Interim Results

Carclo PLC 4 December 2000 Carclo plc Interim Results for the Six Months ended 30 September 2000 Highlights * Sales from continuing operations increased by 7.5% to £83.1m (1999: £77.3m). * Underlying operating profits from continuing operations rose by 16% to £7.0m (1999: £6.0m). * Strong profits recovery in the Specialist Wire Division. * Carclo Technical Plastics made good progress with growth in products for mobile phones. * Underlying earnings per share increased by 4% to 7.1p (1999: 6.8p). * Exit from commodity wire products completed. * Acquisition of Alan Group provides further global opportunities for the Technical Plastics Division. Commenting on the results, George Kennedy, Chairman, said: 'We remain confident that the group is well placed to deliver underlying growth.' For further information please contact: Carclo plc Ian Williamson, Chief Executive On 4 December: 020 7475 2112 Chris Mawe, Finance Director Thereafter: 01924 330500 Golin/Harris Ludgate Richard Hews 020 7253 2252 Trish Featherstone Chairman's Statement Overview Sales in the six months to 30 September 2000 from our continuing operations increased by 7.5% to £83.1million compared to the equivalent period last year. Underlying operating profits on the same basis increased by over 16%, with both divisions making progress. The technical plastics division, which benefited from increased sales of telecommunication components, contributed all of the revenue growth. Operating profits increased by 7.6% and, despite continuing pressure on selling prices and increased polymer prices, operating margins were broadly maintained. The specialist wire division reported sales of £21.0million in the half year, in line with the same period last year. Operating profits were, however, 25.5% ahead and margins have increased reflecting the continuing recovery in card clothing and the successful withdrawal from lower margin commodity wire products. Profit before tax of £4.5million is stated after exceptional charges totalling £0.9million relating to the closure of Lee Smith Wires and the sale of our wire rope businesses. Basic earnings per share were down slightly from 5.9p last year to 5.4p this year due to the one off charges noted above. The progress of the group is better measured by underlying earnings per share, eliminating one off charges and goodwill. This shows an increase of 4.4% to 7.1p reflecting underlying growth in technical plastics and recovery in specialist wire which has compensated for the overall dilutive effect of the Lee Steel Strip disposal in November 1999. Financial Position Net debt at 30 September 2000 was £35.9million, an increase of £7.8million since 31 March 2000. This represents a gearing level of 49% with underlying interest cover of 5.9 times. Core debt within Carclo traditionally peaks in September due to the payment of both an interim and final dividend totalling £6.0million in the first half. The group has continued to invest in growth opportunities and capital expenditure in the period was 1.4 times depreciation. In total £6.0million was expended on capital of which £1.9 million related to new production facilities within the technical plastics division. An earn out payment totalling £3.8million was paid in the period to the former owners of CTP Carrera. This was matched by the proceeds from the sale of the wire rope businesses. At 30 September 2000 cash and unutilised assured medium term facilities totalled £65million, sufficient to fund further acquisitions and the significant organic growth opportunities in the technical plastics division. Dividend Your board has declared an interim dividend of 3.44p per ordinary share, unchanged on the same period last year. Dividend warrants will be posted on 6 April 2001 to shareholders on the register on 2 March 2001. Operating Review Technical plastics benefited from its exposure to growth markets, especially mobile phones and data communications. Growth in these markets more than compensated for the continuing difficult trading environment for UK based manufacturers. The teletronics operations performed well, benefiting from high mobile phone sales. However, this sector has shown some volatility in recent months and accordingly the strong growth experienced in the first half will not continue into the second half of the current financial year. The automotive operations experienced pricing pressures resulting in reduced profits despite modestly increased volumes. With new products scheduled to come on stream in the second half, we remain confident that the automotive companies will deliver a creditable performance for the full year. The optical-medical operations reported an improved performance. Our optical business returned to profit in the first half but the second half will be affected by the planned move to a new facility. Our medical products operations performed extremely well. CTP Carrera again delivered excellent results with operating margins over 15%. A new production facility has been commissioned in Latrobe, Pennsylvania. The specialist wire division reported a substantial improvement in profitability in the period. The card clothing operations continued the positive trend which began during the second half of last year and have benefited from improvements in productivity. The other specialist wire companies performed at similar levels to last year with the exception of the Lee Smith Wires business which slipped back into losses during the first half. Regrettably, with no return to profitability in sight, we will close this low margin business during the second half of the current year. The charge arising in respect of this closure will be up to £1.2million of which £0.9million has been charged in the first half due to the write down of the assets of that business and associated redundancy costs. The Alan Group We have today announced the acquisition of the Alan Group, a leader in precision toolmaking and moulding for the teletronics connector industry. The consideration is £8.4 million including debt assumed. The business has three operations in the UK and a new state of the art facility in Shanghai, China. The Alan Group had sales of £7.7million and earnings before interest of £1.6million in the year to 31 March 2000. The acquisition is an excellent strategic fit with Carclo, opening up synergistic opportunities via its existing customer base, its excellent reputation as a leading precision toolmaker and its world class manufacturing capability in China. This acquisition is the next step in our strategy of building a global technical plastics group. We plan to make further acquisitions to build upon the strong technical capability of our group and to enhance our global coverage. Outlook The trading performance in the first half of the current year has been in line with our expectations. We benefited from significant growth in mobile phone products. In the last few weeks it has become clear that mobile phone manufacturers have entered a turbulent period and we have experienced both new product cancellations and early termination of some established programmes. This will have a modest impact on our second half. However, whilst volatile, the telecom market remains high growth and our involvement in new programmes for next year underpins our confidence in this market. New automotive product developments are set to come on stream in the second half and additional technical plastics capacity in the US and UK will enable us to exploit organic growth opportunities. The specialist wire division is continuing on the path to recovery and further improvements are being seen as we enter the second half. We remain confident that the group is well placed to deliver underlying growth. George Kennedy Chairman 4 December 2000 Consolidated profit and loss account (unaudited) Half year ended Half year ended Year ended 30 September 30 September 31 March 2000 1999 2000 £'000 £'000 £'000 Turnover Continuing operations - ongoing 83,101 77,330 159,772 Discontinued 5,567 21,491 31,521 ------- ------- ------- 88,668 98,821 191,293 ------- ------- ------- Operating profit Continuing operations - ongoing - before rationalisation costs 7,022 6,042 13,243 - rationalisation costs (190) (139) (1,101) ------- ------- ------- - after rationalisation costs 6,832 5,903 12,142 Discontinued 172 1,335 2,026 ------- ------- ------- 7,004 7,238 14,168 Goodwill amortisation (472) (363) (748) ------- ------- ------- Operating profit 6,532 6,875 13,420 Disposal of subsidiary undertaking (46) - (3,875) Loss on termination of operations (852) (251) (538) Profit on sale of properties 97 - - ------ ------- ------- Profit before interest 5,731 6,624 9,007 Net interest payable 1,224 1,686 3,012 ------ ------- ------- Profit on ordinary activities before taxation 4,507 4,938 5,995 Taxation 1,578 1,580 3,484 ------ ------- ------- Profit on ordinary activities after taxation 2,929 3,358 2,511 Preference dividends (non equity) - 32 32 ------ ------- ------- Profit attributable to ordinary shareholders 2,929 3,326 2,479 Ordinary dividends 1,885 1,928 6,016 ------ ------- ------- Retained profit for the period 1,044 1,398 (3,537) ====== ======= ======= Earnings per ordinary share Basic 5.4p 5.9p 4.4p Underlying 7.1p 6.8p 14.9p Dividend per ordinary share 3.44p 3.44p 11.00p Statement of total recognised gains and losses Profit on ordinary activities after taxation for the period 2,929 3,358 2,511 Exchange losses on the translation of overseas assets (216) (42) (216) ------ ------- ------- Total gains and losses recognised since last annual report 2,713 3,316 2,295 ------ ------- ------- Notes: 1. The financial information in this document has been prepared on the basis of the accounting policies set out in the audited accounts for the year ended 31 March 2000. This financial information was approved by the directors on 4 December 2000. 2. The financial information is unaudited but has been reviewed by the auditors and their report to the company is set out on page 7. 3. The results for the year ended 31 March 2000 are an abridged version of the company's full accounts which have been filed with the Registrar of Companies, on which the company's auditors reported without qualification. 4. The amount shown for estimated taxation for the half year ended 30 September 2000 represents 35% of the profit on ordinary activities before taxation (30 September 1999 - 32%). 5. Earnings per ordinary share at 30 September 2000 have been calculated by dividing the profit attributable to ordinary shareholders of £2,929,000 by the weighted average number of ordinary shares in issue of 54,694,191. 6. Copies of the Interim Report will be posted to shareholders on 8 December 2000 and are available from the company's registered office, Ploughland House, P.O. Box 14, 62 George Street, Wakefield, WF1 1ZF Consolidated balance sheet (unaudited) 30 September 2000 30 September 1999 £'000 £'000 £'000 £'000 __________________________________________________________________ Fixed assets Intangible assets 19,687 19,517 Tangible assets 58,030 69,610 Investments 1,383 169 ------- ------- 79,100 89,296 Current assets Stocks 17,396 24,653 Debtors 37,159 45,212 Pensions prepayment due after more than one year 11,393 11,059 Cash at bank and in hand 10,669 5,601 ------- ------- 76,617 86,525 ------- ------- Creditors-amounts falling due within one year Bank loans and overdrafts 9,649 13,244 Trade and other creditors 26,510 34,698 Taxation 1,239 1,892 Dividends 1,882 1,980 ------- ------- 39,280 51,814 ------- ------- Net current assets 37,337 34,711 ------- ------- Total assets less current liabilities 116,437 124,007 Creditors-amounts falling due after more than one year 36,589 47,337 Provisions for liabilities and charges 6,074 7,086 ------- ------ Total net assets 73,774 69,584 ------- ------- Capital and reserves Called up share capital 2,790 2,838 Share premium 41,772 41,722 Revaluation reserve 2,063 2,195 Other reserves 1,134 1,084 Profit and loss account 26,015 21,745 ------- ------- Shareholders' funds 73,774 69,584 ------- ------- Ordinary shareholders' funds per share 132p 123p Consolidated balance sheet (unaudited) 31 March 2000 £'000 £'000 Fixed assets Intangible assets 20,008 Tangible assets 57,918 Investments 1,072 ------- 78,998 Current assets Stocks 19,884 Debtors 40,332 Pensions prepayment due after more than one year 11,106 Cash at bank and in hand 11,672 ------- 82,994 ------- Creditors-amounts falling due within one year Bank loans and overdrafts 8,935 Trade and other creditors 35,175 Taxation 1,031 Dividends 6,016 ------- 51,157 ------- Net current assets 31,837 ------- Total assets less current liabilities 110,835 Creditors-amounts falling due after more than one year 32,051 Provisions for liabilities and charges 5,890 ------- Total net assets 72,894 ------- Capital and reserves Called up share capital 2,788 Share premium 41,722 Revaluation reserve 2,080 Other reserves 1,134 Profit and loss account 25,170 ------- Shareholders' funds 72,894 ------- Ordinary shareholders' funds per share 131p Cash flow statement Half year Half year Year ended ended ended 30 September 30 September 31 March 2000 1999 2000 £'000 £'000 £'000 _____________________________________________________________________ Cashflow from operating activities 7,705 7,705 18,908 Returns on investments and servicing of finance (1,439) (1,701) (3,059) Taxation (1,117) (880) (2,937) Capital expenditure and financial investment (6,245) (6,467) (9,565) Acquisitions and disposals 121 (11,035) 10,318 Equity dividends paid (6,020) (6,163) (6,183) ------- ------- ------- Cash (outflow)/inflow before use of liquid resources and funding (6,995) (18,541) 7,482 Financing Issue of shares 52 - - Repurchase of own shares - (608) (1,817) Increase in debt 5,590 15,203 1,254 Capital element of finance lease rentals (361) (480) (994) ------- ------- ------- (Decrease)/increase in cash in period (1,714) (4,426) 5,925 ======= ======= ======= Half year Half year Year ended ended ended 30 September 30 September 31 March 2000 1999 2000 £'000 £'000 £'000 _____________________________________________________________________ Reconciliation of net cash flow to movement in net debt (Decrease)/increase in cash in period (1,714) (4,426) 5,925 Cash inflow from increase in debt and lease financing (5,229) (14,723) (260) ------- ------- ------- Change in net debt resulting from cash flows (6,943) (19,149) 5,665 Exchange movement (859) 236 336 Loans and finance leases acquired with subsidiary Undertaking - (2,317) (2,367) ------- ------- ------- Movement in net debt in period (7,802) (21,230) 3,634 Net debt at beginning of period (28,115) (31,749) (31,749) ------- ------- ------- Net debt at end of period (35,917) (52,979) (28,115) ======= ======= ======= Half year Half year Year ended ended ended 30 September 30 September 31 March 2000 1999 2000 £'000 £'000 £'000 _____________________________________________________________________ Reconciliation of operating profit to operating cash flows Operating profit 6,532 6,875 13,420 Goodwill amortisation 472 363 748 Depreciation charges 4,211 5,106 9,539 Amortisation of own shares 15 18 30 Loss/(profit) on sale of tangible fixed assets 44 (166) 13 Cash flow relating to exceptional reorganisation - (251) (538) Decrease in stocks 430 224 491 Decrease/(increase) in debtors 1,445 (3,337) (7,028) (Decrease)/increase in creditors (5,444) (1,127) 2,233 ------- ------- ------- Net cash inflow from operating activities 7,705 7,705 18,908 ------- ------- ------- Group turnover and operating profit Half year ended Half year ended 30 September 2000 30 September 1999 Operating Operating Turnover profit Turnover profit £'000 £'000 £'000 £'000 __________________________________________________________________________ Class of business Continuing operations Ongoing Technical plastics division 62,063 5,757 56,189 5,351 Specialist wire division 21,038 1,614 21,141 1,286 ------- ------- ------- ------- 83,101 7,371 77,330 6,637 Rationalisation costs (note 1) (190) (139) ------- ------- ------- ------- 83,101 7,181 77,330 6,498 Discontinued operations 5,567 172 21,491 1,339 Rationalisation costs - (4) ------- ------- 88,668 98,821 ------- ------- ------- ------- Divisional operating profit 7,353 7,833 Central administration costs (499) (575) Pension cost:- - regular cost (1,269) (1,340) - credit in respect of surplus 1,419 1,320 Goodwill amortisation (note 2) (472) (363) ------- ------- Group operating profit 6,532 6,875 ------- ------- Geographical segment - by destination United Kingdom 48,034 50,992 Rest of Europe 13,047 18,182 Rest of World 27,587 29,647 ------- ------- 88,668 98,821 ------- ------- Year ended 31 March 2000 Operating Turnover profit £'000 £'000 __________________________________________________________________________ Class of business Continuing operations Ongoing Technical plastics division 116,573 11,000 Specialist wire division 43,199 3,462 ------- ------- 159,772 14,462 Rationalisation costs (note 1) (1,101) ------- ------- 159,772 13,361 Discontinued operations 31,521 2,151 Rationalisation costs (125) ------- 191,293 ------- ------- Divisional operating profit 15,387 Central administration costs (1,179) Pension cost:- - regular costs (2,590) - credit in respect of surplus 2,550 Goodwill amortisation (note 2) (748) ------- Group operating profit 13,420 ------- Geographical segment - by destination United Kingdom 100,708 Rest of Europe 33,470 Rest of World 57,115 ------- 191,293 ------- Notes: 1. The rationalisation costs in the half year relate to both divisions. 2. Goodwill amortisation relates to the technical plastics division. Reconciliation of movements in shareholders' funds Half year ended Half year ended Year ended 30 September 30 September 31 March 2000 1999 2000 £'000 £'000 £'000 _____________________________________________________________________ Profit on ordinary activities after taxation for the Period 2,929 3,358 2,511 Dividends 1,885 1,960 6,048 ------- -------- ------- 1,044 1,398 (3,537) Other recognised losses relating to the period (216) (42) (216) Goodwill reinstated - - 9,628 New share capital issued 52 1,552 1,552 Share buy back - (608) (1,817) ------- ------- ------- 880 2,300 5,610 Opening shareholders' funds 72,894 67,284 67,284 ------- ------- ------- Closing shareholders' funds 73,774 69,584 72,894 ------- ------- ------- Report of the auditors To Carclo plc Introduction We have been instructed by the company to review the financial information set out on pages 3 to 6 and we have read the other information contained in the interim report and considered whether it contains any apparent misstatements or material inconsistencies with the financial information. Directors' responsibilities The interim report, including the financial information contained therein, is the responsibility of, and has been approved by the directors. The Listing Rules of the Financial Services Authority require that the accounting policies and presentation applied to the interim figures should be consistent with those applied in preparing the preceding annual accounts except where any changes, and the reasons for them, are disclosed. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4 issued by the Auditing Practices Board. A review consists principally of making enquiries of management and applying analytical procedures to the financial information and underlying financial data and based thereon, assessing whether the accounting policies and presentation have been consistently applied unless otherwise disclosed. A review excludes audit procedures such as tests of controls and verification of assets, liabilities and transactions. It is substantially less in scope than an audit performed in accordance with Auditing Standards and therefore provides a lower level of assurance than an audit. Accordingly we do not express an audit opinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications that should be made to the financial information as presented for the six months ended 30 September 2000. Ernst & Young Chartered Accountants Leeds 4 December 2000 Financial Calendar Interim ordinary dividend for 2001 payable to members on the register on 2 March 2001 6 April 2001 Ex-dividend date 28 February 2001 Preliminary announcement of the results for the year ending 31 March 2001 18 June 2001 Registered office: Ploughland House P O Box 14 62 George Street WAKEFIELD WF1 1ZF Telephone: +44 (0) 1924 330500 Fax: +44 (0) 1924 339900 Web site: www.carclo-plc.com

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