TIDMCAR
RNS Number : 6969G
Carclo plc
27 November 2020
Carclo plc
Interim Report and Accounts
Half Year Ended 30 September 2020
Half Year Results for the six months ended 30 September 2020
Carclo plc, a global provider of value-adding engineered
solutions for the medical, optical, electronics and aerospace
industries announces its results for the first half of the
financial year to 31 March 2021, being the six months to 30
September 2020 ("H1 2021").
The key financial performance measures for H1 2021 are
summarised below:
H1 2021 H1 2020
GBP000 GBP000
----------- ---------- ----
Revenue from continuing operations 49,950 56,115
----------- ---------- ----
Underlying(1) operating profit from
continuing operations 1,529 3,322
--------------- ---------- ----
Underlying(1) profit before tax from
continuing operations 437 2,087
--------------- ---------- ----
Underlying(1) earnings per share from
continuing operations 0.0p 2.2p
--------------- ---------- ----
Statutory operating profit / (loss) 227 (4,169)
----------- ---------- ----
Statutory loss before tax (865) (5,554)
----
Basic loss per share (1.8p) (8.3p)
----
Net debt excluding IFRS16 lease liabilities 24,415 26,758
----------- ---------- ----
Net debt including IFRS16 lease liabilities 29,358 31,689
----------- ---------- ----
IAS 19 retirement benefit liability 58,121 51,349
--- ---------- ---------- ----
Revenue from continuing operations
Technical Plastics 47,214 52,440
Aerospace 2,736 3,675
Total 49,950 56,115
Underlying operating profit from continuing operations
Technical Plastics 3,226 4,642
Aerospace 484 718
Unallocated (2,181) (2,038)
Total 1,529 3,322
Underlying EBITDA from continuing operations 4,576 6,345
------------------------------------------------ -------- --------
-- H1 2021 saw resilient performances from the two continuing
businesses (Aerospace and Technical Plastics) in the context of
COVID-19.
-- Revenue from continuing operations decreased by 11% to GBP50.0m (H1 2020: GBP56.1m)
-- Underlying operating profit from continuing operations
decreased by 54% to GBP1.5m (H1 2020: GBP3.3m)
-- Exceptional costs relating to continuing operations were GBP1.3m (H1 2020: GBP1.9m)
-- Group statutory loss before tax was GBP0.9m (H1 2020: GBP5.6m)
-- Progress was made in improving the financial position of the
Group with net debt, excluding IFRS16 lease liabilities, reducing
to GBP24.4m at 30 September 2020 (30 September 2019: GBP26.8m)
-- Two significant tooling agreements were secured with a new
medical customer for COVID-19 test components with supply of
manufactured product due to commence in 2021
Notes:
(1) underlying results are those calculated before discontinued
operations and exceptional items. A reconciliation to statutory
figures is set out below.
Reconciliation of non-GAAP financial measures - H1 2021
Exceptional Underlying
GBPm Statutory items Group
CTP operating profit 3.1 0.1 3.2
Aerospace operating profit 0.5 - 0.5
Central costs (3.4) 1.2 (2.2)
---------------------------------------- ---------- ------------
Group operating profit from continuing
operations 0.2 1.3 1.5
Other finance expense (1.1) - (1.1)
---------------------------------------- ---------- ------------
Group (loss) / profit before
taxation (0.9) 1.3 0.4
Taxation (0.5) - (0.5)
---------------------------------------- ---------- ------------
Group (loss) / profit for the
period (1.3) 1.3 0.0
Basic (loss) / earnings per share
(pence) (1.8p) 1.8p 0.0p
---------------------------------------- ---------- ------------
Commenting on the results, Nick Sanders (Executive Chairman)
said:
"The first half of the financial year has been one of transition
against a backdrop of economic uncertainty resulting from the
COVID-19.
Our priority has been to keep our employees and our communities
safe whilst maximising our output during this challenging
period.
As previously announced the Group reached agreement with the
trustees of the Carclo Group Pension Scheme and its bank to agree a
schedule of contributions to the pension fund and to extend its
banking facilities to 2023. This has provided a stable platform for
the Group to move forward and to develop its CTP and Aerospace
divisions.
Trading in the first half of the year was adversely affected by
the pandemic with the impact of lockdowns in several countries
causing either disruption to our customers or our own
operations.
The Group has responded swiftly to these challenges by taking
advantage of government assistance where available, implementing
local Health & Safety measures and adjusting shift patterns as
necessary.
Demand for CTP products in the medical diagnostics sector is
increasing as a result of the pandemic and we hope to secure
further new contract awards over the coming months. Conversely
demand in the aerospace sector is significantly down on
pre-pandemic levels and we have responded to this by looking for
alternative sources of business and cutting costs. Despite this
trading in the aerospace division will remain challenging for some
time".
Enquiries
Nick Sanders - Executive
Carclo plc Chairman 01924 268040
Nick Hasell / Susanne
FTI Consulting 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 for the year ended 31 March
2020, 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.
Overview of Results
The Group's trading performance for the six month period to 30
September 2020 ("H1 2021") was slightly ahead of the Board's
expectations although performances from both the Technical Plastics
("CTP") and Aerospace divisions (collectively and with the head
office function the "continuing operations") were behind those of
the prior period with Group revenue from continuing operations
decreasing by 11% to GBP50.0m (H1 2020: GBP56.2m) .
CTP revenues decreased by 10% to GBP47.2m (H1 2020: GBP52.4m)
and CTP underlying operating profit decreased by 31% to GBP3.2m (H1
2020: GBP4.6m) following the COVID-19 related disruption to
non-medical diagnostics customer demand and business interruption
caused by local lockdowns. Government grants of GBP0.4m were
recognised within CTP operating expenses during the period.
Aerospace operating profit decreased by 33% to GBP0.5m (H1 2020:
GBP0.7m) with the COVID-19 pandemic suppressing customer demand as
new aircraft build rates reduced. Government grants of GBP0.2m were
recognised within Aerospace operating expenses during the period.
Management has taken steps to reduce operating expenses which has
unfortunately resulted in some redundancies to the workforce. At
the same time the business is pursuing alternative sources of
business to diversify its sector exposure.
On a constant currency basis revenue from continuing operations
decreased by 10%. This revenue decline drove a reduction in
underlying operating profit from continuing operations of 54% to
GBP1.5m (H1 2020: GBP3.3m). On a constant currency basis underlying
operating profit from continuing operations decreased by 53%.
Central costs increased marginally to GBP2.2m (H1 2020:
GBP2.0m). As previously reported, the LED Division was exited
during 2020 and its results for the comparative period are
presented separately from the residual Group as discontinued
operations.
Exceptional costs during H1 2021 totalled GBP1.3m (H1 2020:
GBP1.9m) and principally relate to the costs of external advisers
to the Company, its lending bank and the Group pension scheme for
the restructuring of the Group's financing and contribution
arrangements with its lending bank and the Group pension
scheme.
Finance costs of GBP1.1m (H1 2020: GBP1.4m) consisted of net
interest payable on bank loans and leases of GBP0.7m (H1 2020:
GBP0.8m) and net interest on the defined benefit pension liability
of GBP0.4m (H1 2020: GBP0.6m). The decreases in costs were due to
the reduction in bank loans and the reduction in the opening
defined benefit pension liability relative to the preceding period
end which decreases the imputed interest cost.
The Group statutory loss before tax was GBP0.9m (H1 2020:
GBP5.6m).
The underlying effective tax rate for the period was 61%. The
rate is impacted by a deferred tax asset that has not been
recognised in respect of UK tax losses as there is no certainty
that the losses will be utilised in the foreseeable future.
Underlying earnings per share from continuing operations for H1
2021 was 0.0 pence (H1 2020: 2.2 pence). The statutory loss per
share for the period, for all operations, was 1.8 pence (H1 2020:
8.3 pence).
Board and management changes
During the period the following changes to the Board took
place:
Joe Oatley became Chairman on 27 April 2020; Nick Sanders was
appointed as a Non-Executive Director and Chairman-elect on 18
August 2020 and became Non-Executive Chairman on 30 September 2020;
Antony Collins stood down as Group CEO on 5 October 2020 and Nick
Sanders became Executive Chairman on the same day. The Board would
like to thank Antony for his contribution to the business.
The Company also announces that Matt Durkin-Jones has informed
the Board of his intention to step down from his role as Interim
Chief Financial Officer and as a Director of the Board with effect
from 17 December 2020. Matt had joined the Board for an initial
six-month term on 21 January 2020. The Board would like to thank
Matt for his service over the previous months and extend him every
good wish for the future. The search for his successor is
underway.
Outlook
The Board expects the Group to report a marginally stronger
underlying operating profit performance in the second half of the
financial year subject to any further COVID-19 disruption beyond
its current expectation. This reflects higher anticipated CTP
product sales from its existing customer base alongside revenues
from two new tooling agreements for COVID-19 test components which
were entered into during the period with a new medical customer.
This is expected to offset a weaker performance in the Aerospace
division during the second half due to lower customer demand.
The medium term outlook for the Aerospace business remains
uncertain with ongoing weakness in the sector. However, prospects
for CTP are positive with the division retaining a strong position
in the growing medical diagnostics market.
Financial Position
Cash generated from operations during the first half was GBP0.6m
(H1 2020: GBP14.6m) despite the exceptional cash costs of GBP1.3m
associated with external advisor fees related to the restructuring,
cash payments to the pension scheme of GBP1.1m and net working
capital outflows of GBP2.3m. The comparative period H1 2020 also
suffered GBP2.0m of exceptional advisor costs but benefitted from
one-off asset realisations related to the discontinued LED
division.
Gross capital expenditure for the period was GBP2.8m (H1 2020:
GBP6.2m including discontinued operations of GBP4.7m), with the
majority related to investment in production machinery, facility
improvements and property lease extensions in the CTP division.
Gross capital expenditure on a cash basis was GBP0.8m with the
Group making use of various financing arrangements.
These factors, combined with GBP0.7m of interest payments and
GBP0.3m of tax payments, resulted in net debt (excluding IFRS 16
lease liabilities) increasing since the last financial year end to
GBP24.4m (31 March 2020: GBP22.1m). Including IFRS 16 lease
liabilities net debt was GBP29.4m at the end of the period (31
March 2020: GBP27.4m).
At 30 September 2020, the Group's total UK bank facilities were
GBP38.0m of which GBP34.5m related to a term loan and GBP3.5m to a
revolving credit facility.
Government COVID-19 support loans of GBP2.6m were received
during the period and are presented within interest bearing loans
and borrowings at 30 September 2020.
The Group's IAS 19 pension deficit increased to GBP58.1m as at
30 September 2020 (31 March 2020: GBP37.6m) despite strong asset
returns during the period. This was mainly due to the adverse
impact of a change in the assumption for the discount rate on
liabilities to 1.50% per annum (31 March 2020: 2.30%) as the AA
corporate bond rate fell.
The 31 March 2018 triennial actuarial valuation and recovery
plan was finalised on 14 August 2020 and in accordance with that
recovery plan total contributions paid by the Company (for deficit
recovery contributions and scheme administration costs) for the
six-month period were GBP1.4m (H1 2020: GBP1.1m). Total
contributions for the six-month period to 31 March 2021 are
expected to be GBP1.5m.
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.
Post Balance Sheet Events
On 19 November 2020 GBP0.5m of proceeds from the Administrators
of former subsidiary Wipac Ltd was received by the Group's lending
bank and used to reduce the drawn balance on the Group's debt
facility reducing net debt accordingly. At 30 September 2020 no
asset is recognised in respect of these proceeds and so this will
be recognised by the Group as an exceptional profit on disposal of
discontinued operations during the second half of the financial
year. A total of GBP1.0m potential future proceeds, including this
GBP0.5m, is disclosed as a contingent asset at 30 September
2020.
Principal Risks and Uncertainties
In the Annual Report for the year ended 31 March 2020 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 2020 Annual Report, it is worth noting that:
-- COVID-19 related uncertainty continues with 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 be further impacted;
-- the impact of Brexit remains unclear as negotiations between
the EU and the UK continue and could impact on customers'
investment decisions;
-- during the current period two significant tooling agreements
were entered into with a new medical customer which helps to
diversify the Group's customer portfolio and reduces its reliance
on other major customers. These agreements and pending subsequent
agreements for the supply of manufactured product are subject to
operational execution risk; and
-- as a result of historical trading issues, the PPF levy
payable by the Group pension scheme has increased during the half
year and may continue at a higher rate than has been incurred
historically. This would impact on the Group's reported
earnings.
Going Concern
These interim financial statements have been prepared on a going
concern basis as detailed in Note 1 to these interim accounts.
There is limited headroom in a number of the banking covenants for
the 12 month periods to 30 June 2021 and 30 September 2021. Any
material manifestation of the above risks, individually or in
combination, could therefore lead to a breach of the Group's
banking covenants. Management has considered the impact of
potential mitigations including 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 Matt Durkin-Jones
Executive Chairman Chief Financial Officer
26 November 2020
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 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 finance
leases. Used to report the overall
financial debt of the Group
in a manner that is easy to
understand
------------------------------------------
UNDERLYING Adjusted to exclude all exceptional
items
------------------------------------------
UNDERLYING EBITDA Profit before interest, tax,
depreciation and 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
------------------------------------------
Condensed consolidated income
statement
Six
Six months months Year
ended ended ended
30 30
September September 31 March
2020 2019 2020
unaudited unaudited audited
Notes GBP000 GBP000 GBP000
------------- ---- ---------------- ------- ------ ------ ----- --------- --------- --------
Revenue - continuing operations 4 49,950 56,115 110,506
Underlying operating profit 1,529 3,322 7,313
Exceptional items 5 (1,302) (1,930) (5,470)
Operating profit - 4 227 1,392 1,843
Finance revenue 7 57 51 97
Finance expense 7 (1,149) (1,286) (2,485)
(Loss) / Profit / before
tax - (865) 157 (545)
Income tax expense 8 (456) (501) (1,355)
Loss after tax but before loss
on discontinued operations (1,321) (344) (1,900)
Loss on discontinued operations,
net of tax - (5,747) (9,509)
Loss for the
period (1,321) (6,091) (11,409)
========= ========= ========
Attributable
to -
Equity holders of the parent (1,321) (6,091) (11,409)
Non-controlling interests - - -
(1,321) (6,091) (11,409)
========= ========= ========
Earnings per ordinary share 8
(0.
Basic - continuing operations (1.8) p 5) p (2.6) p
Basic - discontinued operations - p (7.8) p (13.0) p
Basic (1.8) p (8.3) p (15.5) p
========= ========= ========
Diluted - continuing operations (1.8) p (0.5) p (2.6) p
Diluted - discontinued operations - p (7.8) p (13.0) p
Diluted (1.8) p (8.3) p (15.5) p
========= ========= ========
Condensed consolidated statement of
comprehensive
income
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2020 2019 2020
unaudited unaudited audited
GBP000 GBP000 GBP000
----------------------------------------- ------------ ------------ --------
Loss for the period (1,321) (6,091) (11,409)
Other comprehensive income:
Items that will not be reclassified
to the income statement
Remeasurement (losses) / gains
on defined benefit scheme (20,714) (2,450) 7,805
Deferred tax
arising - - -
Total items that will not be reclassified
to the income statement (20,714) (2,450 7,805
------------ ------------ --------
Items that are or may in the future be
classified to the income statement
Foreign exchange translation
differences (79) 2,363 716
Net investment
hedge (18) (704) (549)
Deferred tax
arising 57 (136) (124)
Total items that are or may in future
be classified to the income statement (40) 1,523 43
------------ ------------ --------
Other comprehensive (expense)
/ income, net of income tax (20,754) (927) 7,848
Total comprehensive (expense)
/ income for the period (22,075) (7,018) (3,561)
============ ============ ========
Attributable
to:
Equity holders of the parent (22,075) (7,018) (3,561)
Non-controlling interests - - -
Total comprehensive expense
for the period (22,075) (7,018) (3,561)
============ ============ ========
Condensed consolidated statement
of financial position
30 September 30 September 31 March
2020 2019 2020
unaudited unaudited audited
Notes GBP000 GBP000 GBP000
--------------------------------- ----- ------------ ------------ --------
Assets
Intangible
assets 11 22,863 24,800 22,880
Property, plant and equipment 12 40,127 38,833 40,395
Investments - 7 -
Deferred tax
assets 338 196 407
Trade and other receivables 116 49 114
Total non-current assets 63,444 63,885 63,796
------------ ------------ --------
Inventories 13,968 15,312 14,201
Contract
assets 3,519 2,044 1,424
Trade and other receivables 19,665 22,291 19,775
Cash and cash 17,
deposits 18 23,379 20,493 19,309
Assets held
for sale 13 - 25,886 -
Total current
assets 60,531 86,026 54,709
Total assets 123,975 149,911 118,505
------------ ------------ --------
Liabilities
Interest bearing loans and
borrowings 18 38,738 34,439 3,862
Deferred tax
liabilities 4,315 4,085 4,559
Contract
Liabilities 426 - -
Retirement benefit obligations 15 58,121 51,349 37,620
Total non-current liabilities 101,600 89,873 46,041
------------ ------------ --------
Trade and other payables 17,174 18,299 18,420
Current tax
liabilities 558 583 879
Contract
liabilities 3,877 2,065 1,607
Provisions 18 267 23
Interest bearing loans and
borrowings 18 13,999 16,633 42,804
Liabilities directly associated
with the assets held for sale 13 - 16,850 -
Total current
liabilities 35,626 54,697 63,733
Total liabilities 137,226 144,570 109,774
------------ ------------ --------
Net assets (13,251) 5,341 8,731
============ ============ ========
Equity
Ordinary share capital issued 20 3,671 3,671 3,671
Share premium 7,359 7,359 7,359
Translation
reserve 7,011 8,531 7,051
Retained earnings (31,266) (14,194) (9,324)
Total equity attributable
to equity holders of the parent (13,225) 5,367 8,757
Non-controlling
interests (26) (26) (26)
Total equity (13,251) 5,341 8,731
============ ============ ========
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 2020 3,671 7,359 7051 (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
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)
======= ======= =========== ======== ======== ============ ==========
Prior half year period -
unaudited
Balance at 1 April 2019 3,671 7,359 7,008 (5,745) 12,293 (26) 12,267
Loss for
the period - - - (6,091) (6,091) - (6,091)
Other comprehensive income:
Foreign exchange translation
differences - - 2,363 - 2,363 - 2,363
Net investment hedge - - (704) - (704) - (704)
Remeasurement losses on
defined benefit scheme - - - (2,450) (2,450) - (2,450)
Taxation on items above - - (136) - (136) - (136)
Transactions with owners
recorded directly in equity:
Share based payments - - - 92 92 - 92
Balance at 30 September
2019 3,671 7,359 8,531 (14,194) 5,367 (26) 5,341
======= ======= =========== ======== ======== ============ ==========
Prior year period - audited
Balance at 1 April 2019 3,671 7,359 7,008 (5,745) 12293 (26) 12267
Loss for
the period - - - (11,409) (11,409) - (11,409)
Other comprehensive income:
Foreign exchange translation
differences - - 716 - 716 - 716
Net investment hedge - - (549) - (549) - (549)
Remeasurement losses on
defined benefit scheme - - - 7,805 7,805 - 7,805
Taxation on items above - - (124) - (124) - (124)
Transactions with owners
recorded directly in equity:
Share based payments - - - 25 25 - 25
Balance at 31 March 2020 3,671 7,359 7,051 (9,324) 8,757 (26) 8,731
======= ======= =========== ======== ======== ============ ==========
Condensed consolidated statement
of cash flows
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2020 2019 2020
unaudited unaudited audited
Notes GBP000 GBP000 GBP000
------------------------------------- ----- ------------ ------------ --------
Cash generated from operations 16 570 14,635 21,803
Interest
paid (725) (560) (1,568)
Tax paid (342) (348) (933)
Net cash from operating activities (497) 13,727 19,302
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 2,500
Interest
received 57 57 104
Acquisition of subsidiaries, net
of cash acquired - - (250)
Purchase of property, plant
and equipment (730) (3,296) (8,512)
Purchase of intangible assets
- computer software (80) (16) (19)
Net cash from investing activities (753) (755) (721)
Cash flows from financing
activities
Drawings on term loan facilities 32,221 - -
Repayment of other loan facilities (28,147) - (9)
Receipt of government support
loans 6 2,589 - -
Repayment of lease liabilities (905) (2,334) (3,122)
Net cash from financing activities 5,758 (2,334) (3,131)
Net increase in cash and cash
equivalents 4,508 10,638 15,450
Cash and cash equivalents
at beginning of period 8,352 (7,038) (7,038)
Effect of exchange rate fluctuations
on cash held (153) 260 (60)
Cash and cash equivalents
at end of period 17 12,707 3,860 8,352
============ ============ ========
Notes to the accounts
1 Basis of preparation
Except as outlined below, the condensed consolidated half year report
for Carclo plc ("Carclo" or "the Group") for the six months ended 30
September 2020 has been prepared on the basis of the accounting policies
set out in the audited accounts for the year ended 31 March 2020 and
in accordance with the Disclosure and Transparency Rules of the UK Financial
Conduct Authority and the requirements of IAS 34 "Interim Financial Reporting"
as adopted by the EU.
The financial information is unaudited.
The half year report does not constitute financial statements and does
not include all of 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 2020 which is available
either on request from the Company's registered office, Springstone House,
PO Box 88, 27 Dewsbury Road, Ossett, WF5 9WS, or can be downloaded from
the corporate website - www.carclo-plc.com.
The comparative figures for the financial year ended 31 March 2020 are
not the Company's 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 26 November
2020. Copies are available from the corporate website.
The Group financial statements have been prepared and approved by the
directors in accordance with International Financial Reporting Standards
as adopted by the EU ("Adopted IFRSs").
Going Concern
The interim financial statements are prepared on the going concern basis.
Net debt at 30 September 2020 was GBP29.4m, rising from GBP27.4m at 31
March 2020 and is forecast to peak in the second quarter of the next
financial year. The increase was driven by capital investment and net
working capital outflows. The Group's financing remains within banking
covenants as at 30 September 2020.
The Directors have prepared cash flow and covenant forecasts to cover
the 12-month period from the date of the approval of these condensed
interim financial statements taking into account 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 2020.
These forecasts demonstrate that in the base case the Group has sufficient
liquidity and covenant headroom throughout the forecast period, although
covenant headroom is very limited for the underlying interest cover and
core subsidiary underlying EBITA covenant tests for the 12-month period
ending 30 June 2021, and for the underlying interest cover, net debt
to underlying EBITDA and core subsidiary underlying EBITA covenant tests
for the 12-month period ending 30 September 2021. The limited headroom
is largely due to ongoing COVID-19 disruption coupled with the impact
on earnings of a significant increase in the PPF levy.
The ongoing Coronavirus pandemic and the risk of a no-deal Brexit create
additional uncertainty in the quantum and timing of cash flows and earnings
in the 12-month forecast period. Any material manifestation of these
or other uncertainties could lead to a breach of the Group's banking
covenants.
Management has considered the impact of potential mitigations including
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 they consider issuing a
covenant waiver.
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 12-month period from the date of signing
these interim financial statements. As such the Directors have adopted
the Going Concern assumption in preparing these interim financial statements.
2 Accounting 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 2020.
The Group's accounting policy for government grants is that income-based
government grants are recognised in profit or loss over the period
in which the related costs are recognised as an expense. They are presented
by deducting the grant from the related expense.
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 2020 but they are not expected to have a material
effect on the Group's financial statements.
3 Accounting estimates 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 2020 except for the following
-
Government grants
Management has made a judgement that conditions attached to GBP2.6
million of government grants in support of COVID-19 interruption have
not been met at 30 September 2020 and therefore the proceeds have been
presented as loans and borrowings in the condensed consolidated statement
of financial position.
Discontinued operations
The key judgement regarding the disposal of the LED Technologies business
and presentation of its results as a discontinued operation has no
impact on these interim financial statements.
4 Segment reporting
The Group is organised into two, separately managed, business segments
- Technical Plastics and Aerospace. 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, optical and electronics
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, non-trading companies
and eliminations of inter-segment revenue.
The LED Technologies segment presented as a discontinued operation
in the comparative periods 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.
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.
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
revenue 47,214 2,736 - 49,950
Less inter-segment
revenue - - - -
Total external
revenue 47,214 2,736 - 49,950
Expenses (43,988) (2,252) (2,181) (48,421)
Underlying operating
profit 3,226 484 (2,181) 1,529
Exceptional items (74) (13) (1,215) (1,302)
Operating
profit 3,152 471 (3,396) 227
========== ========== ==========
Net finance expense (1,092)
Income tax expense (456)
Profit
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 LED
Plastics Aerospace Central Total Technologies Group
continuing continuing continuing continuing discontinued total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
---------- ------- ------- --- ------ ------------- ------------- ----------- --------------- --------------- --------------
The segment results for the six months ended 30 September 2019
were as follows -
Consolidated income statement
Total revenue 53,826 3,675 (1,469) 56,032 22,002 78,034
Less inter-segment revenue (1,386) - 1,469 83 (83) -
Total external revenue 52,440 3,675 - 56,115 21,919 78,034
Expenses (47,798) (2,957) (2,038) (52,793) (24,666) (77,459)
Underlying operating profit
/ (loss) 4,642 718 (2,038) 3,322 (2,747) 575
Exceptional
operating
items (22) (10) (1,898) (1,930) (2,814) (4,744)
Operating profit 4,620 708 (3,936) 1,392 (5,561) (4,169)
============= ============= =========== =============== ===============
Net finance expense (1,385)
Income tax expense (537)
Profit after tax (6,091)
==============
Consolidated statement of financial
position
Segment assets 103,894 7,272 7,908 119,074 30,837 149,911
Segment liabilities (23,276) (1,575) (102,869) (127,720) (16,850) (144,570)
Net assets 80,618 5,697 (94,961) (8,646) 13,987 5,341
============= ============= =========== =============== =============== ==============
Other segmental information
Depreciation 2,763 130 25 2,918 249 3,167
Amortisation 55 - 50 105 - 105
Disaggregation of revenue
Major products/service lines
Manufacturing z 3,675 - 52,393 20,919 73,312
Tooling 3,722 - - 3,722 1,000 4,722
------------- ------------- ----------- --------------- --------------- --------------
52,440 3,675 - 56,115 21,919 78,034
============= ============= =========== =============== =============== ==============
Timing of revenue recognition
Products transferred
at a point in time 48,718 3,675 - 52,393 20,919 73,312
Products and services
transferred over time 3,722 - - 3,722 1,000 4,722
------------- ------------- ----------- --------------- --------------- --------------
52,440 3,675 - 56,115 21,919 78,034
============= ============= =========== =============== =============== ==============
Technical LED
Plastics Aerospace Central Total Technologies Group
continuing continuing continuing continuing discontinued total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
--------------- ----- ------------- ------------- ------------- ------------- ------------- ------------
The segment results for the year ended 31 March 2020 were
as follows:
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 - -
Total 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)
============= ============= ============
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
Depreciation 5,675 270 6 5,951 814 6,765
Amortisation 77 - 95 172 - 172
Disaggregation of revenue
Major products/service lines
Manufacturing 94,073 7,453 - 101,526 34,492 136,018
Tooling 8,981 - - 8,981 1,290 10,271
------------- ------------- ------------- ------------- ------------- ------------
103,054 7,453 - 110,507 35,782 146,289
============= ============= ============= ============= ============= ============
Timing of revenue recognition
Products transferred
at a point in time 94,073 7,453 - 101,526 34,492 136,018
Products and services
transferred over time 8,981 - - 8,981 1,290 10,271
------------- ------------- ------------- ------------- ------------- ------------
103,054 7,453 - 110,507 35,782 146,289
============= ============= ============= ============= ============= ============
5 Exceptional costs
Six Six
months months Year
ended ended ended
30 September 30 September 31 March
2020 2019 2020
GBP000 GBP000 GBP000
----------------------------------- ------------- ------------- ---------
Continuing operations
Rationalisation and restructuring
costs (1,302) (1,930) (4,065)
Impairment of Aerospace - - (1,405)
(1,302) (1,930) (5,470)
------------- ------------- ---------
Discontinued operations
Rationalisation costs - (1,313) (1,807)
Impairment of LED Technologies - (1,501) (1,501)
Loss on disposal of discontinued
operations - - (2,962)
- (2,814) (6,270)
------------- ------------- ---------
Exceptional Items (1,302) (4,744) (11,740)
------------- ------------- ---------
GBP1.2 million of rationalisation and restructuring costs during the period
related to the restructuring of the Group's relationships with its main
creditors, namely the bank and the Group pension scheme.
Government support for
6 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 Year
ended ended
Six months
ended
30 September 30 September 31 March
2020 2019 2020
GBP000 GBP000 GBP000
-------------- ------------- ------------
The governmental support utilised during the period was -
Used to offset labour and variable
costs.
Grants Included in operating expenses. 615 - -
Presented in interest bearing loans
Loans and borrowings 2,589 - -
Presented in trade and other
Payment deferrals payables 705 - -
Net finance
7 expense
Six Six
months months
ended ended Year
30 30 ended
31
September September March
2020 2019 2020
GBP000 GBP000 GBP000
------- --------- ---------------- ---------- --- ---- --- ---------- ---------- --------
The expense recognised in the condensed consolidated
income statement comprises -
Continuing operations
Interest receivable on cash and cash
deposits 57 51 96
Interest payable on bank loans and overdrafts (635) (654) (1,142)
Lease interest (89) (42) (165)
Other interest (1) (8) (55)
Net interest on the net defined benefit
liability (424) (582) (1,122)
(1,092) (1,235) (2,388)
---------- ---------- --------
Discontinued operations
Interest receivable on cash and cash deposits - 6 7
Interest payable on bank loans, overdrafts - (84) (121)
Lease interest - (38) (49)
Other interest - (33) (34)
- (149) (197)
---------- ---------- --------
Net finance
expense (1,092) (1,384) (2,585)
========== ========== ========
8 Income tax expense
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2020 2019 2020
GBP000 GBP000 GBP000
-------------------------------- ------------- ------------- -----------
The expense recognised in the
condensed
consolidated income statement
comprises:
Continuing operations
Current tax expense on ordinary
activities (563) (501) (1,100)
Deferred tax credit on ordinary
activities 107 - (268)
Current tax credit on exceptional
items - - 13
(456) (501) (1,355)
------------- ------------- -----------
Discontinued operations
Current tax expense arising on
ordinary
activities - (36) -
Deferred tax expense arising on
ordinary
activities - - (96)
- (36) (96)
------------- ------------- -----------
Total income tax expense recognised in
the
condensed consolidated income
statement (456) (537) (1,451)
------------- ------------- -----------
The half year accounts include an underlying tax charge of 61.5% of underlying
profit before tax (2020 - 82.2%) based on the estimated average effective
income tax rate on ordinary activities for the full year.
The half year tax charge represents (52.7%) of statutory loss before tax
based on the estimated average effective income tax rate on ordinary activities
for the full year.
The Group's effective tax rate on ordinary activities is at a higher level
than the underlying UK tax rate of 19.0% (H1 2020 - 19.0%) mainly because
a deferred tax asset has not been recognized in respect of the UK losses
and also since the Group is earning a higher proportion of its profits
in higher tax jurisdictions.
Deferred tax assets and liabilities at 30 September 2020 have been calculated
on the rates substantively enacted at the balance sheet date. A change
to the main UK corporation tax rate, announced in the Budget on 11 March
2020, was substantively enacted on 17 March 2020. The rate applicable from
1 April 2020 now remains at 19%, rather than the previously enacted reduction
to 17%.
A deferred tax asset has not been recognised at 30 September 2020 in respect
of UK losses, capital allowances and future retirement benefit payments,
as there is no certainty that they will be utilised in the foreseeable
future.
9 Earnings per share
The calculation of basic earnings per share is based on the profit attributable
to equity holders of the parent company divided by the weighted average
number of ordinary shares outstanding during the period.
The calculation of diluted earnings per share is based on profit attributable
to equity holders of the parent company divided by the weighted average
number of ordinary shares outstanding during the period (adjusted for
dilutive options).
The following details the profit and average number of shares used in
calculating the basic and diluted earnings per share:
Six months Six months
Year
ended ended ended
30 September 30 September 31 March
2020 2019 2020
GBP000 GBP000 GBP000
------------------------------------ ------------- ------------- ---------
Loss after tax from continuing
operations (1,321) (344) (1,900)
Loss attributable to non-controlling
interests - - -
Loss attributable to ordinary shareholders
from continuing operations (1,321) (344) (1,900)
Loss on discontinued
operations net of tax - (5,747) (9,509)
Loss after tax, attributable
to equity holders of the parent (1,321) (6,091) (11,409)
============= ============= =========
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2020 2019 2020
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 - - -
Weighted average number of ordinary
shares (diluted) in the period 73,419,193 73,419,193 73,419,193
============= ============= ===============
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 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 -
Six months Six months
ended ended Year ended
30 September 30 September 31 March
2020 2020
2019
GBP000 GBP000 GBP000
------------- ---------------- -------- ------------ --- ------------- ----------------- ----------------
(Loss) / profit after tax, attributable
to equity holders of the parent (1,321) (6,091) (11,409)
Continuing operations:
Rationalisation and restructuring
costs, net of tax 1,302 1,930 4,052
Impairment of Aerospace net of
tax - - 1,405
Discontinued operations:
Rationalisation and restructuring
costs, net of tax - 1,313 1,807
Impairment of LED Technologies,
net of tax - 1,501 1,501
Loss on disposal of discontinued
operations net of tax - - 2,962
Underlying profit / (loss) attributable
to equity holders of the parent (19) (1,347) 318
============= ================= ================
Underlying operating profit - continuing
operations 1,529 3,322 7,313
Finance revenue - continuing
operations 57 51 97
Finance expense - continuing
operations (1,149) (1,286) (2,485)
Income tax expense - continuing
operations (456) (501) (1,355)
Underlying profit / (loss) attributable to
equity holders of the parent - continuing
operations (19) 1,586 3,570
============= ================= ================
The following table summarises the earnings
per share figures based on the above data:
Six months Six months Year
ended ended ended
30 30
September September 31 March
2020 2019 2020
Pence Pence Pence
-------------- ---- --------------- -------- -------- --- --- ----------- ----------- ---------
Basic (loss) / earnings
per share - continuing
operations (1.8) (0.5) (2.6)
Basic (loss) / earnings per share
- discontinued operations - (7.8) (13.0)
Basic (loss) / earnings
per share (1.8) (8.3) (15.5)
----------- ----------- ---------
Diluted (loss) / earnings
per share - continuing
operations (1.8) (0.5) (2.6)
Diluted (loss) / earnings per share
- discontinued operations - (7.8) (13.0)
Diluted (loss) / earnings
per share (1.8) (8.3) (15.5)
----------- ----------- ---------
Underlying earnings per share
- basic - continuing operations 0.0 2.2 4.9
Underlying (loss) / earnings per share
- basic - discontinued operations - (4.0) (4.4)
Underlying (loss) / earnings
per share - basic 0.0 (1.8) 0.4
----------- ----------- ---------
Underlying earnings per share
- diluted - continuing operations 0.0 2.2 4.9
Underlying (loss) / earnings per share
- diluted - discontinued operations - (4.0) (4.4)
Underlying (loss) / earnings
per share - diluted 0.0 (1.8) 0.4
----------- ----------- ---------
10 Dividends paid and proposed
No dividends were paid in the
period or the comparative periods.
As outlined in the annual report 2020 the Directors
are not proposing an interim dividend for 2020/21.
Intangible
11 assets
The movements in the carrying value of intangible
assets are summarised as follows -
Six months Six months Year
ended ended ended
30 30
September September 31 March
2020 2019 2020
GBP000 GBP000 GBP000
-------------- ---- --------------- -------- -------- --- --- ----------- ----------- ---------
Net book value at the start
of the period 22,880 24,144 24,144
Additions 80 16 19
Acquisitions through business
combinations - - 16
Disposals of business - - (13)
Amortisation (144) (105) (172)
Impairment of Aerospace
goodwill - - (1,405)
Effect of movements in
foreign exchange 47 745 291
Net book value at the end
of the period 22,863 24,800 22,880
=========== =========== =========
Included within intangible assets is goodwill of GBP22.0 million (30 September
2019 - GBP23.8 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 2020, the
carrying value of goodwill was supported by fair value less costs of disposal
calculations. There has been no indication of subsequent impairment in
the current financial year.
Intangible assets also include customer-related intangibles of GBP0.3
million (30 September 2019 - GBP0.4 million) and computer software of
GBP0.5 million (30 September 2019 - GBP0.6 million).
12 Property, plant and 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 30
September September 31 March
2020 2019 2020
GBP000 GBP000 GBP000
-------------- ---- --------------- -------- -------- --- --- ----------- ----------- ---------
Net book value at the start
of the period 40,395 48,236 48,164
Additions 2,701 6,179 12,089
Acquisitions through business
combinations - - 307
Depreciation (2,903) (3,167) (6,765)
Disposals - (2,461) (2,173)
Disposal
of business - - (10,087)
Impairment LED Technologies - - (1,501)
Transfers to assets held
for sale (see Note 12) - (10,921) -
Effect of movements in
foreign exchange (66) 967 361
Net book value at the end
of the period 40,127 38,833 40,395
=========== =========== =========
Right of use assets
Right-of-use assets related to lease agreements are presented
as property, plant and equipment. The movements are summarised
as follows:
Six months Six months Year
ended ended ended
30 30
September September 31 March
2020 2019 2020
GBP000 GBP000 GBP000
-------------- ---- --------------- -------- -------- --- --- ----------- ----------- ---------
Net book value at the start
of the period 5,118 7,139 7,139
Depreciation (741) (842) (2,352)
Additions 377 633 2,660
Disposals - (861) (2,329)
Transfers to assets held
for sale (see Note 13) - (1,164) -
Net book value at the end
of the period 4,754 4,905 5,118
=========== =========== =========
Assets held
13 for sale
At 30 September 2019 assets held for sale related to the LED Technologies
segment which was disposed of on 20 December 2019.
14 Discontinued operations
The LED Technologies segment is presented as a discontinued operation
in the comparative periods.
No asset has been recognised for potential post balance sheet proceeds
arising from the administration of Wipac Ltd, which was part of the disposed
discontinued operations. Any such proceeds may be used to reduce the
outstanding balance of the Group's debt facility. Management's best estimate
of the contingent asset in respect of these potential proceeds is GBP1.0
million.
15 Retirement benefit obligations
At 31 March 2020 the Group had a retirement benefit liability, as calculated
under the provisions of IAS 19 "Employee Benefits", of GBP37.6 million.
Since the start of the current financial year, positive asset returns
of GBP10.2 million plus Group contributions of GBP1.1 million offset
by GBP4.4 million of benefit payments, has resulted in the scheme's assets
increasing in value by GBP6.9 million from GBP172.8 million to GBP179.7
million. However, the impact of a decrease in the discount rate used
to evaluate the scheme's liabilities from 2.30% per annum at the start
of the period to 1.50% per annum at the end of the period, together with
the impact of a 0.3% per annum increase in the inflation rate and the
impact of the interest expense arising on the liabilities, offset by
the benefit payments has resulted in the value of the liabilities increasing
by GBP27.4 million from GBP210.4 million to GBP237.8 million. As a consequence
the Scheme, on an IAS 19 basis, has increased from a GBP37.6 million
net liability at 31 March 2020 to a GBP58.1 million net liability at
30 September 2020.
Administration costs of GBP0.9 million, including GBP0.3 million presented
as exceptional costs, have been charged against other operating expenses
during the period (H1 2020 - GBP0.3 million, including GBP0.1 million
presented as exceptional costs). Net interest costs of GBP0.4 million
have been recognised within finance expense during the period (H1 2020
- GBP0.6 million).
Remeasurement losses of GBP20.7 million have been recognised within other
comprehensive income during the period (H1 2020 - GBP2.5 million).
16 Cash generated from operations
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2020 2019 2020
GBP000 GBP000 GBP000
(Loss) / profit for the year -
continuing
operations (1,321) (344) (1,900)
(Loss) / profit for the year -
discontinued
operations - (5,747) (9,509)
(1,321) (6,091) (11,409)
Adjustments for:
Pension scheme contributions before
deduction of administration costs (1,350) (777) (1,551)
Pension scheme administration costs
recognised
in income but paid by the scheme 812
Depreciation charge 2,903 3,167 6,765
Amortisation of intangible
assets 144 105 172
Exceptional tangible fixed asset
write down, arising on
rationalisation
of business - 1,501 1,501
Exceptional impairment of intangible
assets,
arising on rationalisation of business - - 1,405
Loss on business disposal - - 2,962
Profit on disposal of other plant and
equipment - (24) (327)
Loss on disposal of intangible assets - - 13
Loss on disposal of Investments - - 7
Cash flow relating to
provision for site closure
costs (5) (74) (310)
Share based payment charge 93 90 76
Financial
income (57) (57) (104)
Financial expense 1,149 1,441 2,690
Taxation 456 702 1,449
Operating cash flow before
changes in working capital 2,824 (17) 3,339
Changes in working capital (excluding
the
effects of acquisitions of
subsidiaries)
(Increase) / decrease
in inventories 233 (1,087) (653)
Decrease / (increase)
in contract assets (2,095) 16,322 16,942
(Increase) / decrease
in trade and other receivables 107 (1,691) 2,531
Increase / (decrease)
in trade and other payables (3,195) 734 (367)
Increase in contract liabilities 2,696 374 11
------------- ------------- ---------
Cash generated from operations 570 14,635 21,803
============= ============= =========
17 Cash and cash equivalents
As at As at As at
30 September 30 September 31 March
2020 2019 2020
GBP000 GBP000 GBP000
Cash and cash deposits 23,379 20,493 19,309
Bank overdrafts (10,672) (16,633) (10,957)
12,707 3,860 8,352
============= ============= =========
Net
18 debt
The net movement in cash and cash equivalents can
be reconciled to the change in net debt in the period Six months Six months Year
as follows: ended ended ended
30 September 30 September 31 March
2020 2019 2020
GBP000 GBP000 GBP000
----- ---- -------- ---- ---- ------- --------- ---------
Net increase in cash and cash equivalents 4,508 10,638 15,450
Net drawings of term loans, other
loans and government support loans (6,663) 5 9
Repayment of lease liabilities 905 2,334 462
Disposal of business - - 1,481
(1,250) 12,977 17,402
Effect of exchange rate
fluctuations on net debt (751) (516) (609)
(2,001) 12,461 16,793
Net debt at start of period (27,357) (44,150) (44,150)
Net debt at end of period (29,358) (31,689) (27,357)
=========
Net debt
comprises:
As
As at at As at
30 September 30 September 31 March
2020 2019 2020
GBP000 GBP000 GBP000
----- ---- -------- ---- ---- ------- --------- ---------
Cash and cash deposits 23,379 20,493 19,309
Bank
overdrafts (10,672) (16,633) (10,957)
Bank loans (34,504) (30,597) (30,442)
Government COVID-19 support
loans (2,589) - -
Other loans (29) (21) (17)
Lease liabilities (4,943) (4,931) (5,250)
Net debt (29,358) (31,689) (27,357)
=========
On 14 August 2020 the Group concluded a restructuring with the Company's
bank, HSBC. The debt facilities now available to the Group comprise a term
loan of GBP34.5m, of which GBP3.0m will be amortised by 30 September 2022
and a GBP3.5m revolving credit facility maturing on 31 July 2023.
19 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.
20 Ordinary share capital
Number
of shares GBP000
Ordinary shares of 5 pence
each:
Issued and fully paid at 30 September 2019, 31
March 2020 and 30 September 2020 73,419,193 3,671
21 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 30 September 2020.
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 2020, remuneration
to current and former directors amounted to GBP0.350 million (six months
ended 30 September 2019 - GBP0.544 million).
Group pension scheme
A third-party professional firm is engaged to administer the Group pension
scheme. The associated investment costs are borne by the scheme in full.
It has been agreed with the trustees of the scheme that, under the terms
of the recovery plan, the scheme would bear its own administration costs.
Administration costs of GBP0.8 million, including GBP0.3 million presented
as exceptional costs, have been charged against other operating expenses
during the period (H1 2020 - GBP0.3 million, including GBP0.1 million
presented as exceptional costs.)
The total of deficit reduction contributions and administration costs
paid during the period were GBP1.4 million (H1 2020 - GBP0.8 million).
Notes to the accounts continued
22. Post balance sheet events
On 19 November 2020 GBP0.5m of proceeds from the Administrators
of Wipac Ltd was received by the Group's lending bank and used to
reduce the drawn balance on the Group's debt facility. This will be
recognised by the Group as an exceptional profit on disposal of
discontinued operations during the second half of the financial
year. At 30 September 2020, Management's best estimate of the
contingent asset in respect of these proceeds is GBP1.0 million
(see note 14) and this post balance sheet event does not change
this estimate.
On 20 November 2020 a further judgment in the Lloyds Banking
Group GMP equalisation litigation was handed down. The judgment
confirms that trustees of defined benefit pension schemes that
provide Guaranteed Minimum Pensions (GMPs) are required to revisit
and, where necessary, top-up historic cash equivalent transfer
values (CETVs) that have been calculated on an unequalised basis.
The Group will work with the Trustees of the Scheme to identify the
data needed to quantify the impact of this latest ruling on (a) the
funding requirements of the Scheme and (b) the Group's financial
statements.
23. 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 for the period ended 30 September
2020
Introduction
We have been engaged by Carclo plc ("the Company") to review the
condensed set of financial statements in the half-yearly financial
report for the six months ended 30 September 2020 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 condensed
consolidated statement of cash flows and related notes. We have
read the other information contained in the half-yearly financial
report and considered whether it contains any apparent
misstatements or material inconsistencies with the condensed set of
financial statements.
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 half-yearly financial 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 half-yearly financial report in accordance with
International Accounting Standard 34, 'Interim Financial
Reporting', as adopted by the European Union 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 condensed set of financial statements in the half-yearly
financial 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 condensed set of financial statements
in the half-yearly financial report for the six months ended 30
September 2020 is not prepared in all material respects, in
accordance with International Accounting Standard 34, 'Interim
Financial Reporting', as adopted by the European Union and the
Disclosure Guidance and Transparency Rules of the United Kingdom's
Financial Conduct Authority.
Mazars LLP
Chartered Accountants
26 November 2020
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 half-yearly financial 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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RNS may use your IP address to confirm compliance with the terms
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END
IR PPGPCGUPUPPQ
(END) Dow Jones Newswires
November 27, 2020 02:00 ET (07:00 GMT)
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