Preliminary Results for the year ended 31 March 20

RNS Number : 0184X

Carclo plc

25 August 2020

 

Carclo plc

("Carclo" or the "Group")

Preliminary Results for the year ended 31 March 2020

Carclo plc, a global manufacturer, principally of fine tolerance injection moulded plastic parts for the medical, electronics, optics and automotive safety markets, announces its results for the full year ended 31 March 2020 ("2020").

The key financial performance measures for the year are as follows:

		Year ended 31 March 2020	Year ended 31 March 2019
		£000	£000
Continuing Operations
Revenue		110,506	105,338
Underlying operating profit*		7,313	6,390
Exceptional items		(5,470)	(4,507)
Statutory operating profit		1,843	1,883
Discontinued Operations
Loss on discontinued operations, net of tax		(9,509)	(15,693)
Underlying earnings per share - continuing operations		4.9p	2.1p
Basic loss per share - continuing operations		(2.6p)	(4.0p)
Net debt**		27,357	38,481
IAS 19 retirement benefit liability		37,620	49,121

Continuing Operations

Revenue
Technical Plastics	103,053	98,618
Aerospace	7,453	6,720
Total	110,506	105,338
Underlying operating profit
Technical Plastics	9,253	8,064
Aerospace	1,653	1,298
Central	(3,593)	(2,972)
Total	7,313	6,390

Highlights 

· Revenue from continuing operations increased by 4.9% to £110.5m (2019: £105.3m).

· Underlying operating profit from continuing operations increased by £0.9m to £7.3m.

· Statutory operating profit from continuing operations was £1.8m (2019: £1.9m) with statutory loss before tax from continuing operations being £0.5m (2019: £0.0m).

· Successfully concluded exit of the loss-making LED division, reducing net debt and the pension deficit by £5.5m and £3.5m respectively.

· Concluded a new three-year funding arrangement with the Company's main creditors, HSBC and the pension scheme, to secure the continued support of those parties through to July 2023.

*Underlying operating profit from continuing operations is defined as operating profit from continuing operations before all exceptional items.  A reconciliation to statutory figures is given on page 44.

** 2019 net debt is stated before the adoption of IFRS16 Leases. See note 6 for details.

Commenting on the results, Joe Oatley, Chairman said:

" Despite a challenging period for the Group, the continuing businesses performed strongly in 2020.

Following the exit of the loss-making LED business and the completion of a three-year refinancing agreement with the Group's lending bank and pension trustees, Carclo now has a more stable platform from which to develop the business.

Whilst the Covid-19 situation creates some uncertainty over the near-term performance of the Group, t he Board believes that the operating businesses within the Group have attractive long-term growth prospects, in particular within the medical diagnostics market where the CTP business is well positioned.

Alongside investing to deliver its organic growth strategy, the Group is working closely with its pension trustees to reduce the relative scale of the Group's defined benefit pension deficit.  Delivering a reduction in the pension deficit over time will be a key element in translating the performance of the underlying business into value creation for shareholders ."

Further Information

Please contact:
Antony Collins, CEO, Carclo plc	[phone]
Angie Wakes, Company Secretary, Carclo plc,	[phone]
Nick Hasell / Susanne Yule, FTI Consulting	[phone]

Forward looking statements

Certain statements made in these report & accounts 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.

Alternative performance measures

Alternative performance measures are defined in the glossary on page 45. A reconciliation to statutory figures is included on page 44. The Directors believe that alternative performance measures provide a more useful comparison of business trends and performance. The term 'underlying' is not defined under IFRS and may not be comparable with similarly titled measures used by other companies.

Chairman's Statement

The year to 31 March 2020 was one of both significant change and considerable challenge for the Group. Despite this, I am pleased to report the continuing businesses performed strongly, with both the Carclo Technical Plastics Division ("CTP") and the Aerospace Division ("Aerospace") seeing year-on-year improvements in underlying operating profits.

Group underlying operating profit from continuing operations was 14.4% higher at £7.3 million (2019: £6.4 million) with basic underlying earnings per share from continuing operations 133.3% higher at 4.9 pence (2019: 2.1 pence). Statutory basic loss per share was 15.5 pence (2019: 25.4 pence loss).  The Group's net debt including IFRS16 lease liabilities decreased £11.1 million to £27.4 million (2019: £38.5 million) driven by both positive operational cash generation from the two continuing businesses and realisation of value from the assets of the exited LED division.

Whilst it was disappointing that we were unable to return the LED division to a position of profitability and cash generation, we were pleased to have successfully concluded the transactions to exit the businesses within this division during the year.  As a result, key customer commitments were met and jobs were secured.  £3.5 million from the net proceeds were paid to the Group's pension scheme and net debt was reduced by £5.5 million.

As announced on 17 August 2020, I am also pleased to reaffirm that we have concluded a new financing agreement with the Group's lending bank and its pension trustees which provides lending facilities through to 31 July 2023 alongside a schedule of agreed pension deficit reduction contributions for the same period.  Nonetheless, the scale of the defined benefit pension scheme liability remains a significant issue for the Group, with an actuarial valuation of the technical provision deficit as at 31 March 2018 of £90.4 million (31 March 2015: £46.1 million).  Alongside a focus on operational efficiency and growth from the medical diagnostics sector, reducing the scale of the Group's pension deficit over time is a key element of our value creation strategy.

COVID-19

Faced with the COVID-19 pandemic, the Group's primary focus has been to ensure the wellbeing of staff and the continued safe operation of its businesses.  All applicable government advice has been followed across the different countries in which the Group operates, and safe working practices have been adopted.

Pleasingly, it has been possible to keep most sites operational through the lockdown period, enabling the Group to continue to serve its customers, many of whom operate in essential industries, particularly the medical diagnostics sector.

Management has taken a number of actions to mitigate the impact on the Group, including accessing government support programmes and controlling costs, details of which are discussed further in the Chief Executive's statement.

Dividend

Given the financial performance and position of the Group, coupled with restrictions on the payment of dividends contained within the refinancing agreement and the lack of distributable reserves, the Board is not recommending the payment of a dividend for the 2020 financial year (2019: nil).

Governance

Since joining the Board in 2018, I have observed the Board's focus on maintaining a strong corporate governance framework and culture throughout the Group. The Board is fully supportive of the principles laid down in the UK Corporate Governance Code and continues to review its systems, policies and procedures that support the Group's sustainability and governance practices.

Board changes

There were a number of changes to the Board in the year.

Antony Collins joined the Board as Group Chief Executive from 1 October 2019.  Antony had previously been fulfilling the role of Chief Restructuring Officer since joining the Group in May 2019.  Mark Rollins, who served in an executive capacity prior to Antony's appointment, returned to his Non-executive Chairman role from 1 October 2019.

Matt Durkin-Jones was appointed to the Board as Chief Financial Officer ("CFO") on 21 January 2020. Matt is a Chartered Management Accountant with extensive financial experience of manufacturing companies in Europe, Asia and North America.

Matt replaced Ed Watkinson, who fulfilled the CFO role on an interim basis following Sarah Matthews-DeMers' departure in October 2019.  Ed left the Group on 9 January 2020 following the successful Wipac exit.

Mark Rollins stepped down from his role as Non-Executive Chairman and as Director of the Board on 24 March 2020.  Mark had been Chairman of the Company since 2018 and on behalf of the Board, I would like to thank Mark for his dedicated service over the last two years.  Mark had shown strong leadership in a difficult time and made a valuable contribution to the Group.

I assumed the role of Non-Executive Chairman on 27 April 2020 on an interim basis whilst the Board carried out a search for a long-term Chairman.  I am delighted to welcome Nick Sanders to the Board as Chairman-elect with the intention that he will take over the Chairman role from me after this year's Annual General Meeting.

Change of auditor

Following a competitive audit tender process, the Group appointed Mazars LLP as its external auditor in April 2020, following KPMG LLP's resignation in March 2020.

Employees

On behalf of the Board I would like to thank all employees for their commitment during what was a challenging and uncertain year. Our employees play a critical role in the Group's success and we recognise that this will be particularly so in meeting the challenges ahead.  In addition, the Board fully recognises the hard work and commitment of Wipac's employees, operating in often difficult circumstances during the year.

Outlook

Following the exit of the loss-making LED business and the completion of a medium-term financing agreement with the Group's lending bank and its Pension Trustees, Carclo now has a more stable platform from which to develop the business.  The Group has significantly reduced its net debt position, enhanced by the successful exit of Wipac, as well as making a significant contribution to reduce the Company's pension deficit.

The near-term performance of the Group is uncertain as the impact of the COVID-19 pandemic on the business in the current financial year remains difficult to forecast.  However, the medium and longer-term prospects for CTP remain robust, with the business having a strong position in the medical diagnostics market, which benefits from both near-term and long-term positive growth characteristics.  As announced on 17 August 2020, the CTP business has been successful in securing a number of new tooling orders for the medical diagnostics sector after year end which both provides additional resilience for the near term and the opportunity for significant growth in future years. The medium term prospects of the Aerospace business are more difficult to ascertain, being dependent on the pace of recovery in the commercial aerospace market. 

The Board believes that the operating businesses within the Group have attractive long-term growth prospects and the capability to generate improved returns over time.  Nonetheless, the Group has a substantial pension deficit and relatively high net debt. Reducing the scale of the defined benefit pension deficit over time is an important element of translating the performance of the operating businesses into value creation for shareholders and, alongside driving operational excellence and growth in the medical diagnostics market, is a key focus for the business moving forward. 

Joe Oatley

Chairman

25 August 2020

Chief Executive's Review

I was delighted to join the Carclo Board as Chief Executive Officer in October 2019 following my appointment as Chief Restructuring Officer in May. 

I am particularly pleased that we were able to conclude the successful exit of the two Wipac businesses. The challenges faced by the business were substantial and the process to conclude an effective exit consumed considerable management time and attention, in addition to the large financial losses incurred by Wipac.

Despite a challenging year for the Group as a whole, it was pleasing to see that both of the continuing operating businesses performed well and were unaffected by the Wipac issues.  Both the CTP and Aerospace divisions made demonstrable progress in the year. The businesses are well-managed and have remained profitable and cash generative in the reporting period. Their resilient performance during a period of major restructuring for Carclo provides encouragement for the longer-term prospects of the Group.

I am pleased to have been joined on the Board by Matt Durkin-Jones who took up the position of CFO in January 2020.  Matt has extensive experience of international manufacturing companies and adds the required financial acumen and stability to the executive team as we move forward.

Financial performance

Group revenue from continuing operations increased by 4.9% to £110.5 million (2019: £105.3 million), underpinned by strong divisional performances from CTP and Aerospace.  As one of our KPIs, this is very encouraging.  Revenue including discontinued operations increased £1.4 million to £146.3 million (2019: £144.9 million).

Underlying operating profit margin from continuing operations increased to 6.6% (2019: 6.1%) as the business started to realise the benefits of operational improvement initiatives.  Underlying earnings before interest, taxation, depreciation and amortisation from continuing operations increased to £13.4 million (2019: £10.9 million) which includes a positive impact of the adoption of IFRS 16 Leases of £1.7 million.  Underlying operating profit from continuing operations increased 14.4% to £7.3 million (2019: £6.4 million). Return on capital employed increased from 2.0% to 10.1%.

Statutory operating loss including discontinued operations was £4.4 million (2019: £12.6 million loss) with statutory loss before tax and loss on disposal of discontinued operations of £7.0 million (2019: £14.7 million loss).

Refinancing and pension deficit

I am pleased to report that on 14 August 2020 we concluded a restructuring with the company's main creditors, HSBC and the pension scheme, to secure the continued support of those parties through to July 2023.  

The new HSBC facilities comprise a term loan of £34.5 million and a revolving credit facility of £3.5 million .  In parallel to this we reached agreement with the Trustees of the defined benefit pension scheme in respect of an increased level of contributions to the deficit recovery plan.  

The pension deficit recovery plan comprises contributions of the following amounts over the next three years : £2.8 million (2021), £3.9 million (2022) and £3.8 million (2023) .  This agreement also concludes the outstanding 2018 triennial valuation.  The actuarial valuation of the technical provisions deficit as at 31 March 2018 was £90.4 million (31 March 2015: £46.1 million).  The next triennial valuation will be carried out as at 31 March 2021, with an expectation that the valuation and corresponding schedule of contributions will be agreed between the Company and the pension trustees before 30 June 2022.  This will not change the agreed contributions up to July 2023.

COVID-19

As many of the Group's sites supply critical sectors, we have been able to continue operations with limited impact on production.  We have experienced mandatory closures in India due to government regulations and brief closures in France and Scotland. Group revenue for the continuing businesses for the first quarter of the year to 31 March 2021 was 12% lower than the same period in the previous year.

We are actively monitoring the COVID-19 outbreak in line with local and national authorities, public health bodies and WHO guidelines and will continue to modify our procedures and working practices accordingly.

Notwithstanding relatively stable overall activity levels in the CTP business as increased demand for COVID-19 related products partially offset a reduction in demand for routine medical products, governmental guidance on social distancing and temporary shutdowns have had an impact on operational efficiency which inevitably affects profitability. The Group's Aerospace division is witnessing a significant reduction in customers' aircraft newbuild programmes and with much of the European aircraft fleet having been grounded since March 2020, demand for both newbuild and spares has been negatively affected.

The Group has accessed government support programmes where available, including the Coronavirus Job Retention Scheme and HMRC payment deferrals in the UK, and tax relief in China.  In addition, on 17 April 2020, CTP Carrera Inc. in the USA received a loan of $2.9 million under the Paycheck Protection Program which was used to make payroll payments to its US workforce. We have also taken action to reduce costs where possible in both divisional and central areas. The Group remains focused on ensuring operational continuity where it can; however, it remains very difficult to predict how the ongoing crisis will affect performance going forward.

The refinancing agreed with HSBC provides an additional £3 million headroom which will assist the Group's efforts to manage through the near-term uncertainty presented by COVID-19.

Strategy

Having established greater comfort and certainty on the Group's financial position, the priority is to deliver an improved financial performance over the long term through a focus on growth and operational excellence.  The Group delivers its products into highly regulated, safety critical markets where quality and performance are of paramount importance.  Through a focus on operational excellence and by forging deep, long-term customer relationships we aim to be the supplier of choice for precision components into these markets.

The Group has a strong position in the medical market, which exhibits robust structural growth characteristics, and whose importance has been reinforced by the recent pandemic.  Our strategy is to continue to focus on our core markets, in particular medical diagnostics, building on the strengths of the CTP business to deliver above-market growth rates.  The combination of higher utilisation as new volume comes on stream and improved efficiency through our focus on operational excellence will drive increased margins and enhance the Group's return on invested capital.

The Group operates a devolved management structure, ensuring that key day-to-day decision making is done close to our customers and operations.  This devolved structure also enables the Group to operate with a lean overhead base.  Nonetheless, as part of our programme of continuous improvement we are actively managing both central and divisional overheads particularly as we experience the impact of COVID-19.

The CTP and Aerospace businesses are now focused on both enhancing operational efficiency and improving return on invested capital.  New capital commitments are closely evaluated to ensure that they are accretive to overall Group return on capital and have a cash payback within an appropriate timescale.

Health, safety and environment

A comprehensive health and safety policy is in place to ensure a safe working environment at all times with a plan to ensure that all facilities in all countries meet the requirements of the most exacting location.

We were pleased to see a further improvement in the health and safety performance of both continuing divisions.  There was a 35% reduction in incidents during the year.  This was achieved through continuous communication of the policy at all levels through the Group and active participation of employee health & safety committees.  Our aim is to continue to drive down health and safety incidents.  Our Lost Time Frequency rate shows a year on year reduction for the last 3 years.

People

I am extremely grateful for the hard work and commitment of our employees during such a challenging and uncertain year.  I am especially proud that the challenges presented by COVID-19 have been met with dedication and creativity, particularly by our employees in China who were first affected by the outbreak.

The restructuring and ultimate exit of the Wipac business was a long and difficult process for all involved, many of whom made significant sacrifices to ensure a successful outcome.  In addition, it was a very unsettling time for those in the Wipac business and I would like to thank them for their commitment in supporting the business and its customers.  I wish them success in their new organisation. 

We have highly talented people and their continued support will be critical as we execute our strategy.  We are taking steps to introduce a shared set of core values during the year to ensure a consistent approach and measurement of success across all our operating companies.

Divisional review

Carclo Technical Plastics

Carclo Technical Plastics is a leading global manufacturer of fine tolerance injection moulded plastic parts for the medical, electronics, optics and automotive safety markets.

Divisional revenue increased by 4.5% in the year to £103.1 million (2019: £98.6 million), largely driven by increased volume as the business continued to secure a number of new programmes in its core medical market.  The division acquired the business and certain assets of the Optics business on 20 December 2019 from the administrator of the Wipac business for a sum of £0.25 million.  Historical comparators have been restated to include the Optics business. Overall demand for medical testing parts was stable through the year, albeit in Q4 the business saw a significant increase for products associated with COVID-19 testing, offset by a reduction in demand for non-COVID related testing kits which fell as routine medical procedures were affected by the global pandemic.

All of the division's sites made considerable operational and commercial progress during the year. As a result, underlying operating profit increased significantly to £9.3 million (2019: £8.1 million) as the business began to realise the benefits from its continuous improvement activities together with a change in the mix toward higher margin contracts.

Our US operation performed strongly during the year and the business invested in additional technology to enhance automation and capability to service new customers in its core growth sectors. There has been a significant investment in employee welfare, training and education and whilst labour turnover remains high, it has stabilised compared to the previous year.

The UK business performed well in the first half of the year as it increased output of its drug delivery product and commissioned a new fully automated production line for disposable medical testing parts.  The business successfully implemented intelligent process monitoring on a dedicated pharma cell producing insulin pens as part of our operational improvement programme. This initiative has increased automation and introduced predictive quality monitoring to reduce wastage and improve production yields. In the final quarter of the year, the UK operation successfully integrated the newly acquired Optics business.

Our facility in India continued to perform well as the business focused on a more attractive mix of contracts. As reported at the half year, CTP India, whose largest customer makes ATM machines for the global market, saw a marked increase in its market share and benefited from its key customer's newest product ramping up in volume.  The business was successful in gaining the BSI accreditation to the international standard ISO 13485:2016 for medical applications.  The accreditation opens the door to the medical supply market and led to the award of the business' first medical account in India with a major disposable diagnostics OEM.  Following local government regulations related to COVID-19, the plant in India experienced a month-long closure from the end of March and reduced production in April and May.

Our Chinese facility had a notable year, winning new business with a key target customer and commencing production of a new disposable medical diagnostic part for a new multinational OEM customer, alongside a focus on lean activities and continuous improvement projects that led to substantial inventory reductions.  The impact of COVID-19 was effectively managed by the team in China with minimal short-term impact on the business.  The workforce showed tremendous dedication and ownership in getting the facility back to full production as quickly as possible.  Our early experience of COVID-19 in China has assisted our other sites in developing effective protocols to help mitigate the risk of transmission.

As previously reported at the half year, activity in the Group's Czech site was impacted by the loss of volume from a major industrial customer following its decision to discontinue a key product. This reduction had been anticipated with the facility footprint reduced in the period, mitigating the effect of the revenue loss on the operation's profitability.  As a result, the business performed well in the year with the cost reduction from this consolidation of its operations and a ramping up in production of new business offsetting the volume decline. The Optics business, which performed in line with expectations in the first half of the financial year, has been significantly impacted by the COVID-19 outbreak.

The facilities in China, India and Czech all successfully achieved ISO 45001 certification.  This standard seeks to achieve a reduction in occupational injuries and diseases, including promoting and protecting physical and mental health.  Programmes to achieve the same accreditation in the UK and US facilities were halted due to COVID-19 and will be completed in the 2020/21 financial year.

The business sees good opportunities for continued growth in its core medical markets and margin enhancement as it continues to pursue its strategy of operational improvement.  As announced on 17 August 2020, the CTP business has been successful in securing a number of new tooling orders for the medical diagnostics sector after year-end which both provides both additional resilience for the near-term and the opportunity for significant growth in future years.

Aerospace

The Aerospace division is a market leader in cable assemblies and specialist machined parts to European commercial and military aerospace markets.  The business operates facilities in the UK and France under the established and respected brands of Bruntons and Jacottet. 

Divisional revenue increased by £0.7 million to £7.5 million (2019: £6.7 million) due to a healthy level of spares orders, increasing Airbus build-rates in the first half, and some market share gains for machined parts in the UK. Underlying operating profit increased 27% to £1.7 million (2019: £1.3 million), as a result of a positive shift in product mix, in particular high spares volumes, combined with tight cost control.

This business was strongly cash generative, with ongoing investment requirements more than funded by the business itself.

The COVID-19 pandemic is expected to continue to impact the business in the near-term as the airline industry experiences significant schedule disruption world-wide and aerospace customers significantly cut their aircraft newbuild programmes. The longer-term structural impact of the pandemic and thus prospects for the aerospace industry are particularly difficult to predict.  As a result of this uncertainty, a full £1.4 million impairment of the remaining Aerospace goodwill has been recognised during the period.  

Antony Collins

Chief Executive Officer

25 August 2020

Finance Review

Trading performance

Revenue from continuing operations increased by 4.9% to £110.5 million (2019: £105.3 million) with CTP up 4.5% and Aerospace up 10.9%. Revenue from discontinued operations was £35.8 million (2019: £39.5 million).  Overall Group revenue increased by 1.0% to £146.3 million (2019: £144.9 million).

Underlying 1 operating profit from continuing operations increased to £7.3 million (2019: £6.4 million).  This is a three-year increase trend in one of our KPIs.  Underlying earnings before interest, taxation, depreciation and amortisation from continuing operations increased to £13.4 million (2019: £10.9 million) which includes a positive impact from the adoption of IFRS16 in respect of lease contracts of £1.7 million. This represents a return on sales from continuing operations (defined as underlying EBITA divided by revenue) of 6.8% (2019: 6.2%). Operating profit from continuing operations was £1.8 million (2019: £1.9 million).

CTP and Aerospace underlying operating profits¹ grew by 14.7% and 27.3% respectively; however central costs increased by 20.9% due to an increase in the PPF levy and under absorption of overheads following the disposal of the Wipac businesses.  Ongoing operational issues experienced in the LED division resulted in a £3.0 million underlying operating loss from discontinued operations for the period to disposal (2019: £5.1 million loss for the full year).

After net interest of £2.4 million (2019: £1.9 million), Group underlying profit before tax from continuing operations was £4.9 million (2019: £4.5 million).

Net bank interest increased £0.1 million to £1.2 million. The pension finance charge increased to £1.1 million (2019: £0.8 million) due to an increase in the defined benefit pension liability from 31 March 2018 to 31 March 2019. Lease interest charges including those following the adoption of IFRS 16 Leases were £0.2 million (2019: £0.1 million).

The Group underlying tax charge from continuing operations totalled £1.4 million (2019: £1.1 million), an underlying effective tax rate from continuing operations of 27.8% (2019: 23.4%). The effective tax rate is higher than the current UK corporation tax rate due to the weighting of taxable profits generated in higher tax jurisdictions.

Basic underlying earnings per share from continuing operations were 4.9 pence (2019: 2.1 pence).

As set out in Note 7, exceptional items incurred for continuing operations totaled £5.5 million of which £3.4 million relates to the costs of external advisors of the Company, its lending bank and the Group pension scheme and £1.4 million relates to the impairment of goodwill related to Aerospace.

The exceptional costs associated with the discontinued operations total £3.3 million. These costs principally relate to a £1.5 million impairment in the fair value of the LED assets held for sale recognised in the 2020 interim financial statements, a £0.5 million impairment in the value of the contract assets, and a £0.3 million write-down of the carrying value of inventory both associated with the Wipac mid-volume programmes exited during the period and £1.0 million for the fees of external advisors to Wipac in respect to the restructuring and sale of the business.

Statutory operating loss was £4.4 million (2019: £12.6 million loss), and after statutory finance expenses of £2.6 million (2019: £2.1 million), statutory loss before tax and loss on disposal of discontinued operations was £7.0 million (2019: £14.7 million loss), giving a statutory basic loss per share of 15.5 pence (2019: 25.4 pence loss). The statutory tax charge was £1.5 million, compared with a tax charge in 2019 of £4.0 million, with the prior year charge impacted by a £4.0 million derecognition of deferred tax assets. A reconciliation of statutory to underlying non-GAAP financial measures is provided on page 44.

Net debt

Net debt is another Group KPI.  Net debt including IFRS16 lease liabilities as at 31 March 2020 was £27.4 million, of which lease liabilities made up £5.3 million (31 March 2019: £38.5 million including lease liabilities of £1.5 million).

The major components of the net £11.1 million reduction in net debt were the proceeds from the exit of the LED Division which resulted in an inflow of £5.5 million and a reduction in working capital which generated £18.5 million, of which £16.9 million related to discontinued operations. Capital expenditure in the year was £8.6 million (Year to 31 March 2019: £6.7 million)

Lease liabilities increased by £5.7 million upon the adoption of IFRS 16. Net debt excluding IFRS16 lease liabilities at 31 March 2020 was £22.1 million (31 March 2019: £37.0 million).

Cash generated from operating activities from continuing operations was £6.9 million (2019: £8.8 million). 

At the year end, total UK bank facilities were £35.0 million of which £30.0 million related to a revolving credit facility and £5.0 million to an overdraft facility. £30.5 million was drawn at the year end due to foreign exchange retranslation losses but remained within an allowed 5% tolerance under the terms of the facilities.

1 Underlying profit is defined as profit before all exceptional items.

The last triennial actuarial valuation of the Group pension scheme was carried out as at 31 March 2018.  The actuarial technical provisions deficit as of this date was £90.4 million (31 March 2015: £46.1 million), showing the scheme to be 65.4% funded on a continuing basis.

Treasury

The Group faces currency exposure on its overseas subsidiaries and on its foreign currency transactions.

Each business hedges significant transactional exposure using forward foreign exchange contracts for any exposure over £20,000. The Group reports trading results of overseas subsidiaries based on average rates of exchange compared with sterling over the year. This income statement translation exposure is not hedged as this is an accounting rather than cash exposure and as a result the income statement is exposed to movements in the US dollar, euro, Czech koruna and Indian rupee. Based on the 2020 results, a 10% increase in the value of sterling against these currencies would have increased reported loss before tax by £0.7 million.

Dividend

Given the financial performance and position of the Group, coupled with restrictions on the payment of dividends contained within the refinancing agreement and the lack of distributable reserves, the Board is not recommending the payment of a dividend for the 2020 financial year (2019: nil).  The Board intends to recommence dividend payments only when it becomes confident that a sustainable and regular dividend can be introduced.  Under the terms of the restructuring agreement the Group is not permitted to make a dividend payment to shareholders up to the period ending in July 2023. .

Alternative performance measures

In the analysis of the Group's financial performance, position, operating results and cash flows, alternative performance measures are presented to provide readers with additional information. The principal measures presented are underlying measures of earnings including underlying operating profit, underlying profit before tax, underlying profit after tax, underlying EBITDA and underlying earnings per share.

This results statement includes both statutory and adjusted non-GAAP financial measures, the latter of which the Directors believe better reflect the underlying performance of the business and provides a more meaningful comparison of how the business is managed and measured on a day-to-day basis. The Group's alternative performance measures and KPIs are aligned to the Group's strategy and together are used to measure the performance of the business and form the basis of the performance measures for remuneration. Underlying results exclude certain items because if included, these items could distort the understanding of the performance for the year and the comparability between the periods. A reconciliation of the Group's non-GAAP financial measures is shown on page 44.

We provide comparatives alongside all current year figures. The term "underlying" is not defined under IFRS and may not be comparable with similarly titled measures used by other companies.

All profit and earnings per share figures in this preliminary statement relate to underlying business performance (as defined above) unless otherwise stated. A reconciliation of underlying measures to statutory measures is provided below:

£m	Statutory	Exceptional items	Underlying Group	Underlying continuing
CTP operating profit	9.2	-	9.2	9.2
Aerospace operating profit	0.2	1.4	1.6	1.6
Central costs	(7.6)	4.1	(3.5)	(3.5)
Group operating profit from continuing operations	1.8	5.5	7.3	7.3
Group operating loss from discontinued operations	(6.2)	3.3	(2.9)	-
Group operating (loss) / profit	(4.4)	8.8	4.4	7.3
Net finance expense	(2.6)	-	(2.6)	(2.4)
Group (loss) / profit before taxation	(7.0)	8.8	1.8	4.9
Taxation	(1.5)	-	(1.5)	(1.4)
Loss on disposal of discontinued operations	(2.9)	2.9	-	-
Group (loss) / profit for the year	(11.4)	11.7	0.3	3.6
Basic (loss) / profit per share (pence)	(15.5p)	n/a	0.4p	4.9p

The exceptional items comprise:

£m	Continuing operations	Discontinued operations	Group
Professional advisers' fees for restructuring	3.4	1.0	4.4
Consultants fees for restructuring	0.3	-	0.3
Other rationalisation costs	0.4	-	0.4
Impairment of Aerospace goodwill	1.4	-	1.4
Impairment of LED business	-	1.5	1.5
Exit of medium volume automotive lighting contracts	-	0.8	0.8
Loss on sale of LED business	-	2.9	2.9
Total exceptional items	5.5	6.2	11.7

Post balance sheet events and going concern

Post balance sheet events

On 14 August 2020 the Group concluded a restructuring with the Company's main creditors being its bank, HSBC and the pension scheme to secure the continued support of those parties through to July 2023 .  

The debt facilities now available to the Group comprise a term loan of £34.5 million, of which £3.0 million will be amortised by 30 September 2022, and a £3.5 million revolving credit facility maturing on 31 July 2023.  The additional £3.0 million provides the Group with additional headroom to deal with uncertainty in short-term cash flows due to the current economic climate.

In addition, a new schedule of contributions has been agreed with the pension trustees covering the period to September 2037 or until such time as a new Schedule of Contributions and Recovery Plan has been agreed

in respect of the Scheme.

The bank facilities are subject to four covenants to be tested on a quarterly basis:

1. underlying interest cover;

2. net debt to underlying EBITDA;

3. core subsidiary underlying EBITA; and

4. core subsidiary revenue.

Core subsidiaries are defined as Carclo Technical Plastics Ltd; Bruntons Aero Products Ltd; Carclo Technical Plastics

(Brno) s.r.o; CTP Carrera Inc and Jacottet Industrie SAS, with CTP Taicang Co. Ltd and Carclo Technical Plastics Pvt Co Ltd being treated as non-core for the purposes of these covenants.

In addition, the pension scheme has the benefit of a fifth covenant to be tested on 1 May each year up to and including 2023. In the year to 31 March 2021 the test is met by the payment of the agreed schedule of contributions. In subsequent years the test requires any shortfall of pension deficit recovery contributions when measured against PPF priority drift (which is a measure of the increase in the UK Pension Protection Fund's potential exposure to the Group's pension scheme liabilities) to be met by a combination of cash payments to the scheme plus a notional (non-cash) proportion of the increase in the underlying value of the CTP and Aerospace businesses based on an EBITDA multiple for those businesses which is to be determined annually.

Under the terms of the restructuring agreement the Group is not permitted to make a dividend payment to shareholders of Carclo plc up to the period ending in July 2023.

Going concern

The base case financial projection was prepared taking into account the anticipated effect of the ongoing COVID-19 pandemic using the experience of the Group's performance in the first quarter of the 2020/21 financial year.  The forecast also takes into account the impact of significant new tooling orders secured after the balance sheet date in the medical diagnostic sector which are expected to have a material positive impact on earnings and  cash generation over both the next twelve months and future years as the business moves into follow-on volume production.

Sensitivity testing has been carried out based on a number of reasonably possible scenarios including taking into account an estimate of the reasonably possible impact on the Group of a second wave of the COVID-19 pandemic, and a no deal Brexit.

A severe downside scenario was also considered as part of the sensitivity analysis, addressing additional significant reductions in sales volumes. Such a scenario is considered remote and the Group has the capacity to take additional mitigating actions to ensure that the Group remains financially viable, including further reducing operating expenditures as necessary.

On the basis of this forecast and sensitivity testing, the Board has determined that it is reasonable to assume that the Group will continue to operate within the facilities available to it and to adhere to the covenant tests to which it is subject throughout the twelve-month period from the date of signing the financial statements and as such it has adopted the going concern assumption in preparing the financial statements.

Matt Durkin Jones

Chief Financial Officer

25 August 2020

Consolidated income statement

year ended 31 March

				2020		2019
						restated*
		Notes		£000		£000
Continuing operations -
Revenue		3		110,506		105,338
Underlying operating profit				7,313		6,390
Exceptional items		7		(5,470)		(4,507)
Operating profit		3		1,843		1,883
Finance revenue				97		35
Finance expense				(2,485)		(1,926)
Loss before tax				(545)		(8)
Income tax expense		8		(1,355)		(2,931)
Loss after tax but before loss on discontinued operations				(1,900)		(2,939)
Discontinued operations -
Loss on discontinued operations, net of tax		4		(9,509)		(15,693)
Loss for the period				(11,409)		(18,632)
Attributable to -
Equity holders of the Company				(11,409)		(18,632)
Non-controlling interests				-		-
				(11,409)		(18,632)
Loss per ordinary share		9
Basic - continuing operations				(2.6)	p	(4.0)	p
Basic - discontinued operations				(13.0)	p	(21.4)	p
Basic				(15.5)	p	(25.4)	p
Diluted - continuing operations				(2.6)	p	(4.0)	p
Diluted - discontinued operations				(13.0)	p	(21.4)	p
Diluted				(15.5)	p	(25.4)	p

The Group initially applied IFRS 16 at 1 April 2019, using the modified retrospective approach. Under this approach, comparative information is not restated and the cumulative effect of initially applying IFRS 16 is recognised in retained earnings at the date of initial application. See note 6.

*The 2019 comparative information has been re ‑ presented due to a discontinued operation, namely the LED Technologies segment comprising two Wipac businesses which was disposed of during the period, as detailed in note 4.

Consolidated statement of comprehensive income

year ended 31 March

				2020		2019
				£000		£000
Loss for the period				(11,409)		(18,632)
Other comprehensive income / (expense) -
Items that will not be reclassified to the income statement
Remeasurement gains / (losses) on defined benefit scheme				7,805		(16,293)
Deferred tax arising				-		(5,260)
Total items that will not be reclassified to the income statement				7,805		(21,553)
Items that are or may in future be classified to the income statement
Foreign exchange translation differences				716		1,260
Net investment hedge				(549)		(425)
Deferred tax arising				(124)		(61)
Total items that are or may in future be classified to the income statement				43		774
Other comprehensive income / (expense), net of tax				7,848		(20,779)
Total comprehensive expense for the year				(3,561)		(39,411)
Attributable to -
Equity holders of the Company				(3,561)		(39,411)
Non-controlling interests				-		-
Total comprehensive expense for the period				(3,561)		(39,411)

Consolidated statement of financial position

as at 31 March

					2020		2019
			Notes		£000		£000
Assets
Intangible assets			11		22,880		24,144
Property, plant and equipment					40,395		42,495
Investments					-		7
Deferred tax assets					407		442
Trade and other receivables					114		126
Total non current assets					63,796		67,214
Inventories					14,201		19,657
Contract assets					1,424		20,264
Trade and other receivables					19,775		32,101
Cash and cash deposits					19,309		10,330
Total current assets					54,709		82,352
Total assets					118,505		149,566
Liabilities
Interest bearing loans and borrowings					3,862		1,048
Deferred tax liabilities					4,559		4,051
Trade and other payables					-		132
Retirement benefit obligations			12		37,620		49,121
Total non current liabilities					46,041		54,352
Trade and other payables					18,420		31,444
Current tax liabilities					879		867
Contract liabilities					1,607		2,540
Provisions					23		333
Interest bearing loans and borrowings					42,804		47,763
Total current liabilities					63,733		82,947
Total liabilities					109,774		137,299
Net assets					8,731		12,267
Equity
Ordinary share capital issued			13		3,671		3,671
Share premium					7,359		7,359
Translation reserve					7,051		7,008
Retained earnings					(9,324)		(5,745)
Total equity attributable to equity holders of the Company					8,757		12,293
Non-controlling interests					(26)		(26)
Total equity					8,731		12,267

The Group initially applied IFRS 16 at 1 April 2019, using the modified retrospective approach. Under this approach, comparative information is not restated and the cumulative effect of initially applying IFRS 16 is recognised in retained earnings at the date of initial application. See note 6.

Approved by the Board of Directors and signed on its behalf by

Antony Collins	Matt Durkin-Jones
24 August 2020

Consolidated statement of changes in equity

						Attributable to equity holders of the Company
			Share			Share		Translation		Retained					Non-controlling				Total
			Capital			premium		reserve		earnings		Total			interests				equity
			£000			£000		£000		£000		£000			£000				£000
Balance at 1 April 2018			3,664			7,359		6,234		34,719		51,976			(26)				51,950
Loss for the year			-			-		-		(18,632)		(18,632)			-				(18,632)
Other comprehensive income / (loss) -
Foreign exchange translation differences			-			-		1,260		-		1,260			-				1,260
Net investment hedge			-			-		(425)		-		(425)			-				(425)
Remeasurement losses on defined benefit scheme			-			-		-		(16,293)		(16,293)			-				(16,293)
Taxation on items above			-			-		(61)		(5,260)		(5,321)			-				(5,321)
Total comprehensive income / (loss) for the period			-			-		774		(40,185)		(39,411)			-				(39,411)
Transactions with owners recorded directly in equity
Share based payments			-			-		-		36		36			-				36
Exercise of share options			7			-		-		(97)		(90)			-				(90)
Taxation on items recorded directly in equity			-			-		-		(218)		(218)			-				(218)
Balance at 31 March 2019*			3,671			7,359		7,008		(5,745)		12,293			(26)				12,267
Balance at 1 April 2019, as previously reported			3,671			7,359		7,008		(5,745)		12,293			(26)				12,267
Adjustment on initial application of IFRS 16, net of tax.*			-		-			-		-		-		-				-
Adjusted balance at 1 April 2019			3,671			7,359		7,008		(5,745)		12,293			(26)				12,267
Loss for the year			-			-		-		(11,409)		(11,409)			-				(11,409)
Other comprehensive income / (loss) -
Foreign exchange translation differences			-			-		716		-		716			-				716
Net investment hedge			-			-		(549)		-		(549)			-				(549)
Remeasurement gains on defined benefit scheme			-			-		-		7,805		7,805			-				7,805
Taxation on items above			-			-		(124)		-		(124)			-				(124)
Total comprehensive income / (loss) for the period			-			-		43		(3,604)		(3,561)			-				(3,561)
Transactions with owners recorded directly in equity -
Share based payments			-			-		-		25		25			-				25
Taxation on items recorded directly in equity			-			-		-		-		-			-				-
Balance at 31 March 2020			3,671			7,359		7,051		(9,324)		8,757			(26)				8,731

*The Group initially applied IFRS 16 at 1 April 2019, using the modified retrospective approach. Under this approach, comparative information is not restated and the cumulative effect of initially applying IFRS 16 is recognised in retained earnings at the date of initial application. See note 6.

Consolidated statement of cash flows

year ended 31 March

					2020			2019
			Notes		£000			£000
Cash generated from operations			14		21,803			4,145
Interest paid					(1,568)			(1,202)
Tax paid					(933)			(1,107)
Net cash from operating activities					19,302			1,836
Cash flows from investing activities
Proceeds from sale of business, net of cash disposed					5,456			-
Proceeds from sale of property, plant and equipment					2,500			333
Interest received					104			58
Acquisition of business, net of cash acquired					(250)			-
Purchase of property, plant and equipment					(8,512)			(6,897)
Purchase of intangible assets - computer software					(19)			(87)
Net cash from investing activities					(721)			(6,593)
Cash flows from financing activities
Drawings on term loan facilities					-			215
(Repayment of) / drawings on other loan facilities					(9)			26
Cash outflow in respect of performance share plan awards					-			(52)
Repayment of lease liabilities (2019: repayment of finance lease liabilities)					(3,122)			(453)
Net cash from financing activities					(3,131)			(264)
Net increase / (decrease) in cash and cash equivalents					15,450			(5,021)
Cash and cash equivalents at beginning of period					(7,038)			(2,223)
Effect of exchange rate fluctuations on cash held					(60)			206
Cash and cash equivalents at end of period					8,352			(7,038)
Cash and cash equivalents comprise -
Cash and cash deposits					19,309			10,330
Bank overdrafts					(10,957)			(17,368)
					8,352			(7,038)

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 2020, this statement does not itself contain sufficient information to comply with IFRS. The Group expects to publish full consolidated financial statements on 4 September 2020.

The financial information set out above does not constitute the Company's statutory accounts for the years ended 31 March 2020 or 2019 but is derived from those accounts. Statutory accounts for 2019 have been delivered to the registrar of companies, and those for 2020 will be delivered in due course. The auditor has reported on those accounts. Their report for 2020 was (i) unqualified and (ii) did not contain a statement under section 498(2) or (3) of the Companies Act 2006. The auditor's report for the accounts of 2019 was (i) unqualified, (ii) contained a material uncertainty in respect of going concern to which the auditor drew attention by way of emphasis without modifying their report and (iii) did not contain a statement under section 498(2) or (3) of the Companies Act 2006.

The financial statements are prepared on the going concern basis. 

Net debt as of 31 March 2020 was £27.4m, representing a decrease from £38.5m at 31 March 2019. The decrease was driven in the main by proceeds from the disposal of the LED division.

On 14th August 2020 we concluded a restructuring with the Company's main creditors being its bank, HSBC and the

Pension Scheme to secure the continued support of those parties through to July 2023.

The debt facilities available to the Group now comprise a term loan of £34.5m, of which £3.0m will be amortised by

30 September 2022 and a £3.5m revolving credit facility maturing on 31 July 2023.

Further a schedule of contributions has been agreed with the pension trustee through to September 2037.

The bank facilities are subject to four covenants to be tested on a quarterly basis:

1. Underlying interest cover;

2. Net debt to underlying EBITDA;

3. Core subsidiary underlying EBITA;

4. Core subsidiary revenue.

Core subsidiaries are defined as Carclo Technical Plastics Ltd; Bruntons Aero Products Ltd; Carclo Technical Plastics (Brno) s.r.o; CTP Carrera Inc and Jacottet Industrie SAS, with CTP Taicang Co. Ltd and Carclo Technical Plastics Pvt Co Ltd being treated as non-core for the purposes of these covenants.

In addition, the Pension Scheme has the benefit of a fifth covenant to be tested on 1 May each year up to and including 2023. In the year to 31 March 2021 the test is met by the payment of the agreed schedule of contributions.

In subsequent years the test requires any shortfall of pension deficit recovery contributions when measured against PPF priority drift (which is a measure of the increase in the UK Pension Protection Fund's potential exposure to the Group's pension scheme liabilities) to be met by a combination of cash payments to the scheme plus a notional (non-cash) proportion of the increase in the underlying value of the CTP and Aero businesses based on an EBITDA multiple for those businesses which is to be determined annually.

The Directors have prepared cash flow and covenant forecasts to cover the 12 month period from the date of signing these financial statements taking into account the Group's available debt facilities and the terms of the arrangements with the Bank and the Pension Scheme. These demonstrate that the Group has sufficient headroom in terms of liquidity and covenant testing through the forecast period.

The Directors have performed sensitivity testing based on a number of reasonably possible scenarios including taking into account the current view of reasonably possible impacts of the COVID-19 pandemic on the Group, covering reductions in customer demand; impacts to manufacturing operations arising from outbreaks impacting the local workforce; national and regional lockdown measures; and other indirect impacts to supply chains arising from the pandemic. The Directors also considered the potential impact to the Group of a no deal Brexit with the possibility of increases to costs arising from changes to import and export tariffs as well as additional administrative costs to deal with changes to how our UK ‑ based operations process transactions with the EU after January 1st, 2021.

A severe downside scenario was also considered as part of the sensitivity analysis, addressing additional

significant reductions in sales volumes. Such a scenario is considered remote and the Group has the capacity to take

additional mitigating actions to ensure that the Group remains financially viable, including further reducing operating

expenditures as necessary.

On the basis of this forecast and sensitivity testing, the Board has determined that it is reasonable to assume that the Group will continue to operate within the facilities available to it and to adhere to the covenant tests to which it is subject throughout the 12 month period from the date of signing the financial statements and as such it has adopted the Going Concern assumption in preparing the 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 mistaken 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

The Directors at the date of this statement confirm that to the best of their 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 strategic report includes a fair review of the development and performance of the business and the position of the issuer 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 set out in the last published financial statements for the year to 31 March 2019 have been applied consistently to all periods presented in this preliminary statement, unless otherwise stated.

Judgements made by the Directors, in the application of these accounting policies that have significant effect on the financial statements and estimates with a significant risk of material adjustment in the next year are discussed in the Annual Report and Accounts.

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 2019.  The following new standards and amendments to standards are mandatory and have been adopted for the first time for the financial year beginning 1 April 2019:

IFRS 16 Leases (effective date 1 January 2019)
The standard replaces IAS 17 'Leases', IFRIC 14 'Determining whether and Arrangement contains a lease', SIC-15 'Operating Leases-Incentives' and SIC-27 'Evaluating the Substance of Transactions Involving the Legal Form of a Lease'. The standard applies a single recognition and measurement approach for all applicable leases under which the Group is the lessee.

The Group has lease contracts for property and equipment. Before the adoption of IFRS 16, leases in which substantially all the risks and rewards of ownership were retained by the lessor were classified as operating leases; all other leases were classified as finance leases. Under the previous standard, lease payments on operating leases were recognised as rental costs in the consolidated income statement. There was no recognition of the associated assets or liability in the consolidated statement of financial position, except to the extent that there were any prepaid or accrued rents.

Upon adoption of IFRS 16, for all leases where the Group is a lessee, the Group recognises a right-of-use asset and a lease liability in its consolidated statement of financial position. The consolidated income statement includes depreciation in relation to the right-of-use assets and a finance charge in relation to the lease liabilities.

The Group does not act as a lessor.

The Group applied IFRS 16 using the modified retrospective approach, under which the cumulative effect of initial application is recognised in retained earnings at 1 April 2019. Accordingly, the comparative information presented for 2019 is not restated - i.e. it is presented, as previously reported, under IAS 17 and related interpretations. The nature and effect of the changes, and of the practical expedients used by the Group, are disclosed in note 6.

Annual Improvements to IFRS Standards 2015-2017 Cycle (Amendments to IFRS 3, IFRS 11, IAS 12 and IAS 23) (effective date 1 January 2019);

IFRIC 23 Uncertainty over Income Tax Treatments (effective date 1 January 2019);

Amendments to IFRS 9: Prepayment Features with Negative Compensation (effective date 1 January 2019);

Amendments to IAS 28: Long-term Interests in Associates and Joint Ventures (effective date 1 January 2019); and

Amendments to IAS 19: Plan Amendment, Curtailment or Settlement (effective date 1 January 2019).

These standards have not had a material impact on the Consolidated Financial Statements unless indicated.

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 2020. The Group has elected not to adopt early these standards which are described below.

Amendments to References to Conceptual Framework in IFRS Standards (effective date 1 January 2020);

Amendments to IFRS 3: Definition of a Business (effective date 1 January 2020);

Amendments to IAS 1 and IAS 8: Definition of Material (effective date 1 January 2020); and

IFRS 17 Insurance Contracts (effective date 1 January 2021).

The above are not expected to have a material impact on the financial statements unless indicated.

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

During the period the Group was organised into three, separately managed, business segments - Technical Plastics, Aerospace and LED Technologies.  These are the segments for which summarised management information is presented to the Group's chief operating decision maker (comprising the Main Board and Group Executive Committee).

The Technical Plastics segment supplies fine tolerance, injection moulded plastic components, which are used in medical, electronics, optics and automotive safety products. This business operates internationally in a fast growing and dynamic market underpinned by rapid technological development.  This segment now includes the Optics business formerly included within LED Technologies.

The Aerospace segment supplies systems to the manufacturing and aerospace industries.

The LED Technologies segment has been presented as a discontinued operation as detailed in note 4. It developed innovative solutions in LED lighting, and was a leader in the development of high power LED lighting for the premium automotive industry.

The Central segment relates to central costs, non-trading companies and eliminations of intra-group revenue. Central costs and non-trading companies were previously reported as unallocated.

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 2020 were as follows -

		Technical Plastics (continuing)		Aerospace (continuing)		Central (continuing)		Total (continuing operations)		LED Technologies (discontinued)		Group total
		£000		£000		£000		£000		£000		£000
Consolidated income statement
Total revenue		105,169		7,453		(2,116)		110,506		35,782		146,288
Less inter-segment revenue		(2,116)		-		2,116		-		-		-
External revenue		103,053		7,453		-		110,506		35,782		146,288
Expenses		(93,800)		(5,800)		(3,593)		(103,193)		(38,730)		(141,923)
Underlying operating profit / (loss)		9,253		1,653		(3,593)		7,313		(2,948)		4,365
Exceptional operating items		(10)		(1,440)		(4,020)		(5,470)		(3,309)		(8,779)
Operating profit / (loss)		9,243		213		(7,613)		1,843		(6,257)		(4,414)
Net finance expense								(2,388)		(197)		(2,585)
Income tax expense								(1,355)		(94)		(1,449)
Loss from operating activities after tax								(1,900)		(6,548)		(8,448)
Loss on disposal of discontinued operations, net of tax								-		(2,962)		(2,962)
Loss for the period								(1,900)		(9,510)		(11,410)
		Technical Plastics (continuing)		Aerospace (continuing)		Central (continuing)		Total (continuing operations)		LED Technologies (discontinued)		Group total
		£000		£000		£000		£000		£000		£000
Consolidated statement of financial position
Segment assets		101,005		6,287		11,213		118,505		-		118,505
Segment liabilities		(27,207)		(1,321)		(81,246)		(109,774)		-		(109,774)
Net assets		73,798		4,966		(70,033)		(8,731)		-		8,731

Other segmental information
Capital expenditure on property, plant and equipment		7,066		166		66		7,298	4,791		12,089
Capital expenditure on computer software		19		-		-		19	-		19
Depreciation		5,675		270		6		5,951	814		6,765
Impairment of property, plant and equipment		-		-		-		-	1,501		1501
Amortisation of computer software		19		-		95		114	-		114
Amortisation of other intangibles		58		-		-		58	-		58
Impairment of goodwill		-		1,405		-		1,405	-		1,405

The Group's Aylesbury based Optics business ("Optics") operated historically and until 20 December 2019 within the Wipac Limited legal entity, but with its business closely related to the Group's Technical Plastics segment. Immediately following Administrators being appointed to Wipac Limited (see note 4) the Group acquired the business and assets, other than trade debtors, related to Optics (see note 5). Therefore the Optics business is shown as part of continuing operations within Technical Plastics segment and the comparatives have been restated to remove the Optics business from the LED Technologies segment and to present it within the Technical Plastics segment.

The segment results for the year ended 31 March 2019 following restatement for the presentation of the Optics business were as follows -

		Technical Plastics Restated (continuing)		Aerospace (continuing)		Central (continuing)		Total (continuing operations)		LED Technologies Restated (discontinued)		Group total
		£000		£000		£000		£000		£000		£000
Consolidated income statement
Total revenue		101,281		6,720		(2,854)		105,147		39,704		144,851
Less inter-segment revenue		(2,663)		-		2,854		191		(191)		-
Total external revenue		98,618		6,720		-		105,338		39,513		144,851
Expenses		(90,554)		(5,422)		(2,972)		(98,948)		(44,588)		(143,536)
Underlying operating profit / (loss)		8,064		1,298		(2,972)		6,390		(5,075)		1,315
Exceptional items		(445)		-		(4,062)		(4,507)		(9,401)		(13,908)
Operating profit  / (loss)		7,619		1,298		(7,034)		1,883		(14,476)		(12,593)
Net finance expense								(1,891)		(170)		(2,061)
Income tax expense								(2,931)		(1,047)		(3,978)
Loss for the period								(2,939)		(15,693)		(18,632)
Consolidated statement of financial position
Segment assets		95,939		6,352		4,270		106,561		43,005		149,566
Segment liabilities		(19,562)		(1,046)		(94,145)		(114,753)		(22,546)		(137,299)
Net assets		76,377		5,306		(89,875)		(8,192)		20,459		12,267

Other segmental information
Capital expenditure on property, plant and equipment		1,964		311		-		2,275		5,547		7822
Capital expenditure on computer software		42		-		22		64		23		87
Depreciation		4,164		178		2		4,344		916		5,260
Impairment of property, plant and equipment		-		-		-		-		7,115		7,115
Amortisation of computer software		20		-		100		120		73		193
Amortisation of other intangibles		56		-		-		56		30		86
Impairment of goodwill		-		-		-		-		1,060		1,060
Impairment of computer software		-		-		-		-		191		191
Impairment of other intangibles		-		-		-		-		114		114

Analysis by geographical segment

The business operates in three main geographical regions - the United Kingdom, North America and in lower cost regions including the Czech Republic, China and India, and the geographical analysis was as follows -

												Expenditure on tangible
												fixed assets and
				External revenue				Net segment assets				computer software
		2020		2019		2020		2019		2020		2019
		£000		£000		£000		£000		£000		£000
United Kingdom		39,555		39,559		(42,180)		(44,777)		10,353		6,731
North America		47,736		46,566		26,143		30,114		1,214		770
Rest of world		58,997		58,726		24,768		26,930		541		408
		146,288		144,851		8,731		12,267		12,108		7,909

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 the Central segment assets and liabilities are retirement benefit obligation net liabilities of

£37.620 million (2019 - net liabilities of £49.121 million), and net borrowings of £31.458 million (2019 - £37.374 million).

One Technical Plastics customer accounted for 23.7% of Group revenues from continuing operations (2019 - 25.4%) and similar proportions of trade receivables. No other customer accounted for more than 10.0% of revenues from continuing operations in the year or prior year.

Deferred tax assets by geographical location are as follows, United Kingdom £nil (2019 - £nil), North America £0.268 million (2019 - £0.139 million), rest of world £0.139 million (2019 - £0.303 million).

Total non-current assets by geographical location are as follows, United Kingdom £20.485 million (2019 - £25.434 million), North America £23.831 million (2019 - £21.918 million), Rest of world £18.959 million (2019 - £19.287 million).

4  Discontinued operation

Following the restatement of the operating segments for the presentation of the Optics business as set out in note 3, the LED Technologies segment comprised entirely the two Wipac businesses which operated from the UK and from the Czech Republic.

As previously reported, the decision was taken during the first half of the period to sell the two Wipac businesses, with both businesses being successfully disposed of during the period.

Firstly, the entire share capital of Wipac Czech s.r.o. was sold on 26 November 2019 to Magna Automotive Europe GmbH for proceeds of £0.8 million of which £0.7 million was settled in cash and £0.1 million is deferred consideration.

Then, on 20 December 2019, the Group exited the Wipac UK business with Administrators being appointed to Wipac Limited and immediately, following their appointment, selling the business. The business and assets of Wipac Limited (in administration), other than those related to its Aylesbury based Optics business ("Optics"), were sold to Wipac Technology Limited, a newly formed wholly owned subsidiary of Wuhu Anrui Optoelectrics Co. Ltd. The Group's defined benefit pension scheme and lending bank were the principal secured creditors of Wipac Limited and £3.5 million of the net proceeds were paid by the Administrators to the Group's pension scheme and £5.0 million was used during the period to reduce the drawn balance of the Group's overdraft.

No asset has been recognised for potential post balance sheet proceeds which may be used to further reduce the outstanding drawn balance of the Group's revolving credit facility. Management's best estimate of the contingent asset in respect of these potential proceeds is £1.0 million.

Following the restatement of the operating segments for the presentation of the Optics business as set out in note 3, the LED Technologies segment comprised entirely the two Wipac businesses.

When the decision was taken to sell the two Wipac businesses the LED Technologies segment became classified as held-for-sale and the disposal group's assets were held at fair value less costs to sell of £10.9 million.

Following an impairment review at 30 September 2019, and as published in the Group's Interim Report as at that date, a £1.501 million impairment of the held-for-sale assets was recognised and was allocated against property, plant and equipment.

The disposal of the two Wipac businesses has been deemed as a single transaction.

The comparative consolidated income statement and OCI has been represented to show the discontinued operation separately from continuing operations.

				2020		2019
				£000		£000
Results of discontinued operation
Total revenue				35,782		39,704
Less inter-segment revenue				-		(191)
Total external revenue				35,782		39,513
Expenses				(38,728)		(44,588)
Underlying operating loss				(2,946)		(5,075)
Rationalisation and restructuring costs				(1,808)		(922)
Impairment				(1,501)		(8,479)
Operating loss				(6,255)		(14,476)
Net finance expense				(198)		(170)
Loss before tax				(6,453)		(14,646)
Income tax expense				(94)		(1,047)
Loss from operating activities after tax				(6,547)		(15,693)
Loss on sale of discontinued operation				(2,962)		-
Tax on loss on sale of discontinued operation				-		-
Loss from discontinued operations, net of tax				(9,509)		(15,693)
				2020		2019
				£000		£000
Cash flows from / (used in) discontinued operation
Net cash from / (used in) in operating activities				12,353		(6,979)
Net cash from / (used in) investing activities				2,700		(5,059)
Cash flows (used in) / from financing activities				(1,721)		1,524
Net cash flows for the period				13,332		(10,514)

	2020
	£000
Effect of disposal on the financial position of the Group
Property, plant and equipment	10,087
Inventories	7,053
Contract assets	1,898
Trade and other receivables	9,807
Cash and cash deposits	183
Interest bearing loans and borrowings	(1,481)
Deferred tax liabilities	39
Trade and other payables	(14,412)
Contract liabilities	(944)
Net assets and liabilities disposed of	12,230
Consideration received, satisfied in cash	5,639
Cash and cash equivalents disposed of	(183)
Net cash inflows	5,456
Deferred consideration received	129
Consideration received by the Group pension scheme	3,500
Non-cash disposal proceeds	3,629
Loss on disposal working
Total disposal proceeds	9,268
Net assets and liabilities disposed of	(12,230)
Loss on disposal	(2,962)

5  Acquisition of Optics

On 20 December 2019, the Group purchased the business and assets of the Aylesbury based Optics business from the Administrators of Wipac Limited.

Whilst the Optics business was under control of the Group until 20 December 2019, control was lost at the point at which Administrators were appointed to Wipac Limited. The purchase of the Optics business and assets from the Administrators immediately thereafter was a separate transaction.

Prior to 20 December 2019 Optics was a profitable standalone business operating within the Wipac Limited legal entity but with its business closely related to the Group's Technical Plastics Division and with its principal supplier being CTP Czech. Reacquiring optics secures a major customer for the CTP Czech business.

Consideration for the acquisition was £0.25 million and the fair value of the identifiable net assets acquired was £0.25 million.

Acquisition-related costs

The Group incurred acquisition-related costs of £0.050 million on legal fees and professional advisor costs. These costs have been included in 'exceptional items' in the Group's consolidated statement of comprehensive income.

6  Leases

The Group initially applied IFRS 16 Leases from 1 April 2019.

The Group's leases are principally for warehouse and manufacturing facilities with a small number of vehicles and other plant and machinery.

The Group applied IFRS 16 using the modified retrospective approach, under which the cumulative effect of initial application is recognised in retained earnings at 1 April 2019. Accordingly, the comparative information presented for 2019 is not restated - i.e. it is presented, as previously reported, under IAS 17 and related interpretations. The details of the changes in accounting policies are disclosed below. Additionally, the disclosure requirements in IFRS 16 have not generally been applied to comparative information.

Definition of a lease

Previously, the Group determined at contract inception whether an arrangement was or contained a lease under IFRIC 4 Determining whether an Arrangement contains a Lease. The Group now assesses whether a contract is or contains a lease based on the definition of a lease, as explained in Note 1g) to the Financial Statements.

On transition to IFRS 16, the Group elected to apply the practical expedient to grandfather the assessment of which transactions are leases. The Group applied IFRS 16 only to contracts that were previously identified as leases. Contracts that were not identified as leases under IAS 17 and IFRIC 4 were not reassessed for whether there is a lease under IFRS 16. Therefore, the definition of a lease under IFRS 16 was applied only to contracts entered into or changed on or after 1 April 2019.

As a lessee

As a lessee, the Group leases several assets including property, production equipment, vehicles and IT equipment. The Group previously classified leases as operating or finance leases based on its assessment of whether the lease transferred significantly all of the risks and rewards incidental to ownership of the underlying asset to the Group. Under IFRS 16, the Group recognises right-of-use assets and lease liabilities for most of these leases - i.e. these leases are on-balance sheet.

At commencement or on modification of a contract that contains a lease component, the Group allocates the consideration in the contract to each lease component on the basis of its relative stand-alone price.

However, for leases of property the Group has elected not to separate non-lease components and account for the lease and associated non-lease components as a single lease component.

Leases classified as operating leases under IAS 17

Previously, the Group classified property leases as operating leases under IAS 17. On transition, for these leases, lease liabilities were measured at the present value of the remaining lease payments, discounted at the Group's incremental borrowing rate as at 1 April 2019. Right-of-use assets were measured at an amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments.

The Group relied on its assessment of whether leases are onerous applying IAS 37 Provisions, Contingent Liabilities and Contingent Assets immediately before the date of initial application as an alternative to performing an impairment review for right-of-use assets.

The Group used a number of practical expedients when applying IFRS 16 to leases previously classified as operating leases under IAS 17. In particular, the Group:

- did not recognise right-of-use assets and liabilities for leases for which the lease term ends within 12 months of the date of initial application;

- did not recognise right-of-use assets and liabilities for leases of low value assets;

- excluded initial direct costs from the measurement of the right-of-use asset at the date of initial application;

- applied a single discount rate to a portfolio of leases with reasonably similar characteristics; and

- used hindsight when determining the lease term.

Leases classified as finance leases under IAS 17

The Group leased a small number of items of production equipment. These leases were classified as finance leases under IAS 17. For these finance leases, the carrying amount of the right-of-use asset and the lease liability at 1 April 2019 were determined at the carrying amount of the lease asset and lease liability under IAS 17 immediately before that date.

Impact of transition upon the financial statements

On transition to IFRS 16, the Group recognised additional right-of-use assets and additional lease liabilities, recognising the difference in retained earnings. The impact on transition is summarised below.

	1 April 2019
	£000
Right-of-use assets - property, plant and equipment	5,669
Deferred tax asset	-
Lease liabilities	5,669
Retained earnings	-

When measuring lease liabilities for leases that were classified as operating leases, the Group discounted lease payments using its incremental borrowing rate at 1 April 2019. The weighted average rate applied is 4.78%.

		2019
		£000
Operating lease commitments at 31 March 2019 under IAS 17 in the Group financial statements.		8,084
Effect of using the incremental borrowing rate at 31 March 2019		(569)
Finance lease liabilities recognised as at 31 March 2019		1,524
Less: recognition exemption for leases of low-value assets		(17)
Less: recognition exemption for leases with less than 12 months of lease term at transition		(296)
Less: break options on properties of discontinued operations reasonably certain to be exercised		(1,533)
Lease liabilities recognised at 1 April 2019		7,193

The warehouse and factory leases were entered into at various points in the past and in some cases as combined leases of land and buildings. Previously, these leases were classified as operating leases under IAS 17.

The Group leased a small quantity of production equipment under a number of leases, which were classified as finance leases under IAS 17. These were largely disposed of upon the exit of the LED Technologies business during the period.

The Group leases office and IT equipment with contract terms typically of one to ten years. These leases are short term and/or leases of low-value items. The Group has elected not to recognise right-of-use assets and lease liabilities for these leases.

Information about leases for which the Group is a lessee is presented below.

Right-of-use assets

Right-of-use assets related to leased properties are presented as property, plant and equipment.

		Land and Buildings		Plant and Equipment		Total
		£000		£000		£000
Balance at 1 April 2019		5,109		2,030		7,139
Depreciation charge for the year		(1,579)		(773)		(2,352)
Additions to right-of-use assets		2,431		229		2,660
Derecognition of right-of-use assets		(1,122)		(1,206)		(2,328)
Balance at 31 March 2020		4,839		280		5,119
Amounts recognised in profit or loss
						2020
						£000
2020 - Leases under IFRS 16
Interest on lease liabilities						199
Expenses relating to short-term leases						296
Expenses relating to leases of low-value assets, excluding short-term leases of low-value assets						17
						2019
						£000
2019 - Operating leases under IAS 17
Lease expense						2,272
Amounts recognised in consolidated statement of cash flows
						2020
						£000
Total cash outflow for leases						(3,634)

Break options

Some property leases contain break options exercisable by the Group, typically at the 5 year anniversary of the lease inception. Where practicable, the Group seeks to include break options in new leases to provide operational flexibility. The Group assesses at lease commencement date whether it is reasonably certain to exercise the break options. The Group reassesses whether it is reasonably certain to exercise the options if there is a significant event or significant changes in circumstances within its control.

The Group has estimated that the potential future lease payments, should it exercise the break options, would result in a decrease in lease liabilities of £0.7 million.

7  Exceptional items

	2020		2019
	£000		£000
Continuing operations
Rationalisation costs	(4,065)		(1,014)
Charge in respect of retirement benefits - see note 12	-		(3,559)
Costs associated with proposed offer	-		(52)
Profit arising on the disposal of surplus properties	-		118
Impairment of Aerospace - see note 11	(1,405)		-
	(5,470)		(4,507)
Discontinued operations
Rationalisation costs	(1,807)		(921)
Impairment of LED Technologies - see note 4	(1,501)		(8,480)
Loss on disposal of discontinued operations - see note 4	(2,962)		-
	(6,270)		(9,401)
	(11,740)		(13,908)

Rationalisation costs on continuing operations during the period relate to the restructuring and refinancing of the Group; £3.0 million of this is in respect of legal and professional fees, £0.3 million is in respect of consultant fees, £0.3 million is in respect of bank fees; £0.4 million is in respect of exceptional pension scheme administration costs.

Rationalisation costs on discontinued operations during the period relate to the restructuring of the Wipac businesses; £0.8 million of this is in respect of the cost of exiting medium volume automotive lighting contracts, £1.0 million is in respect of legal and professional fees.

The prior period £3.6 million charge in relation to retirement benefits relates to the cost of GMP equalisation. See note 12 for further details.

8  Income tax expense

	2020		2019
	£000		£000
The expense recognised in the consolidated income statement comprises-
United Kingdom corporation tax
Corporation tax on (losses) / profits for the current year	-		108
Adjustments for prior years	265		(83)
Overseas taxation
Current tax	(1,352)		(1,272)
Total current tax net expense	(1,087)		(1,247)
Deferred tax expense
Origination and reversal of temporary differences -
Deferred tax	(364)		1,026
Deferred tax - exceptional derecognition of deferred tax assets	-		(3,978)
Adjustments for prior years	-		221
Rate change	-		-
Total deferred tax charge	(364)		(2,731)
Total income tax expense recognised in the consolidated income statement	(1,451)		(3,978)

Factors affecting the tax charge for the year -

The tax assessed for the year is lower (2019 - lower) than the standard rate of corporation tax in the UK. The differences are explained as follows -

			2020				2019
	£000		%		£000		%
Loss before tax	(9,960)				(14,654)
Income tax using standard rate of UK corporation tax of 19% (2019 - 19%)	(1,892)		19.0		(2,784)		19.0
Other items not deductible for tax purposes	2,769		(27.8)		(486)		3.3
Losses attributable to Wipac	3,311		(33.2)		2,677		(18.3)
Income not taxable	(1,774)		17.8		-		-
Adjustments in respect of overseas tax rates	286		(2.9)		207		(1.4)
Other temporary differences	(1,184)		11.9		142		(1.0)
Exceptional derecognition of deferred tax assets	-		-		3,978		(27.1)
Adjustment to current tax in respect of prior periods (UK and overseas)	(265)		2.7		83		(0.6)
Adjustments to deferred tax in respect of prior periods (UK and overseas)	-		-		(221)		1.5
Foreign taxes expensed in the UK	200		(2.0)		382		(2.6)
Total income tax expense	1,451		(14.5)		3,978		(27.2)

A net tax credit of £0.013 million (2019 charge: £2.760 million) has been classified as exceptional items, in relation to non-UK rationalisation and restructuring costs.

A net tax charge of £0.094 million (2019 charge: £1.047 million) has been recognised on discontinued operations.

Tax on items charged outside of the Consolidated Income Statement -

	2020		2019
	£000		£000
Recognised in other comprehensive income -
Deferred tax relating to actuarial remeasurement of the defined benefit scheme	-		5,260
Foreign exchange movements	124		61
Total income tax charged to other comprehensive income	124		5,321
Recognised in equity -
Share based payments	-		218
Total income tax charged to equity	-		218

9  Earnings per share

The calculation of basic earnings per share is based on the (loss) / 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 the (loss) / 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 result and average number of shares used in calculating the basic and diluted earnings per share -

	2020		2019
	£000		£000
Loss after tax but before loss on discontinued operations	(1,900)		(2,939)
Loss attributable to non-controlling interests	-		-
Loss attributable to ordinary shareholders from continuing operations	(1,900)		(2,939)
Loss on discontinued operations, net of tax	(9,509)		(15,693)
Loss after tax, attributable to equity holders of the parent	(11,409)		(18,632)

	2020		2019
	Shares		Shares
Weighted average number of ordinary shares in the year	73,419,193		73,374,078
Effect of share options in issue	-		-
Weighted average number of ordinary shares (diluted) in the year	73,419,193		73,374,078

In addition to the above, the Company also calculates an earnings per share based on underlying profit as the Board believes this provides a more useful comparison of business trends and performance. Underlying profit is defined as profit before impairments, rationalisation costs, one-off retirement benefit effects, exceptional bad debts, business closure costs, litigation costs, other one-off 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; and

	2020		2019
	£000		£000
Loss after tax, attributable to equity holders of the parent	(11,409)		(18,632)
Continuing operations:
Rationalisation and restructuring costs, net of tax	4,052		915
Charge in respect of retirement benefits, net of tax	-		3,559
Costs associated with proposed offer, net of tax	-		52
Credit arising on the disposal of surplus properties, net of tax	-		(118)
Derecognition of UK deferred tax assets	-		1,975
Impairment of Aerospace net of tax	1,405		-
Discontinued operations:
Rationalisation and restructuring costs, net of tax	1,807		922
Impairment of LED Technologies, net of tax	1,501		8,480
Loss on disposal of discontinued operations, net of tax	2,962		-
Derecognition of UK deferred tax assets	-		883
Underlying profit / (loss) attributable to equity holders of the parent	318		(1,964)
Underlying operating profit - continuing operations	7,313		6,390
Finance revenue - continuing operations	97		35
Finance expense - continuing operations	(2,485)		(1,926)
Income tax expense - continuing operations	(1,355)		(2,931)
Underlying profit attributable to equity holders of the parent - continuing operations	3,570		1,568

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

	2020		2019
	Pence		Pence
Basic (loss) / earnings per share - continuing operations	(2.6)		(4.0)
Basic (loss) / earnings per share - discontinued operations	(13.0)		(21.4)
Basic (loss) / earnings per share	(15.5)		(25.4)
Diluted (loss) / earnings per share - continuing operations	(2.6)		(4.0)
Diluted (loss) / earnings per share - discontinued operations	(13.0)		(21.4)
Diluted (loss) / earnings per share	(15.5)		(25.4)
Underlying earnings per share - basic - continuing operations	4.9		2.1
Underlying loss per share - basic - discontinued operations	(4.5)		(4.8)
Underlying earnings / (loss) per share - basic	0.4		(2.7)
Underlying earnings per share - diluted - continuing operations	4.9		2.1
Underlying loss per share - diluted - discontinued operations	(4.5)		(4.8)
Underlying earnings / (loss) per share - diluted	0.4		(2.7)

10  Dividends paid and proposed

The Directors are not proposing a final dividend for the year ended 31 March 2020.

No interim dividend has been paid after the year end.

11  Intangible assets

Impairment reviews were carried out at 31 March 2020 and an impairment of £1.405 million was recognised on intangible assets in respect of the Aerospace cash generating unit.

Impairment tests for cash generating units containing goodwill

Goodwill acquired in a business combination is allocated at acquisition to the cash-generating units ("CGUs") that are expected to benefit from that business combination. The carrying amount of the goodwill has been allocated to the Group's principal CGUs, being the operating segments described in the operating segment descriptions in note 3.

The following cash generating units have significant carrying amounts of goodwill post impairment -

	2020		2019
	£000		£000
Technical Plastics	21,962		21,747
Aerospace	-		1,368
	21,962		23,115

Technical Plastics

There has been a change in the valuation technique used to value this CGU and the impairment review of the Technical Plastics cash generating unit was based on an estimate of fair value less costs of disposal "FVLCD" as this method had already been calculated and considered by management as part of the restructuring analysis underpinning the financing agreements that have been entered into with the Group's bank and the Group Pension Scheme subsequent to the balance sheet date (see note 15).  In the prior period this was based on a calculation of value in use.

The FVLCD valuation uses an estimate of the value which would be expected to be received from a third party in a sale of the CGU, net of estimated sale costs. This valuation is a level 3 measurement which is based on inputs which are normally unobservable to market participants.

The earnings multiple is a key assumption and this has been based on tailored advice provided by a competent third party advisor. The level of earnings is another key assumption and is based on current, Board-approved EBITDA forecasts.

Sensitivity testing of the recoverable amount to reasonably possible changes in key assumptions, including earnings and earnings multiples, has been performed. A reduction in EBITDA of 1.8% applied to historical earnings would reduce the headroom on the Technical Plastics CGU to nil. However subsequent to the balance sheet date the CGU has been trading ahead of its forecast and new medical customer contracts secured after the balance sheet date, which are incremental to the CGU's earnings forecasts, support the earnings multiple used in the FVLCD valuation.

Aerospace

There has been a change in the valuation technique used to value this CGU and the impairment review of the Aerospace cash generating unit was based on an estimate of fair value less costs of disposal "FVLCD" as this method had already been calculated and considered by management as part of the restructuring analysis underpinning the financing agreements that have been entered into with the Group's bank and the Group Pension Scheme subsequent to the balance sheet date (see note 15).  In the prior period this was based on a calculation of value in use.

The FVLCD valuation uses an estimate of the value which would be expected to be received from a third party in a sale of the CGU, net of estimated sale costs. This valuation is a level 3 measurement which is based on inputs which are normally unobservable to market participants.

The earnings multiple is a key assumption and this has been based on tailored advice provided by a competent third party advisor. The level of earnings is another key assumption and is based on current, Board-approved EBITDA forecasts.

The aerospace industry wide uncertainty experienced due to COVID-19 in the latter part of the period and since the balance sheet date brings significant uncertainty to the earnings multiple that would be expected to be achieved in the event of a third party sale of the CGU, and likewise to the forecast earnings of the CGU under a value in use model. As such management considers it appropriate to adopt an earnings multiple at the lower end of the expected range to determine FVLCD and under this valuation the goodwill relating to the Aerospace CGU was impaired with a charge of £1.405 million recognised. Property, plant and equipment and other working capital balances within the Aerospace CGU were not impaired on the basis that the assets were held at the recoverable amount.

The recoverable amount of the Aerospace CGU is shown in the Segment reporting note 3.

12  Retirement benefit obligations

The Group operates a defined benefit UK pension scheme which provides pensions based on service and final pay. Outside of the UK, retirement benefits are determined according to local practice and funded accordingly.

In the UK, Carclo plc sponsors the Carclo Group Pension Scheme (the "Scheme"), a funded defined benefit pension scheme which provides defined benefits for some of its members. This is a legally separate, trustee administered fund holding the Scheme's assets to meet long term pension liabilities for some 3,009 current and past employees as at 31 March 2018.

The Trustees of the Scheme are required to act in the best interest of the Scheme's beneficiaries. The appointment of the Trustees is determined by the Scheme's trust documentation. It is policy that one third of all Trustees should be nominated by the members. The Trustees currently comprise three company-nominated trustees (of which one is an independent professional trustee and one is the Chairperson) as well as one member-nominated trustee with an ongoing process to appoint a second member-nominated trustee. The Trustees are also responsible for the investment of the Scheme's assets.

The Scheme provides pensions and lump sums to members on retirement and to their dependants on death. The level of retirement benefit is principally based on final pensionable salary prior to leaving active service and is linked to changes in inflation up to retirement. The defined benefit scheme is closed to new entrants who now 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 such that members who have not yet retired are entitled to a deferred pension.

The Company currently pays contributions to the Scheme as determined by regular actuarial valuations. The Trustees are required to use prudent assumptions to value the liabilities and costs of the Scheme whereas the accounting assumptions must be best estimates.

The Scheme is subject to the funding legislation, which came into force on 30 December 2005, outlined in the Pensions Act 2004. This, together with documents issued by the Pensions Regulator, and Guidance Notes adopted by the Financial Reporting Council, set out the framework for funding defined benefit occupational pension plans in the UK.

A full actuarial valuation was carried out as at 31 March 2015 in accordance with the scheme funding requirements of the Pensions Act 2004. The funding of the Scheme is agreed between the Group and the Trustees in line with those requirements. These in particular require the surplus or deficit to be calculated using prudent, as opposed to best estimate actuarial assumptions. This 31 March 2015 actuarial valuation showed a deficit of £46.1 million. Under the recovery plan agreed with the Trustees following the 2015 valuation, the Group agreed that it would aim to eliminate the deficit over a period of 14 years 8 months from 1 November 2015 by the payment of annual contributions of £1.2 million which increase at 2.9% per annum, together with the assumed asset returns in excess of the rate used to discount the liabilities. Under that plan, the amount payable for the year ending 31 March 2020 would have been £1.3 million plus expenses of the Scheme and the Pension Protection Fund ("PPF") levy.

During the year a Memorandum of Understanding was signed on 21 July 2019 and provides for a change to the contributions payable by the Group so that the equivalent of £225,000 per month is payable from July 2019 to January 2021 inclusive. For the year ending 31 March 2020, the contributions totalled £2.025 million including scheme expenses and PPF levy and for the period after the balance sheet date until 31 January 2021 the contributions including scheme expenses and PPF levy will be £2.250 million.

Subsequent to the balance sheet date the triennial actuarial valuation as at 31 March 2018 was finalised and an updated recovery plan agreed with the trustees whereby deficit repair contributions to be paid to the Scheme over the three years to 31 March 2023 are £2.8 million, £3.9 million and £3.8 million respectively.

On the disposal of the Wipac business (see note 4) the trustees agreed to the release of the security that was held over the principal property used in the Wipac business and in consideration received £3.5 million of the proceeds which has been included in contributions by employer in the year.

For the purposes of IAS19 the preliminary results of the actuarial valuation as at 31 March 2018, which was carried out by a qualified independent actuary, have been updated on an approximate basis to 31 March 2020. There have been no changes in the valuation methodology adopted for this period's disclosures compared to the previous period's disclosures.

The Scheme exposes the Group to actuarial risks and the key risks are set out in the table below. In each instance these risks would detrimentally impact the Group's balance sheet position and may give rise to increased interest costs in the Group income statement. The Trustees could require higher cash contributions or additional security from the Group.

The Trustees manage governance and operational risks through a number of internal controls policies, including a risk register and integrated risk management.

Risk	Description		Mitigation
Investment risk	Weaker than expected investment returns result in a worsening in the Scheme's funding position.		The Trustees continually monitor investment risk and performance and have established an investment sub-committee which includes a Group representative, meets regularly and is advised by professional investment advisors. Fiduciary investment management operates for tactical investment management of the plan assets. The Scheme currently invests approximately 34% of its asset value in a portfolio of diversified growth funds, 28% in Liability Driven Investments, 8% in a diversified credit fund and 30% in a money market fund. This investment allocation was put in place to reduce investment risk during the period of financing negotiations between the Company, its bank and the Scheme.
Interest rate risk	A decrease in corporate bond yields increases the present value of the IAS 19 defined benefit obligations. A decrease in gilt yields results in a worsening in the Scheme's funding position.		The Trustees' investment strategy includes investing in liability-driven investments and bonds whose values increase with decreases in interest rates. Approximately 95% of the Scheme's funded liabilities are currently hedged against interest rates using liability-driven investments and the Trustees have a step plan to incrementally increase this level of hedging as its funding position improves. Note that the Scheme hedges interest rate risk on a statutory and long-term funding basis (gilts) whereas AA corporate bonds are implicit in the IAS 19 discount rate and so there is some mismatching risk to the Group should yields on gilts and corporate bonds diverge.
Inflation risk	An increase in inflation results in higher benefit increases for members which in turn increases the Scheme's liabilities.		The Trustees' investment strategy includes investing in liability-driven investments which will move with inflation expectations with approximately 80% of the Scheme's inflation linked liabilities being hedged on a funded basis. The growth assets held are expected to provide protection over inflation in the long term.
Mortality risk	An increase in life expectancy leads to benefits being payable for a longer period which results in an increase in the Scheme's liabilities.		The Trustees' actuary provides regular updates on mortality, based on scheme experience, and the assumption continues to be reviewed.

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

	2020		2019
	£000		£000
Present value of funded obligations	(210,386)		(215,391)
Fair value of scheme assets	172,766		166,270
Recognised liability for defined benefit obligations	(37,620)		(49,121)

The present value of Scheme liabilities is measured by discounting the best estimate of future cash flows to be paid out of the Scheme using the projected unit credit method. The value calculated in this way is reflected in the net liability in the balance sheet as shown above.

The projected unit credit method is an accrued benefits valuation method in which allowance is made for projected earnings increases. The accumulated benefit obligation is an alternative actuarial measure of the Scheme's liabilities whose calculation differs from that under the projected unit credit method in that it includes no assumption for future earnings increases. In this case as the Scheme is closed to future accrual, the accumulated benefit obligation is equal to the valuation using the projected unit credit method.

All actuarial gains and losses will be recognised in the year in which they occur in other comprehensive income.

The cumulative remeasurement net loss reported in the statement of comprehensive income since 1 April 2004 is £41.885 million.

The present value of the deficit funding commitment to the Carclo Group Pension Scheme is less than the IAS 19 deficit at the balance sheet date and therefore IFRIC 14 has no effect on the figures disclosed.

Movements in the net liability for defined benefit obligations recognised in the consolidated statement of financial position -

	2020		2019
	£000		£000
Net liability for defined benefit obligations at the start of the year	(49,121)		(29,798)
Contributions paid	5,051		1,238
Net expense recognised in the consolidated income statement (see below)	(1,122)		(4,347)
Remeasurement gains / (losses) gains recognised in other comprehensive income	7,572		(16,214)
Net liability for defined benefit obligations at the end of the year	(37,620)		(49,121)

Contributions paid during the period include a payment of £3.5 million relating to the sale of property formerly owned by Wipac Limited following Administrators being appointed to that company (see note 4).

Movements in the present value of defined benefit obligations -

	2020		2019
	£000		£000
Defined benefit obligation at the start of the year	215,391		199,883
Interest expense	5,036		5,243
Actuarial (gains) / losses due to scheme experience	(393)		3,726
Actuarial losses due to changes in demographic assumptions	1,528		8,537
Actuarial losses due to changes in financial assumptions	237		5,900
Benefits paid	(11,413)		(11,457)
Past service costs (see note 7)	-		3,559
Defined benefit obligation at the end of the year	210,386		215,391

There have been no plan amendments, curtailments or settlements during the period.

The English High Court ruling in Lloyds Banking Group Pension Trustees Limited v Lloyds Bank plc and others was published on 26 October 2018, and held that UK pension schemes with Guaranteed Minimum Pensions (GMPs) accrued from 17 May 1990 must equalise for the different effects of these GMPs between men and women. The case also gave some guidance on related matters, including the methods for equalisation.

The Trustees of the plan will need to obtain legal advice covering the impact of the ruling on the plan, before deciding with the employer on the method to adopt. The legal advice will need to consider (amongst other things) the appropriate GMP equalisation solution, whether there should be a time limit on the obligation to make back-payments to members (the "look-back" period) and the treatment of former members (members who have died without a spouse and members who have transferred out for example).

The Trustees commissioned scheme-specific calculations to determine the likely impact of the ruling on the Scheme. The initial analysis suggests that an allowance of 1.68% of the total value of the accrued liabilities would be appropriate and that allowance has been made in these disclosures with a resulting past service cost of £3.559 million recognised in the income statement in the comparative period.

The Scheme liabilities are split between active, deferred and pensioner members at 31 March as follows -

	2020		2019
	%		%
Active	-		-
Deferred	43		43
Pensioners	57		57
	100		100

Movements in the fair value of Scheme assets -

	2020		2019
	£000		£000
Fair value of Scheme assets at the start of the year	166,270		170,085
Interest income	3,914		4,455
Return on Scheme assets excluding interest income	8,944		1,949
Contributions by employer	5,051		1,238
Benefits paid	(11,413)		(11,457)
Fair value of Scheme assets at the end of the year	172,766		166,270
Actual return on Scheme assets	12,858		6,404

The fair value of Scheme asset investments was as follows -

	2020		2019
	£000		£000
Diversified growth funds	115,046		126,396
Bonds and liability driven investment funds	56,725		38,893
Cash	995		981
Total assets	172,766		166,270

None of the fair values of the assets shown above include any of the Group's own financial instruments or any property occupied, 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 Trustees' bank account balance.

Diversified growth funds are pooled funds invested across a diversified range of assets with the aim of giving long term investment growth with lower short term volatility than equities.

It is the policy of the Trustees and the Group to review the investment strategy at the time of each funding valuation. The Trustees' investment objectives and the processes undertaken to measure and manage the risks inherent in the Scheme are set out in the Statement of Investment Principles.

A proportion of the Scheme's assets is invested in the BMO LDI Nominal Dynamic LDI Fund which provides a degree of asset liability matching.

The expense recognised in the consolidated income statement was as follows -

	2020		2019
	£000		£000
Past service cost	-		3,559
Net interest on the net defined benefit liability	1,122		788
	1,122		4,347

The expense is recognised in the following line items in the consolidated income statement -

	2020		2019
	£000		£000
Charged to exceptional items	-		3,559
Other finance revenue and expense - net interest on the net defined benefit liability	1,122		788
	1,122		4,347

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

	2020		2019
Discount rate at 31 March	2.30%		2.40%
Future salary increases	N/A		N/A
Inflation (RPI)	2.80%		3.30%
Inflation (CPI)	2.30%		2.20%
Allowance for revaluation of deferred pensions of RPI or 5% p.a. if less	2.80%		3.30%
Allowance for revaluation of deferred pensions of CPI or 5% p.a. if less	2.30%		2.20%
Allowance for pension in payment increases of RPI or 5% p.a. if less	2.70%		3.20%
Allowance for pension in payment increases of CPI or 3% p.a. if less	2.30%		2.20%
Allowance for pension in payment increases of RPI or 5% p.a. if less, minimum 3% p.a.	3.00%		3.30%
Allowance for pension in payment increases of RPI or 5% p.a. if less, minimum 4% p.a.	4.00%		4.00%

The mortality assumptions adopted at 31 March 2020 are 137% of the standard tables S3PMA / S3PFA_M, Year of Birth, no age rating for males and females, projected using CMI_2019 converging to 1.00% p.a. These imply the following life expectancies -

	2020		2019
Life expectancy for a male (current pensioner) aged 65	19.6 years		19.3 years
Life expectancy for a female (current pensioner) aged 65	21.3 years		21.2 years
Life expectancy at 65 for a male aged 45	20.6 years		20.3 years
Life expectancy at 65 for a female aged 45	22.6 years		22.4 years

It is assumed that 75% of the post A-Day maximum for active and deferred members will be commuted for cash (2019 - 75%).

The pension scheme liabilities are derived using actuarial assumptions for inflation, future salary increases, discount rates, mortality rates and commutation. Due to the relative size of the Scheme's liabilities, small changes to these assumptions can give rise to a significant impact on the pension scheme deficit reported in the Group balance sheet.

The sensitivity to the principal actuarial assumptions of the present value of the defined benefit obligation is shown in the following table -

	2020		2020		2019		2019
	%		£000		%		£000
Discount rate 1
Decrease of 0.25% per annum	3.60%		7,574		3.60%		7,754
Decrease of 1.0% per annum	15.7%		33,031		15.7%		33,816
Inflation 2
Increase of 0.25% per annum	2.00%		4,208		2.00%		4,308
Increase of 1.0% per annum	7.60%		15,989		7.60%		16,370
Decrease of 0.1% per annum	-0.80%		(1,683)		-0.80%		(1,723)
Life expectancy
Increase of 1 year	3.80%		7,995		3.80%		8,185

¹ At 31 March 2020, the assumed discount rate is 2.30% (2019: 2.40%).

² At 31 March 2020, the assumed rate of RPI inflation is 2.80% and CPI inflation 2.30% (2019: RPI 3.30% and CPI 2.20%).

The sensitivities shown above are approximate. Each sensitivity considers one change in isolation. The inflation sensitivity includes the impact of changes to the assumptions for revaluation and pension increases.

The weighted average duration of the defined benefit obligation at 31 March 2020 is 14 years (2019: 14 years).

The life expectancy assumption has been applied by allowing for an increase/decrease in life expectation from age 60 of one year, based upon the approximate weighted average age for the Scheme. Whilst this is an approximate approach and will not give the same result as a one year increase in life expectancy at every age, it provides an appropriate indication of the potential impact on the Scheme from changes in life expectancy.

There was no change in the methods and assumptions used in preparing the sensitivity analysis from the prior year.

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

	2020		2019
	£000		£000
Present value of funded obligation	(210,386)		(215,391)
Fair value of scheme asset investments	172,766		166,270
Recognised liability for defined benefit obligations	(37,620)		(49,121)
Actual return on scheme assets	12,858		6,404
Actuarial (gains) / losses due to scheme experience	393		(3,726)
Actuarial losses due to changes in demographic assumptions	(1,528)		(8,537)
Actuarial losses due to changes in financial assumptions	(237)		(5,900)

13  Ordinary share capital

Ordinary shares of 5 pence each -

	Number
	of shares		£000
Issued and fully paid at 31 March 2019	73,419,193		3,671
Issued and fully paid at 31 March 2020	73,419,193		3,671

There are 246,333 potential share options outstanding under the performance share plan at 31 March 2020.

14  Cash generated from operations

	2020		2019
	£000		£000
(Loss) for the year	(11,409)		(18,632)
Adjustments for -
Pension fund contributions	(1,551)		(1,238)
Depreciation charge	6,765		5,260
Amortisation of intangible assets	172		279
Exceptional impairment of tangible assets, arising on rationalisation of business	1,501		7,115
Exceptional impairment of intangible assets, arising on rationalisation of business	1,405		1,365
Loss on business disposal	2,962		-
(Profit) / loss on disposal of other plant and equipment	(307)		7
Exceptional charge in respect of retirement benefits	-		3,559
Cash flow relating to provision for site closure costs	(310)		(151)
Share based payment charge	76		36
Financial income	(104)		(58)
Financial expense	2,690		2,119
Taxation	1,449		3,978
Operating cash flow before changes in working capital	3,339		3,639
Changes in working capital
(Increase) / decrease in inventories	(653)		456
Decrease / (increase) in contract assets	16,942		(20,264)
Decrease in trade and other receivables	2,531		14,799
(Decrease) / increase in trade and other payables	(367)		2,975
Increase in contract liabilities	11		2,540
Cash generated from operations	21,803		4,145

15  Post balance sheet events

On 14 August 2020 the Group concluded a restructuring with the Company's main creditors being its bank, HSBC and the pension scheme to secure the continued support of those parties through to 31 July 2023.

The debt facilities now available to the Group comprise a term loan of £34.5m, of which £3.0m will be amortised by 30 September 2022 and a £3.5m revolving credit facility maturing on 31 July 2023.  The additional £3.0m provides the Group with additional headroom to deal with uncertainty in short-term cash-flows due to the current economic climate.

In addition, a new schedule of contributions has been agreed with the Pension Trustee covering the period or until such time as a new Schedule of Contributions and Recovery Plan has been agreed

in respect of the Scheme.

The bank facilities are subject to four covenants to be tested on a quarterly basis:

1.  underlying interest cover;

2.  net debt to underlying EBITDA;

3.  core subsidiary underlying EBITA; and

4.  core subsidiary revenue.

Core subsidiaries are defined as Carclo Technical Plastics Ltd; Bruntons Aero Products Ltd; Carclo Technical Plastics (Brno) s.r.o; CTP Carrera Inc and Jacottet Industrie SAS, with CTP Taicang Co. Ltd and Carclo Technical Plastics Pvt Co Ltd being treated as non-core for the purposes of these covenants.

In addition, the Pension Scheme has the benefit of a fifth covenant to be tested on 1 May each year up to and including 2023. In FY21 the test is met by the payment of the agreed schedule of contributions. In subsequent years the test requires any shortfall of pension deficit recovery contributions when measured against PPF priority drift (which is a measure of the increase in the UK Pension Protection Fund's potential exposure to the Group's pension scheme liabilities) to be met by a combination of cash payments to the scheme plus a notional (non-cash) proportion of the increase in the underlying value of the CTP and Aero businesses based on EBITDA multiples for those businesses which are to be determined annually.

Under the terms of the restructuring agreement the Group is not permitted to make a dividend payment to shareholders of Carclo plc up to the period ending in July 2023.

Information for shareholders

(a) Reconciliation of non-GAAP financial measures

				2020		2019
						restated*
		Notes		£000		£000
Loss for the period				(11,409)		(18,632)
Add back: Loss on discontinued operations, net of tax		4		9,509		15,693
Statutory loss after tax from continuing operations				(1,900)		(2,939)
Add back: Income tax expense from continuing operations		8,4		1,355		2,931
Loss before tax from continuing operations				(545)		(8)
Add back: Net financing charge from continuing operations				2,388		1,891
Operating profit from continuing operations				1,843		1,883
Add back: Exceptional items from continuing operations		7		5,470		4,507
Underlying operating profit from continuing operations				7,313		6,390
Add back: Amortisation of intangible assets from continuing operations				172		176
Underlying earnings before interest, tax and amortisation (EBITA) from continuing operations				7,485		6,566
Add back: Depreciation of property, plant and equipment from continuing operations				5,951		4,344
Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) from continuing operations				13,426		10,910
Loss before tax from continuing operations				(545)		(8)
Add back: Exceptional items from continuing operations		7		5,470		4,507
Underlying profit before tax from continuing operations				4,925		4,499
Income tax expense from continuing operations		8,4		1,355		2,931
Add back: Exceptional tax credit / (expense) from continuing operations		8,4		13		(1,876)
Group underlying tax expense from continuing operations				1,368		1,055
Group statutory effective tax rate from continuing operations				-248.6%		-36637.5%
Group underlying effective tax rate from continuing operations				27.8%		23.4%
Cash at bank and in hand				19,309		10,330
Interest bearing loans and borrowings - current				(42,804)		(47,763)
Interest bearing loans and borrowings - non-current				(3,862)		(1,048)
Net Debt				(27,357)		(38,481)

*The 2019 comparative information has been re ‑ presented due to a discontinued operation, namely the LED Technologies segment comprising two Wipac businesses which was disposed of during the period, as detailed in note 4.

Glossary

COMPOUND ANNUAL GROWTH RATE ("CAGR")	The geometric progression ratio that provides a constant rate of return over a time period
CONSTANT CURRENCY	Retranslated at the prior year's average exchange rate. Included to explain the effect of changing exchange rates during volatile times to assist the reader's understanding
GROUP CAPITAL EXPENDITURE	Fixed asset additions
NET BANK INTEREST	Interest receivable on cash at bank less interest payable on bank loans and overdrafts. Reported in this manner due to the global nature of the Group and its banking agreements
NET DEBT	Cash and cash deposits less current and non-current interest-bearing loans, borrowings and lease liabilities. Used to report the overall financial debt of the Group in a manner that is easy to understand
OPERATIONAL GEARING	Ratio of fixed overheads to sales
UNDERLYING	Adjusted to exclude all exceptional items
UNDERLYING EBITDA	Profit before interest tax, depreciation, amortisation adjusted to exclude all exceptional items
UNDERLYING EARNINGS PER SHARE	Earnings per share adjusted to exclude all exceptional items
UNDERLYING OPERATING PROFIT	Operating profit adjusted to exclude all exceptional items
UNDERLYING PROFIT BEFORE TAX	Profit before tax adjusted to exclude all exceptional items

 

END

 

 

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