM supply to replace the inevitable reduction in spares for older aircraft as they are retired.

We disposed of the business, assets and stocks of our Birkett Cutmaster bandsaw business at the end of the year for £0.3 million in cash; this disposal will have minimal impact on the division's future profitability.

Carclo Diagnostic Solutions

Our CDS business has developed fully disposable, novel Point-of-Care diagnostics platforms which do not rely on a secondary reader for analysis and quantitative results. CDS platforms integrate low cost electronics from CIT with microfluidic mouldings from our Technical Plastics business.

Earlier in the year CDS partnered with EKF Diagnostics plc ("EKF") to develop its Micropoc-pro platform to be used with EKF's acute kidney injury marker ("pi-GST"). Initial patient sample trials are now underway; the first indicative results for the platform are encouraging. Further sample trials with larger numbers of devices are planned over the coming months. Aside from the potential commercial rollout of a disposable point of care kidney injury marker device, this joint program has enabled us to rapidly develop our Micropoc-pro platform and to better understand its likely specificity and sensitivity.

Having had CDS as an embryonic technology for several years, it was appropriate to conduct a full strategic review of this business and, working with a leading global medical device consultancy firm, we considered whether our technology was relevant to the industry, whether it was sufficiently unique and whether our market focus was appropriate. The outcome of the review was very positive and provided a strong recommendation on the most suitable market application areas for the current technology base.

On the basis of this review, along with information we have received from potential partners, we are now in the process of increasing our investment in CDS in order to realise the high potential from our technology. We have commenced the recruitment of a life sciences technical group based within our CIT Cambridge facility. This new team will work alongside our existing Daresbury team and focus on an aggressive development of our device in a total of four application areas. The first two applications are consistent with our previous effort, being the kidney injury marker ("pi-GST") and a whole blood coagulation device. In addition we will develop two other devices, the first for a Cardiac Marker ("Troponin-l") used to diagnose acute myocardial infarction ("AMI") as well as heart muscle cell death and a second for an infectious disease marker ("CRP") used to diagnose a number of conditions including bacterial infections, cardiac conditions and certain cancers. In all cases we plan to use pre-existing third party reagents during the initial stages of development. We have now developed a detailed work plan.

The markets for the four products identified have a combined value of over £2.5 billion and are growing rapidly. Our business model is focused on the initial development of an optimised demonstration device, in collaboration with partners, and thereafter licensing deals would be expected to provide either one-off or recurring revenues.

This business is still in its early stages and there remains a level of technical risk associated with our platforms and their suitability for the chosen application areas. Progress has been sufficiently positive such that we see accelerating our investment as necessary if we are to realise the potential of this development.

CIT Printed Electronics

Having already created a high volume and low cost method of creating copper on film circuitry we are now focused on finding appropriate applications for this technology. This printed electronics technology development was the precursor to our touch screen developments and the focus on touch screens left the simpler lower cost "printed" version of our technology sitting in the background. We have now created a standalone business within CIT tasked with commercialising this technology. We completed the installation of pilot scale production equipment during the year to add component assembly on to our materials so that we can demonstrate the unique capabilities of this technology to customers and also supply small scale production of functioning product. Our own focus will be on integrating electronics into medical devices and as such we are working on several technology demonstrators. We are also working on a number of other projects in printed electronics as well as projects that utilise our fine line technology. Our strategy will be to focus on medium term revenue opportunities which may be supplied from our own facilities or built by external partners.

Chris Malley

10 June 2014

 

Finance director's review

 

 

Financial summary

	2014 £million	2013 restated £million
Revenue	97.3	86.5
Divisional operating profit	8.6	7.7
Unallocated	(2.0)	(2.1)
Underlying operating profit from continuing operations	6.6	5.6
Exceptional items	(0.5)	(0.7)
Net bank interest	(0.6)	(0.6)
Net interest on the net defined benefit liability	(0.7)	(1.1)
Profit before tax	4.8	3.2
Income tax expense	(1.2)	(0.4)
Loss on discontinued operations	(0.0)	(0.1)
Profit attributable to ordinary shareholders	3.6	2.7
Ordinary dividend paid or declared	(1.7)	(1.6)
Surplus for the year	1.9	1.1
Divisional operating margin from continuing operations	8.8%	8.9%
Basic earnings per share	5.5p	4.3p
Underlying earnings per share	6.1p	5.2p
The comparatives have been restated in respect of the revisions to IAS 19 - "Employee Benefits".

Group sales in the financial year were £97.3 million (2013 - £86.5 million).  The £10.8 million increase was mainly due to the significant growth in turnover in LED Technologies to £28.2 million (2013 - £23.0 million) and an increase in sales at Conductive Inkjet Technology ("CIT") to £3.3 million (2013 - £0.7 million).  Technical Plastics also reported higher revenues at £58.1 million (2013 - £55.3 million) and Precision Engineering also saw slightly higher revenues at £7.8 million (2013 - £7.5 million).

Divisional operating profit was £8.6 million (2013 - £7.7 million) and underlying operating profit from continuing operations was £6.6 million, £1.0 million higher than in the previous year (2013 - £5.6 million).  Unallocated costs were £2.0 million (2013 - £2.1 million). Unallocated costs comprised central group administration costs and the expenditure associated with administrating the group pension scheme which are now charged directly to the income statement in line with the revised accounting provisions of IAS 19 - "Employee Benefits" ("IAS 19") which have also been applied to the comparatives.  As expected, the second half of the year was much stronger in both Technical Plastics and LED Technologies and both divisions reported higher operating profits in the second half of the year than in the first half.

Profit before tax was £4.8 million (2013 - £3.2 million) after an exceptional charge of £0.5 million (2013 - £0.7 million), and this predominantly related to the cost of the group's litigation claim against Uni-Pixel Inc. which has now been settled.

Net bank interest at £0.6 million (2013 - £0.6 million) was at a similar level to the prior year.  The net pensions financing charge under the provisions of IAS 19 was £0.7 million (2013 - £1.1 million restated for the changes to IAS 19) reflecting the decrease in the deficit in the period to 31 March 2013. 

The group tax charge for the year was £1.2 million (2013 - £0.4 million).  This equates to an effective tax rate of 24.8% which compares to the current UK corporation tax rate of 23%.  The higher effective rate is due to profits earned in higher tax jurisdictions.

 

Net debt and gearing

	2014 £million	2013 £million
Underlying cash flow	7.3	13.1
Interest and tax	(1.4)	(1.5)
Capital expenditure	(7.5)	(8.2)
Free cash flow	(1.6)	3.4
Pension payments	(1.0)	(1.0)
Non recurring	(0.6)	(0.6)
Proceeds from issue of share capital	0.4	12.8
Performance share plan awards	(0.9)	(0.2)
Equity dividends	(1.7)	(1.5)
Cash flow from corporate activities	(5.4)	12.9
Development expenditure	(3.5)	(3.8)
Acquisitions and disposals	(0.0)	(0.1)
Exchange movement	0.4	(0.2)
(Increase) / decrease in net debt in year	(8.5)	8.8

Net debt comprises interest bearing loans and borrowings less cash and cash deposits.

Group debt increased to £17.7 million at 31 March 2014 (2013 - £9.2 million).  This represents gearing of 23.7% (2013 - 11.9%) after excluding the net pension surplus of £0.2 million (2013 - net pension deficit of £11.9 million).  The prior year cash flow was inflated by the receipt of the US$10.0 million prepayment from our partner Atmel Corporation ("Atmel") at the end of 2013 financial year and this prepayment partially unwound during the 2014 financial year.  On a like for like basis underlying cash flow of £8.1 million was £1.0 million higher than in the prior year (2013 - £7.1 million). 

Group capital expenditure in cash terms was £7.5 million (2013 - £8.2 million) representing 200% of the total group depreciation charge (2013 - 229%).  This is the second year of above depreciation capital expenditure and this was due mainly to the capital cost of the US Technical Plastics facility expansion.

Pension contributions of £1.0 million (2013 - £1.0 million) were made during the year in respect of the annual deficit recovery plan payment.  The group also paid the pension scheme administration costs of £0.6 million (2013 - £0.6 million).

Development expenditure of £3.5 million (2013 - £3.8 million) was capitalised during the year. £2.4 million of this related to CIT whilst £1.1 million related to Carclo Diagnostic Solutions ("CDS").

Group debt will increase further during the current financial year due to another year of high capital expenditure to fund the group's significant growth prospects.

Financing

As at 31 March 2014 the group's net debt was £17.7 million and the group had total bank facilities of £31.4 million, which included committed facilities of £20.0 million which expire in November 2015, and which were drawn to £17.6 million as at 31 March 2014.  Since the year end, we have negotiated an additional £6.0 million of committed facility with one of our lending banks.  This facility, which is priced competitively in line with our existing facilities, will also expire in November 2015.  This additional facility will provide the group with sufficient headroom in order to fulfil its capital investment plans over the current financial year in order to drive significant future growth.

The two main covenants in the facility agreements are interest cover and the ratio of net debt to EBITDA and the group has a very comfortable level of headroom on both of these covenants as at 31 March 2014.  Under the facility agreements the group's banks have security in the form of guarantees from certain group companies and fixed and floating charges over the current assets of the group's three main UK trading subsidiaries.

Pensions

As at 31 March 2014 the group pension scheme showed a small surplus of £0.2 million (2013 - deficit of £11.9 million, net of deferred tax) as calculated under IAS 19.  Whilst the defined benefit pension liability reduced slightly to £183.6 million (2013 - £185.9 million), the fair value of the plan assets increased significantly to £183.8 million (2013 - £170.5 million).  The trustees of the pension scheme are in the final stages of revising the investment strategy to incorporate diversified growth funds and liability driven investment products in order to reduce the risk on the liability and maintain growth potential for the assets moving forward.

These results take account of the changes made following the revisions to IAS 19 and these changes have also been applied to the comparatives.  The amendments to the accounting standard result in pension scheme administration costs being charged directly to the income statement, within the central cost allocation, whilst the pension financing credit/charge is determined directly by applying the discount rate to the net defined benefit asset or liability.  The impact on the results for the financial year is to reduce operating profit by £0.6 million (2013 - £0.6 million) and increase net finance expense by £2.1 million (2013 - £1.2 million).

The cash cost of the pension scheme to the group during the financial year was £1.6 million.  This includes the annual recovery plan contribution of £1.0 million and scheme administration costs of £0.6 million. The recovery plan contribution was part of the recovery plan agreed with the trustees subsequent to the scheme triennial valuation at 31 March 2012.  Under this recovery plan annual contributions will remain at around £1.0 million (indexed annually at 2.9%) for the remaining recovery plan period of 12 years from 31 March 2012.  The next triennial valuation will be on 31 March 2015.  At 31 March 2014 group properties with a net book value of £6.4 million were subject to a registered charge in favour of the group pension scheme.

Conductive Inkjet Technology

CIT reported revenues of £3.3 million (2013 - £0.7 million) and a small underlying operating loss of £0.2 million for the year (2013 - £nil) after an amortisation charge totalling £0.8 million (2013 - £0.2 million).  This amortisation charge on the intangible assets of the business will be higher in the current financial year to reflect a full year's charge.

CIT received the US$10.0 million prepayment from Atmel at the end of the 2012/13 financial year and this has reduced during the 2013/14 financial year against sales of coated film. 

CIT incurred capital expenditure of £1.1 million (2013 - £3.5 million) during the year. In addition, the total amount of development expenditure capitalised was £2.4 million (2013 - £2.9 million).  The group balance sheet now includes intangible assets totalling £21.1 million in respect of CIT (2013 - £19.5 million), with £14.1 million (2013 - £12.5 million) of this amount being capitalised development costs funded by the group. The remaining £7.0 million represents the fair value assigned to the intellectual property that arose from the accounting treatment of the previous acquisitions of the minority holdings from our original joint venture partner.  The group's policy is to conduct an annual impairment review in respect of the goodwill and to amortise the other intangible assets on a straight line basis over the estimated economic life of the intangible asset which has now been judged to be a period of up to 10 years from the date upon which the patent or related development expenditure becomes available for use. The reduction in the estimated economic life from 12 years to 10 years reflects a more prudent view by the directors and this will result in higher annual amortisation charges going forward. 

CIT has incurred legal costs of £0.4 million in the year ended 31 March 2014 (2013 - £0.4 million) in respect of its litigation against Uni-Pixel Inc.  This litigation has now been settled and minimal further costs are expected in the current financial year.

Carclo Diagnostic Solutions ("CDS") and Platform Diagnostics ("PDL")

In the financial year the group incurred £1.1 million of development costs (2013 - £0.8 million) in respect of CDS and these costs have been capitalised on the group balance sheet.  This increases the total fair value of intangible assets relating to the group's investment in CDS and PDL to £5.4 million.

Robert Brooksbank

10 June 2014

Consolidated income statement

year ended 31 March

	Notes	2014   £000		2013 restated* £000
Revenue	3	97,267		86,514
Underlying operating profit
Operating profit before exceptional items		6,551		5,585
-  rationalisation costs	4	(92)		(161)
-  litigation costs	4	(428)		(414)
-  exit from Ford volume automotive communication business	4	-		(95)
After exceptional items		6,031		4,915
Operating profit	3	6,031		4,915
Finance revenue		16		12
Finance expense		(1,276)		(1,710)
Profit before tax		4,771		3,217
Income tax expense		(1,179)		(408)
Profit after tax but before loss on discontinued operations		3,592		2,809
Loss on discontinued operations, net of tax		(37)		(70)
Profit after tax		3,555		2,739
Attributable to -
Equity holders of the parent		3,597		2,767
Non-controlling interests		(42)		(28)
		3,555		2,739
Earnings per ordinary share	5
Basic - continuing operations		5.5  p		4.4  p
Basic - discontinued operations		(0.0)  p		(0.1)  p
Basic - total		5.5  p		4.3  p
Diluted - continuing operations		5.5  p		4.4  p
Diluted - discontinued operations		(0.0)  p		(0.1)  p
Diluted - total		5.5  p		4.3  p

* The comparatives have been restated in respect of the revisions to IAS 19 - "Employee Benefits ". More detail is set out in note 2 to this preliminary statement.

 

Consolidated statement of comprehensive income

year ended 31 March

	2014 £000		2013 restated* £000
Profit for the period	3,555		2,739
Other comprehensive income -
Items that will not be reclassified to the income statement
Remeasurement gains on defined benefit scheme	15,365		7,225
Deferred tax arising	(4,196)		(2,237)
Total items that will not be reclassified to the income statement	11,169		4,988
Items that are or may in the future be classified to the income statement
Foreign exchange translation differences	(3,029)		607
Deferred tax arising	222		(185)
Total items that are or may in the future be classified to the income statement	(2,807)		422
Other comprehensive income, net of tax	8,362		5,410
Total comprehensive income for the period	11,917		8,149
Attributable to -
Equity holders of the parent	11,959		8,177

Non-controlling interests                                                                                                                                         (42)                    (28)       

Total comprehensive income for the period

11,917

8,149

* The comparatives have been restated in respect of the revisions to IAS 19 - "Employee Benefits". More detail is set out in note 2 to this preliminary statement.

 

Consolidated statement of financial position

as at 31 March

		Notes	2014 £000		2013 £000
Assets
Intangible assets			45,994		44,516
Property, plant and equipment			35,657		33,449
Investments			7		6
Deferred tax assets			4,789		9,741
Retirement benefit obligations		7	239		-
Total non current assets			86,686		87,712
Inventories			13,363		12,574
Trade and other receivables			21,136		19,444
Cash and cash deposits			11,764		16,098
Total current assets			46,263		48,116
Total assets			132,949		135,828
Liabilities
Interest bearing loans and borrowings			17,569		18,308
Deferred tax liabilities			6,642		6,720
Retirement benefit obligations		7	-		15,476
Total non current liabilities			24,211		40,504
Trade and other payables			20,163		20,979
Current tax liabilities			2,144		2,255
Interest bearing loans and borrowings			11,875		6,968
Total current liabilities			34,182		30,202
Total liabilities			58,393		70,706
Net assets			74,556		65,122
Equity
Ordinary share capital issued		8	3,303		3,258
Share premium			21,291		20,901
Other reserves			3,584		3,584
Translation reserve			1,766		4,795
Retained earnings			43,781		31,504
Total equity attributable to equity holders of the parent			73,725		64,042
Non-controlling interests			831		1,080
Total equity			74,556		65,122
Approved by the board of directors and signed on its behalf by -
Michael Derbyshire	} directors
Robert Brooksbank
10 June 2014

 

Consolidated statement of changes in equity

Attributable to equity holders of the company

	Share		Share		Translation		Other		Retained				Non-controlling				Total
	capital		premium		reserve		reserves		earnings		Total		interests				Equity
	£000		£000		£000		£000		£000		£000		£000				£000
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	-		-		-		-		2,767		2,767		(28)				2,739
Other comprehensive income -
Foreign exchange translation differences	-		-		607		-		-		607		-				607
Remeasurement gains on defined benefit scheme	-		-		-		-		7,215		7,215		-				7,215
Taxation on items above	-		-		-		-		(2,412)		(2,412)		-				(2,412)
Transactions with owners recorded directly in equity -
Share based payments	-		-		-		-		189		189		-				189
Dividends to shareholders	-		-		-		-		(1,071)		(1,071)		-				(1,071)
Exercise of share options	1		23		-		-		-		24		-				24
Issue of shares net of costs	154		12,492		-		-		-		12,646		-				12,646
Proceeds from sale of own shares	-		-		-		-		6		6		-				6
Performance share plan awards	13		90		-		-		(246)		(143)		-				(143)
Taxation on items recorded directly in equity	-		-		-		-		48		48	-	-				48
Balance at 31 March 2013	3,258		20,901		4,795		3,584		31,504		64,042		1,080				65,122
Balance at 1 April 2013	3,258		20,901		4,795		3,584		31,504		64,042		1,080				65,122
Profit for the period	-		-		-		-		3,597		3,597		(42)				3,555
Other comprehensive income -
Foreign exchange translation differences	-		-		(3,029)		-		-		(3,029)		-				(3,029)
Remeasurement gains on defined benefit scheme	-		-		-		-		15,365		15,365		-				15,365
Taxation on above	-		-		-		-		(3,974)		(3,974)		-				(3,974)
Transactions with owners recorded directly in equity -
Share based payments	-		-		-		-		34		34		-				34
Dividends to shareholders	-		-		-		-		(1,674)		(1,674)		-				(1,674)
Exercise of share options	10		122		-		-		-		132		-				132
Performance share plan awards	35		268		-		-		(913)		(610)		-				(610)
Increase in holding in subsidiary with non-controlling interests	-		-		-		-		192		192		(207)				(15)
Taxation on items recorded directly in equity	-		-		-		-		(350)		(350)	-	-				(350)
Balance at 31 March 2014	3,303		21,291		1,766		3,584		43,781		73,725		831				74,556

Consolidated statement of cash flows

year ended 31 March

	Notes	2014 £000		2013 £000
Cash generated from operations	9	5,627		11,303
Interest paid		(641)		(624)
Tax paid		(753)		(852)
Net cash from operating activities		4,233		9,827
Cash flows from investing activities
Proceeds from sale of property, plant and equipment		60		227
Interest received		16		12
Cash flow on discontinued operations		(37)		(70)
Acquisition of property, plant and equipment		(7,352)		(8,174)
Acquisition of intangible assets - computer software		(110)		(26)
Investment in Platform Diagnostics Limited		(15)		-
Development expenditure		(3,519)		(3,765)
Net cash from investing activities		(10,957)		(11,796)
Cash flows from financing activities
Proceeds from issue of share capital net of costs		-		12,646
Proceeds from exercise of share options		132		128
Proceeds from sale of own shares		-		6
Drawings on term loan facilities		-		350
Repayment of borrowings		-		(1,600)
Cash outflow in respect of performance share plan awards		(610)		(246)
Dividends paid		(1,674)		(1,534)
Net cash from financing activities		(2,152)		9,750
Net (decrease) / increase  in cash and cash equivalents		(8,876)		7,781
Cash and cash equivalents at beginning of period		9,130		1,159
Effect of exchange rate fluctuations on cash held		(365)		190
Cash and cash equivalents at end of period		(111)		9,130
Cash and cash equivalents comprise -
Cash and cash deposits		11,764		16,098
Bank overdrafts		(11,875)		(6,968)
		(111)		9,130

Notes on the accounts

1.          Notes on the preliminary statement

Basis of preparation

Whilst the financial information included in this preliminary statement has been prepared on the basis of the requirements of IFRSs in issue, as adopted by the European Union and effective at 31 March 2014, this statement does not itself contain sufficient information to comply with IFRS. The group expects to publish full consolidated financial statements on 27 June 2014.

The financial information set out in this preliminary statement does not constitute the company's consolidated financial statements for the years ended 31 March 2014 or 2013, but is derived from those financial statements. Statutory financial statements for 2013 have been delivered to the Registrar of Companies and those for 2014 will be delivered following the company's annual general meeting. The auditor, KPMG LLP, has reported on those financial statements; its report was unqualified, did not draw attention to any matters by way of emphasis without qualifying their report and did not contain statements under section 498 (2) or (3) of the Companies Act 2006 in respect of the financial statements for 2014 and 2013

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 has applied all accounting standards and interpretations issued by the IASB and International Financial Reporting Committee relevant to its operations and which are effective in respect of these Financial Statements.

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 2013 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.

Directors' liability

Neither the company nor the directors accept any liability to any person in relation to this report except to the extent that such liability could arise under English law.  Accordingly, any liability to a person who has demonstrated reliance on any untrue or misleading statement or omission shall be determined in accordance with section 90(A) of the Financial Services and Markets Act 2000.

Responsibility statement of the directors in respect of the annual report

We confirm that to the best of our knowledge -

·      the financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the company and the undertakings included in the consolidation taken as a whole; and

·      the management report, which comprises the directors' report and the strategic report includes a fair review of the development and performance of the business and the position of the company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.

2.          Accounting policies

The accounting policies have been applied consistently to all periods presented in the consolidated financial statements, unless otherwise stated.

Certain new standards, amendments and interpretations to existing standards have been published that are mandatory for the group's accounting period beginning on or after 1 April 2013.  The following new standards and amendments to standards are mandatory for the first time for the financial year beginning 1 April 2013:

Amendments to IAS 19 - "Employee Benefits (2011)";

Amendments to IAS 1 - "Presentation of Items of Other Comprehensive Income";

Amendments to IFRS 13 - "Fair Value Measurement";

Amendments to IFRS 7 - "Financial Instruments: Disclosures - Offsetting Financial Assets and Liabilities";

Amendments to IAS 32 - "Presentation"; and

Annual improvements to IFRSs - "2009-2011 Cycle."

The impact of IAS 19 -"Employee Benefits (2011)" is described below. The implementation of the other standards has only had a presentational impact.

The group adopted IAS 19 "Employee Benefits"' on 1 April 2013. The principal impact of the revised standard is that the concepts of expected return on the defined benefit obligation as separate components of the defined benefit cost have been replaced by a single concept such that interest is now calculated on the net defined benefit deficit. This calculation uses the discount rate previously used to measure defined benefit pension liabilities after allowance for any asset ceilings and  additional liability under IFRIC 14: The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction (IFRIC 14).  In addition, plan administration expenses, previously deducted from the expected return on scheme assets, are now included within operating profit. As a result of these amendments the comparative financial information in the income statement and statement of comprehensive income for the year ended 31 March 2013 has been restated. The impact on the results for the year ended 31 March 2013 is to reduce operating profit by £0.614 million, increase net finance expense by £1.183 million, reduce remeasurement losses in the statement of comprehensive income by £1.797 million, reduce the income tax expense by £0.413 million, reduce basic earnings per share from 6.5p to 4.3p and reduce diluted earnings per share from 6.4p to 4.3p. The pensions deficit has remained unchanged and so the balance sheet has not been restated. The impact on the results for the year ended 31 March 2014 has been to reduce operating profit by £0.651 million, increase net finance expense by £2.079 million and reduce remeasurement gains by £2.730 million. The impact on the current year tax expense and earnings per share have not been calculated as it would be impractical to do so.

IFRS 13 establishes a single framework for measuring fair value and making disclosures about fair value measurements, when such measurements are required or permitted by other IFRSs. In particular, it unifies the definition of fair value as the price at which an orderly transaction to sell an asset or to transfer a liability would take place between market participants at the measurement date. It also replaces and expands the disclosure requirements about fair value measurements in other IFRSs, including IFRS 7 Financial Instruments: Disclosures.

In accordance with the transitional provisions of IFRS 13, the group has applied the new fair value measurement guidance prospectively, and has not provided any comparative information for new disclosures. The change had no significant impact on the measurements of the group's assets and liabilities.

Certain new standards, amendments and interpretations to existing standards have been published that are mandatory for the group's accounting period beginning on or after 1 April 2014. The group has elected not to adopt early these standards which are described below:

Investment Entities (Amendments to IFRS 10, IFRS 12 and IAS 27)

Offsetting Financial Assets and Financial Liabilities (Amendments to IAS 32)

Recoverable Amounts Disclosures for Non-Financial Assets (Amendments to IAS 36)

IFRIC 21 - Levies

Novation of Derivatives and Continuation of Hedge Accounting (Amendments to IAS 39)

The above are not expected to have a material impact on the group's reported results.

In addition, the IASB has indicated that it will issue a new standard on accounting for leases. Under the proposals, lessees would be required to recognise assets and liabilities arising from both operating and finance leases on the balance sheet. The IASB also plans to issue new standards on insurance contracts and revenue recognition. The group will consider the financial impacts of these new standards as they are finalised.

There are no other IFRS or IFRIC interpretations that are not yet effective that would be expected to have a material impact on the group.

3.         Segment reporting

At 31 March 2014, 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).

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 on to plastic substrates.

The Unallocated segment also includes the group's development companies, Platform Diagnostics Limited and Carclo Diagnostic Solutions Limited, until these companies start to achieve income streams for the group.

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

The group's geographical segments are based on the location of the group's assets. Sales to external customers disclosed in geographical segments are based on the geographical location of its customers.

      Analysis by business segment

       The segment results for the year ended 31 March 2014 were as follows -

	Technical Plastics £000	LED Technologies £000	Precision Engineering £000	Conductive Inkjet Technology £000	Unallocated £000	Eliminations £000	Group total £000
Consolidated income statement
Total revenue	59,945	28,187	7,776	3,251	-	(1,892)	97,267
Less inter-segment revenue	(1,865)	(27)	-	-	-	1,892	-
Total external revenue	58,080	28,160	7,776	3,251	-	-	97,267
Expenses	(53,465)	(25,591)	(6,239)	(3,420)	(2,001)	-	(90,716)
Underlying operating profit	4,615	2,569	1,537	(169)	(2,001)	-	6,551
Rationalisation costs	-	-	-	-	(92)	-	(92)
Litigation costs	-	-	-	(428)	-	-	(428)
Operating profit	4,615	2,569	1,537	(597)	(2,093)	-	6,031
Net finance expense							(1,260)
Income tax expense							(1,179)
Loss on discontinued operations, net of tax							(37)
Profit after tax							3,555
Consolidated statement of financial position
Segment assets	68,235	18,354	6,491	28,427	11,442	-	132,949
Segment liabilities	(13,999)	(3,838)	(935)	(4,871)	(34,750)	-	(58,393)
Net assets	54,236	14,516	5,556	23,556	(23,308)	-	74,556
Other segmental information
Capital expenditure on property, plant and equipment	4,917	890	198	1,141	4	-	7,150
Capital expenditure on computer software	15	41	-	-	54	-	110
Capital expenditure on other intangibles	-	-	-	2,413	1,106	-	3,519
Depreciation	2,275	652	133	572	36	-	3,668
Amortisation of computer software	7	37	1	-	13	-	58
Amortisation of other intangibles	11	115	-	822	-	-	948

       Analysis by business segment

         The segment results for the year ended 31 March 2013 following restatement as a result of IAS 19 -"Employee Benefits" were as follows -

	Technical Plastics restated £000	LED Technologies restated £000	Precision Engineering restated £000	Conductive Inkjet Technology restated £000	Unallocated restated £000	Eliminations  restated  £000	Group total restated £000
Consolidated income statement
Total revenue	57,103	23,115	7,505	661	-	(1,870)	86,514
Less inter-segment revenue	(1,768)	(102)	-	-	-	1,870	-
Total external revenue	55,335	23,013	7,505	661	-	-	86,514
Expenses	(51,379)	(20,823)	(6,000)	(653)	(2,074)	-	(80,929)
Underlying operating profit	3,956	2,190	1,505	8	(2,074)	-	5,585
Rationalisation costs	(48)	(32)	-	-	(81)	-	(161)
Exit from Ford volume automotive communication business	-	(95)	-	-	-	-	(95)
Litigation costs	-	-	-	(414)	-	-	(414)
Operating profit	3,908	2,063	1,505	(406)	(2,155)	-	4,915
Net finance expense							(1,698)
Income tax expense							(408)
Loss on discontinued operations, net of tax							(70)
Profit after tax							2,739
Consolidated statement of financial position
Segment assets	65,485	17,041	6,600	32,668	14,034	-	135,828
Segment liabilities	(11,384)	(3,050)	(1,586)	(7,774)	(46,912)	-	(70,706)
Net assets	54,101	13,991	5,014	24,894	(32,878)	-	65,122
Other segmental information
Capital expenditure on property, plant and equipment	4,293	772	64	3,494	69	-	8,692
Capital expenditure on computer software	4	16	6	-	-	-	26
Capital expenditure on other intangibles	-	-	-	2,941	824	-	3,765
Depreciation	2,356	677	156	299	33	-	3,521
Amortisation of computer software	15	22	3	-	16	-	56
Amortisation of other intangibles	-	101	12	192	-	-	305

      Analysis by geographical segment

        The business operates in three main geographical regions - the United Kingdom, North America and in lower cost regions such as the Czech Republic, China and India.

        The geographic analysis was as follows -

	External revenue				Net segment assets				Expenditure on tangible fixed assets and computer software
	2014 £000		2013 £000		2014 £000		2013 £000		2014 £000		2013 £000
United Kingdom	30,091		23,056		34,104		24,757		3,152		5,248
North America	27,724		23,821		19,129		18,643		3,865		1,469
Rest of world	39,452		39,637		21,323		21,722		243		2,001
	97,267		86,514		74,556		65,122		7,260		8,718

The analysis of segment revenue represents revenue from external customers based upon the location of the customer. The analysis of segment assets and capital expenditure is based upon the location of the assets.

The material components of unallocated segment assets and liabilities are retirement benefit obligation net assets of £0.239 million (2013 - net liabilities of £15.476 million) and net borrowings of £22.198 million (2013 - £19.908 million).

One Technical Plastics customer accounted for 22.8% of group revenues (2013 - 20.4%) and one LED Technologies customer accounted for 12.4% of group revenues (2013 - 12.4%) and similar proportions of trade receivables. No other customer accounted for more than 10.0% of revenues in the year or prior year.

The unallocated segment relates to central costs and non-trading companies and also includes the group's development companies, Platform Diagnostics Limited and Carclo Diagnostic Solutions, until these companies start to achieve income streams for the group.

Deferred tax assets by geographical location are as follows, United Kingdom £3.916 million (2013 - £8.388 million), North America £0.668 million (2013 - £1.236 million), Rest of world £0.205 million (2013 - £0.119 million).

Total non-current assets by geographical location are as follows, United Kingdom £63.073 million (2013 - £64.051 million), North America £13.209 million (2013 - £12.129 million), Rest of world £10.404 million (2013 - £11.532 million).

4.   Exceptional costs

                                                                                                                                                                   2014                      2013

		£000		£000
United Kingdom
Redundancy costs		-		(77)
Exit from Ford volume automotive business		-		(95)
Litigation costs		(428)		(414)
Rationalisation costs		(92)		(81)
Rest of world
Redundancy costs		-		(3)
		(520)		(670)

Litigation costs relate to fees incurred as part of the group's proceedings against Uni-Pixel Inc.

We stated in the prior year financial statements that Conductive Inkjet Technology ("CIT") had issued proceedings in the English High Court against Uni-Pixel Inc.

On 3 April 2014 we announced that CIT and Uni-Pixel Displays, Inc (Uni-Pixel) had agreed to settle the on-going litigation in the US and the UK. CIT agreed to withdraw its UK claims that Uni-Pixel had used CIT's confidential information for a number of unauthorized purposes relating to its current technology, its past technology and also two of its patent filings. Uni-Pixel agreed to withdraw its US claims for declarations that it did not do what CIT alleged, and that CIT breached an agreement between the parties by issuing its claims in the UK courts. CIT further agreed to release any current and future claims to Uni-Pixel's past and current technology, patents and other property based on the subject matter of the suits. Uni-Pixel further agreed to grant CIT certain limited rights to use technology that would be protected by the patents arising from the disputed patent filings. No money will change hands as part of the settlement. The parties agree that Uni-Pixel owes no further duty of confidentiality to CIT regarding any CIT technology. There are no admissions of any wrong-doing in connection with this dispute.

5.   Earnings per share

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

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

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

		2014		2013 restated
		£000		£000
Profit after tax from continuing operations		3,592		2,809
Loss attributable to non-controlling interests		42		28
Profit attributable to ordinary shareholders from continuing operations		3,634		2,837
Loss on discontinued operations, net of tax		(37)		(70)
Profit after tax, attributable to equity holders of the parent		3,597		2,767
		2014		2013
		Shares		Shares
Weighted average number of ordinary shares in the year		65,761,466		64,125,734
Effect of share options in issue		171,187		344,080
Weighted average number of ordinary shares (diluted) in the year		65,932,653		64,469,814

In addition to the above, the company also calculates earnings per share based on underlying profits as the board believe this to be a better yardstick against which to judge the progress of the group.  Underlying profit is defined as profit before rationalisation costs, one-off retirement benefit effects, exceptional bad debts, business closure costs, litigation costs and the impact of property and business disposals, net of attributable taxes.

 The following table reconciles the group's profit to underlying profit used in the numerator in calculating underlying earnings

 per share -

		2014		2013 restated
		£000		£000
Profit after tax, attributable to equity holders of the parent		3,597		2,767
Rationalisation costs, net of tax		71		122
Litigation costs, net of tax		330		315
Exit from Ford volume automotive communication business, net of tax		-		72
Loss on disposal of discontinued operations, net of tax		37		70
Underlying profit attributable to equity holders of the parent		4,035		3,346

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

		2014		2013 restated
		Pence		Pence
Basic - continuing operations		5.5		4.4
Basic - discontinued operations		(0.0)		(0.1)
Basic - total		5.5		4.3
Diluted - continuing operations		5.5		4.4
Diluted - discontinued operations		(0.0)		(0.1)
Diluted - total		5.5		4.3
Underlying earnings per share - basic		6.1		5.2
Underlying earnings per share - diluted		6.1		5.2

6.    Dividends paid and proposed

          Ordinary dividends per 5 pence share paid or proposed in the period comprised -

				2014				2013
		£000		Pence		£000		Pence
Final dividend for 2011/12		-		-		1,071		1.65
Interim dividend for 2012/13		-		-		521		0.80
Final dividend for 2012/13		1,153		1.75		-		-
Interim dividend for 2013/14		560		0.85		-		-
		1,713		2.60		1,592		2.25

The directors are proposing a final dividend of 1.80 pence per ordinary share for the year ended 31 March 2014. If approved at the annual general meeting on 4 September 2014, the dividend payment totalling £1.189 million will be paid on 3 October 2014 to shareholders on the share register at close of business on 29 August 2014.

The interim dividend of £0.560 million was paid on 8 April 2014 and consequently has not been accrued.

7.    Retirement benefit obligations

The group operates a defined benefit UK pension scheme which provides pensions based on service and final pay. The defined benefit scheme is now closed to new entrants who have the option of entering into a defined contribution scheme and the company has elected to cease future accrual for existing members of the defined benefit scheme.  The assets of the defined benefit scheme are held in a separate trustee administered pension fund. Outside of the UK, retirement benefits are determined according to local practice and funded accordingly.

The amounts recognised in the balance sheet in respect of the defined benefit scheme were as follows -                                                                                                                                      

		2014		2013
		£000		£000
Present value of funded obligations		(183,585)		(185,948)
Fair value of scheme assets		183,824		170,472
Recognised asset / (liability) for defined benefit obligations		239		(15,476)
Movements in the net asset / (liability) for defined benefit obligations recognised in the consolidated statement of financial                  position -
		2014		2013 restated
		£000		£000
Net liability for defined benefit obligations at the start of the year		(15,476)		(22,597)
Contributions paid		1,009		990
Net expense recognised in the consolidated income statement (see below)		(659)		(1,084)
Remeasurement gains recognised directly in equity		15,365		7,215
Net asset / (liability) for defined benefit obligations at the end of the year		239		(15,476)
Movements in the present value of defined benefit obligations and scheme assets -
		2014		2013 restated
		£000		£000
Liability at the start of the year		185,948		172,761
Net interest on the net defined benefit liability		7,976		8,287
Remeasurement (gains) / losses		(893)		14,371
Benefits paid		(9,446)		(9,471)
Liability at the end of the year		183,585		185,948
7.    Retirement benefit obligations continued		2014		2013 restated
		£000		£000
Assets at the start of the year		170,472		150,164
Interest on scheme assets		7,317		7,203
Remeasurement gains		14,472		21,586
Contributions by employer		1,009		990
Benefits paid		(9,446)		(9,471)
Assets at the end of the year		183,824		170,472
Actual return on scheme assets		21,789		28,185
The fair value of scheme asset investments was as follows -
		2014		2013
		£000		£000
Equities		92,787		76,760
Bonds		66,874		68,010
Property		22,708		22,108
Cash		1,455		3,594
		183,824		170,472
None of the fair values of the assets shown above include any of the group's own financial instruments or any property occupied by, or other assets used by the group. All of the scheme assets have a quoted market price in an active market with the exception of the Trustee's bank account balance.
The income recognised in the consolidated income statement -
		2014		2013 restated
		£000		£000
Net interest on the net defined benefit liability		659		1,084
		659		1,084
The income is recognised in the following line items in the consolidated income statement -
		2014		2013 restated
		£000		£000
Other finance revenue and expense - net interest on the net defined benefit liability		659		1,084
		659		1,084

The group recognises remeasurement gains and losses immediately on the balance sheet through the statement of comprehensive income. The cumulative remeasurement net loss reported in the statement of comprehensive income since 1 April 2004 is £1.073 million.

The current best estimate of employer cash contributions to be paid in the year ending 31 March 2015 is £1.038 million.

The overperformance of the scheme assets against expectations in the year was due to a stronger performance by the market.

The principal actuarial assumptions at the balance sheet date (expressed as weighted averages) were -

						2014	2013
Discount rate at 31 March						4.4%	4.4%
Expected return on plan assets at 31 March						N/A	N/A
Future salary increases						N/A	N/A
Inflation						3.45%	3.5%
Future pension increases						2.35%	2.4%
Life expectancy for a male (current pensioner) aged 65						18.2 years	18.1 years
Life expectancy at 65 for a male aged 40						19.9 years	19.8 years

It is assumed that 100% of the post A-Day maximum for actives and deferreds will be commuted for cash (2013 - 100%). 

The history of the scheme's deficits and experience gains and losses is shown in the following table -

					2014 £000	2013 restated £000
Present value of funded obligation					(183,585)	(185,948)
Fair value of scheme asset investments					183,824	170,472
Recognised surplus / (liability) for defined benefit obligations					239	(15,476)
Actual return on scheme assets					21,789	28,185
Remeasurement gains / (losses) on scheme liabilities					893	(14,419)

8.    Ordinary share capital

		Number of
		Shares		£000
Ordinary shares of 5 pence each
Issued and fully paid at 31 March 2013		65,169,642		3,258
Shares issued on exercise of share options		884,500		45
Issued and fully paid at 31 March 2014		66,054,142		3,303

During the course of the financial year 884,500 shares were issued in respect of share options at an average exercise price of 44.0 pence per ordinary share. The shares are fully paid.

9.   Cash generated from operations

	2014		2013 restated
	£000		£000
Operating profit	6,031		4,915
Adjustments for -
Pension fund contributions in excess of service costs	(1,009)		(980)
Depreciation charge	3,669		3,521
Amortisation of intangible assets	1,006		361
Provision for site closure	-		(130)
Profit on disposal of other plant and equipment	(25)		(42)
Share based payment charge	34		189
Operating cash flow before changes in working capital	9,706		7,834
Changes in working capital
Increase in inventories	(1,265)		(710)
Increase in trade and other receivables	(2,451)		(2,527)
(Decrease) / increase in trade and other payables	(363)		6,706
Cash generated from operations	5,627		11,303

 

END

 

 

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