TIDMCAR
RNS Number : 8902S
Carclo plc
19 November 2021
Carclo plc
Interim Report and Accounts
Half Year Results for the six months ended 30 September 2021
Carclo plc, a global provider of value-adding engineered
solutions for the medical, diagnostics, optical, electronics and
aerospace industries, announces its results for the six months to
30 September 2021 ("H1 2022").
The key financial performance measures for H1 2022 are
summarised below:
H1 2022 H1 2021
GBP000 GBP000
Revenue from continuing operations 58,672 49,950
Underlying(1) operating profit from continuing operations 3,682 1,529
Underlying(1) profit before tax from continuing operations 2,279 437
Underlying(1) earnings per share from continuing operations 2.5p 0.0p
Statutory operating profit from continuing operations 5,769 227
Statutory profit/(loss) before tax from continuing operations 4,366 (865)
Statutory profit/(loss) for the period 5,487 (1,321)
Basic earnings/(loss) per share 7.5p (1.8p)
Net debt excluding lease liabilities 21,613 24,415
Net debt 28,371 29,358
Retirement benefit obligations 33,407 58,121
Revenue from continuing operations
Technical Plastics (CTP) 56,583 47,214
Aerospace 2,089 2,736
Total 58,672 49,950
Underlying operating profit from continuing operations (1)
Technical Plastics (CTP) 4,784 3,226
Aerospace 227 484
Central (1,329) (2,181)
Total 3,682 1,529
Underlying EBITDA from continuing operations (1) 6,863 4,576
---------------------------------------------------- -------- --------
Highlights
-- Strong trading momentum and operational execution throughout
the period delivered significant growth in both revenues and
underlying operating margins
-- Total revenues of GBP58.7m, up 17.5% on the prior year (H1 2021: GBP50.0m)
o Technical Plastics ("CTP") total revenues up 19.8% to
GBP56.6m, tooling income up 48.2% to GBP9.1m, product sales up
15.6%
o Higher tooling income reflects new business wins, further
building the pipeline for future product sales growth
o Aerospace revenue down GBP0.6m (23.6%) against a comparative
period which benefited from the fulfilment of a strong pre-Covid
order pipeline
-- Underlying Operating Profit more than doubled to GBP3.7m (H1
2021: GBP1.5m) excluding the benefit of GBP2.1m of non-repeating US
Covid grant income
-- Statutory operating profit of GBP5.8m (H1 2021: GBP0.2m)
-- Discontinued business income received of GBP0.7m from
residual claims on LED Technologies business disposal (H1 2021:
GBPnil)
-- Net debt excluding lease liabilities at 30 September 2021 was
GBP21.6m, a reduction of GBP2.8m compared to 30 September 2020.
-- Net debt reduced by GBP1.0m to GBP28.4m (H1 2021: GBP29.4m),
an increase of GBP0.8m in the six months to 30 September 2021,
including GBP3.5m inventory increase mainly to protect materials
availability against current supply chain uncertainties
-- IAS19 Retirement Benefit liability down to GBP33.4m, reduced
by GBP24.7m since September 2020 (and reduced by GBP3.9m since
March 2021) from improved asset returns, additional employer
contributions, and initiatives progressed with the Trustees
Notes:
(1) underlying results are those calculated before discontinued
operations, separately disclosed items and exceptional items. A
reconciliation to statutory figures is set out below.
Reconciliation of non-GAAP financial measures - H1 2022
Exceptional COVID-related
GBPm Statutory items Before exceptional US grant Underlying
CTP operating profit 6,871 - 6,871 2,087 4,784
Aerospace operating
profit 227 - 227 - 227
Central costs (1,329) - (1,329) - (1,329)
----------------------------- ---------- ------------ ------------------- -------------- -----------
Group operating profit
from continuing operations 5,769 - 5,769 2,087 3,682
Net finance expense (1,403) - (1,403) - (1,403)
----------------------------- ---------- ------------ ------------------- -------------- -----------
Group profit before
taxation 4,366 - 4,366 2,087 2,279
Taxation credit /
(expense) 428 893 (465) - (465)
----------------------------- ---------- ------------ ------------------- -------------- -----------
Group profit for the
period from continuing
operations 4,794 - 3,901 2,087 1,814
Profit on discontinued
operations, net of
tax 693 693 - - -
----------------------------- ---------- ------------ ------------------- -------------- -----------
Group profit for the
period 5,487 1,596 3,901 2,087 1,814
----------------------------- ---------- ------------ ------------------- -------------- -----------
Basic earnings per
share (pence) 7.5p 2.2p 5.3p 2.8p 2.5p
----------------------------- ---------- ------------ ------------------- -------------- -----------
Commenting on the results, Nick Sanders, Executive Chairman,
said:
"The Group continued to make good progress in the first half of
the financial year. In common with many companies, we experienced
significant Covid-related operational headwinds, but despite these
delivered a strong set of financial results. Our first half
performance is ahead of our expectations even after the impact of
one-off benefits is removed.
Our primary focus has been to continue to ensure our employees
and communities remain safe, whilst increasing output in line with
customer demand. This has been achieved despite the continuing
effect of mandatory lockdowns and production restrictions in some
countries.
Demand for CTP products in the medical and diagnostic sectors
has continued to increase from both existing and new customers and
we expect this will continue in the post-pandemic period. Labour
shortages and increased labour costs, particularly in the US,
increased raw material costs and extended logistic lead times have
all presented significant challenges in the first half. We have
responded by implementing a range of measures and have been able to
mitigate some of the impact of cost pressures by increasing
prices.
While maintaining our usual high level of delivery performance
has been difficult in recent months, and this situation will take
some months yet to fully recover, we nevertheless have been able to
strengthen our customer and supply chain relationships in working
through these challenges together.
Encouragingly, our CTP businesses in Asia have performed
strongly in line with our strategy to grow more rapidly outside of
our traditionally strong US and European markets.
We have also benefited from strong demand for tooling with
significant orders received for both replacement and new projects.
Tooling orders are generally a precursor to production orders which
provides us with optimism about future demand.
Our Aerospace division is also showing the early signs of
recovery with order intake in the first half exceeding sales. A
number of new contracts with existing and some new customers have
also been secured. It will however take some time for these orders
to feed through into sales and profit.
Central costs have been well managed, and our continued focus of
cash management has again delivered good cash headroom and reduced
bank debt. The Group has also worked closely with the Pension
Trustees to develop enhancements to the pension schemes which
improve scheme benefits and reduce the overall deficit.
Subject to there being no significant deterioration in trading
conditions as a result of supply chain or Covid-related disruption,
the Board expects the positive commercial momentum seen in the
first half to continue, with further product sales growth in H2.
Trading margins for the second half are expected to be slightly
lower than H1, reflecting the current higher cost environment.
Nevertheless, the Board currently anticipates full year underlying
trading will be slightly ahead of expectations, with the one-off
benefits of the Covid-related grant income and contribution from
discontinued operations incremental to this.
Enquiries
Carclo plc Nick Sanders - Executive Chairman 01924 268040
FTI Consulting Nick Hasell / Susanne Yule 020 3727 1340
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
The alternative performance measures are defined in the
financial review of the Annual Report and Accounts (ARA) for the
year ended 31 March 2021, with a reconciliation to statutory
figures included in this Half Year Report to aid the user of these
accounts. 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. Operating profit before exceptional items is not
referred to in the ARA for the year ended 31 March 2021.
Overview of Results
The Group delivered a strong trading performance in H1 2022,
ahead of the Board's expectations, making progress over the prior
year period on all the listed key performance measures. This was
achieved despite continuing Covid-related headwinds on the Carclo
supply chain, in common with many international businesses.
Comparing all results with H1 2021, Group revenues rose 17.5% to
GBP58.7m (H1 2021: GBP50.0m).
Technical Plastics ("CTP") revenues rose 19.8% to GBP56.6m (H1
2021: GBP47.2m), including a 15.6% increase in product sales to
GBP47.5m (H1 2021: GBP41.1m) and a 48.2% increase in tooling income
to GBP9.1m (H1 2021: GBP6.1m).
The higher proportion of new and existing business converted
into tooling income in the period will also help drive on
subsequent product sales.
CTP underlying operating profit rose by 48.3% to GBP4.8m (H1
2021: GBP3.2m) as a result of improved tooling and product sales,
with an additional GBP2.1m recognised in respect of a Covid-related
US government loan which was forgiven and converted into grant
income in H1 2022. All other Covid-related costs and credits are
also included in operating profit. Other non-US Covid-related
credits amounted to GBP0.1m in the period.
As anticipated, Aerospace revenue of GBP2.1m was down GBP0.6m on
the previous period which benefited from a high pre-Covid order
pipeline. Whilst the aerospace industry remains heavily impacted by
the pandemic, the division continued to be profitable with GBP0.2m
delivered in the period, a reduction of GBP0.3m. Encouragingly, the
division is already seeing orders recover. These have been tracking
ahead of revenues for the Aerospace business over recent months and
will gradually benefit sales as the orders convert.
On a constant currency basis revenue from continuing operations
increased by 23.3%, and underlying operating profit by 149.7%.
Central costs have been well managed, and our continued focus on
cash management has again delivered good cash headroom and helped
reduce net bank debt to GBP21.6m (H1 2021: GBP24.4m). Central costs
including pension administration costs reduced from GBP2.2m to
GBP1.3m and finance costs increased from GBP1.1m to GBP1.4m.
Finance costs comprise net interest payable on bank loans and
leases of GBP1.0m (H1 2021: GBP0.7m) including bank commitment
fees, and net interest on the defined benefit pension liability of
GBP0.4m (H1 2021: GBP0.4m).
There were no exceptional costs recognised in the period (H1
2021: GBP1.3m). The Board concluded that Covid-related costs and
credits, given the indeterminate nature of evaluating the
additional costs, should all be included within operating
costs.
A further residual GBP0.7m was received following final
distribution by administrators of the discontinued LED business
exited in December 2019, with the income being shown separately
from continuing operations.
The Group statutory profit before tax was GBP4.4m (H1 2021: loss
(GBP0.9m)).
Taxation was a credit of GBP0.4m against a statutory profit
before tax of GBP4.4m, giving an effective tax credit rate of 8.5%
(H1 2021: tax expense GBP0.5m giving a 52.7% effective tax rate on
a pre-tax loss of GBP0.9m). The result includes a GBP0.9m credit
from renewed deferred tax asset recognition from UK combined
businesses which have returned to forecasting taxable profits,
providing available tax losses to be set off against future
profits. The underlying effective tax rate, after excluding the
deferred tax credit of GBP0.9 million, amounts to 20.4% of
underlying profit before tax (H1 2021: 104.3%).
Underlying earnings per share from continuing operations for H1
2022 was 2.5 pence (H1 2021: 0.0 pence). The statutory earnings per
share for the period, for all operations, was 7.5 pence (H1 2021:
loss of 1.8 pence).
Board changes
As reported in our Full Year Results on 30 June 2021, Peter
Slabbert and David Toohey stepped down from the Board as
Non-Executive Directors on 31 March 2021 and 30 April 2021
respectively.
Eric Hutchinson and Frank Doorenbosch were appointed to the
Board as Non-Executive Directors on 7 January 2021 and 1 February
2021 respectively. Eric became Chair of the Audit Committee in
March 2021, taking over from Peter Slabbert. Frank took over as
Chair of the Remuneration Committee in April 2021 following David
Toohey's departure.
Financial Position
Cash generated from continuing operations during the first half
was GBP2.0m (H1 2021: GBP0.6m), including increased cash payments
(net of administration costs) into the pension scheme of GBP1.8m
(H1 2021: GBP1.0m) and a net working capital increase of GBP3.3m
(H1 2021: GBP2.3m), of which GBP3.5m related to inventory increases
mainly to protect operations amidst post-Covid supply chain
disruption.
Gross cash capital expenditure for the period was GBP3.5m (H1
2021: GBP0.8m).
As a result, net debt excluding lease liabilities reduced by
GBP2.8m to GBP21.6m (H1 2021: GBP24.4m), and net debt reduced by
GBP1.0m to GBP28.4m compared to 30 September 2021.
At 30 September 2021, the Group's total UK bank facilities were
GBP33.6m of which GBP30.1m related to a term loan and GBP3.5m to a
revolving credit facility.
No additional government COVID-19 support was received in cash
during the period (H1 2021: GBP3.9m of which GBP2.6m was presented
within interest bearing loans and borrowings).
The Group's IAS 19 pension deficit reduced to GBP33.4m as at 30
September 2021 (30 September 2020: GBP58.1m and 31 March 2021:
GBP37.3m) on additional contributions made by the Group, backed by
improved asset returns and initiatives progressed with the
Trustees. No change was made in the discount rate assumption of
2.0% since March 2021 and no changes were made at this stage in the
mortality assessments. No initial data has yet been released on the
triennial actuarial valuation of March 2021. Relevant data here
will be taken into account to the extent that it is available for
IAS19 valuation purposes at the end of the financial year.
In accordance with the recovery plan agreed by the Pensions
Regulator and pension scheme trustees, total contributions paid by
the Company (for deficit recovery contributions and scheme
administration costs) for the six-month period were GBP2.1m (H1
2021: GBP1.1m). Total contributions for the six-month period to 31
March 2022 are expected to be GBP1.8m.
Dividend
Under the terms of its financing agreements the Company is not
permitted to make a dividend payment to shareholders up to the
period ending in July 2023.
Outlook
Subject to there being no significant deterioration in trading
conditions as a result of supply chain or Covid-related disruption,
the Board expects the positive commercial momentum seen in the
first half to continue, with further product sales growth in H2.
Trading margins for the second half are expected to be slightly
lower than H1, reflecting the current higher cost environment.
Nevertheless, the Board currently anticipates full year underlying
trading will be slightly ahead of expectations, with the one-off
benefits of the Covid-related grant income and contribution from
discontinued operations incremental to this.
Principal Risks and Uncertainties
In the Annual Report for the year ended 31 March 2021 a detailed
review of the principal risks faced by the Group, and how these
risks were being managed, was provided. We continue to face, and
proactively manage, the risks and uncertainties in our business
and, whilst the Board considers that these principal risks and
uncertainties have not materially changed since the publication of
the 2021 Annual Report, it is worth noting that:
-- COVID-19 related uncertainty continues as to the impact on
the Group's markets and geographies evolving over time. It is
possible that the Group's operations, its supply chains and
customer demand could continue to be further impacted, particularly
in the US, where labour and material shortage experience has been
most acute;
-- the impact of Brexit has to some extent become intertwined
with post-Covid impact on labour and materials resource shortages
in the supply chain and as such is seen as a lesser but
contributory factor in the COVID-19 risks identified above; and
-- during the current period significant new tooling agreements
have been either entered into or progressed with new and existing
customers. These agreements and pending subsequent agreements for
the supply of manufactured product are subject to operational
execution risk.
Going Concern
These interim financial statements have been prepared on a going
concern basis as detailed in Note 1 to these interim accounts.
While headroom against banking covenants has increased
significantly over the last 6 months, it should continue to be
noted that any material manifestation of the above risks,
individually or in combination, could lead to a breach of the
Group's banking covenants. Management has considered the impact of
potential mitigations including improved trading, cost saving and
working capital management initiatives, as well as compensation
from customers in respect of delays and it considers that the
potential benefits from these give sufficient comfort that the
downside risks can be mitigated. If it were not possible to
mitigate a potential breach the bank would be approached to request
that it considers issuing a waiver for any covenant that may be
breached.
Responsibility Statement
We confirm to the best of our knowledge:
(a) the condensed consolidated set of financial statements has
been prepared in accordance with IAS 34 Interim Financial
Reporting;
(b) the interim management report includes a fair review of the
information required by DTR 4.2.7R (indication of important events
during the first six months and description of principal risks and
uncertainties for the remaining six months of the year); and
(c) the interim management report includes a fair review of the
information required by DTR 4.2.8R (disclosure of related parties'
transactions and changes therein).
By order of the Board,
Nick Sanders Phil White
Executive Chairman Chief Financial Officer
18 November 2021
Glossary of Terms
CONSTANT CURRENCY Retranslated at the prior half-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 EXPITURE Non-current 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
loans and borrowings. Used to
report the overall financial
debt of the Group in a manner
that is easy to understand
----------------------------------------
NET DEBT EXCLUDING LEASE LIABILITIES Net debt, as defined above,
excluding lease liabilities.
Used to report the overall non-leasing
debt of the Group in a manner
that is easy to understand
----------------------------------------
EBITDA Profit before interest, tax,
depreciation and amortisation
adjusted to exclude all exceptional
and separately disclosed items
----------------------------------------
UNDERLYING Adjusted to exclude all exceptional
and separately disclosed items
----------------------------------------
UNDERLYING EBITDA Profit before interest, tax,
depreciation and amortisation
adjusted to exclude all exceptional
and separately disclosed items
----------------------------------------
UNDERLYING EARNINGS PER SHARE Earnings per share adjusted
to exclude all exceptional and
separately disclosed items
----------------------------------------
UNDERLYING OPERATING PROFIT Operating profit adjusted to
exclude all exceptional and
separately disclosed items
----------------------------------------
UNDERLYING PROFIT BEFORE TAX Profit before tax adjusted to
exclude all exceptional and
separately disclosed items
----------------------------------------
OPERATING PROFIT BEFORE EXCEPTIONAL Statutory operating profit adjusted
ITEMS to exclude all exceptional items
----------------------------------------
Condensed consolidated income statement
Six
months Six months
ended ended Year ended
30
September 30 September 31 March
2021 2020 2021
unaudited unaudited audited
Notes GBP000 GBP000 GBP000
-------------- ------ ----- ----- ------- ---------- ------ ------------ --------- ---------- ---------------- ----------------------
Continuing operations:
Revenue 4 58,672 49,950 107,564
Underlying operating
profit 3,682 1,529 4,840
COVID related US government grant income 7 2,087 - -
Operating profit before exceptional items 5,769 1,529 4,840
Exceptional
items 6 - (1,302) 4,490
Operating
profit 4 5,769 227 9,330
Finance
revenue 8 34 57 42
Finance
expense 8 (1,437) (1,149) (2,701)
Profit / (loss) before
tax 4,366 (865) 6,671
Income tax credit /
(expense) 9 428 (456) (457)
Profit / (loss) after tax but
before profit on
discontinued operations 4,794 (1,321) 6,214
Discontinued operations:
Profit on discontinued operations, net of tax 6 693 - 1,198
Profit / (loss) for
the period 5,487 (1,321) 7,412
========== ================ ======================
Attributable
to:
Equity holders of the parent company 5,487 (1,321) 7,412
Non-controlling
interests - - -
5,487 (1,321) 7,412
========== ================ ======================
Earnings / (loss) per
ordinary share 10
Basic - continuing operations 6.5 p (1.8) p 8.5 p
Basic - discontinued
operations 0.9 p - p 1.6 p
Basic 7.5 p (1.8) p 10.1 p
========== ================ ======================
Diluted - continuing
operations 6.5 p (1.8) p 8.5 p
Diluted - discontinued
operations 0.9 p - p 1.6 p
Diluted 7.5 p (1.8) p 10.1 p
========== ================ ======================
Condensed consolidated statement of comprehensive income
Six
months Six months
ended ended Year ended
30
September 30 September 31 March
2021 2020 2021
unaudited unaudited audited
GBP000 GBP000 GBP000
-------------- ------ ----- ----- ------- ---------- ------ ------------ --------- ---------- ---------------- ----------------------
Profit / (loss) for
the period 5,487 (1,321) 7,412
Other comprehensive income /
(expense):
Items that will not be reclassified to the income statement
Remeasurement gains / (losses) on defined benefit scheme 2,730 (20,714) (6,540)
Total items that will not be reclassified to the income statement 2,730 (20,714) (6,540)
---------- ---------------- ----------------------
Items that will or may in the future be classified to the income statement
Foreign exchange translation differences 913 (79) (2,939)
Net investment
hedge (205) (18) 1,084
Deferred tax
arising 236 57 137
Total items that will or may in future be classified to the income statement 944 (40) (1,718)
---------- ---------------- ----------------------
Other comprehensive income / (expense), net of income tax 3,674 (20,754) (8,258)
Total comprehensive income / (expense) for the period 9,161 (22,075) (846)
========== ================ ======================
Attributable
to:
Equity holders of the Company 9,161 (22,075) (846)
Non-controlling
interests - - -
Total comprehensive income / (expense) for
the period 9,161 (22,075) (846)
========== ================ ======================
Condensed consolidated statement of financial position
30
September 30 September 31 March
2021 2020 2021
unaudited unaudited audited
Notes GBP000 GBP000 GBP000
--------------- ------ ----- --------- -------- -------- ------------ --------- ---------- ---------------- ----------------------
Non-current
assets
Intangible
assets 12 22,214 22,863 21,848
Property, plant and equipment 13 43,632 40,127 43,218
Deferred tax
assets 1,500 338 384
Trade and other
receivables 114 116 112
Total non-current
assets 67,460 63,444 65,562
---------- ---------------- ----------------------
Current assets
Inventories 16,355 13,968 12,821
Contract assets 6,131 3,519 2,898
Trade and other
receivables 23,172 19,665 19,254
Cash and cash deposits 16 10,394 23,379 15,485
Current tax
assets 538 - -
Total current
assets 56,590 60,531 50,458
Total assets 124,050 123,975 116,020
---------- ---------------- ----------------------
Non-current
liabilities
Loans and borrowings 17 36,014 38,738 37,997
Deferred tax
liabilities 4,577 4,315 4,393
Contract
liabilities - 426 866
Retirement benefit obligations 14 33,407 58,121 37,275
Total non-current
liabilities 73,998 101,600 80,531
---------- ---------------- ----------------------
Current
liabilities
Loans and borrowings 17 2,751 13,999 5,084
Trade and other
payables 21,022 17,174 17,016
Current tax
liabilities 534 558 17
Contract
liabilities 8,654 3,877 5,461
Provisions - 18 -
---------- ---------------- ----------------------
Total current liabilities 32,961 35,626 27,578
Total
liabilities 106,959 137,226 108,109
---------- ---------------- ----------------------
Net assets / (liabilities) 17,091 (13,251) 7,911
========== ================ ======================
Equity
Ordinary share capital issued 19 3,671 3,671 3,671
Share premium 7,359 7,359 7,359
Translation
reserve 6,277 7,011 5,333
Retained
earnings (190) (31,266) (8,426)
Total equity attributable to equity holders of the Company 17,117 (13,225) 7,937
Non-controlling interests (26) (26) (26)
----------------------
Total equity 17,091 (13,251) 7,911
========== ================ ======================
Condensed 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
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
--------------- ------ ----- ------------- -------------- -------------------- --------- ---------- ---------------- ----------------------
Current half year period unaudited
Balance at 1 April 2021 3,671 7,359 5,333 (8,426) 7,937 (26) 7,911
Profit for the period - - - 5,487 5,487 - 5,487
Other comprehensive income:
Foreign exchange translation
differences - - 913 - 913 - 913
Net investment hedge - - (205) - (205) - (205)
Remeasurement gains on
defined benefit scheme - - - 2,730 2,730 - 2,730
Taxation on items above - - 236 - 236 - 236
Total comprehensive income
for the period - - 944 8,217 9,161 - 9,161
Transactions with owners
recorded directly in equity:
Share based payments - - - 19 19 - 19
Balance at 30 September 2021 3,671 7,359 6,277 (190) 17,117 (26) 17,091
========= ========== ================ ========= ========== ================ ======================
Prior half year period unaudited
Balance at 1 April 2020 3,671 7,359 7,051 (9,324) 8,757 (26) 8,731
Loss for the period - - - (1,321) (1,321) - (1,321)
Other comprehensive income:
Foreign exchange translation
differences - - (79) - (79) - (79)
Net investment hedge - - (18) - (18) - (18)
Remeasurement losses on
defined benefit scheme - - - (20,714) (20,714) - (20,714)
Taxation on items
above - - 57 - 57 - 57
Total comprehensive loss for
the period - - (40) (22,035) (22,075) - (22,075)
Transactions with owners
recorded directly in equity:
Share based payments - - - 93 93 - 93
Balance at 30 September
2020 3,671 7,359 7,011 (31,266) (13,225) (26) (13,251)
========= ========== ================ ========= ========== ================ ======================
Attributable to equity holders of the Company
--------- ---------------------------------------------------------------
Share Share Translation Retained Non-controlling Total
capital premium reserve earnings Total interests equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Prior year - audited
Balance at 1 April 2020 3,671 7,359 7,051 (9,324) 8,757 (26) 8,731
Profit for the year - - - 7,412 7,412 - 7,412
Other comprehensive (loss) /
income:
Foreign exchange translation
differences - - (2,939) - (2,939) - (2,939)
Net investment hedge - - 1,084 - 1,084 - 1,084
Remeasurement losses on
defined benefit scheme - - - (6,540) (6,540) - (6,540)
Taxation on items above - - 137 - 137 - 137
Total comprehensive (loss) /
income for the period - - (1,718) 872 (846) - (846)
Transactions with owners
recorded directly in equity: -
Share based payments - - - 26 26 - 26
Balance at 31 March 2021 3,671 7,359 5,333 (8,426) 7,937 (26) 7,911
========= ========== ================ ========= ========== ================ =========================
Condensed consolidated statement of cash flows
Six Six
months months Year
ended ended ended
30 30
September September 31 March
2021 2020 2021
unaudited unaudited audited
Notes GBP000 GBP000 GBP000
---------- ------------- -------- ---- ---- ------ ---------- ---------- ----------
Cash generated from
operations 15 2,020 570 11,202
Interest paid (983) (725) (1,782)
Tax paid (486) (342) (1,023)
Net cash from / (used in) operating
activities 551 (497) 8,397
Cash flows from investing
activities
Proceeds from sale of business, net of
cash disposed 693 - 1,250
Proceeds from sale of property, plant
and equipment 25 - 21
Interest received 34 57 42
Purchase of property, plant and
equipment (3,514) (730) (7,180)
Purchase of intangible assets - computer
software (15) (80) (139)
Net cash used in investing
activities (2,777) (753) (6,006)
Cash flows from financing
activities
Drawings on new
facilities - 32,221 36,454
Transaction costs associated with the
issue of debt - - (380)
Repayment of borrowings excluding
lease liabilities (2,247) (28,147) (31,666)
Receipt of government
support loans 7 - 2,589 2,243
Repayment of lease
liabilities (866) (905) (1,601)
Net cash (used in) / from financing
activities (3,113) 5,758 5,050
Net (decrease) / increase in cash and
cash equivalents (5,339) 4,508 7,441
Cash and cash equivalents at beginning
of period 15,485 8,352 8,352
Effect of exchange rate fluctuations on
cash held 248 (153) (308)
Cash and cash equivalents at end of
period 16 10,394 12,707 15,485
========== ========== ==========
Notes to the accounts
Basis of
1. preparation
The condensed consolidated half year report for Carclo plc ("Carclo" or "the Group") for the
six months ended 30 September 2021 has been prepared on the basis of the accounting policies
set out in the audited accounts for the year ended 31 March 2021 and in accordance with the
Disclosure and Transparency Rules of the UK Financial Conduct Authority and the requirements
of UK adopted International Accounting Standard 34, "Interim Financial Reporting".
The financial
information is
unaudited.
The half year report does not constitute financial statements and does not include all the
information and disclosures required for full annual statements. It should be read in conjunction
with the annual report and financial statements for the year ended 31 March 2021 which is
available either on request from the Company's registered office, Unit 5, Silkwood Court,
Ossett, WF5 9TP, or can be downloaded from the corporate website - www.carclo-plc.com.
The comparative figures for the financial year ended 31 March 2021 are not the Company's complete
statutory accounts for that financial year. Those accounts have been reported on by the Company's
auditors and delivered to the Registrar of Companies. The report of the auditors was (i) unqualified,
(ii) did not include a reference to any matters which the auditors drew attention by way of
emphasis without qualifying their report and (iii) did not contain statements under Section
498 (2) of the Companies Act 2006.
The half year report was approved by the Board of Directors on 18 November 2021. Copies are
available from the corporate website.
The Group financial statements for the year ended 31 March 2021 were prepared and approved
by the Directors in accordance with International Financial Reporting Standards as adopted
pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union ("Adopted IFRSs").
Going concern
The interim financial statements are prepared on the going concern basis.
The Directors have reviewed cash flow and covenant forecasts to cover the twelve-month period
from the date of the approval of these condensed interim financial statements considering
the Group's available debt facilities and the terms of the arrangements with the Group's bank
and the Group pension scheme which were disclosed in Note 1, Basis of Preparation - Going
Concern, to the Group's consolidated financial statements for the year ended 31 March 2021.
Net debt at 30 September 2021 was GBP28.4 million, rising from GBP27.6 million at 31 March
2021 (30 September 2020: GBP29.4 million) and is forecast to increase over the twelve-month
period driven by capital investment and net working capital outflows to support business growth.
The Group's financing remains within banking covenants as at 30 September 2021 and the base
case forecasts demonstrate that the Group has more than sufficient liquidity and covenant
headroom throughout the forecast period.
COVID-19 related uncertainty and the resulting supply chain disruption and cost increases
continue to impact the Group's markets and geographies and the situation is evolving over
time. It is possible that the Group's operations, its supply chains and customer demand could
continue to be further impacted, particularly in the US, where labour and material shortage
experience has been most acute. Any material manifestation of these or other uncertainties
could lead to a breach of the Group's banking covenants.
The Directors have reviewed sensitivity testing modelling a range of severe downside scenarios.
These sensitivities attempt to incorporate identified risks set out in the Principal Risks
and Uncertainties section of this report.
Severe downside sensitivities modelled included a range of scenarios modelling the financial
effects of loss of business from: discrete sites, an overall fall in gross margin of 1% across
the Group, a fall in Group sales of 5% matched by a corresponding fall in cost of sales of
the same amount, exchange risk and interest rate risk. These sensitivities attempt to incorporate
the risks arising from national and regional impacts of the global pandemic from local lockdowns,
impacts on manufacturing and supply chain and other potential increases to direct and indirect
costs. The Group has the capacity to take mitigating actions to ensure that the Group remains
financially viable, including further reducing operating expenditures as necessary.
On this basis, the Directors have determined that it is reasonable to assume that the Group
will continue to operate within the facilities available to it and that it will adhere to
the covenant tests to which it is subject throughout the twelve-month period from the date
of signing these condensed interim financial statements. As such the Directors have adopted
the Going Concern assumption in preparing these interim financial statements.
Accounting
2. policies
The accounting policies applied in these interim financial statements are the same as those
applied in the Group's consolidated financial statements as at, and for the year ended 31
March 2021. Certain new standards, amendments and interpretations to existing standards have
been published that are mandatory for the Group's accounting period beginning on 1 April 2021
but they are not expected to have a material effect on the Group's financial statements.
Accounting estimates
3. and judgements
The preparation of the interim financial statements requires management to make judgements,
estimates and assumptions that affect the application of accounting policies and the reported
amounts of assets and liabilities, income and expenses. In preparing these half year financial
statements, the significant judgements made by management in applying the Group's accounting
policies and the key source of estimation uncertainty were the same as those applied to the
audited consolidated financial statements as at, and for the year ended, 31 March 2021 except
for the following -
Government
grants
Key judgement
At 31 March 2021 management made a key judgement that there was insufficient certainty as
to whether conditions attached to the $2.9 million of government loans in support of COVID-19
interruption had been met and therefore the proceeds were presented as loans and borrowings
in the consolidated statement of financial position and no associated government grant income
was recognised during that period. On 5 May 2021 the Group received confirmation of forgiveness
of the loan by the US Small Business Administration, resulting in its conversion from a loan
to a grant.
Confirmation of forgiveness provides certainty that all conditions attached to the loan have
been met. As such, the full GBP2.1 million ($2.9 million) was recognised as income in May
2021.
Recognition of
deferred tax assets
Key judgement
Management have exercised judgement over the level of future taxable profits in the UK against
which to relieve the Group's deferred tax assets. On this basis management believe it is appropriate
to recognise deferred tax assets and at 30 September 2021 UK deferred tax assets of GBP0.9
million have been recognised (31 March 2021: GBPnil).
Impairment of
assets
Key judgement
Management have exercised judgement to determine that there are no indicators of impairment
for intangible assets at 30 September 2021.
4. Segment reporting
The Group is organised into three, separately managed, business segments - Technical Plastics,
Aerospace and Central. These are the segments for which summarised management information
is presented to the Group's chief operating decision maker (being the Group Executive Committee).
The Technical Plastics segment supplies fine tolerance, injection moulded plastic components,
which are used in medical, diagnostics, optical and electronic products. This business operates
internationally in a fast growing and dynamic market underpinned by rapid technological development.
The Aerospace segment supplies systems to the manufacturing and aerospace industries.
The Central segment relates to central costs and non-trading companies.
The LED Technologies segment presented as a discontinued operation was a leader in the development
of high-power LED lighting for the premium automotive industry and was disposed of in the
year to 31 March 2020 - see note 5.
Transfer pricing between business segments is set on an arm's length basis. Segmental revenues
and results shown below are after the elimination of transfers between business segments.
Technical Total
Plastics Aerospace Central (continuing Discontinued Group
(continuing) (continuing) (continuing) operations) operations total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------ --- --- ------------ -------- -------- ----- ------------- ------------ ---------- -------------- ------- ---------- -------------
The segment results for the
six months ended 30
September 2021 were as
follows:
Consolidated income statement
Total external revenue 56,583 2,089 - 58,672 - 58,672
Expenses (51,799) (1,862) (1,329) (54,990) - (54,990)
Underlying operating profit /
(loss) 4,784 227 (1,329) 3,682 - 3,682
COVID related US government grant
income 2,087 - - 2,087 - 2,087
Operating profit / (loss)
before exceptional items 6,871 227 (1,329) 5,769 - 5,769
Exceptional operating
items - - - - - -
Operating profit / (loss) 6,871 227 (1,329) 5,769 - 5,769
============ ======== =============
Net finance
expense (1,403) - (1,403)
Income tax
credit 428 - 428
Profit from operating activities after
tax 4,794 - 4,794
========== ======= =============
Profit on disposal of discontinued operations, net of tax - see
note 5 - 693 693
Profit for the
period 4,794 693 5,487
========== ======= =============
Technical Total
Plastics Aerospace Central (continuing Discontinued Group
(continuing) (continuing) (continuing) operations) operations total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Consolidated statement of
financial position
Segment assets 117,433 6,107 510 124,050 - 124,050
Segment
liabilities (38,973) (751) (67,235) (106,959) - (106,959)
Net assets 78,460 5,356 (66,725) 17,091 - 17,091
============ ======== ============= ========== ======= =============
Other segmental
information
Depreciation 2950 114 19 3,083 - 3,083
Amortisation 38 - 60 98 - 98
Disaggregation of
revenue
Major products/service
lines
Manufacturing 47,499 2,089 - 49,588 - 49,588
Tooling 9,084 - - 9,084 - 9,084
------------
56,583 2,089 - 58,672 - 58,672
============ ======== ============= ========== ======= =============
Timing of revenue
recognition
Products transferred at a point
in time 47,499 2,089 - 49,588 - 49,588
Products and services transferred
over time 9,084 - - 9,084 - 9,084
------------
56,583 2,089 - 58,672 - 58,672
============ ======== ============= ========== ======= =============
Technical Group
Plastics Aerospace Central total
GBP000 GBP000 GBP000 GBP000
------------------ --- ------------ -------------- ----- ------------- ------ ---------------- ------ --------------- ------ ---------------
The segment results for
the six months ended 30
September 2020 were as
follows:
Consolidated income
statement
Total external revenue 47,214 2,736 - 49,950
Expenses (43,988) (2,252) (2,181) (48,421)
Underlying operating
profit / (loss) 3,226 484 (2,181) 1,529
Exceptional
operating items (74) (13) (1,216) (1,302)
Operating profit
/ (loss) 3,152 471 (3,397) 227
============= ================ ===============
Net finance
expense (1,092)
Income tax
expense (456)
Loss after tax (1,321)
===============
Consolidated statement of
financial position
Segment assets 104,160 6,492 13,323 123,975
Segment
liabilities (30,191) (1,049) (105,986) (137,226)
Net assets 73,969 5,443 (92,663) (13,251)
============= ================ ===============
Other segmental
information
Depreciation 2,755 133 15 2,903
Amortisation 103 - 41 144
Disaggregation of
revenue
Major
products/service
lines
Manufacturing 41,086 2,736 - 43,822
Tooling 6,128 - - 6,128
47,214 2,736 - 49,950
============= ================ =============== ===============
Timing of revenue
recognition
Products transferred at a point
in time 41,086 2,736 - 43,822
Products and services transferred
over time 6,128 - - 6,128
47,214 2,736 - 49,950
============= ================ =============== ===============
Technical Total
Plastics Aerospace Central (continuing Discontinued Group
(continuing) (continuing) (continuing) operations) operations total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------ ----------------- -------------- ----- ------------- ------ ---------------- ------ --------------- ------ ---------------
The segment results for the year ended 31 March 2021 were as follows:
Consolidated income
statement
Total external
revenue 102,473 5,091 - 107,564 - 107,564
Expenses (93,256) (4,541) (4,927) (102,724) - (102,724)
Underlying operating
profit / (loss) 9,217 550 (4,927) 4,840 - 4,840
Exceptional
operating Items - - 4,490 4,490 (52) 4,438
Operating profit / (loss) 9,217 550 (437) 9,330 (52) 9,278
================= ============== =============
Net finance
expense (2,659) - (2,659)
Income tax
expense (457) - (457)
Profit from operating
activities after tax 6,214 (52) 6,162
Profit on disposal of discontinued operations, net of tax - see
note 5 - 1,250 1,250
Profit for the
period 6,214 1,198 7,412
================ =============== ===============
Consolidated statement of
financial position
Segment assets 109,217 6,073 730 116,020 - 116,020
Segment
liabilities (33,951) (832) (73,326) (108,109) - (108,109)
Net assets 75,266 5,241 (72,596) 7,911 - 7,911
================= ============== ============= ================ =============== ===============
Other segmental
information
Depreciation 5,492 250 32 5,774 - 5,774
Amortisation 110 - 96 206 - 206
Disaggregation of
revenue
Major
products/service
lines
Manufacturing 88,210 5,091 - 93,301 - 93,301
Tooling 14,263 - - 14,263 - 14,263
-----------------
102,473 5,091 - 107,564 - 107,564
================= ============== ============= ================ =============== ===============
Timing of revenue
recognition
Products
transferred at a
point in time 88,210 5,091 - 93,301 - 93,301
Products and
services
transferred over
time 14,263 - - 14,263 - 14,263
-----------------
102,473 5,091 - 107,564 - 107,564
================= ============== ============= ================ =============== ===============
5. Discontinued operations
Whilst there were no new discontinued operations in the 6 months to 30 September 2021 or in
the prior year comparative, on 5 May 2021 and 6 August 2021, proceeds of GBP0.2 million and
GBP0.3 million respectively were received from the administrators of Wipac Ltd which was part
of the LED Technologies segment that was classified as discontinued in the year to 31 March
2020 (year to 31 March 2021: GBP1.3 million). The proceeds were received by the Group's lending
bank, HSBC and used to prepay the Group's term loan.
On 28 July 2021, an additional GBP0.2 million was received from the Wipac Ltd administrators
in payment of a first and final dividend for the Group's unsecured creditor claim against
the company. In accordance with the facility agreement, the first GBP0.1 million was retained
by the Group with the balance of GBP0.1 million used to prepay the Group's term loan.
No asset was recognised in the results for the year to 31 March 2021 for potential post balance
sheet proceeds or dividends, and as such, the full GBP0.7 million has been recognised as exceptional
profit on disposal of discontinued operations in the current period .
Management does not expect to receive any further proceeds from the administrators of Wipac
Ltd.
6. Exceptional items
Six months Six months
ended ended Year ended
30 September 30 September 31 March
2021 2020 2021
GBP000 GBP000 GBP000
------------------ --- ------------ -------------- ----- ------------- ------ ---------------- ------ --------------- ------ ---------------
Continuing operations
Rationalisation
costs - (1,302) (1,968)
Gain in respect of retirement
benefits - - 6,458
Total recognised in operating profit - (1,302) 4,490
Deferred tax credit - see note 9 893 - -
893 (1,302) 4,940
---------------- --------------- ---------------
Discontinued operations
Rationalisation
costs - - (52)
Profit on disposal of discontinued operations - see note 5 693 - 1,250
693 - 1,198
---------------- --------------- ---------------
Exceptional items 693 (1,302) 5,688
================ =============== ===============
There have been no exceptional items recognised in operating profit in the period to 30 September
2021.
The turnover and cost impacts of the COVID-19 pandemic are so pervasive and difficult to identify
that they cannot be readily separated and quantified from the ongoing trading of the Group.
As a result, consistent with the results reported in the financial statements for the year
ended 31 March 2021, neither COVID-19 related costs nor credits arising from government assistance
have been presented as exceptional items in the condensed consolidated income statement for
the six months to 30 September 2021.
A GBP0.9 million deferred tax credit upon the re-recognition of UK deferred tax assets has
been treated as exceptional.
The profit on disposal of discontinued operations of GBP0.7 million comprises proceeds received
from the administrators of Wipac Ltd which was part of the LED Technologies segment which
was classified as discontinued in the year ended 31 March 2021. The GBP1.3 million received
in the year ended 31 March 2021 was all in respect to proceeds.
The 31 March 2021 gain in respect to retirement benefits is a past service credit for the
impact of introducing a Bridging Pension Option, partly offset by a past service cost relating
to GMP equalisation.
Government support for
7. COVID-19
During the period the Group has utilised governmental support in its operating locations to
mitigate the impact of COVID-19. Support has been in the form of grants, loans and deferral
of tax payments.
Six months ended Six months ended Year ended
30 September 30 September 31 March
2021 2020 2021
GBP000 GBP000 GBP000
------------------ --- ------------ -------------- ----- ------------- -------------------- ------------------- -------------------
The governmental support utilised during the period was:
Grants - used to offset labour and variable costs, included within operating profit 2,153 615 747
Loans - presented in loans and borrowings - 2,589 2,104
Payment deferrals - presented in trade and other payables - 705 68
In April 2020, the Group received a loan under the Payback Protection Program, underwritten
by the US government in support of COVID-19 for $2.9 million, presented as loans and borrowings
in the prior period and year end comparatives. On 5 May 2021, notice of forgiveness of the
loan was received from the Small Business Administration, resulting in its conversion from
a loan to a grant and therefore its release to the condensed consolidated income statement.
In the 6 months to 30 September 2021 the full amount has been recognised within operating
profit in the income statement as a credit to off-set labour and variable COVID-19 related
costs incurred to date.
The credit recognised in respect to the COVID-19 related government grant has been presented
separately on the face of the condensed consolidated income statement for the 6 months to
30 September 2021 for clarity.
Net finance
8. expense
Six months ended Six months ended Year ended
30 September 30 September 31 March
2021 2020 2021
GBP000 GBP000 GBP000
------------------ --- ------------ -------------- ----- ------------- -------------------- ------------------- -------------------
The expense recognised in the condensed consolidated income statement comprises:
Interest receivable on cash and cash deposits 34 57 42
Interest payable on bank loans and overdrafts (816) (635) (1,559)
Lease interest (165) (89) (210)
Other interest (92) (1) (90)
Net interest on the net defined benefit liability (364) (424) (842)
Net finance
expense (1,403) (1,092) (2,659)
-------------------- ------------------- -------------------
9. Income tax expense
Six months Six months
ended ended Year ended
30 September 30 September 31 March
2021 2020 2021
GBP000 GBP000 GBP000
------------------- ----------- ----------------------- ------------- ------------- ------ ----------- ---------------- -------------- --------------- --------- --------------------
The credit / (expense) recognised in the condensed consolidated income statement comprises:
Continuing operations
Current tax expense on ordinary activities (465) (563) (293)
Deferred tax credit / (expense) on ordinary activities - 107 (164)
Exceptional deferred tax credit - recognition of deferred tax assets 893 - -
Total income tax credit / (expense) recognised in the condensed consolidated income statement 428 (456) (457)
---------------- --------------- --------------------
The half year tax credit represents -8.5% of statutory profit before tax (2021: -52.7%) based
on the estimated average effective tax rate on ordinary activities for the full year.
This rate includes a deferred tax credit of GBP0.9 million which has been recognised in the
six months ended 30 September 2021 upon the recognition of GBP0.9 million deferred tax assets
in respect of UK losses and capital allowances.
The half year underlying effective tax rate, after excluding the deferred tax credit of GBP0.9
million, amounts to 20.4% of underlying profit before tax, exceptional items and COVID related
US government grant income (2021: 104.3%).
The Group's underlying effective tax rate is higher than the underlying UK tax rate of 19.0%
(H1 2021: 19.0%) mainly because the Group is earning a higher proportion of its profits in
higher tax jurisdictions.
Deferred tax assets and liabilities at 30 September 2021 have been calculated on the rates
substantively enacted at the balance sheet date. A change to the main UK corporation tax rate,
set out in the Finance Bill 2021 was substantively enacted on 24 May 2021 with the main rate
of corporation tax to become 25% from 1 April 2023.
10. Earnings per share
The calculation of basic earnings per share is based on the profit / (loss) attributable to
equity holders of the parent company divided by the weighted average number of ordinary shares
outstanding during the period.
The calculation of diluted earnings per share is based on profit / (loss) attributable to
equity holders of the parent company divided by the weighted average number of ordinary shares
outstanding during the period (adjusted for dilutive options).
The following details the result and average number of shares used in calculating the basic
and diluted earnings per share:
Six months ended Six months ended Year ended
30 September 30 September 31 March
2021 2020 2021
GBP000 GBP000 GBP000
------------------- ----------- ----------------------- ------------- ------------- ------ ------------------------- ------ ----------------------- ---------------------------
Profit / (loss) after tax but before profit on discontinued operations 4,794 (1,321) 6,214
Profit / (loss) attributable to non-controlling interests - - -
Profit / (loss) attributable to ordinary shareholders from continuing operations 4,794 (1,321) 6,214
Profit on discontinued operations, net of tax 693 - 1,198
Profit / (loss) after tax, attributable to equity holders of the parent 5,487 (1,321) 7,412
========================= ======================= ===========================
Six months ended Six months ended Year ended
30 September 30 September 31 March
2021 2020 2021
Shares Shares Shares
------------------- ----------- ----------------------- ------------- ------------- ------ ------------------------- ------ ----------------------- ---------------------------
Weighted average number of ordinary shares in the period 73,419,193 73,419,193 73,419,193
Effect of share options in issue 15,974 15,974 15,974
Weighted average number of ordinary shares (diluted) in the period 73,435,167 73,435,167 73,435,167
========================= =======================
In addition to the above, the Company also calculates an earnings per share based on underlying
profit as the Board believe 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 separately disclosed one-off items 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:
Six months ended Six months ended Year ended
30 September 30 September 31 March
2021 2020 2021
GBP000 GBP000 GBP000
------------------- ----------- ----------------------- ------------- ------------- ------ ------------------------- ------ ----------------------- ---------------------------
Profit / (loss) after tax, attributable to equity holders of the parent 5,487 (1,321) 7,412
Continuing operations:
Exceptional - rationalisation and restructuring costs, net of tax - 1,302 1,968
Exceptional - gain in respect of retirement benefits, net of tax - - (6,458)
COVID related US government grant income, net of tax (2,087) - -
Exceptional - recognition of UK deferred tax assets (893) - -
Discontinued operations:
Exceptional - rationalisation and restructuring costs, net of tax - - 52
Exceptional - gain on disposal of discontinued operations, net of tax (693) - (1,250)
Underlying profit / (loss) attributable to equity holders of the parent 1,814 (19) 1,724
========================= ======================= ===========================
Underlying profit / (loss) attributable to equity holders of the parent 1,814 (19) 1,724
COVID related US government grant income, net of tax 2,087 - -
Profit / (loss) after tax but before exceptional items, attributable to equity holders of
the parent 3,901 (19) 1,724
========================= ======================= ===========================
Underlying operating profit - continuing operations 3,682 1,529 4,840
Finance revenue - continuing operations 34 57 42
Finance expense - continuing operations (1,437) (1,149) (2,701)
Income tax credit / (expense) - continuing operations 428 (456) (457)
Exceptional recognition of UK deferred tax assets - continuing operations (893) - -
Underlying profit / (loss) attributable to equity holders of the parent - continuing operations 1,814 (19) 1,724
========================= ======================= ===========================
Underlying profit / (loss) attributable to equity holders of the parent - continuing operations 1,814 (19) 1,724
COVID related US government grant income, net of tax 2,087 - -
Profit / (loss) after tax but before exceptional items - continuing operations 3,901 (19) 1,724
========================= ======================= ===========================
The following table summarises the earnings per share figures based on the above data:
Six months ended Six months ended Year ended
30 September 30 September 31 March
2021 2020 2021
Pence Pence Pence
------------------- ----------- ----------------------- ------------- ------------- ------ ------------------------- ------ ----------------------- ---------------------------
Basic earnings / (loss) per share - continuing operations 6.5 (1.8) 8.5
Basic earnings / (loss) per share - discontinued operations 0.9 - 1.6
Basic earnings / (loss) per share 7.5 (1.8) 10.1
------------------------- ----------------------- ---------------------------
Diluted earnings / (loss) per share - continuing operations 6.5 (1.8) 8.5
Diluted earnings / (loss) per share - discontinued operations 0.9 - 1.6
Diluted earnings / (loss) per share 7.5 (1.8) 10.1
------------------------- ----------------------- ---------------------------
Underlying earnings / (loss) per share - basic - continuing operations 2.5 (0.0) 2.4
Underlying earnings / (loss) per share - basic - discontinued operations - - -
Underlying earnings / (loss) per share - basic 2.5 (0.0) 2.4
------------------------- ----------------------- ---------------------------
Underlying earnings / (loss) per share - diluted - continuing operations 2.5 (0.0) 2.4
Underlying earnings / (loss) per share - diluted - discontinued operations - - -
Underlying earnings / (loss) per share - diluted 2.5 (0.0) 2.4
------------------------- ----------------------- ---------------------------
Earnings / (loss) per share before exceptional items - basic - continuing operations 5.3 (0.0) 2.4
Earnings / (loss) per share before exceptional items - basic - discontinued operations - - -
Earnings / (loss) per share before exceptional items - basic 5.3 (0.0) 2.4
------------------------- ----------------------- ---------------------------
Earnings / (loss) per share before exceptional items - diluted - continuing operations 5.3 (0.0) 2.4
Earnings / (loss) per share before exceptional items - diluted - discontinued operations - - -
Earnings / (loss) per share before exceptional items - diluted 5.3 (0.0) 2.4
------------------------- ----------------------- ---------------------------
11. Dividends paid and proposed
No dividends were paid in the period or the comparative periods.
Under the terms of the restructuring agreement, the Group is not permitted to make a dividend
payment to shareholders up to the period ending July 2023.
12. Intangible assets
The movements in the carrying value of intangible assets are summarised as follows:
Six months ended Six months ended Year ended
30 September 30 September 31 March
2021 2020 2021
GBP000 GBP000 GBP000
------------------------ ------ ----------------------- -------- ------------------ ------ ----------------------------- --------------------------- ---------------------------
Net book value at the start of the period 21,848 22,880 22,880
Additions 15 80 139
Disposals - - (5)
Amortisation (98) (144) (206)
Effect of movements in foreign exchange 449 47 (960)
Net book value at the end of the period 22,214 22,863 21,848
============================= =========================== ===========================
Included within intangible assets is goodwill of GBP21.5 million (30 September 2020 - GBP22.0
million). The carrying value of goodwill is subject to annual impairment tests by reviewing
detailed projections of the recoverable amounts from the underlying cash generating units.
At 31 March 2021, the carrying value of goodwill was supported by value-in-use calculations.
There has been no indication of subsequent impairment in the current financial period.
Intangible assets also include customer-related intangibles of GBP0.3 million (30 September
2020: GBP0.3 million) and computer software of GBP0.4 million (30 September 2020: GBP0.5 million).
Property, plant and
13. equipment
The movements in the carrying value of property plant and equipment are summarised as
follows:
Six
months Six months Year
ended ended ended
30 31
September 30 September March
2021 2020 2021
GBP000 GBP000 GBP000
-------------- ----- ---- ---- ---- ---------- -------------- ----------
Net book value at the
start of the period 43,218 40,395 40,395
Additions 2,952 2,701 10,374
Depreciation (3,083) (2,903) (5,774)
Disposals - - (193)
Impairment - - 13
Effect of movements in
foreign exchange 545 (66) (1,597)
Net book value at the
end of the period 43,632 40,127 43,218
========== ============== ==========
Right-of-use
assets
Right-of-use assets related to lease agreements are presented within property, plant
and equipment
above. The movements are summarised as follows:
Six
months Six months Year
ended ended ended
30 31
September 30 September March
2021 2020 2021
GBP000 GBP000 GBP000
---------- -------------- ----------
Net book value at the start of
the period 6,988 5,119 5,119
Depreciation (823) (741) (1,582)
Additions 196 385 3,769
Derecognition of
right-of-use assets - - (148)
Effect of movements in
foreign exchange 90 (9) (170)
Net book value at the
end of the period 6,451 4,754 6,988
========== ============== ==========
14. 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.
The amounts recognised in the condensed consolidated statement of financial position
in respect
of the defined benefit scheme were as follows:
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2021 2020 2021
GBP000 GBP000 GBP000
--------------- -------------------- ----------- ---------
Present value of funded obligations (203,198) (237,839) (204,654)
Fair value of scheme assets 169,791 179,718 167,379
Recognised liability for defined
benefit obligations (33,407) (58,121) (37,275)
--------------- -------------------- ---------
Six months
ended Six months ended Year ended
30 September 30 September 31 March
Movement in the net liability for
defined benefit obligations recognised
in the condensed
consolidated statement of financial
position: 2021 2020 2021
GBP000 GBP000 GBP000
--------------- -------------------- ----------- ---------
Net liability for defined benefit
obligations at the start of the
period (37,275) (37,620) (37,620)
Contributions paid 2,050 1,067 2,834
Net credit / (expense) recognised in the condensed
consolidated income statement (939) (424) 4,052
Remeasurement (losses) / gains recognised in other
comprehensive income 2,757 (21,144) (6,541)
Net liability for defined benefit
obligations at the end of the period (33,407) (58,121) (37,275)
--------------- -------------------- ---------
Six months Year
ended Six months ended ended
30 September 30 September 31 March
2021 2020 2021
Movements in the fair value of Scheme
assets: GBP000 GBP000 GBP000
--------------- -------------------- ----------- ---------
Fair value of Scheme
assets at the start of
the period 167,379 172,766 172,766
Interest income 1,646 1,957 3,888
Return / (loss) on Scheme assets
excluding interest income 4,667 8,285 (988)
Contributions by employer 2,050 1,879 2,834
Benefit payments (5,376) (4,357) (9,557)
Expenses paid (575) (812) (1,564)
Fair value of Scheme assets at the
end of the year 169,791 179,718 167,379
--------------- -------------------- ---------
Actual return on Scheme assets 6,313 10,242 2,900
--------------- -------------------- ---------
Six months
ended Six months ended Year ended
30 September 30 September 31 March
2021 2020 2021
Movements in the present value of
defined benefit obligations: GBP000 GBP000 GBP000
--------------- -------------------- ----------- ---------
Defined benefit obligation at the start
of the period 204,654 210,386 210,386
Interest expense 2,010 2,381 4,730
Actuarial gains due to changes in
demographic assumptions - - (6,727)
Actuarial losses due to changes in
financial assumptions 1,910 29,429 12,280
Benefit payments (5,376) (4,357) (9,557)
Past service credit - - (6,458)
Defined benefit obligation at the end
of the period 203,198 237,839 204,654
--------------- -------------------- ---------
30 September 30 September 31 March
2021 2020 2021
The principal actuarial
assumptions at the balance
sheet date (expressed as
weighted averages)
were:
Discount rate at period end 2.00% 1.50% 2.00%
Inflation (RPI) (non-pensioner) 3.45% 3.10% 3.25%
Inflation (CPI) (non-pensioner) 2.95% 2.60% 2.75%
Allowance for revaluation of deferred pensions of RPI or
5% p.a. if less 3.45% 3.10% 3.25%
Allowance for revaluation of deferred pensions of CPI or
5% p.a. if less 2.95% 2.60% 2.75%
Allowance for pension in payment
increases of RPI or 5% p.a. if less 3.35% 3.00% 3.15%
Allowance for pension in payment
increases of CPI or 5% p.a. if less 2.40% 3.00% 2.30%
Allowance for pension in payment increases of RPI or 5%
p.a. if less, minimum 3% p.a. 3.75% 3.10% 3.65%
Allowance for pension in payment increases of RPI or 5%
p.a. if less, minimum 4% p.a. 4.25% 4.00% 4.20%
Life expectancy years years years
Male (current age
45) 19.9 20.6 19.9
Male (current age
65) 19.0 19.6 19.0
Female (current age
45) 22.2 22,6 22.2
Female (current age
65) 21.0 21.3 21.0
--------------- -------------------- ------------------
Cash generated from
15. operations
Six months Six months
ended ended Year ended
30
30 September September 31 March
2021 2020 2021
GBP000 GBP000 GBP000
------------------ ---- ---- ---- ----- ---- ----------- --- --------------- ----------- ------- ----------------------
Profit / (loss) for the period - continuing
operations 4,794 (1,321) 6,214
Profit for the period - discontinued operations 693 - 1,198
5,487 (1,321) 7,412
Adjustments for -
Pension scheme contributions net of administration costs settled
by the Company (1,787) (993) (2,179)
Pension scheme administration costs settled by the Scheme 285 455 910
Depreciation
charge 3,083 2,903 5,774
Amortisation of intangible
assets 98 144 206
Exceptional gain in respect of retirement
benefits - - (6,458)
COVID related US government grant income (2,104) - -
(Profit) on business
disposal (693) - (1,250)
(Profit) / loss on disposal of other plant
and equipment (25) - 10
Loss on disposal of intangible assets - - 5
Cash flow relating to provision for site
closure costs - (5) (23)
Share based payment
charge 24 93 1
Financial income (34) (57) (42)
Financial expense 1,437 1,149 2,701
Taxation (credit) /
expense (428) 456 457
Operating cash flow before changes in working
capital 5,343 2,824 7,524
Changes in working
capital
(Increase) / decrease in inventories (3,534) 233 768
Increase in contract assets (3,233) (2,095) (1,492)
(Increase) / decrease in trade and other
receivables (3,920) 107 (308)
Increase / (decrease) in trade and other
payables 5,037 (3,195) 864
Increase in
contract
liabilities 2,327 2,696 3,846
--------------- ----------- ----------------------
Cash generated from operations 2,020 570 11,202
=============== =========== ======================
Cash and cash
16. deposits
As at As at As at
30
30 September September 31 March
2021 2020 2021
GBP000 GBP000 GBP000
------------------ ---- ---- ---- ----- ---- ----------- --- --------------- ----------- ------- ----------------------
Cash and cash
deposits 10,394 23,379 15,485
Bank overdrafts - (10,672) -
10,394 12,707 15,485
=============== =========== ======================
The Group has a net UK multi-currency overdraft facility with a GBPnil net limit and a GBP12.5
million gross limit agreed as part of the refinancing arrangement signed 14 August 2020. At
30 September 2021, Carclo plc's overdraft of GBP3.9 million (31 March 2021: GBP4.6 million)
has been recognised within cash and cash deposits when consolidated.
17. Net debt
The net movement in cash and cash equivalents can be reconciled to the change in net debt
in the period as follows -
Six months Six months
ended ended Year ended
30
30 September September 31 March
2021 2020 2021
GBP000 GBP000 GBP000
------------------ ---- ---- ---- ----- ---- ----------- --- --------------- ----------- ------- ----------------------
Net (decrease) / increase in cash and cash
equivalents (5,339) 4,508 7,441
Net repayment of / (drawings on) term loans
and other loans 2,247 (4,074) (4,492)
Net forgiveness / (receipt) of government
support loans 2,104 (2,589) (2,243)
Net repayment of / (drawing on) lease
liabilities 670 905 (2,020)
(318) (1,250) (1,314)
Effect of exchange rate fluctuations on net
debt (457) (751) 1,075
(775) (2,001) (239)
Net debt at start of
period (27,596) (27,357) (27,357)
Net debt at end of period (28,371) (29,358) (27,596)
=============== ===========
Net debt comprises
-
As at As at As at
30
30 September September 31 March
2021 2020 2021
GBP000 GBP000 GBP000
------------------ ---- ---- ---- ----- ---- ----------- --- --------------- ----------- ------- ----------------------
Cash and cash deposits 10,394 23,379 15,485
Bank overdrafts - (10,672) -
Term loan (29,893) - (31,812)
Government COVID-19
support loans - (2,589) (2,104)
Revolving credit
facility (2,000) (34,504) (2,000)
Lease liabilities (6,758) (4,943) (7,055)
Other loans (114) (29) (110)
Net debt (28,371) (29,358) (27,596)
=============== ===========
On 14 August 2020 the Group concluded a restructuring with the Company's bank, HSBC. The debt
facilities currently available to the Group comprise a term loan of GBP30.1 million (31 March
2021: GBP32.1 million), of which a further GBP1.4 million (31 March 2021: GBP3.0 million)
will be amortised by 30 September 2022 and a GBP3.5m revolving credit facility maturing on
31 July 2023.
18. Financial instruments
The fair value of financial assets and liabilities are not materially
different from their
carrying value.
There are no material items as required to be disclosed under the fair value
hierarchy.
19. Ordinary share capital
Number
of shares GBP000
------------------ ---- ---- ---- ----- ---- ----------- --- --------------- ----------- ------- ----------------------
Ordinary shares of 5 pence each
Issued and fully paid at 30 September 2020, 31 March 2021 and 30 September
2021 73,419,193 3,671
=========== ======================
20. Related parties
Identity of related
parties
The Company has a related party relationship with its subsidiaries, its Directors and executive
officers and the Group pension scheme. There are no transactions that are required to be disclosed
in relation to the Group's 60% dormant subsidiary Platform Diagnostics Limited.
There have been no changes in related parties in the period to 30th September 2021.
Transactions with key management personnel
Key management personnel are considered to be the executive directors of the Group. Full details
of directors' remuneration are disclosed in the Group's annual report. In the six months ended
30 September 2021, remuneration to current and former directors amounted to GBP0.219 million
(six months ended 30 September 2020 - GBP0.350 million).
On 5 August 2021 P White, the Group's Chief Financial Officer was granted 386,778 share options
under the terms of the Carclo plc 2017 Performance Share Plan. The options will vest at the
end of a three-year period depending on the achievement of performance targets set out in
the LTIP and are then subject to a further two-year holding period. The awards take the form
of nil cost options, being an option under the LTIP with a nil exercise price. Share price
at date of award was 41.6 pence and fair value at date of award totalled GBP0.118 million.
On 30 June 2021, N Sanders the Group's Chief Executive Officer and P White purchased 95,656
and 19,136 shares respectively in Carclo plc at market price of 51.8 pence per share.
Group pension scheme
A third-party professional firm is engaged to administer the Group pension scheme (the Carclo
Group Pension Scheme). The associated investment costs are borne by the scheme in full. It
has been agreed with the trustees of the pension scheme that, under the terms of the recovery
plan, the scheme would bear its own administration costs.
Contributions of GBP0.292 million per month have been made during the six months to 30 September
2021, incorporating both deficit recovery contributions and scheme expenses including PPF
levy. A further payment of GBP0.3 million has also been made during the period being part
of the GBP0.750 million agreed as payable between 30 June 2021 and September 2022 under the
schedule of contributions.
Carclo incurred administration costs of GBP0.575 million during the period which has been
charged to the consolidated income statement, GBPnil have been presented as exceptional, (six
months to 30 September 2020: GBP0.8 million, of which GBP0.3 million was presented as exceptional).
Of the administration costs, GBP0.285 million was paid directly by the scheme (six months
to 30 September 2020: GBP0.455 million). The total deficit reduction contributions and administration
costs paid during the period was GBP2.1 million (six months to 30 September 2020: GBP1.4 million).
Post balance sheet
21. events
There are no events that have occurred since the period end that require disclosure in the
report.
22. Seasonality
There are no specific seasonal factors which impact on the demand for products and services
supplied by the Group, other than for the timing of holidays and customer shutdowns. These
tend to fall predominantly in the first half of Carclo's financial year and, as a result,
revenues and profits are usually higher in the second half of the financial year compared
to the first half.
Independent review report
Introduction
We have been engaged by Carclo plc ("the Company") to review the
financial information for the six months ended 30 September 2021
which comprises the condensed consolidated income statement, the
condensed consolidated statement of comprehensive income, the
condensed consolidated statement of financial position, the
condensed consolidated statement of changes in equity, the
consolidated cash flow statement and related notes. We have read
the other information contained in the interim report and
considered whether it contains any apparent misstatements or
material inconsistencies with the financial information.
This report is made solely to the Company in accordance with
International Standard on Review Engagements (UK and Ireland) 2410
issued by the Auditing Practices Board and our Engagement Letter.
Our work has been undertaken so that we might state to the Company
those matters we are required to state to them in an independent
review report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to
anyone other than the Company, for our review work, for this
report, or for the conclusions we have formed.
Respective responsibilities of directors and auditor
The interim report, including the financial information
contained therein, is the responsibility of, and has been approved
by, the directors. The directors are responsible for preparing the
interim report in accordance with UK adopted International
Accounting Standard 34, 'Interim Financial Reporting' and the
Disclosure Guidance and Transparency Rules of the United Kingdom's
Financial Conduct Authority.
Our responsibility is to express to the Company a conclusion on
the consolidated financial information in the interim report based
on our review.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity" issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK) and consequently does not enable us to obtain
assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not
express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the consolidated financial information in
the interim report does not give a true and fair view of the
financial position of the Company as at 30 September 2021 and of
its financial performance and its cash flows for the six months
then ended, in accordance with UK adopted International Accounting
Standard 34, 'Interim Financial Reporting' and the Disclosure
Guidance and Transparency Rules of the United Kingdom's Financial
Conduct Authority.
Signed:
Mazars LLP
Chartered Accountants
Tower Bridge House
St Katharine's Way
London
E1W 1DD
Date: 18 November 2021
Notes:
(a) The maintenance and integrity of the Carclo plc web site is
the responsibility of the directors; the work carried out by us
does not involve consideration of these matters and, accordingly,
we accept no responsibility for any changes that may have occurred
to the interim report since it was initially presented on the web
site.
(b) Legislation in the United Kingdom governing the preparation
and dissemination of financial information may differ from
legislation in other jurisdictions.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
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END
IR FZMMMNRFGMZM
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