REG - Carclo plc - Final Results
30/06/2022 07:16
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RNS Number : 7303Q Carclo plc 30 June 2022
Carclo plc
("Carclo" or the "Group")
Full Year Results for the year ended 31 March 2022
Carclo plc, the global provider of value-adding engineered solutions
for the medical, optical and aerospace industries, announces its results
for the financial year ended 31 March 2022 ("2021/22").
The key financial performance measures for the year are as follows:
Year ended Year ended
31 March 31 March
2022 2021
£000 £000
Continuing operations
Revenue 128,576 107,564
Underlying operating profit 6,096 4,840
Exceptional items 721 4,490
COVID related US government grant income 2,087 -
Operating profit 8,904 9,330
Discontinued operations
Profit on discontinued operations, net of tax 693 1,198
Underlying earnings per share - basic - continuing operations 3.1p 2.4p
Basic earnings per share - continuing operations 7.0p 8.5p
Net debt excluding lease liabilities 21,535 20,541
Net debt 32,405 27,596
IAS 19 retirement benefit liability 25,979 37,275
Continuing operations
Revenue
Technical Plastics ("CTP") 123,869 102,473
Aerospace 4,707 5,091
Total 128,576 107,564
Underlying operating profit
Technical Plastics ("CTP") 8,393 9,217
Aerospace 677 550
Central (2,974) (4,927)
Total 6,096 4,840
Highlights
· Resilient revenue performance despite the continued challenging
operating environment following COVID-19
· Revenue from continuing operations increased by 19.5% to £128.6
million (2021: £107.6 million)
· Underlying operating profit from continuing operations increased
by 27.1% to £6.1 million (2021: £4.8 million)
· Cash generated from operations was £6.8 million (2021: £11.2
million)
· Statutory operating profit from continuing operations £8.9
million (2021: £9.3 million) included £2.1 million one-off credit arising
from the forgiveness of US government COVID support loans
· Net exceptional gain in the year of £0.7 million
(2021: £4.5 million), reflects a £0.9 million (2021: £6.5 million)
pension credit, primarily from the introduction of flexible early
retirement benefits, offset by £0.1 million (2021: £2.0 million)
restructuring costs
· First full trading year for refreshed Board and management
· Further capital investment growth for longer-term returns in the
Technical Plastics business
Commenting on the results, Nick Sanders, Executive Chair said:
"I am pleased with the progress that Carclo has made again this year. Despite
significant headwinds the business has delivered significant revenue and
profit growth and at the same time continued to invest in growing capacity to
meet the demands of growing markets.
Although the direct impacts of the pandemic have reduced progressively during
the year the secondary impacts of cost inflation, labour shortages and
logistics delays impacted the second half of the year. We have countered these
effects by improving operational efficiency, passing on cost increases
wherever possible and holding more inventory.
Both divisions have continued to execute on the strategic plans developed in
2021 through targeting organic growth opportunities in their chosen markets
and strengthening management teams. This has resulted in a number of new
business wins which will contribute to our future revenue and profit growth.
The management team has continued to work closely with the pension trustees
towards the objective of reducing the historic pension deficit and I am
pleased to report that the IAS 19 deficit has reduced materially over the last
year.
The Board expects market demand for both the CTP and Aerospace divisions to
continue to grow in the next financial year but also that the headwinds that
prevailed in the second half will continue during the first half."
Further Information
Please contact:
Nick Sanders, Executive Chair, Carclo plc +44 (0)1924 268040
Phil White, Chief Financial Officer, Carclo plc +44 (0)1924 268040
Nick Hasell / Susanne Yule, FTI Consulting +44 (0) 203 727 1340
Forward-looking statements
Certain statements made in this annual report and accounts
are forward-looking statements. Such statements are based on current
expectations and are subject to a number of risks and uncertainties that could
cause actual events to differ materially from any expected future events or
results referred to in these forward-looking statements.
Alternative performance measures
Alternative performance measures are defined in the glossary on page 42. A
reconciliation to statutory numbers is included on page 41. 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.
Executive Chair's Statement
I am pleased to report that the Group has delivered a strong performance for
the year, with revenue growth ahead of previous expectations and a significant
increase in underlying profit despite the challenging macroeconomic backdrop.
The Group balance sheet also strengthened considerably throughout the course
of the year, with the IAS 19 pension deficit being substantially reduced.
Customer demand in our CTP division remained strong throughout the year and we
delivered significant growth in both product and tooling revenues. Whilst
demand in the Aerospace division was subdued in the first half of the year,
order intake increased significantly in the second half, largely as a result
of increases in commercial air travel.
The impact of the pandemic continued to be felt throughout the year, albeit
this has manifested itself in different ways. Compared to the prior year,
plant closures were less of an issue but occurred in some countries for short
periods of time. Staff absenteeism declined in most countries but was still
subject to sporadic increases that caused some short-term disruption. However,
the secondary impacts of labour shortages, extended logistics lead times and
significant cost inflation became more prevalent as the year progressed.
In the latter part of the year, the war in Ukraine has resulted in added
uncertainty. Although the Group does not have direct customer or supplier
contracts with either Ukraine or Russia, the impact of increases in oil and
power prices further added to the inflationary environment.
These inflationary pressures reduced margins in the second half of the year in
CTP. The majority of CTP customer contracts permit material cost increases
to be passed through which contributed to some of the revenue growth.
Wherever possible, additional price increases are being passed on to our
customers to offset the impact of energy, labour and overhead cost increases,
albeit there is inherently a time lag associated with this. Pricing
negotiations with customers have been largely concluded for now and the
benefit of the agreed increases are expected to accrue progressively in the
first half of the FY23. In addition, the cost base has continued to be tightly
managed.
Despite these challenges, the Group delivered a significant year-on-year
growth in underlying operating profit and a robust operating profit
performance.
In line with our divisional growth strategies, we continued to invest
significantly in new capital equipment, mainly focused on increasing future
business in the medical and diagnostic sectors with our existing global
customer base. Our focus on business development also resulted in both
divisions acquiring a number of new customers during the year.
As a result of uncertainties in global supply chains we have increased raw
material stocks to ensure that we can continue to deliver to our customers and
this, along with the later than planned introduction of a new customer
product, resulted in increased inventory holding throughout the year. We
expect to reduce these inventory levels to more normalised levels during the
course of the next financial year. Given the growth opportunities that the
market presents and the ongoing operational headwinds, the Board has asked
Frank Doorenbosch to temporarily relinquish his Non-Executive position to work
alongside the CTP management team.
The safety and wellbeing of the Carclo team worldwide has continued to be
foremost in the minds of the Board and in addition to the measures introduced
at the start of the pandemic, a range of further actions have been taken to
support employees through these challenging times. As well as keeping our
people and communities safe throughout the pandemic, we have introduced a
range of additional measures to enhance the health and wellbeing of our
workforce. The Board is grateful for the positivity, resilience and dedication
shown by employees again this year.
The management team has continued to work proactively with the pension
trustees to introduce a range of scheme initiatives aimed at both benefiting
the scheme members and reducing the pension deficit. These measures, along
with the payment of the contributions agreed as part of the August 2020
refinancing agreement referred to in previous reports, are intended to reduce
the overall pension deficit in the coming years. A market increase in discount
rates used to measure pension liabilities also contributed to a substantial
reduction in the IAS 19 pension deficit.
Financial performance
Despite the significant global economic challenges, I am pleased to report
financial improvement across our key performance measures.
Total revenue of £128.6 million increased by 19.5% (£21.0 million) with a
large £10.9 million increase in tooling revenue to £25.1 million and a
£10.1 million increase in product revenue. This drove a 21.3% improvement
in underlying EBITDA to £13.1 million (2021: £10.8 million). Underlying
EPS increased by 29.2% to 3.1 pence (2021: 2.4 pence).
Complementing our operational performance improvement, we have made further
exceptional gains in the year of £1.4 million (2021: £5.7 million), driven
equally by pension benefit gains and final proceeds of discontinued business,
producing a statutory EPS result of 7.9 pence (2021: 10.1 pence).
The balance sheet has more than tripled in net asset value to £24.4 million
(2021: £7.9 million) from retained profits and pension gains.
The pension deficit reduced 30.3% in the year to £26.0 million (2021: £37.3
million) from a combination of additional pension contributions and improved
financial assumption projections and reduced mortality rates.
The Group has taken the opportunity to continue to invest significantly in
capital expenditure to grow the business at £9.7 million (2021: £10.4
million).
Net debt excluding leases increased to £21.5 million (2021: £20.5
million). Net debt including lease liabilities was £32.4 million (2021:
£27.6 million), reflecting continued strong capital investment while holding
higher inventories to protect our operations from post-COVID supply chain
uncertainties. After these investments, cash generated from operations was
£6.8 million (2021: £11.2 million).
With underlying profit after tax increased by 33.3% to £2.3 million (2021:
£1.7 million), the underlying EPS was 3.1p (2021: 2.4p), on underlying
operating profit up 26.0% to £6.1 million (2021: £4.8 million).
The Group, the bank and the pension scheme trustees are actively engaged in
negotiations over the refinancing of the bank debt beyond the current expiry
date of 31 July 2023 and over the updated schedule of contributions. The
parties are committed to a plan to finalise these by 31 July 2022 and the
Directors have an expectation that this will be achieved.
I am pleased to report meanwhile that the Group has delivered profit growth to
expectations and is now streamlined and focused on growing its CTP and
Aerospace divisions.
Our people
Once again, the Carclo team worldwide has shown great resilience, positivity
and dedication in challenging times and I and my Board colleagues would like
to convey our sincere thanks for their support throughout the year.
A number of initiatives were introduced this year to enhance the personal
development planning process. I am also pleased to report that we resumed the
recruitment of apprentices this year and intend to continue this in the coming
years.
In recognition of the revenue growth that the business is currently achieving
and targeting, the aim is to continue the strengthening of the divisional
management teams focused on business development and operations.
The organisational structure of each division is also being developed to focus
on global rather than country-specific growth opportunities.
Throughout the year, the Group continued to promote the health and wellbeing
of its employees. The Group formally launched its Group Health and Wellbeing
Programme 'Carclo cares' on 1 June 2021, with the introduction of an EAP
helpline for all its employees globally from that date.
Board and governance
Peter Slabbert and David Toohey indicated their intention not to seek
re-election as Non-Executive Directors after both serving the Group over the
last six years, and they retired from the Board on 31 March 2021 and 30 April
2021 respectively. I would like to thank both Peter and David for their
contribution to the business.
We were pleased to recruit Eric Hutchinson and Frank Doorenbosch to the Board,
bringing a wealth of business and specific industry experience that is
invaluable as we execute our strategies going forward. Eric was appointed in
January 2021 and became Chair of the Audit Committee in March 2021, taking
over from Peter Slabbert. Frank was appointed in February 2021, and took over
as Chair of the Remuneration Committee in April 2021 following David's
departure. Both Eric and Frank bring significant industrial experience to the
Board.
Joe Oatley continued as the Senior Independent Director throughout the year.
Joe has been instrumental in reviewing Board effectiveness.
In March 2021, Phil White joined the Board as the permanent CFO after a short
period as interim CFO. Phil also brings a wealth of knowledge and experience
to the business and he is working alongside me on driving improvements across
the Group.
With effect from 6 June 2022, Frank Doorenbosch was appointed as a consultant
to the Group for a period of up to twelve months, and accordingly became an
Executive Director for that period. Frank will focus on assisting the Carclo
Technical Plastics division to improve its operational effectiveness in the
face of rapidly increasing demand coupled with current supply chain
challenges.
It is intended that Frank will revert back to being a Non-Executive Director
of the Company and resume his position on the Board Committees and as Chair of
the Remuneration Committee as soon as the consultancy period has ended. Joe
Oatley has been re-appointed Chair of the Remuneration Committee in the
interim period.
As COVID-19 restrictions have eased, the Board has been able to make an
increased number of site visits and so has been able to engage directly with
employees in more parts of the business.
The Board has continued to be diligent on all governance issues and is
regularly updated on new and updated requirements. In particular, the Board is
fully supportive of the principles laid down in the UK Corporate Governance
Code and continues to review its systems, policies and procedures that support
the Group's sustainability and governance practices.
Health, safety and environment
The Board and management team have continued to focus on ensuring that Carclo
is a safe place to work. Regular reviews at site, divisional and Group level
are conducted to record any incidents that have occurred, to ensure that root
cause analysis is completed and that appropriate corrective actions have been
put in place.
I am pleased to report that as a result of our actions the accident rate
(number of accidents/hours worked) was reduced from 4.5/100,000 hours in
2020/21 to 3.7/100,000 in 2021/22.
In addition to the disciplines already in place, management incentives for the
new financial year will now include an element related to improving health and
safety performance in line with agreed targets.
The Board is committed to tackling climate change and a range of environmental
measures have been introduced, such as:
· the Head Office function has been moved to a significantly
smaller, more energy efficient building;
· thermal insulation has been introduced to moulding machines in
CTP China and this is being rolled out across the CTP division;
· LED lighting is being progressively introduced across
manufacturing sites; and
· we have reduced compressed air usage within our operations.
We are also currently evaluating a system to monitor the energy usage of each
machine in the CTP division in real time to facilitate a reduction in energy
consumption.
Dividend
In accordance with the provisions of the refinancing agreement signed in
August 2020, the business is not currently permitted to pay dividends. The
Board is therefore not recommending the payment of a dividend for 2021/22
(2020/21: £nil).
Pensions
The management team has worked closely with the pension trustees to develop a
number of initiatives that enhance the members' benefits and are also aimed at
reducing the scheme's liabilities going forward. Following on from introducing
Bridging Pension Options ("BPO") last year, offering more member choice on
early retirement pension commutation and reducing the IAS 19 liability by
£6.7 million, we have introduced Pension Increase Exchange ("PIE") options to
members, allowing increased pensions earlier in exchange for pension inflation
indexing, which has reduced the IAS 19 liability projections by £0.9 million.
Following the 2018 valuation, the Group agreed that it would aim to eliminate
the deficit over a period of 19 years and nine months from 1 February 2021 to
31 October 2040. The annual contributions would increase to £3.9 million for
the year to 31 March 2022, £3.8 million for the year to March 2023, and £3.5
million annually thereafter.
Coupled with other improvements in pension scheme assumptions, most notably
the increased market discount rate used for valuing retirement obligations,
the IAS19 pension deficit has reduced by £11.3 million in the year to £26.0
million (£37.3 million).
Further initiatives include a change of investment management completed by the
pension trustees in the year, providing a fresh insight and full reset of the
pension scheme asset management strategy.
Divisional review
Carclo Technical Plastics ("CTP")
The CTP division performed strongly in the first half of the year, with demand
continuing to grow for medical and diagnostic products. However, second half
trading was more challenging due initially to difficulties recruiting labour
in the US and then cost escalations across raw materials, energy, packaging,
freight and other overheads. Whilst the impact of raw material cost increases
can largely be passed on to customers (albeit with some time lag), the overall
impact of these increases reduced margins in the second half, particularly in
the US and UK operations. Price increases have also been negotiated with
customers to offset the impact of the non-material cost increases.
The new large customer contract reported in previous trading updates has now
entered production in the UK, albeit after a longer period of prove out; the
US production line is still in the prove out stage but is expected to commence
production in the first half of the 2022/23 financial year.
Material shortages and the later than planned introduction of the new
production lines resulted in increased inventory holdings of raw materials
which are expected to reduce during the 2022/23 financial year.
Despite these challenges the division has been awarded significant new tooling
contracts by an existing large customer and it is anticipated that, as a
result, new production lines will be installed in CTP businesses around the
globe in line with our long-term strategy. This will, in turn, lead to
continuing long-term revenue growth. As a result, it is anticipated that
capital investment in the division will remain significant in the 2022/23
financial year.
In addition to this large tooling order, the division continued to deliver on
its longer-term growth strategy, initiating the installation of 17 additional
new product lines across four of our global sites which will commence
production in the next two years. We have also seen five new accounts of
significance added in target sectors including pharmaceutical accounts in the
Czech Republic and US, a medical account in India, and China accounts added in
the diabetes and diagnostics sectors.
The division also benefited from a US government loan related to COVID-19
disruption being forgiven in the year; the resulting profit has been disclosed
separately in the income statement.
Demand for the division's products remains strong, particularly in the medical
and diagnostic sectors, and the new tooling orders won are expected to lead to
further revenue growth in the new year. The pricing actions already
implemented are expected to feed into improved margins progressively through
the year.
Aerospace
The Aerospace division performed well in the aftermath of the pandemic.
Air travel started to recover, particularly in the second half of the year
with the utilisation of short haul, narrow body aircraft increasing as travel
restrictions eased. Long haul travel, which predominantly utilises wide body
aircraft, also increased but at a slower rate. This resulted in aircraft
manufacturers starting to increase their build rates although it will be some
time before they recover to pre-pandemic levels.
As a result of this increase in market activity and an increased focus on
business development within the division, order intake grew steadily through
the year and was particularly strong in the final quarter.
Sales were lower than the prior year as a result of the low order intake in
the first half of the year but increased in the second half and in the final
quarter particularly. Despite input cost inflation, margins have been well
managed and increased year on year. Cost management has been maintained and as
a result the division delivered increased profit and cash in the year.
Recruitment has now resumed as activity levels increase and we expect to start
recruiting apprentices again this year.
The division starts the new financial year with a healthy order book and
expects to see good revenue and profit growth in the 2022/23 financial year.
Strategy
The primary objectives of the Group's strategy are to grow revenues, profits
and cash generation in each of its operating divisions whilst working with the
pension trustees to reduce the pension deficit over time.
Each division is increasingly becoming "standalone" and will progressively
have the resources to operate independently of central functions.
In the short-term, the focus remains to grow organically in each of its
existing markets, but in the medium to long-term this may be supplemented by
accretive and synergistic acquisitions.
It is anticipated that capital investment will remain high in the short and
medium-term to enable our ambitious growth plans to be achieved.
The central team will continue to focus on Group strategy, capital allocation,
IT and governance as well as continuing to work with the pension trustees to
reduce the deficit.
Outlook
I am pleased with the progress that Carclo has made again this year. Despite
significant headwinds the business has delivered significant revenue and
profit growth and at the same time continued to invest in growing capacity to
meet the demands of growing markets.
Although the direct impacts of the pandemic have reduced progressively during
the year the secondary impacts of cost inflation, labour shortages and
logistics delays impacted the second half of the year. We have countered these
effects by improving operational efficiency, passing on cost increases
wherever possible and holding more inventory.
Both divisions have continued to execute on the strategic plans developed in
2021 through targeting organic growth opportunities in their chosen markets
and strengthening management teams. This has resulted in a number of new
business wins which will contribute to our future revenue and profit growth.
The management team has continued to work closely with the pension trustees
towards the objective of reducing the historic pension deficit and I am
pleased to report that the IAS 19 deficit has reduced materially over the last
year.
The Board expects market demand for both the CTP and Aerospace divisions to
continue to grow in the next financial year but also that the headwinds that
prevailed in the second half will continue during the first half.
Nick Sanders
Executive Chair
30 June 2022
Finance Review
Across the board, financial improvement despite global economic headwinds:
- Group revenue up 19.5% to £128.6 million (2021: £107.6 million)
- Underlying EBITDA up 21.3% to £13.1 million (2021: £10.8 million)
- Underlying operating profit up 26.0% to £6.1 million (2021: £4.8
million)
- Underlying EPS up 29.2% to 3.1 pence (2021: 2.4 pence)
- Statutory EPS 7.9 pence (2021: 10.1 pence)
- Exceptional, non-recurring gains £1.4 million (2021: £5.7 million)
- Pension deficit reduced 30.3% to £26.0 million (2021: £37.3
million)
- Net assets more than tripled to £24.4 million (2021: £7.9 million)
from profit and pension gains
- Cash generated from operations of £6.8 million (2021: £11.2
million)
- Continued capital investment maintained at £9.7 million (2021:
£10.4 million)
Against a range of global economic challenges in the financial year, the Group
has delivered 19.5% revenue growth to £128.6 million (2021: £107.6 million),
and higher underlying EBITDA growth of 21.3% to £13.1 million (2021: £10.8
million).
Underlying operating profit of £6.1 million (2021: £4.8 million) produced a
return on sales of 4.7% (2021: 4.5%), despite the impact of rising cost
inflation, particularly in the second half.
Underlying EBITDA growth of 21.3% to £13.1 million (2021: £10.8 million)
included CTP EBITDA of £15.0 million (2021: £14.8 million), Aerospace EBITDA
of £0.9 million (2021: £0.8 million), while Central underlying EBITDA
costs improved by £2.0 million to £2.8 million (2021: £4.8 million),
largely driven by the full year benefit of the cost reductions commenced in
the prior year.
Net cash generated from operations was £6.8 million (2021: £11.2 million).
The Group gained substantial net exceptional and non-recurring income for the
second successive year totalling £3.5 million (2021: £5.7 million). This
included £2.1 million grant income from a US government post COVID-19 loan
forgiven in the year, £0.9 million from new pension benefit initiatives,
£0.7 million in discontinued operations from the final exit gains of the LED
technology business, and £0.2 million costs for restructuring and
rationalisation.
As a result, statutory operating profit remained high for a second successive
year at £8.9 million (2021: £9.3 million).
Finance costs were £3.0 million (2021: £2.7 million), including notional
pension deficit interest charged of £0.7 million (2021: £0.8 million), and
taxation charges stayed low at £0.8 million (2021: £0.5 million), benefiting
from a deferred tax credit of £0.7 million on resumed recognition of taxable
profitability in the UK entities (the 2021 taxation charge included the
release of some taxation provisions related to uncertainty).
Statutory profit after tax was £5.8 million (2021: £7.4 million) on all
operations, and £5.1 million (2021: £6.2 million) on continuing operations,
giving a statutory EPS on all operations of 7.9 pence (2021: 10.1 pence), and
7.0 pence on continuing operations (2021: 8.5 pence).
Underlying profit after tax increased by 33.3% to £2.3 million (2021: £1.7
million), giving an underlying EPS of 3.1 pence (2021: 2.4 pence), on
underlying operating profit up 26.0% to £6.1 million (2021: £4.8 million).
The balance sheet has substantially strengthened as a result, with net assets
growing by £16.5 million to £24.4 million (2021: £7.9 million). £11.3
million of the net asset growth came from the reduction in the pension deficit
from £37.3 million to £26.0 million, aided particularly by committed
additional pension contributions and improved discount rates applied to the
pension scheme liabilities.
Net debt
All available net cash has been reinvested in targeted capital expenditure to
drive forward business growth, with tangible additions of £9.7 million (2021:
£10.4 million). £6.8 million of this investment has been achieved in
leasing. Net debt including IFRS16 lease liabilities increased in the year
by £4.8 million to £32.4 million (31 March 2021: £27.6 million), with the
increase driven by a combination of significant investment in new plant and
equipment to support future growth and an increase in inventory. Net debt
excluding leases remaining broadly similar at £21.5 million (2021: £20.5
million).
Trading performance
Overall Group revenue (wholly from continuing operations) increased by 19.5%
to £128.6 million (2021: £107.6 million) with CTP revenue of £123.9
million, up 20.9% (2021: £102.5 million) and Aerospace revenue of £4.7
million, down 7.8% (2021: £5.1 million).
Underlying EBITDA from continuing operations increased 21.3% to £13.1 million
(2021: £10.8 million).
Underlying operating profit from continuing operations increased
by £1.3 million to £6.1 million (2021: £4.8 million), with the total
rising to £8.2 million including the separately disclosed income from the
forgiveness of a US government loan provided to support the impact of COVID-19
on US businesses.
Of this, Aerospace operating profit was £0.7 million (2021: £0.6 million).
CTP operating profit was £10.5 million including £2.1 million post COVID-19
grant income (2021: £9.2 million). Other Group and central costs were cut by
£1.9 million to £3.0 million (2021: £4.9 million). We significantly
rationalised central costs while giving divisions more accountability.
A reconciliation of statutory to underlying non-GAAP financial measures is
provided on page 41.
The CTP division performed strongly in the first half of the year with demand
continuing to grow for medical and diagnostic products. However, second half
trading was more challenging due initially to difficulties recruiting labour
in the US and then cost escalations across raw materials, energy, packaging,
freight and other overheads. Whilst the impact of raw material cost increases
can largely be passed on to customers (albeit with some time lag) the overall
impact of these increases reduced margins in the second half, particularly in
the US operations.
The Aerospace division has managed to maintain operating profitability at
£0.7 million for the year (2021: £0.6 million) and continued to generate
cash throughout the year. Order intake improved significantly in the second
half of the year. Margins have been maintained despite significant cost
increases in the second half and made up for a small reduction in turnover to
£4.7 million (2021: £5.1 million).
The Group has received its final proceeds from the exit of its LED
Technologies business, and has simplified its structure and focus purely on
CTP and Aerospace growth. The Group has completed this re-focus while making
net exceptional gains for a second successive year, mainly from the LED
business exit and pension scheme initiatives. As a result, net exceptional
gains from discontinued business were £0.7 million (2021: £1.2 million).
Further net exceptional gains from pension scheme initiatives were £0.9
million (2021: £6.5 million). Other net exceptional costs primarily deal with
the restructuring and rationalisation of the Group £0.2 million (2021: £2.0
million). These were undertaken largely in conjunction with mutually agreed
plans and actions between the Group, the pension trustees and the principal
bank as established in the re-financing agreement of August 2020.
After exceptional and separately disclosed items, operating profits for
continuing operations were £8.9 million (2021: £9.3 million).
Finance costs were £3.0 million (2021: £2.7 million), comprising net bank
interest of £1.7 million (2021: £1.6 million), pension non-cash notional
finance charges of £0.7 million (2021: £0.8 million) and leasing and other
interest charges of £0.5 million (2021: £0.3 million).
Group underlying profit before tax from continuing operations was £3.1
million (2021: £2.2 million), rising to £5.2 million including the
COVID-related US loan forgiven in the year. Group statutory profit from
continuing operations before tax including exceptional and non-recurring items
was £5.9 million (2021: £6.7 million).
Group taxation of £0.8 million (2021: £0.5 million) includes a deferred tax
credit of £0.7 million as the UK businesses return to sufficient projected
profits in total to recognise a deferred tax asset. The 2021 tax charge was
lower than the UK effective tax rate after taking account of provisions for
tax uncertainties no longer required and timing differences. Underlying Group
tax charges tend to be higher than the UK effective tax rate due to the
weighting of taxable profits generated in higher tax jurisdictions as well as
occasional withholding tax charges charged on some overseas dividends
declared.
Profit after tax before discontinued operations was £5.1 million (2021: £6.2
million) and Group statutory profit after tax, which includes discontinued
operations, was £5.8 million (2021: £7.4 million).
Basic underlying earnings per share from continuing operations were 3.1 pence
(2021: 2.4 pence) which excludes separately disclosed and exceptional items
and discontinued operations.
Statutory basic and underlying earnings per share from continuing operations
were 7.0 pence (2021: 8.5 pence) and including discontinued operations was 7.9
pence (2021: 10.1 pence).
Capital expenditure
In the year, the Group invested £9.7 million in property, plant and
equipment (2021: £10.4 million), with the majority in CTP's UK and US
operations to support growth with both existing and new customers, largely
from the medical sector. This represents 142.2% of the Group depreciation
charge of £6.8 million for the year for property, plant and equipment (2021:
179.7% on £5.8 million charge).
Bank facilities
At 31 March 2022, total UK bank facilities were £33.8 million, of which £3.5
million related to a revolving credit facility and £30.3 million in term loan
facilities, which include £1.4 million scheduled for repayment by September
2022.
The Group, the bank and the pension scheme trustees are actively engaged in
negotiations over the refinancing of the bank debt beyond the current expiry
date of 31 July 2023 and over the updated schedule of contributions. The
parties are committed to a plan to finalise these by 31 July 2022 and the
Directors have an expectation that this will be achieved.
Defined benefit pension scheme actuarial valuation
The last triennial actuarial valuation of the Group pension scheme was carried
out as at 31 March 2018, reporting an actuarial technical provisions deficit
of £90.4 million. The next triennial actuarial valuation results as at 31
March 2021 are not expected to be finalised until the end of July 2022. The
actuary released a draft 2021 valuation report on 23 November 2021 based on
early assumptions which recorded an actuarial deficit of £82.8 million (2021:
£90.4 million from the 2018 triennial valuation) representing a 67% funding
level.
By way of comparison, the statutory accounting method of valuing the Group
pension scheme deficit under IAS 19 resulted in a reduction in the net
liability to £26.0 million (2021: £37.3 million).
Treasury
The Group faces currency exposure on its overseas subsidiaries and on
its foreign currency transactions.
Each business hedges significant transactional exposure using forward foreign
exchange contracts for any exposure over £20,000. The Group reports trading
results of overseas subsidiaries based on average rates of exchange compared
with sterling over the year. This income statement translation exposure is not
hedged as this is an accounting rather than cash exposure and as a result the
income statement is exposed to movements in the US dollar, euro, Czech koruna
and Indian rupee. In terms of sensitivity, based on the 2021/22 results, a
10% increase in the value of sterling against these currencies would have
decreased reported profit before tax by £0.8 million (2021: £0.7 million).
Dividend
Given the financial performance and position of the Group, coupled with
restrictions on the payment of dividends contained within the refinancing
agreement and the lack of distributable reserves, the Board is not
recommending the payment of a dividend for 2021/22 (2021: £nil). The Board
intends to recommence dividend payments only when it becomes confident that a
sustainable and regular dividend can be re‑introduced. Under the terms of
the restructuring agreement, the Group is not permitted to make a dividend
payment to shareholders up to the period ending in July 2023.
Alternative performance measures
In the analysis of the Group's financial performance, position, operating
results and cash flows, alternative performance measures are presented to
provide readers with additional information. The principal measures presented
are underlying measures of earnings including underlying operating profit,
underlying profit before tax, underlying profit after tax, underlying EBITDA
and underlying earnings per share.
This results statement includes both statutory and adjusted non-GAAP financial
measures, the latter of which the Directors believe better reflect the
underlying performance of the business and provides a more meaningful
comparison of how the business is managed and measured on a day-to-day basis.
The Group's alternative performance measures and KPIs are aligned to the
Group's strategy and together are used to measure the performance of the
business and form the basis of the performance measures for remuneration.
Underlying results exclude certain items because, if included, these items
could distort the understanding of the performance for the year and the
comparability between the periods. A reconciliation of the Group's non-GAAP
financial measures is shown on page 41.
We provide comparatives alongside all current year figures. The term
"underlying" is not defined under IFRS and may not be comparable with
similarly titled measures used by other companies.
All profit and earnings per share figures relate to underlying business
performance (as defined above) unless otherwise stated. A reconciliation of
underlying measures to statutory measures for 2021/22 is provided below:
£'000 Statutory Exceptional items Before exceptional COVID-related US grant Underlying
CTP operating profit 10,480 - 10,480 2,087 8,393
Aerospace operating profit 677 - 677 - 677
Central costs (2,253) 721 (2,974) - (2,974)
Group operating profit from continuing operations 8,904 721 8,183 2,087 6,096
Net finance expense (2,989) - (2,989) - (2,989)
Group profit before taxation from continuing operations 5,915 721 5,194 2,087 3,107
Taxation expense (809) - (809) - (809)
Group profit for the period from continuing operations 5,106 721 4,385 2,087 2,298
Profit on discontinued operations, net of tax 693 693 - - -
Group profit for the period 5,799 1,414 4,385 2,087 2,298
Basic earnings per share (pence) 7.9p 1.9p 6.0p 2.8p 3.1p
The exceptional items comprise:
£'000 Continuing Discontinued Group
operations operations
Restructuring and rationalisation costs (133) - (133)
Gain in respect of retirement benefits 854 - 854
Profit on sale of LED Technologies business - 693 693
Total exceptional items 721 693 1,414
Post balance sheet events and going concern
Post balance sheet events
On 29 April 2022, subsequent to the balance sheet date, the Group entered into
a sale and leaseback agreement for a Technical Plastics manufacturing site at
Tucson, Arizona, USA. The transaction is expected to complete in July 2022
for a purchase price of $2.95 million less costs of $0.2 million. A lease
term of nine years has been agreed and grants the Group the right to cancel
any time after three years, provided twelve months' notice is given. At 31
March 2022 there is no reasonable certainty that the Group will exercise the
break clause. The Group expects to recognise a profit on disposal in respect
of the site of £0.6 million in the year ending 31 March 2023.
Going concern
The financial statements are prepared on the going concern basis.
Group performance during the year has enabled capital and working capital
investment to be made whilst retaining a stable financial position with net
debt excluding lease liabilities as of 31 March 2022 increasing to £21.5
million (2021: £20.5 million).
The debt facilities available to the Group comprise a term loan of £30.3
million, of which £1.4 million will be amortised by 30 September 2022 and a
£3.5 million revolving credit facility which was fully utilised as of 31
March 2022. Both of these facilities mature on 31 July 2023.
A schedule of contributions with the pension trustees is in place through to
July 2023; beyond this a schedule of contributions for £3.5 million annually
is in place until 31 October 2040. This schedule is reviewed and reconsidered
between the Company and the trustees at each triennial actuarial valuation,
the next being after the results of the 31 March 2021 triennial valuation are
known. This valuation, and accordingly an updated schedule of contributions
which has been provisionally agreed, is expected to be concluded by 31 July
2022. For the purposes of this going concern review the extant schedule of
contributions has been considered in the base case.
An intercreditor deed between Carclo plc, certain other Group companies, the
bank and the pension scheme trustees requires the Group to have refinanced its
bank debt with a maturity date not earlier than 31 March 2026 and to have
agreed an updated schedule of contributions for the actuarial valuation of the
scheme as at 31 March 2021 by 31 July 2022 (this date having been recently
extended by one month).
The Group, the bank and the pension scheme trustees are actively engaged in
negotiations over the refinancing of the bank debt beyond the current expiry
date of 31 July 2023 and over the updated schedule of contributions. The
parties are committed to a plan to finalise these by 31 July 2022 and the
Directors have an expectation that this will be achieved.
As such the Directors' going concern assessment period is twelve months from
the date of signing these financial statements.
The bank facilities are subject to four covenants to be tested on a quarterly
basis:
1. underlying interest cover;
2. net debt to underlying EBITDA;
3. core subsidiary underlying EBITA; and
4. core subsidiary revenue.
Core subsidiaries are defined as Carclo Technical Plastics Limited; Bruntons
Aero Products Limited; Carclo Technical Plastics (Brno) s.r.o; CTP Carrera Inc
and Jacottet Industrie SAS, with CTP Taicang Co. Ltd and Carclo Technical
Plastics Pvt Co Limited being treated as non-core for the purposes of these
covenants.
It is assumed that the bank covenants and thresholds set out in the current
banking agreement are in place throughout the going concern assessment period
and are not amended as a result of the ongoing refinancing.
Based on our current base case forecasts, these covenant tests are expected to
be met throughout the assessment period.
In addition, the pension scheme has the benefit of a fifth covenant to be
tested on 1 May each year up to and including 2023. In respect to the years
to 31 March 2022 and 31 March 2023 the test requires any shortfall of pension
deficit recovery contributions when measured against Pension Protection Fund
priority drift (which is a measure of the increase in the UK Pension
Protection Fund's potential exposure to the Group's pension scheme
liabilities) to be met by a combination of cash payments to the scheme, plus a
notional (non-cash) proportion of the increase in the underlying value of the
Technical Plastics and Aerospace businesses based on an EBITDA multiple for
those businesses which is to be determined annually.
The Directors have reviewed cash flow and covenant forecasts to cover the
twelve-month period from the date of signing these financial statements taking
into account the Group's available debt facilities and the terms of the
current arrangements with the bank and the pension scheme. These demonstrate
that the Group has sufficient headroom in terms of liquidity and covenant
testing through the forecast period.
In addition, the Directors have reviewed cash flow and covenant forecasts for
the same time period based on management's best estimates of the impact of the
ongoing negotiations on facilities and pension contributions which includes
currently uncommitted bank loan repayments and provisionally agreed additional
pension deficit recovery contributions contingent on future performance. These
demonstrate that the Group has sufficient headroom in terms of liquidity and
covenant testing through the forecast period.
The Directors have reviewed sensitivity testing based on a number of
reasonably possible scenarios, taking into account the current view of impacts
of the continuing COVID-19 pandemic on the Group (particularly from supply
chain disruption and any unmitigated cost inflation across all types of
operational expenditure) and possible political uncertainty, including the
impact of the Russian invasion of Ukraine and heightened risk of wider
conflict, Brexit and other possible overseas trading issues.
Severe downside sensitivity testing has been performed under 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, delays in the timing of commencement of significant contractual
projects, reduction in revenue from specific customers, minimum wage
increases, unmitigated inflationary impact across operating costs and exchange
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 Directors consider that the Group has the
capacity to take mitigating actions to ensure that the Group remains
financially viable, including further reducing operating expenditure as
necessary.
On the basis of this forecast and sensitivity testing, the Board has
determined that it is reasonable to assume that the Group will continue to
operate within the facilities available to it and to adhere to the covenant
tests to which it is subject throughout the twelve-month period from the date
of signing the financial statements and as such it has adopted the going
concern assumption in preparing the financial statements.
Phil White
Chief Financial Officer
30 June 2022
Consolidated income statement
for the year ended 31 March 2022
2022 2021
Notes £000 £000
Continuing operations -
Revenue 4 128,576 107,564
Underlying operating profit 6,096 4,840
COVID related US government grant income 7 2,087 -
Exceptional items 6 721 4,490
Operating profit 4 8,904 9,330
Finance revenue 77 42
Finance expense (3,066) (2,701)
Profit before tax 5,915 6,671
Income tax expense 8 (809) (457)
Profit after tax but before profit on discontinued operations 5,106 6,214
Discontinued operations -
Profit on discontinued operations, net of tax 5 693 1,198
Profit for the period 5,799 7,412
Attributable to -
Equity holders of the Company 5,799 7,412
Non-controlling interests - -
5,799 7,412
Earnings per ordinary share 9
Basic - continuing operations 7.0 p 8.5 p
Basic - discontinued operations 0.9 p 1.6 p
Basic 7.9 p 10.1 p
Diluted - continuing operations 6.9 p 8.5 p
Diluted - discontinued operations 0.9 p 1.6 p
Diluted 7.9 p 10.1 p
Consolidated statement of comprehensive income
for the year ended 31 March 2022
2022 2021
£000 £000
Profit for the period 5,799 7,412
Other comprehensive income / (expense)
Items that will not be reclassified to the income statement
Remeasurement gains / (losses) on defined benefit scheme 8,480 (6,540)
Deferred tax arising - -
Total items that will not be reclassified to the income statement 8,480 (6,540)
Items that are or may in future be classified to the income statement
Foreign exchange translation differences 1,840 (2,939)
Net investment hedge 440 1,084
Deferred tax arising (127) 137
Total items that are or may in future be classified to the income statement 2,153 (1,718)
Other comprehensive income / (expense), net of tax 10,633 (8,258)
Total comprehensive income / (expense) for the year 16,432 (846)
Attributable to -
Equity holders of the Company 16,432 (846)
Non-controlling interests - -
Total comprehensive income / (expense) for the period 16,432 (846)
Consolidated statement of financial position
as at 31 March 2022
2022 2021
Notes £000 £000
Non-current assets
Intangible assets 22,714 21,848
Property, plant and equipment 46,964 43,218
Deferred tax assets 1,403 384
Trade and other receivables 115 112
Total non-current assets 71,196 65,562
Current assets
Inventories 16,987 12,821
Contract assets 7,700 2,898
Trade and other receivables 19,702 19,254
Cash and cash deposits 12,347 15,485
Non-current assets classified as held for sale 266 -
Total current assets 57,002 50,458
Total assets 128,198 116,020
Non-current liabilities
Loans and borrowings 12 41,804 37,997
Deferred tax liabilities 4,878 4,393
Contract liabilities 3,099 866
Retirement benefit obligations 13 25,979 37,275
Total non-current liabilities 75,760 80,531
Current liabilities
Loans and borrowings 12 2,948 5,084
Trade and other payables 21,062 17,016
Current tax liabilities 170 17
Contract liabilities 3,755 5,461
Provisions 87 -
Total current liabilities 28,022 27,578
Total liabilities 103,782 108,109
Net assets 24,416 7,911
Equity
Ordinary share capital issued 14 3,671 3,671
Share premium 7,359 7,359
Translation reserve 7,486 5,333
Retained earnings 5,926 (8,426)
Total equity attributable to equity holders of the Company 24,442 7,937
Non-controlling interests (26) (26)
Total equity 24,416 7,911
Approved by the Board of Directors and signed on its behalf by
Nick Sanders Phil White
29 June 2022 29 June 2022
Consolidated statement of changes in equity for the year ended 31 March 2022
Attributable to equity holders of the Company
Share Share Translation Retained Non-controlling Total
capital premium reserve earnings Total interests equity
£000 £000 £000 £000 £000 £000 £000
Balance at 1 April 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 (expense) / 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 (expense) / income for the period - - (1,718) 872 (846) - (846)
Transactions with owners recorded directly in equity
Share-based payments - - - 26 26 - 26
Taxation on items recorded directly in equity - - - - - - -
Balance at 31 March 2021 3,671 7,359 5,333 (8,426) 7,937 (26) 7,911
Balance at 1 April 2021 3,671 7,359 5,333 (8,426) 7,937 (26) 7,911
Profit for the year - - - 5,799 5,799 - 5,799
Other comprehensive income / (expense)
Foreign exchange translation differences - - 1,840 - 1,840 - 1,840
Net investment hedge - - 440 - 440 - 440
Remeasurement gains on defined benefit scheme - - - 8,480 8,480 - 8,480
Taxation on items above - - (127) - (127) - (127)
Total comprehensive income for the period - - 2,153 14,279 16,432 - 16,432
Transactions with owners recorded directly in equity
Share-based payments - - - 73 73 - 73
Taxation on items recorded directly in equity - - - - - - -
Balance at 31 March 2022 3,671 7,359 7,486 5,926 24,442 (26) 24,416
Consolidated statement of cash flows
for the year ended 31 March 2022
2022 2021
Notes £000 £000
Cash generated from operations 15 6,780 11,202
Interest paid (2,502) (1,782)
Tax paid (1,309) (1,023)
Net cash from operating activities 2,969 8,397
Cash flows (used in) / from investing activities
Proceeds from sale of business 693 1,250
Proceeds from sale of property, plant and equipment 20 21
Interest received 77 42
Purchase of property, plant and equipment (4,804) (7,180)
Purchase of intangible assets - computer software (135) (139)
Net cash used in investing activities (4,149) (6,006)
Cash flows (used in) / from financing activities
Drawings on new facilities 1,575 38,697
Transaction costs associated with the issue of debt - (380)
Proceeds from sale and leaseback of property, plant and equipment 1,410 -
Repayment of borrowings excluding lease liabilities (2,282) (31,666)
Repayment of lease liabilities (3,196) (1,601)
Net cash (used in) / from financing activities (2,493) 5,050
Net (decrease) / increase in cash and cash equivalents (3,673) 7,441
Cash and cash equivalents at beginning of period 15,485 8,352
Effect of exchange rate fluctuations on cash held 535 (308)
Cash and cash equivalents at end of period 12,347 15,485
Cash and cash equivalents comprise -
Cash and cash deposits 12,347 15,485
12,347 15,485
Notes on the preliminary statement
1 Basis of preparation
Whilst the financial information included in this preliminary statement has
been prepared on the basis of the requirements of UK-adopted international
accounting standards ("Adopted IFRSs") effective at 31 March 2022, this
statement does not itself contain sufficient information to comply with IFRS.
The Group expects to publish full consolidated financial statements on 25 July
2022.
The financial information set out above does not constitute the Company's
statutory accounts for the years ended 31 March 2022 or 31 March 2021 but is
derived from those accounts. Statutory accounts for 2020/21 have been
delivered to the registrar of companies, and those for 2021/22 will be
delivered in due course. The auditor has reported on those accounts. Their
report for 2021/22 was (i) unqualified and (ii) did not contain a statement
under section 498(2) or (3) of the Companies Act 2006. The auditor's report
for the accounts of 2020/21 was (i) unqualified and (ii) did not contain a
statement under section 498(2) or (3) of the Companies Act 2006.
The financial statements are prepared on the going concern basis.
Group performance during the year has enabled capital and working capital
investment to be made whilst retaining a stable financial position with net
debt excluding lease liabilities as of 31 March 2022 increasing to £21.5
million (2021: £20.5 million).
The debt facilities available to the Group comprise a term loan of £30.3
million, of which £1.4 million will be amortised by 30 September 2022 and a
£3.5 million revolving credit facility which was fully utilised as of 31
March 2022. Both of these facilities mature on 31 July 2023.
A schedule of contributions with the pension trustees is in place through to
July 2023; beyond this a schedule of contributions for £3.5 million annually
is in place until 31 October 2040. This schedule is reviewed and reconsidered
between the Company and the trustees at each triennial actuarial valuation,
the next being after the results of the 31 March 2021 triennial valuation are
known. This valuation, and accordingly an updated schedule of contributions
which has been provisionally agreed, is expected to be concluded by 31 July
2022. For the purposes of this going concern review the extant schedule of
contributions has been considered in the base case.
An intercreditor deed between Carclo plc, certain other Group companies, the
bank and the pension scheme trustees requires the Group to have refinanced its
bank debt with a maturity date not earlier than 31 March 2026 and to have
agreed an updated schedule of contributions for the actuarial valuation of the
scheme as at 31 March 2021 by 31 July 2022 (this date having been recently
extended by one month).
The Group, the bank and the pension scheme trustees are actively engaged in
negotiations over the refinancing of the bank debt beyond the current expiry
date of 31 July 2023 and over the updated schedule of contributions. The
parties are committed to a plan to finalise these by 31 July 2022 and the
Directors have an expectation that this will be achieved.
As such the Directors' going concern assessment period is 12 months from the
date of signing these financial statements.
The bank facilities are subject to four covenants to be tested on a quarterly
basis:
1. underlying interest cover;
2. net debt to underlying EBITDA;
3. core subsidiary underlying EBITA; and
4. core subsidiary revenue.
Core subsidiaries are defined as Carclo Technical Plastics Ltd; Bruntons Aero
Products Ltd; Carclo Technical Plastics (Brno) s.r.o; CTP Carrera Inc and
Jacottet Industrie SAS, with CTP Taicang Co. Ltd and Carclo Technical Plastics
Pvt Co Ltd being treated as non-core for the purposes of these covenants.
It is assumed that the bank covenants and thresholds set out in the current
banking agreement are in place throughout the going concern assessment period
and are not amended as a result of the ongoing refinancing.
Based on our current base case forecasts, these covenant tests are expected to
be met throughout the assessment period.
In addition, the pension scheme has the benefit of a fifth covenant to be
tested on 1 May each year up to and including 2023. In respect to the years
to 31 March 2022 and 31 March 2023 the test requires any shortfall of pension
deficit recovery contributions when measured against Pension Protection Fund
priority drift (which is a measure of the increase in the UK Pension
Protection Fund's potential exposure to the Group's pension scheme
liabilities) to be met by a combination of cash payments to the scheme, plus a
notional (non-cash) proportion of the increase in the underlying value of the
Technical Plastics and Aerospace businesses based on an EBITDA multiple for
those businesses which is to be determined annually.
The Directors have reviewed cash flow and covenant forecasts to cover the
twelve-month period from the date of signing these financial statements taking
into account the Group's available debt facilities and the terms of the
current arrangements with the bank and the pension scheme. These demonstrate
that the Group has sufficient headroom in terms of liquidity and covenant
testing through the forecast period.
In addition, the Directors have reviewed cash flow and covenant forecasts for
the same time period based on management's best estimates of the impact of the
ongoing negotiations on facilities and pension contributions which includes
currently uncommitted bank loan repayments and provisionally agreed additional
pension deficit recovery contributions contingent on future performance. These
demonstrate that the Group has sufficient headroom in terms of liquidity and
covenant testing through the forecast period.
The Directors have reviewed sensitivity testing based on a number of
reasonably possible scenarios, taking into account the current view of impacts
of the continuing COVID-19 pandemic on the Group (particularly from supply
chain disruption and any unmitigated cost inflation across all types of
operational expenditure) and possible political uncertainty, including the
impact of the Russian invasion of Ukraine and heightened risk of wider
conflict, Brexit and other possible overseas trading issues.
Severe downside sensitivity testing has been performed under 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, delays in the timing of commencement of significant contractual
projects, reduction in revenue from specific customers, minimum wage
increases, unmitigated inflationary impact across operating costs and exchange
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 Directors consider that the Group has the
capacity to take mitigating actions to ensure that the Group remains
financially viable, including further reducing operating expenditure as
necessary.
On the basis of this forecast and sensitivity testing, the Board has
determined that it is reasonable to assume that the Group will continue to
operate within the facilities available to it and to adhere to the covenant
tests to which it is subject throughout the twelve-month period from the date
of signing the financial statements and as such it has adopted the going
concern assumption in preparing the financial statements.
Directors' liability
Neither the Company nor the Directors accept any liability to any person in
relation to this report except to the extent that such liability could arise
under English law. Accordingly, any liability to a person who has demonstrated
reliance on any untrue or mistaken statement or omission shall be determined
in accordance with section 90(A) of the Financial Services and Markets Act
2000.
Responsibility statement of the Directors in respect of the annual report
The Directors at the date of this statement confirm that to the best of their
knowledge:
· the financial statements, prepared in accordance with the
applicable set of accounting standards, give a true and fair view of the
assets, liabilities, financial position and profit or loss of the Company and
the undertakings included in the consolidation taken as a whole; and
· the strategic report includes a fair review of the development
and performance of the business and the position of the issuer and the
undertakings included in the consolidation taken as a whole, together with a
description of the principal risks and uncertainties that they face.
2. Accounting policies
The accounting policies set out in the last published financial statements for
the year to 31 March 2021 have been applied consistently to all periods
presented in this preliminary statement, unless otherwise stated.
Judgements made by the Directors, in the application of these accounting
policies that have significant effect on the financial statements and
estimates with a significant risk of material adjustment in the next year are
discussed in note 3.
Certain new standards, amendments and interpretations to existing standards
have been published that are mandatory for the Group's accounting period
beginning on or after 1 April 2021. The following new standards and
amendments to standards are mandatory and have been adopted for the first time
for the financial year beginning 1 April 2021:
· IFRS 9 Financial Instruments, IAS 19 Financial Instruments:
Recognition and Measurement. IFRS 7 Financial Instruments: Disclosures, IFRS 4
Insurance Contracts and IFRS 16 Leases (Amendment): Interest Rate Benchmark
Reform - Phase 2; and
· IFRS 16 Leases (Amendment): COVID-19 related rent concessions
beyond 30 June 2021.
These standards have not had a material impact on the consolidated financial
statements.
Certain new standards, amendments and interpretations to existing standards
have been published that are mandatory for the Group's accounting period
beginning on or after 1 April 2022. The Group has elected not to early adopt
these standards which are described below.
· IAS 16 Property, Plant and Equipment (Amendment): Proceeds before
intended use (effective date 1 January 2022);
· IAS 37 Provisions, Contingent Liabilities and Contingent Assets
(Amendment): Onerous contracts - Costs of Fulfilling a Contract (effective
date 1 January 2022);
· IFRS 3 Business Combinations (Amendment): Reference to the
Conceptual Framework (effective date 1 January 2022);
· Annual Improvements to IFRSs (2018-2020 cycle) (effective date 1
January 2022);
· IAS 1 Presentation of Financial Statements (Amendment):
Classification of liabilities as current or non-current - deferral of
effective date (effective date 1 January 2023);
· IAS 1 Presentation of Financial Statements and IFRS Practice
Statement 2 Making Material Judgements (Amendment): Disclosure of accounting
policies (effective date 1 January 2023);
· IAS 8 Accounting Policies, Changes in Accounting Estimates and
Errors (Amendment): Definition of accounting estimates (effective date 1
January 2023); and
· IAS 12 Income Taxes: Deferred Tax related to assets and
liabilities arising from a single transaction (effective 1 January 2023).
The above are not expected to have a material impact on the financial
statements.
There are no other IFRS or IFRIC interpretations that are not yet effective
that would be expected to have a material impact on the Group.
3 Accounting estimates and judgements
The preparation of the financial statements in conformity with IFRS requires
management to make judgements, estimates and assumptions that affect the
application of policies and reported amounts of assets and liabilities, income
and expenses.
The estimates and assumptions are based on historical experience and various
other factors that are believed to be reasonable under the circumstances.
These estimates and assumptions form the basis for making judgements about the
carrying values of assets and liabilities that are not readily apparent from
other sources. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period, or in the period
of revision and future periods if the revision affects both current and future
periods.
The following are the critical judgements and key sources of estimation
uncertainty that the Directors have made in the process of applying the
Group's accounting policies and that have the most significant effect on the
amounts recognised in the financial statements. Management has discussed
these with the Audit and Risk Committee. These should be read in conjunction
with the significant accounting policies provided in the Annual Report and
Accounts.
Going concern
Note 1 contains information about the preparation of these financial
statements on a going concern basis.
Key judgements -
Management has exercised judgement over the likelihood of the Group being able
to continue to operate within its available facilities and in accordance with
its covenants for the twelve months from the date of signing these financial
statements. This determines whether the Group should operate the going concern
basis of preparation for these financial statements.
Impairment of assets
Note 11 contains information about management's estimates of the recoverable
amount of cash generating units and their risk factors.
Key judgements -
Management has exercised judgement over the underlying assumptions within the
valuation models and has applied judgement to determine the Group's cash
generating units to which goodwill is allocated and against which impairment
testing is performed. These are key factors in their assessment of whether
there is any impairment in related goodwill or other assets.
Recently acquired assets awaiting full scale production have been considered
for indicators of impairment. Judgement has been applied when considering
volumes and timing of orders.
Key sources of estimation uncertainty -
The Group tests whether goodwill has suffered any impairment and considers
whether there is any indication of impairment on an annual basis. Goodwill
at 31 March 2022 amounts to £22.0 million (2021: £21.1 million), as set out
in more detail in note 11.
The recoverable amounts may be based on either value in use calculations or
fair value less costs of disposal calculations. The former requires the
estimation of future cash flows and the choice of a discount rate in order to
calculate the present value of the future cash flows. The latter method
requires the estimation of fair value.
Details of the sensitivity of assumptions is included in note 11.
Pension assumptions
Note 13 contains information about management's estimate of the net liability
for defined benefit obligations and their risk factors. The pension liability
at 31 March 2022 amounts to £26.0 million (2021: £37.6 million).
Key sources of estimation uncertainty -
The value of the defined benefit pension plan obligation is determined by
long-term actuarial assumptions. These assumptions include discount rates,
inflation rates and mortality rates. Differences arising from actual
experience or future changes in assumptions will be reflected in the Group's
consolidated statement of comprehensive income. The Group exercises
judgement in determining the assumptions to be adopted after discussion with a
qualified actuary. Details of the key actuarial assumptions used and of the
sensitivity of these assumptions are included within Note 13.
The Scheme introduced a right for members to Pension Increase Exchange ("PIE")
at retirement in the year to 31 March 2022 via a Deed of Amendment and
communication to deferred members. Having taken actuarial advice, the
Executive management has exercised judgement that, similar to the Bridging
Pension Option adopted last year, 40% of members will take the PIE option at
retirement. This estimate impacts on the past service credit recognised as an
exceptional item in the income statement.
Lease break options
The Annual Report and Accounts contain information about lease break options.
Key judgement -
Management has applied judgement when determining the expected certainty that
a break option within a lease will be exercised.
Revenue recognition
As revenue from tooling contracts is recognised over time, the amount of
revenue recognised in a reporting period depends on the extent to which the
performance obligations have been satisfied.
Key judgements -
The revenue recognised on certain contracts in the Technical Plastics segment
required management to use judgement to apportion contract revenue to the
tooling performance obligations.
Key sources of estimation uncertainty -
Revenue recognised on certain contracts in the Technical Plastics segment
required management to estimate the remaining costs to complete the tooling
performance obligation in order to determine the percentage of completion and
revenue to recognise in respect of those performance obligations.
Recognition of deferred tax assets
Information about the deferred tax assets recognised in the consolidated
statement of financial position is included in the Annual Report and Accounts.
Key judgement -
Management has 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 believes it is appropriate to recognise deferred tax assets
and at 31 March 2022 UK deferred tax assets of £0.7 million have been
recognised (31 March 2021: £nil).
Classification of exceptional items
Note 6 contains information about items classified as exceptional.
Key judgements -
Management has exercised judgement over whether items are exceptional as set
out in the Group's accounting policies within the Annual Report and Accounts.
Non-current assets held for sale
Information about non-current assets held for sale is included in the Annual
Report and Accounts
Key judgements -
Management has applied judgement in determining that a sale and leaseback of
one of the Technical Plastics sites was highly probably at 31 March 2022 and
as such has classified the proportion in respect to the disposed useful
economic life as non-current assets held for sale at balance sheet date.
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 (comprising the main Board and 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. Since
its disposal, further proceeds have been received from the administrators of
Wipac Limited (this year and prior), which are disclosed as profit on disposal
of discontinued operations below - see note 5.
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.
Analysis by business segment
The segment results for the year ended 31 March 2022 were as follows -
Technical Plastics Aerospace Central Total (continuing operations) Discontinued operations Group total
(continuing) (continuing) (continuing)
£000 £000 £000 £000 £000 £000
Consolidated income statement
External revenue 123,869 4,707 - 128,576 - 128,576
Expenses (115,476) (4,030) (2,974) (122,480) - (122,480)
Underlying operating profit / (loss) 8,393 677 (2,974) 6,096 - 6,096
COVID related US government grant income 2,087 - - 2,087 2,087
Operating profit / (loss) before exceptional items 10,480 677 (2,974) 8,183 - 8,183
Exceptional operating items - - 721 721 - 721
Operating profit / (loss) 10,480 677 (2,253) 8,904 - 8,904
Net finance expense (2,989) - (2,989)
Income tax expense (809) - (809)
Profit from operating activities after tax 5,106 - 5,106
Profit on disposal of discontinued operations, net of tax - see note 5 - 693 693
Profit for the period 5,106 693 5,799
Consolidated statement of financial position
Segment assets 121,119 6,418 661 128,198 - 128,198
Segment liabilities (40,686) (998) (62,098) (103,782) - (103,782)
Net assets 80,433 5,420 (61,437) 24,416 - 24,416
Other segmental information
Capital expenditure on property, plant and equipment 9,529 36 143 9,708 - 9,708
Capital expenditure on computer software 62 - 73 135 - 135
Depreciation 6,533 234 58 6,825 - 6,825
Amortisation of computer software 16 - 120 136 - 136
Amortisation of other intangibles 67 - - 67 - 67
The segment results for the year ended 31 March 2021 were as follows -
Technical Plastics (continuing) Aerospace Central Total Discontinued operations Group total
(continuing) (continuing) (continuing operations)
£000 £000 £000 £000 £000 £000
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 / (loss) from operating activities after tax 6,214 (52) 6,162
Profit on disposal of discontinued operations, net of tax - 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
Capital expenditure on property, plant and equipment 10,128 208 38 10,374 - 10,374
Capital expenditure on computer software 3 - 136 139 - 139
Depreciation 5,492 250 32 5,774 - 5,774
Impairment of property, plant and equipment - (13) - (13) - (13)
Amortisation of computer software 57 - 96 153 - 153
Amortisation of other intangibles 53 - - 53 - 53
Analysis by geographical segment
The business operates in three main geographical regions - the United Kingdom,
North America and in lower-cost regions including the Czech Republic, China
and India, and the geographical analysis was as follows:
Expenditure on tangible
fixed assets and
computer software
External revenue Net segment assets
2022 2021 2022 2021 2022 2021
£000 £000 £000 £000 £000 £000
United Kingdom 12,632 12,413 (29,367) (41,577) 1,651 6,006
North America 65,296 50,814 27,267 25,173 6,918 3,720
Rest of world 50,648 44,337 26,516 24,315 1,274 787
128,576 107,564 24,416 7,911 9,843 10,513
The analysis of segment revenue represents revenue from external customers
based upon the location of the customer.
The analysis of segment assets and capital expenditure is based upon the
location of the assets.
The material components of the Central segment assets and liabilities are
retirement benefit obligation net liabilities of £25.979 million (2021 - net
liabilities of £37.275 million), and net borrowings of £36.134 million (2021
- £34.017 million).
One Technical Plastics customer accounted for 37.8% (2021 - 24.5%) and another
customer for 10.4% of Group revenues from continuing operations and similar
proportions of trade receivables. No other customer accounted for more than
10.0% of revenues from continuing operations in the year.
Deferred tax assets by geographical location are as follows, United Kingdom
£0.952 million (2021 - £nil), North America £0.288 million (2021 - £0.277
million), rest of world £0.163 million (2021 - £0.107 million).
Total non-current assets by geographical location are as follows, United
Kingdom £24.159 million (2021 - £23.096 million), North America £28.142
million (2021 - £24.212 million), Rest of world £18.895 million (2021 -
£18.254 million).
5 Discontinued operation
Whilst there were no new discontinued operations in the year ended 31 March
2022 or in the prior year comparative, on 5 May 2021 and 6 August 2021,
proceeds of £0.2 million and £0.3 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 (31 March
2021: £1.3 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 £0.2 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 £0.1 million was retained by the Group with the
balance of £0.1 million used to prepay the Group's term loan.
No net 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
£0.7 million has been recognised as exceptional profit on disposal of
discontinued operations in the current year.
Management does not expect to receive any further proceeds from the
administrators of Wipac Ltd nor other proceeds from the exit of the LED
Technologies segment.
6 Exceptional items
2022 2021
£000 £000
Continuing operations
Rationalisation costs (133) (1,968)
Credit in respect of retirement benefits - see note 13 854 6,458
721 4,490
Discontinued operations
Rationalisation costs - (52)
Profit on disposal of discontinued operations - see note 5 693 1,250
693 1,198
1,414 5,688
The revenue 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 consolidated income statement
for the year ending 31 March 2022.
Rationalisation costs from continuing operations during the period relate to
the restructuring and refinancing of the Group. These include £0.1 million
credit in respect to legal and professional accruals released (2021: £1.3
million costs), £0.1 million for consultants' fees (2021: £0.1 million) and
£0.2 million exceptional pension scheme administration costs (2021: £0.5
million).
The gain in respect to retirement benefits is a past service credit for the
impact of introducing a Pension Increase Exchange option to members (2021:
past service credit in respect to the introduction of a bridging pension
option, partly offset by a past service cost relating to GMP equalisation).
See note 13 for more information.
The profit on exit of discontinued operations of £0.7 million (2021: £1.3
million) is proceeds received in the current year from the administrators of
Wipac Limited. See note 5.
7 Government support for COVID-19
During the period and the comparative period the Group has utilised
governmental support in some of its operating locations to mitigate the impact
of COVID-19. Support has been in the form of grants, loans and deferral of
tax payments.
2022 2021
£000 £000
The governmental support utilised during the period was -
Grants - used to off-set labour and variable costs, included within operating 2,157 747
expenses
Loans - presented in loans and borrowings - 2,104
Payment deferrals - presented in trade and other payables - 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 year 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 consolidated income statement. In the year
ended 31 March 2022, the full amount has been recognised within operating
profit in the income statement as a credit to offset labour and variable
COVID-19-related costs incurred to date.
The credit of £2.1 million, recognised in respect to this COVID-19-related
government grant, has been presented separately on the face of the
consolidated income statement for the year ended 31 March 2022 for clarity due
to its value and nature.
8 Income tax expense
The expense recognised in the consolidated income statement comprises-
2022 2021
£000 £000
United Kingdom corporation tax
Corporation tax on losses for the current year - 308
Adjustments for prior years (14) -
Overseas taxation
Current tax (1,266) (564)
Adjustments for prior years (190) (37)
Total current tax net expense (1,470) (293)
Deferred tax expense
Origination and reversal of temporary differences -
Deferred tax 629 (80)
Adjustments for prior years 32 (84)
Total deferred tax credit / (charge) 661 (164)
Total income tax expense recognised in the consolidated income statement (809) (457)
Reconciliation of tax expense for the year -
The tax assessed for the year is lower (2021 - lower) than the standard rate
of corporation tax in the UK. The differences are explained as follows -
2022 2021
£000 % £000 %
Profit before tax 6,608 7,869
Income tax using standard rate of UK corporation tax of 19% (2021 - 19%) 1,256 19.0 1,495 19.0
Other items not deductible for tax purposes 267 4.0 99 1.3
R&D tax relief (22) (0.3) (26) (0.3)
Income not taxable (603) (9.1) (456) (5.8)
Adjustments in respect of overseas tax rates 273 4.1 62 0.8
Recognition of deferred tax asset previously unrecognised (657) (9.9) - -
Release of tax provisions - - (308) (3.9)
Other temporary differences (412) (6.2) (650) (8.3)
Adjustment to current tax in respect of prior periods (UK and overseas) 204 3.1 37 0.5
Adjustments to deferred tax in respect of prior periods (UK and overseas) (32) (0.5) 84 1.1
Foreign taxes expensed in the UK 535 8.1 120 1.5
Total income tax expense 809 12.2 457 5.8
Tax on items charged outside of the consolidated income statement -
2022 2021
£000 £000
Recognised in other comprehensive income -
Foreign exchange movements 127 (137)
Total income tax charged / (credited) to other comprehensive income 127 (137)
9 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 year.
The calculation of diluted 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 year (adjusted for
dilutive options).
The following details the result and average number of shares used in
calculating the basic and diluted earnings per share -
2022 2021
£000 £000
Profit after tax but before profit on discontinued operations 5,106 6,214
Profit attributable to non-controlling interests - -
Profit attributable to ordinary shareholders from continuing operations 5,106 6,214
Profit on discontinued operations, net of tax 693 1,198
Profit after tax, attributable to equity holders of the parent 5,799 7,412
2022 2021
Shares Shares
Weighted average number of ordinary shares in the year 73,419,193 73,419,193
Effect of share options in issue 324,977 15,974
Weighted average number of ordinary shares (diluted) in the year 73,744,170 73,435,167
In addition to the above, the Company also calculates an earnings per share
based on underlying profit as the Board believes this provides a more useful
comparison of business trends and performance. Underlying profit is defined as
profit before impairments, rationalisation costs, one-off retirement benefit
effects, exceptional bad debts, business closure costs, litigation costs,
other 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:
2022 2021
£000 £000
Profit after tax, attributable to equity holders of the parent 5,799 7,412
Continuing operations:
Exceptional - rationalisation and restructuring costs, net of tax 133 1,968
Exceptional - gain in respect of retirement benefits, net of tax (854) (6,458)
COVID-related US government grant income, net of tax (2,087) -
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 attributable to equity holders of the parent 2,298 1,724
COVID-related US government grant income, net of tax 2,087 -
Profit after tax but before exceptional items, attributable to equity holders 4,385 1,724
of the parent
Underlying operating profit - continuing operations 6,096 4,840
Finance revenue - continuing operations 77 42
Finance expense - continuing operations (3,066) (2,701)
Income tax expense - continuing operations (809) (457)
Underlying profit attributable to equity holders of the parent - continuing 2,298 1,724
operations
COVID-related US government grant income, net of tax 2,087 -
Profit after tax but before exceptional items - continuing operations 4,385 1,724
The following table summarises the earnings per share figures based on the
above data -
2022 2021
Pence Pence
Basic earnings per share - continuing operations 7.0 8.5
Basic earnings per share - discontinued operations 0.9 1.6
Basic earnings per share 7.9 10.1
Diluted earnings per share - continuing operations 6.9 8.5
Diluted earnings per share - discontinued operations 0.9 1.6
Diluted earnings per share 7.9 10.1
Underlying earnings per share - basic - continuing operations 3.1 2.4
Underlying loss per share - basic - discontinued operations - -
Underlying earnings per share - basic 3.1 2.4
Underlying earnings per share - diluted - continuing operations 3.1 2.4
Underlying loss per share - diluted - discontinued operations - -
Underlying earnings per share - diluted 3.1 2.4
Earnings per share before exceptional items - basic - continuing operations 6.0 2.4
Earnings per share before exceptional items - basic - discontinued operations - -
Earnings per share before exceptional items - basic 6.0 2.4
Earnings per share before exceptional items - diluted - continuing operations 6.0 2.4
Earnings per share before exceptional items - diluted - discontinued - -
operations
Earnings per share before exceptional items - diluted 6.0 2.4
10 Dividends paid and proposed
The Directors are not proposing a final dividend for the year ended 31 March
2022 (2021: £nil). Under the terms of the restructuring agreement entered
into on 14 August 2020, the Group is not permitted to make a dividend payment
to shareholders up to the period ending in July 2023.
11 Impairment of assets
Impairment tests for cash generating units containing goodwill
Goodwill acquired in a business combination is allocated at acquisition to the
cash generating units ("CGUs") that are expected to benefit from that business
combination. The carrying amount of goodwill is allocated to the Group's
principal CGUs, being the operating segments described in the operating
segment descriptions in note 4.
The carrying value of goodwill at 31 March 2022 and 31 March 2021 is allocated
wholly to the Technical Plastics cash generating unit as follows:
2022 2021
£000 £000
Technical Plastics 21,964 21,065
At 31 March 2022, the recoverable amount of the Technical Plastics cash
generating unit was determined on a calculation of value in use, being the
higher of that and fair value less costs of disposal "FVLCD". The results of
each produced the same answer, that there is no impairment of goodwill.
The value in use calculations use cash flow projections based upon financial
budgets approved by management covering a three-year period. Cash flows
beyond the three-year period are extrapolated using estimated growth rates of
between 2.3% and 4.2% (2021: 1.5% and 4.6%) depending upon the market
served.
The cash flows were discounted at pre-tax rates in the range 6.1% and 8.7%
(2021: 4.89% - 8.37%). These rates are calculated and reviewed annually.
Changes in income and expenditure are based on expectations of future changes
in the market. Sensitivity testing of the recoverable amount to reasonably
possible changes in key assumptions has been performed, including changes in
the discount rate and changes in forecast cash flows.
All other assumptions unchanged, a 6.6% (2021: 7.75%) increase in the discount
rate increasing the range to 12.7% - 15.3% (2021: 12.64% - 16.12%), or a 45%
(2021: 47%) decrease in underlying EBIT would reduce the headroom on the
Technical Plastics CGU to £nil. Should the discount rate increase further
than this or the profitability decrease further, then an impairment of the
goodwill would be likely.
12 Loans and borrowings
Reconciliation of movements of liabilities to cash flows arising from
financing activities:
Bank overdrafts used for cash management purposes Term loan Government COVID-19 support loan Revolving credit facility Lease liabilities Other loans Total
£000 £000 £000 £000 £000 £000 £000
Balance at 31 March 2020 10,957 - - 30,442 5,250 17 46,666
Changes from financing cash flows
Drawings on new facilities - 34,354 2,243 2,000 - 100 38,697
Transaction costs associated with the issue of debt - (380) - - - - (380)
Repayment of borrowings - (1,589) - (30,071) (1,601) (6) (33,267)
- 32,385 2,243 (28,071) (1,601) 94 5,050
Effect of changes in foreign exchange rates - (657) (139) (371) (215) (1) (1,383)
Liability-related other changes
Changes in bank overdraft 2,184 - - - - - 2,184
Drawings on new facilities - - - - 3,769 - 3,769
Termination of facilities (13,193) - - - (148) - (13,341)
Interest expense 61 84 - - - - 145
Interest receivable (9) - - - - - (9)
(10,957) 84 - - 3,621 - (7,252)
Equity-related other changes - - - - - - -
Balance at 31 March 2021 - 31,812 2,104 2,000 7,055 110 43,081
Changes from financing cash flows
Drawings on new facilities - - - 1,500 - 75 1,575
Repayment of borrowings - (2,218) - - (3,195) (64) (5,477)
(2,218) - 1,500 (3,195) 11 (3,902)
Effect of changes in foreign exchange rates - 440 (17) - 192 1 616
Liability-related other changes
Drawings on new facilities - - - - 6,818 - 6,818
Conversion of loan to a grant - - (2,087) - - - (2,087)
Interest expense - 226 - - - - 226
- 226 (2,087) - 6,818 - 4,957
Equity-related other changes - - - - - - -
Balance at 31 March 2022 - 30,260 - 3,500 10,870 122 44,752
13 Retirement benefit obligations
The Group operates a defined benefit UK pension scheme which provides pensions
based on service and final pay. Outside of the UK, retirement benefits are
determined according to local practice and funded accordingly.
In the UK, Carclo plc sponsors the Carclo Group Pension Scheme (the "Scheme"),
a funded defined benefit pension scheme which provides defined benefits for
some of its members. This is a legally separate, trustee-administered fund
holding the Scheme's assets to meet long-term pension liabilities for some
2,662 current and past employees as at 31 March 2022.
The trustees of the Scheme are required to act in the best interest of the
Scheme's beneficiaries. The appointment of the trustees is determined by the
Scheme's trust documentation. It is policy that at least one-third of all
trustees should be nominated by the members. The trustees currently comprise
two Company-nominated trustees (of which one is an independent professional
trustee and one is the independent professional Chairperson) as well as two
member-nominated trustees. The trustees are also responsible for the
investment of the Scheme's assets.
The Scheme provides pensions and lump sums to members on retirement and to
their dependants on death. During the year to 31 March 2022, the Scheme
introduced a Pension Increase Exchange option ("PIE"), see below for further
details. The level of retirement benefit is principally based on final
pensionable salary prior to leaving active service and is linked to changes in
inflation up to retirement. The defined benefit section is closed to new
entrants, who now have the option of entering into a separate defined
contribution scheme, and the Group has elected to cease future accrual for
existing members of the defined benefit section such that members who have not
yet retired are entitled to a deferred pension.
The Company currently pays contributions to the Scheme as determined by
regular actuarial valuations. The trustees are required to use prudent
assumptions to value the liabilities and costs of the Scheme whereas the
accounting assumptions under IAS 19 must be best estimates.
The Scheme is subject to the funding legislation, which came into force on 30
December 2005, outlined in the Pensions Act 2004. This, together with
documents issued by the Pensions Regulator, and Guidance Notes adopted by the
Financial Reporting Council, set out the framework for funding defined benefit
occupational pension plans in the UK.
A full actuarial valuation was carried out as at 31 March 2018 in accordance
with the scheme funding requirements of the Pensions Act 2004. The funding of
the Scheme is agreed between the Group and the trustees in line with those
requirements. These in particular require the surplus or deficit to be
calculated using prudent, as opposed to best estimate, actuarial assumptions.
This 31 March 2018 actuarial valuation showed a deficit of £90.4 million.
Under the recovery plan agreed with the trustees following the 2018 valuation,
the Group agreed that it would aim to eliminate the deficit over a period of
19 years 9 months from 1 February 2021, which is by 31 October 2040, by the
payment of annual contributions combined with the assumed asset returns in
excess of gilt yields. Contributions paid in the year to 31 March 2021
amounted to £2.8 million, £3.9 million during the year to 31 March 2022 and
are agreed as £3.8 million in the year ending March 2023. These
contributions include an allowance of £0.6 million p.a. in respect of the
expenses of running the Scheme and the Pension Protection Fund ("PPF") levy.
Beyond 2023, a schedule of contributions for £3.5 million annually is in
place until 31 October 2040, but is reviewed and reconsidered between the
employer and the trustees at each triennial actuarial valuation; the next
review being no later than by 31 July 2022 after the results of the 31 March
2021 triennial valuation are known.
On 14 August 2020 additional security was granted by certain Group companies
to the Scheme trustees such that at 31 March 2022 the gross value of the
assets secured, which includes applicable intra-group balances, goodwill and
investments in subsidiaries at net book value in the relevant component
companies' accounts, but which eliminate in the Group upon consolidation,
amounted to £248.2 million (2021: £251.2 million). Excluding the assets
which eliminate in the Group upon consolidation the value of the security was
£36.3 million (2021: £37.9 million).
For the purposes of IAS 19, the results of the actuarial valuation as at 31
March 2018, which was carried out by a qualified independent actuary, have
been updated on an approximate basis to 31 March 2022. There have been no
changes in the valuation methodology adopted for this period's disclosures
compared to the previous period's disclosures.
The Scheme exposes the Group to actuarial risks and the key risks are set out
in the table below. In each instance these risks would detrimentally impact
the Group's statement of financial position and may give rise to increased
interest costs in the Group income statement. The trustees could require
higher cash contributions or additional security from the Group.
The trustees manage governance and operational risks through a number of
internal controls policies, including a risk register and integrated risk
management.
Risk Description Mitigation
Investment risk Weaker than expected investment returns result in a worsening in the Scheme's The trustees continually monitor investment risk and performance and have
funding position. established an investment sub-committee which includes a Group representative,
meets regularly and is advised by professional investment advisors. A number
of the investment managers operate tactical investment management of the plan
assets.
The Scheme currently invests approximately 56% in liability-driven
investments, 42% of its asset value in a portfolio of diversified growth funds
and 2% in cash and liquidity funds.
Interest rate risk A decrease in corporate bond yields increases the present value of the IAS 19 The trustees' investment strategy includes investing in liability-driven
defined benefit obligations. investments and bonds whose values increase with decreases in interest rates.
A decrease in gilt yields results in a worsening in the Scheme's funding Approximately 96% of the Scheme's funded liabilities are currently hedged
position. against interest rates using liability-driven investments.
Note that the Scheme hedges interest rate risk on a statutory and long-term
funding basis (gilts) whereas AA corporate bonds are implicit in the IAS 19
discount rate and so there is some mismatching risk to the Group
should yields on gilts and corporate bonds diverge.
Inflation risk An increase in inflation results in higher benefit increases for members which The trustees' investment strategy includes investing in liability-driven
in turn increases the Scheme's liabilities. investments which will move with inflation expectations with approximately 80%
of the Scheme's inflation-linked liabilities being hedged on a funded basis.
The growth assets held are expected to provide protection over inflation in
the long term.
Mortality risk An increase in life expectancy leads to benefits being payable for a longer The trustees' actuary provides regular updates on mortality, based on scheme
period which results in an increase in the Scheme's liabilities. experience, and the assumption continues to be reviewed.
The amounts recognised in the statement of financial position in respect of
the defined benefit scheme were as follows:
2022 2021
£000 £000
Present value of funded obligations (181,759) (204,654)
Fair value of scheme assets 155,780 167,379
Recognised liability for defined benefit obligations (25,979) (37,275)
The present value of Scheme liabilities is measured by discounting the best
estimate of future cash flows to be paid out of the Scheme using the projected
unit credit method. The value calculated in this way is reflected in the net
liability in the statement of financial position as shown above.
The projected unit credit method is an accrued benefits valuation method in
which allowance is made for projected earnings increases. The accumulated
benefit obligation is an alternative actuarial measure of the Scheme's
liabilities whose calculation differs from that under the projected unit
credit method in that it includes no assumption for future earnings increases.
In this case, as the Scheme is closed to future accrual, the accumulated
benefit obligation is equal to the valuation using the projected unit credit
method.
All actuarial remeasurement gains and losses will be recognised in the year in
which they occur in other comprehensive income.
The cumulative remeasurement net loss reported in the statement of
comprehensive income since 1 April 2004 is £40.856 million.
IFRIC 14 has no effect on the figures disclosed because the Company has an
unconditional right to a refund under the resulting trust principle.
Movements in the net liability for defined benefit obligations recognised in
the consolidated statement of financial position -
2022 2021
£000 £000
Net liability for defined benefit obligations at the start of the year (37,275) (37,620)
Contributions paid 3,900 2,834
Net (expense) / credit recognised in the consolidated income statement (see (1,084) 4,052
below)
Remeasurement gains / (losses) recognised in other comprehensive income 8,480 (6,541)
Net liability for defined benefit obligations at the end of the year (25,979) (37,275)
Movements in the present value of defined benefit obligations -
2022 2021
£000 £000
Defined benefit obligation at the start of the year 204,654 210,386
Interest expense 3,986 4,730
Actuarial gains due to changes in demographic assumptions (1,767) (6,727)
Actuarial (gains) / losses due to changes in financial assumptions (13,476) 12,280
Benefits paid (10,784) (9,557)
Past service credit (see note 6) (854) (6,458)
Defined benefit obligation at the end of the year 181,759 204,654
With the exception of that described below there have been no plan amendments,
curtailments or settlements during the period.
The Scheme introduced a Pension Increase Exchange ("PIE") option at retirement
during the year. A Deed of Amendment, signed 16 March 2022, created the
right for deferred members to take a PIE at retirement. A member
announcement was issued to all deferred members at the end of March 2022.
The Deed of Amendment also created the right for members to receive PIE on
terms such that 20% of the PIE value is retained within the Scheme. Based
upon the assumption that 40% of members will opt for PIE at retirement, this
resulted in a reduction in the current value of accrued liabilities and as a
result a past service credit has been recognised in the income statement of
£0.9 million, presented within exceptional items. A Bridging Pension Option
was introduced in the prior year with similar assumptions made. A past
service credit was recognised in the year ended 31 March 2021 in the income
statement of £6.689 million and presented as exceptional items.
The English High Court ruling in Lloyds Banking Group Pension Trustees Limited
v Lloyds Bank plc and others was published on 26 October 2018, and held that
UK pension schemes with Guaranteed Minimum Pensions ("GMPs") accrued from 17
May 1990 must equalise for the different effects of these GMPs between men and
women. The case also gave some guidance on related matters, including the
methods for equalisation.
The trustees of the plan will need to obtain legal advice covering the impact
of the ruling on the plan, before deciding with the employer on the method to
adopt. The legal advice will need to consider (amongst other things) the
appropriate GMP equalisation solution, whether there should be a time limit on
the obligation to make back-payments to members (the "look-back" period) and
the treatment of former members (members who have died without a spouse and
members who have transferred out for example).
The trustees commissioned scheme-specific calculations to determine the likely
impact of the ruling on the Scheme. An allowance for the impact of GMP
equalisation was included within the 31 March 2019 accounting figures,
increasing liabilities by 1.68%, a resulting past service cost of £3.559
million was recognised in the income statement at that time. The Scheme has
not yet implemented GMP equalisation and therefore the allowance made in 2019
has been maintained for accounting disclosures.
On 20 November 2020, the High Court issued a supplementary ruling in the
Lloyds Bank GMP equalisation case with respect to members that have
transferred out of their scheme prior to the ruling. The results mean that
trustees are obliged to make top-up payments that reflect equalisation
benefits and to make top-up payments where this was not the case in the
past. Also, a defined benefit scheme that received a transfer is
concurrently obliged to provide equalised benefits in respect to the transfer
payments and, finally, there were no exclusions on the grounds of discharge
forms, CETV legislation, forfeiture provisions or the Limitation Act 1980.
The impact of this ruling was estimated to cost £0.231 million (approximately
0.1% of liabilities). This additional service cost was recognised through
the income statement as a past service cost in the year ending 31 March 2021
and was presented within exceptional items and therefore the impact of the
ruling is allowed for in the figures presented at 31 March 2022.
The Scheme's liabilities are split between active, deferred and pensioner
members at 31 March as follows -
2022 2021
% %
Active - -
Deferred 35 35
Pensioners 65 65
100 100
Movements in the present value of defined benefit obligations -
2022 2021
£000 £000
Fair value of Scheme assets at the start of the year 167,379 172,766
Interest income 3,259 3,888
Loss on Scheme assets excluding interest income (6,763) (988)
Contributions by employer 3,900 2,834
Benefits paid (10,784) (9,557)
Expenses paid (1,211) (1,564)
Fair value of Scheme assets at the end of the year 155,780 167,379
Actual (loss) / return on Scheme assets (3,504) 2,900
The fair value of Scheme asset investments was as follows -
2022 2021
£000 £000
Diversified growth funds 65,234 90,177
Bonds and liability-driven investment funds 87,931 71,044
Cash and liquidity funds 2,615 6,158
Total assets 155,780 167,379
None of the fair values of the assets shown above include any of the Group's
own financial instruments or any property occupied, or other assets used by
the Group.
All of the Scheme assets have a quoted market price in an active market with
the exception of the trustees' bank account balance.
Diversified growth funds are pooled funds invested across a diversified range
of assets with the aim of giving long-term investment growth with lower
short-term volatility than equities.
It is the policy of the trustees and the Group to review the investment
strategy at the time of each funding valuation. The trustees' investment
objectives and the processes undertaken to measure and manage the risks
inherent in the Scheme are set out in the Statement of Investment Principles.
A proportion of the Scheme's assets is invested in the BMO LDI Nominal Dynamic
LDI Fund and in the BMO LDI Real Dynamic LDI Fund which provides a degree of
asset liability matching.
The net expense / (gain) recognised in the consolidated income statement was
as follows -
2022 2021
£000 £000
Past service credit (854) (6,458)
Net interest on the net defined benefit liability 727 842
Scheme administration expenses 1,211 1,564
1,084 (4,052)
The net expense / (gain) is recognised in the following line items in the
consolidated income statement -
2022 2021
£000 £000
Charged to operating profit 1,000 1,117
Credited to exceptional items (643) (6,011)
Other finance revenue and expense - net interest on the net defined benefit 727 842
liability
1,084 (4,052)
The principal actuarial assumptions at the balance sheet date (expressed as
weighted averages) were -
2022 2021
Discount rate at 31 March 2.70% 2.00%
Future salary increases N/A N/A
Inflation (RPI) (non-pensioner) 3.70% 3.25%
Inflation (CPI) (non-pensioner) 3.20% 2.75%
Allowance for revaluation of deferred pensions of RPI or 5% p.a. if less 3.70% 3.25%
Allowance for revaluation of deferred pensions of CPI or 5% p.a. if less 3.20% 2.75%
Allowance for pension in payment increases of RPI or 5% p.a. if less 3.55% 3.15%
Allowance for pension in payment increases of CPI or 3% p.a. if less 2.60% 2.30%
Allowance for pension in payment increases of RPI or 5% p.a. if less, minimum 3.85% 3.65%
3% p.a.
Allowance for pension in payment increases of RPI or 5% p.a. if less, minimum 4.30% 4.20%
4% p.a.
The mortality assumptions adopted at 31 March 2022 are 143% and 153%
respectively of the standard tables S3PMA / S3PFA (2021: 143%/153% for
S3PMA/S3PFA respectively), year of birth, no age rating for males and females,
projected using CMI_2021 converging to 1.00% p.a. (2021: 1.00%) with a
smoothing parameter 7.0% (2021: 7.0).
It is recognised that the Core CMI_2021 model is likely to represent an overly
cautious view of experience in the near term. As a result, management have
applied judgement and the CMI_2021 model has been adopted with a w2021 and
w2020 weighting parameter of 10% to represent possible future trend as a best
estimate and will be kept under review in the future. These assumptions imply
the following life expectancies:
2022 2021
Life expectancy for a male (current pensioner) aged 65 18.8 years 19.0 years
Life expectancy for a female (current pensioner) aged 65 20.9 years 21.0 years
Life expectancy at 65 for a male aged 45 19.7 years 19.9 years
Life expectancy at 65 for a female aged 45 22.0 years 22.2 years
It is assumed that 75% of the post A-Day maximum for active and deferred
members will be commuted for cash (2021 - 75%).
Pension Increase Exchange take-up is assumed to be 40% (2021: Bridging Pension
Option take-up 40%).
The pension scheme liabilities are derived using actuarial assumptions for
inflation, future salary increases, discount rates, mortality rates and
commutation. Due to the relative size of the Scheme's liabilities, small
changes to these assumptions can give rise to a significant impact on the
pension scheme deficit reported in the Group statement of financial position.
The sensitivity to the principal actuarial assumptions of the present value of
the defined benefit obligation is shown in the following table -
2022 2022 2021 2021
% £000 % £000
Discount rate (1)
Increase of 0.25% per annum (3.68%) (6,682) (3.43%) (7,014)
Decrease of 0.25% per annum 3.82% 6,937 3.61% 7,396
Decrease of 1.0% per annum 16.10% 29,258 15.71% 32,147
Inflation (2)
Increase of 0.25% per annum 1.25% 2,272 1.14% 2,334
Increase of 1.0% per annum 4.71% 8,568 4.89% 10,004
Decrease of 1.0% per annum (5.47%) (9,948) n/a n/a
Life expectancy
Increase of 1 year 4.88% 8,862 5.06% 10,355
(1) At 31 March 2022, the assumed discount rate is 2.70% (2021: 2.00%).
(2) At 31 March 2022, the assumed rate of RPI inflation is 3.70% and CPI
inflation 3.20% (2021: RPI 3.25% and CPI 2.75%). Sensitivity to an inflation
decrease of 1.0% was not calculated in the comparative period.
The sensitivities shown above are approximate. Each sensitivity considers one
change in isolation. The inflation sensitivity includes the impact of changes
to the assumptions for revaluation and pension increases.
The weighted average duration of the defined benefit obligation at 31 March
2022 is 15 years (2021: 15 years).
The life expectancy assumption at 31 March 2022 is based upon increasing the
age rating assumption by 1 year
(2021: 1 year).
Other than those specifically mentioned above, there were no changes in the
methods and assumptions used in preparing the sensitivity analysis from the
prior year.
The history of the Scheme's deficits and experience gains and losses is shown
in the following table -
2022 2021
£000 £000
Present value of funded obligation (181,759) (204,654)
Fair value of scheme asset investments 155,780 167,379
Recognised liability for defined benefit obligations (25,979) (37,275)
Actual return on scheme assets (3,504) 2,900
Actuarial gains due to changes in demographic assumptions 1,767 6,727
Actuarial (gains) / losses due to changes in financial assumptions (13,476) 12,280
14 Ordinary share capital
Ordinary shares of 5 pence each -
Number
of shares £000
Issued and fully paid at 31 March 2021 73,419,193 3,671
Issued and fully paid at 31 March 2022 73,419,193 3,671
There are 15,974 vested shares outstanding in respect of a buyout award
granted to a former Director of the Company. These are yet to be issued.
There are 1,517,376 potential share options outstanding under the performance
share plan at 31 March 2022 (2021: 133,000). The 133,000 share options
outstanding at 31 March 2021 failed to vest on 31 July 2021 and hence lapsed.
15 Cash generated from operations
2022 2021
£000 £000
Profit for the year 5,799 7,412
Adjustments for -
Pension scheme contributions net of costs settled by the Company (3,258) (2,179)
Pension scheme costs settled by the Scheme 569 910
Depreciation charge 6,825 5,774
Amortisation charge 203 206
Exceptional gain in respect of retirement benefits (854) (6,458)
Conversion of COVID-19 government support loan to grant (2,087) -
Profit on business disposal (693) (1,250)
Loss on disposal of other plant and equipment - 10
Loss on disposal of intangible non-current assets - 5
Cash flow relating to provision for site closure costs - (23)
Share-based payment charge 73 1
Financial income (77) (42)
Financial expense 3,066 2,701
Taxation 809 457
Operating cash flow before changes in working capital 10,375 7,524
Changes in working capital
(Increase) / decrease in inventories (3,816) 768
Increase in contract assets (4,708) (1,492)
Decrease / (increase) in trade and other receivables 42 (308)
Increase in trade and other payables 4,549 864
(Decrease) / increase in contract liabilities 338 3,846
Cash generated from operations 6,780 11,202
16 Post balance sheet events
On 29 April 2022, subsequent to balance sheet date, the Group entered into a
sale and leaseback agreement for a Technical Plastics manufacturing site at
Tucson, Arizona, USA. The transaction is expected to complete in July 2022
for a purchase price of $2.95 million less costs of $0.2 million. A lease term
of nine years has been agreed and grants the Group the right to cancel any
time after three years, provided twelve months' notice is given. At 31 March
2022 there is no reasonable certainty that the Group will exercise the break
clause. The Group expects to recognise a profit on disposal in respect to the
site of £0.6 million in the year ending 31 March 2023.
Information for shareholders
Reconciliation of non-GAAP financial measures
2022 2021
Notes £000 £000
Profit for the period 5,799 7,412
Add back: profit on discontinued operations, net of tax 4 (693) (1,198)
Statutory profit after tax from continuing operations 5,106 6,214
Add back: Income tax expense from continuing operations 4 809 457
Profit before tax from continuing operations 5,915 6,671
Add back: Net financing charge from continuing operations 2,989 2,659
Operating profit from continuing operations 8,904 9,330
Less: Exceptional items from continuing operations 6 (721) (4,490)
Operating profit before exceptional items from continuing operations 8,183 4,840
Less: COVID related US government grant income (2,087) -
Underlying operating profit from continuing operations 6,096 4,840
Add back: Amortisation of intangible assets from continuing operations 203 206
Underlying earnings before interest, tax and amortisation (EBITA) from 6,299 5,046
continuing operations
Add back: Depreciation of property, plant and equipment from continuing 6,825 5,774
operations
Underlying earnings before interest, tax, depreciation and amortisation 13,124 10,820
(EBITDA) from continuing operations
Profit before tax from continuing operations 5,915 6,671
Less: Exceptional items from continuing operations 6 (721) (4,490)
Less: COVID related US government grant income (2,087) -
Underlying profit before tax from continuing operations 3,107 2,181
Income tax expense from continuing operations 4 809 457
Add back: Exceptional tax expense from continuing operations - -
Group underlying tax expense from continuing operations 809 457
Group statutory effective tax rate from continuing operations 13.7% 6.9%
Group underlying effective tax rate from continuing operations 26.0% 21.0%
Cash at bank and in hand 12,347 15,485
Loans and borrowings - current (2,948) (5,084)
Loans and borrowings - non-current (41,804) (37,997)
Net debt (32,405) (27,596)
Add back: Lease liabilities 10,870 7,055
Net debt excluding lease liabilities (21,535) (20,541)
Information on consolidated statement of cash flows
Net cash from operating activities 2,969 8,397
Less: Net cash used in operating activities from discontinued operations - 52
Net cash from operating activities from continuing operations 2,969 8,449
Net cash used in investing activities (4,149) (6,006)
Less: Net cash from investing activities from discontinued operations 5 (693) (1,250)
Net cash used in investing activities from continuing operations (4,842) (7,256)
Net cash (used in) / from financing activities (2,493) 5,050
Less: Net cash used in financing activities from discontinued operations - -
Net cash (used in) / from financing activities from continuing operations (2,493) 5,050
Glossary
COMPOUND ANNUAL GROWTH RATE ("CAGR") The geometric progression ratio that provides a constant rate of return over a
time period
CONSTANT CURRENCY Retranslated at the prior year's average exchange rate. Included to explain
the effect of changing exchange rates during volatile times to assist the
reader's understanding
GROUP CAPITAL EXPENDITURE 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
OPERATIONAL GEARING Ratio of fixed overheads to sales
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 ITEMS Operating profit adjusted to exclude all exceptional items
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