REG - Carclo plc - Interim Report and Accounts 30 September 2024
05/12/2024 07:00
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RNS Number : 8782O Carclo plc 05 December 2024
Carclo plc
("Carclo" or the "Group")
Interim Report and Accounts
Half-year results for the six months ended 30 September 2024
Carclo plc, a global leader in high-precision components with comprehensive,
end-to-end manufacturing capabilities, announces its results for the six
months ended 30 September 2024 ('HY25'). With expertise spanning mould design,
automation, production, assembly, and printing, Carclo supports critical
growth sectors, particularly life sciences, aerospace, and optics, with
tailored, precision solutions.
Key Achievements:
Carclo plc has made substantial progress in HY25, with strategic execution
across operational efficiency, profitability, and restructuring initiatives,
all aligned with our planned objectives. Key achievements include:
Health & Safety Excellence:
· Significant achievement in health & safety across all
operations, with total incident rate reduced by 43.0% compared to HY24.
Financial Highlights:
· Revenue Performance
Revenue aligned with expectations at £61.0 million (HY24: £66.9 million),
marking a decrease of 8.9% (7.4% at constant currency) due to strategic exits
from non-scalable business, as outlined in the 2024 full-year results.
· Profitability Gains
Profitability improved on reduced revenue, with operational efficiencies
yielding a higher underlying return on sales, increasing to 5.7% from 3.3% in
HY24.
· Operating Profit
Underlying operating profit from continuing operations rose to £3.4 million
(HY24: £2.2 million), reflecting an increase of £1.5 million on a constant
currency basis.
· Exceptional Costs and Cash Management
Net exceptional costs in the period were reduced to £1.0 million (HY24: £2.1
million), with £1.3 million for refinancing of the Group's bank debt
facilities (expected to complete in Q4 FY25) and a net £0.3 million credit
following completion of the Tucson site closure. Exceptional costs resulted in
a net cash outflow of £1.9 million, which is below anticipated restructuring
plan expenses.
Operational Achievements:
· Efficiency and Cost Management
Operational performance was elevated through increased machine utilisation and
effective cost control measures, with improved contribution margins supporting
enhanced underlying operating profit.
· Margin Improvements
Manufacturing contribution margins improved significantly, more than
offsetting the decrease in revenue and driving a stronger underlying return on
sales.
Strategic Initiatives:
· Restructuring Plan Execution
Carclo continues to execute its turnaround plan, successfully increasing
profitability despite planned reductions in revenue and a focus on core,
scalable operations.
· Debt and Cash Flow
Cash management remained strong through disciplined working capital management
and capital expenditure control. The refinancing of the Group's debt
facilities is expected to complete in Q4 FY25.
· Debt Reduction
Net debt, inclusive of IFRS16 lease liabilities, was lowered to £25.2 million
(31 March 2024: £29.5 million), reducing the Trailing Twelve Months ("TTM")
net debt-to-underlying EBITDA ratio to 1.6 times (31 March 2024: 2.0 times).
Outlook:
The markets for our businesses are stable, this along with our solid HY25
performance, provide the Board with increasing confidence in meeting its
full-year expectations. The strategic changes underway are building a strong
foundation for sustained performance improvement and we are confident that we
remain on track to achieve our long-term strategic goals.
Commenting on the results, Frank Doorenbosch, Chief Executive Officer said:
"I'm pleased to report the meaningful progress achieved by the Carclo team in
revitalising our operations and focusing on factory specialisation. Through
continued execution of our restructuring plan, Carclo has reinforced its
foundation, ensuring long-term resilience and positioning the business for
sustainable growth. Our operational shifts-guided by efficiency,
specialisation, and valued partnerships with our key customers-act as a
catalyst to elevate Carclo's performance and support sustainable value
creation. With a steadfast commitment to innovation and excellence, we are
confident in Carclo's trajectory and growth potential."
The key financial performance measures for the period are as follows:
HY25 HY24
£000 £000
Continuing operations
Revenue 60,957 66,921
Underlying operating profit(1) 3,445 2,232
Exceptional items (973) (2,095)
Operating profit 2,472 137
Underlying earnings / (loss) per share - basic(1) 0.7p (0.5p)
Basic loss per share (0.8p) (3.0p)
£000 £000
Cash generated from operations 7,255 12,882
HY25 HY24
£000 £000
Net debt excluding lease liabilities 16,844 17,838
Net debt 25,249 29,500
IAS 19 retirement benefit liability 37,878 36,683
Continuing operations
Revenue HY25 HY24
£000 £000
CTP 53,968 60,949
Speciality 6,989 5,972
Total 60,957 66,921
Underlying operating profit(1)
CTP 4,447 3,504
Speciality 1,386 1,185
Segment total 5,833 4,689
Central (2,388) (2,457)
Total 3,445 2,232
Notes: ((1)) Underlying results are those calculated before exceptional items.
A reconciliation to statutory figures is set out below.
Reconciliation of non-GAAP financial measures - HY25
£000 Underlying Exceptional items Statutory
CTP operating profit 4,447 378 4,825
Speciality operating profit 1,386 - 1,386
Central costs (2,388) (1,351) (3,739)
Operating profit / (loss) 3,445 (973) 2,472
Net finance expense (2,563) - (2,563)
Profit / (loss) before tax 882 (973) (91)
Income tax expense (376) (140) (516)
Profit / (loss) for the period 506 (1,113) (607)
Basic earnings / (loss) per share (pence) 0.7p (1.5)p (0.8)p
Enquiries
Please contact:
Frank Doorenbosch - Chief Executive Officer, Carclo plc +44 (0)20 8685 0500
Eric Hutchinson - Chief Financial Officer, Carclo plc +44 (0)20 8685 0500
Forward-looking statements
Certain statements made in these reports & 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 outcomes to differ
materially from those expected.
Alternative performance measures
Alternative performance measures are defined in the financial review of the
Annual Report and Accounts (ARA) for the year ended 31 March 2024, with a
reconciliation to statutory figures included in this Half Year Report to aid
the user of these accounts. The Directors believe that alternative performance
measures provide a more useful comparison of business trends and performance.
The term 'underlying' is not defined under IFRS and may not be comparable with
similarly titled measures used by other companies.
Overview of Results
The Group continues to successfully execute its turnaround plan, achieving
increased profitability despite a planned reduction in revenue, as outlined in
the full-year 2024 results. Revenue decreased in line with expectations to
£61.0 million (HY24: £66.9 million), representing a decline of 8.9% (7.4% at
constant currency).
Revenue HY25 HY24
£000 £000
CTP Design & Engineering 7,173 11,317
CTP Manufacturing Solutions 46,795 49,632
CTP Total Revenue 53,968 60,949
Speciality 6,989 5,972
Total 60,957 66,921
Underlying operating profit
CTP 4,447 3,504
Speciality 1,386 1,185
Segment total 5,833 4,689
Central (2,388) (2,457)
Total 3,445 2,232
% %
Underlying return on sales 5.7 3.3
Carclo's operational performance continued to improve in HY25, driven by
enhanced machine utilisation and rigorous cost control measures.
These initiatives resulted in improved manufacturing contribution margins,
which more than offset the planned revenue decline. Underlying return on sales
increased to 5.7%, up from 3.3% in HY24.
Underlying operating profit from continuing operations rose to £3.4 million
(HY24: £2.2 million), reflecting an increase of £1.5 million on a constant
currency basis.
Exceptional costs in the period reduced to £1.0 million (HY24: £2.1
million), with £1.3 million primarily attributed to refinancing the Group's
bank debt facilities, expected to complete in Q4 FY25. Exceptional costs
resulted in a net cash outflow of £1.9 million, which is below anticipated
restructuring plan expenses.
Net finance costs remained flat at £2.6 million (HY24: £2.6 million). This
included £0.9 million (HY24: £0.8 million) in imputed net interest on the
defined benefit pension liability.
The Group reported a pre-tax loss of £0.1 million (HY24: £2.5 million loss).
The income tax expense was £0.5 million (HY24: £0.3 million credit), and the
underlying tax expense was £0.4 million (HY24: £0.1 million credit). The tax
charge is driven by increased taxable profits in the US and India.
Underlying earnings per share recorded a profit of 0.7 pence (HY24: 0.5 pence
loss), while statutory earnings per share also improved to a 0.8 pence loss
(HY24: 3.0 pence loss).
Return on capital employed (ROCE) increased to 17.5% (HY24: 8.6%),
underscoring continued discipline in capital expenditure and working capital
management. As a result, the fixed asset utilisation ratio improved to 3.5
times (HY24: 3.2 times).
Segment and Division Overview:
Carclo has strategically realigned its operations by integrating Aerospace and
Optics into the newly formed Speciality Division, enhancing operational
efficiency and financial resilience. This move leverages Aerospace's
established expertise and leadership to strengthen Optics' focus on
short-series, value-added solutions in niche markets.
In HY25, CTP continued to drive innovation in diagnostics and drug delivery,
while the Speciality Division delivered progress in precision aerospace
components and advanced automotive and LED lighting solutions. Together, these
divisions are aligned to Carclo's long-term objectives, supporting sustained
growth and value creation.
CTP Division:
· Revenue and Restructuring
CTP revenues decreased by 11.5% to £54.0 million (HY24: £60.9 million),
impacted by currency translation of £1.0 million and the planned exit from
small series, non-scalable business in the US, which resulted in site
closures. The division's focus on factory specialisation has driven
operational efficiency.
· Manufacturing Solutions
Revenue from manufacturing solutions decreased to £46.8 million (HY24: £49.6
million) due to strategic exits from short-run non-core business lines.
Growth, adjusted for strategic exits from the Derry and Tucson facilities in
this segment, amounted to £4.2 million, with increased machine utilisation
and strengthening of the European businesses supporting margin improvement.
· Return on Sales
CTP return on sales improved to 8.2% (HY24: 5.7%), reflecting operational
improvements and overhead expense reductions.
Speciality Division:
The newly formed Speciality Division focuses on critical components for the
Aerospace and advanced optics markets. The key product groups serving these
markets are:
· Cables & Wires and Machined Critical Components
Delivering precision-engineered solutions for Aerospace applications, ensuring
reliability and performance in demanding environments.
· Light & Motion
Providing innovative LED lighting solutions including aftermarket for
automotive lighting, Fresnel lenses for diverse applications, and visual aids
under the Coil brand for eye care optics.
In HY25, the Speciality Division achieved revenue growth of 17.0% to £7.0
million, reflecting robust demand in Aerospace and a return to growth for
Light & Motion. The success of the division was underpinned by disciplined
cost management, maintaining a return on sales of 19.8% and which solidified
its positive contribution to Carclo's overall performance.
Central costs:
Central costs were well-controlled during HY25, achieving a slight reduction
to £2.4 million (HY24: £2.5 million). This reflects Carclo's continued focus
on cost discipline and efficiency across all group functions, ensuring that
resources are aligned with strategic priorities while supporting the delivery
of operational and financial improvements.
Carclo 2025 Strategy
The Carclo 2025 strategy, 'Focus and Value,' remains the cornerstone of our
efforts to drive improved returns and cash flow. This plan aims to reset our
operational model, restore margins, and achieve a medium-term target of a
through-cycle return on capital employed (ROCE) of 25%.
Key elements of the Carclo 2025 strategy include:
· Operational Excellence: Enhancing efficiency and customer service
across the business by embedding best practices and process improvements.
· Asset Utilisation: Maximising the use of our asset base,
particularly within the CTP division, through targeted near-term investments
that deliver continuous improvements and more predictable, higher returns.
· Strategic Growth: Prioritising growth in less capital-intensive
areas to optimise value creation and financial resilience.
· One Carclo Culture: Fostering a collaborative and entrepreneurial
culture across the organisation, reinforcing Carclo as a destination for
talent and career development.
We have made excellent progress, particularly in improving the efficiency of
our US operations and sustaining operational improvements in Europe.
Additionally, our disciplined approach to cash management has maintained
strong cash generation, enabling further reductions in the Group's debt
burden.
Board changes
Natalia Kozmina was appointed as a Non-Executive Director effective 22 April
2024. She also joined the Audit & Risk, Nomination and Remuneration
Committees on this date. She took over as Chair of the Remuneration
Committee on 1 May 2024. There have been no Board leavers.
Eric Hutchinson joined the Board as a Non-Executive Director in 2021 and in
2023 took up the role of Chief Financial Officer and Executive Director to
advance the turnaround and put the Group into a more resilient financial
position. With these being substantially achieved, Eric has informed the
Board of his intention to retire in 2025; the Company will provide a further
update on the appointment of his successor in due course.
Financial Position
Net debt excluding lease liabilities decreased by £1.4 million during the
first half to £16.8 million (31 March 2024: £18.3 million). Total net debt
decreased by £4.2 million to £25.2 million (31 March 2024: £29.5 million).
Cash was £7.3 million (31 March 2024: £6.0 million).
Cash
Net cash inflow from operating activities during the first half was £3.4
million (HY24: net cash inflow £8.5 million), comprising underlying EBITDA of
£7.1 million (HY24: £6.2 million), net working capital inflows of £2.0
million (HY24: inflow £7.0 million), net pension contributions of £1.1
million (HY24: £1.4 million), interest costs of £2.1 million (HY24: £2.2
million), taxes of £0.6 million (HY24: £0.7 million), exceptional costs of
£1.9 million (HY24: £0.4 million).
Net cash outflow from investing activities during the first half was
negligible (HY24: outflow £1.7 million) being £0.3 million interest received
less £0.3 million capital expenditure.
Net cash outflow from financing activities during the first half was £1.6
million (HY24: outflow £10.0 million), comprising £2.1 million repayment of
lease liabilities (HY24: £2.1 million) and net drawings of other borrowings
£0.5 million (HY24: £7.9 million repayment).
A foreign exchange loss on cash of £0.4 million (HY24: negligible gain),
coupled with the £1.8 million net cash inflow (HY24: net cash outflow £3.2
million) resulted in an overall £1.4 million increase in cash during the
first half (HY24: reduction £3.2 million).
Debt
Gross debt decreased by £2.8 million during the first half of the financial
year to £32.6 million (31 March 2024: £35.4 million). It was reduced by
£1.0 million repayments of term loans, £2.1 million repayments of lease
liabilities, £0.3 million from termination lease debt and £1.1 million
favourable foreign exchange movements. It was increased by £1.7 million drawn
on the revolving credit facility.
The debt facilities available to the Group at 30 September 2024 comprise term
loans of £22.3 million (31 March 2024: £24.0 million), denominated in
sterling 8.2 million, in US Dollar 13.3 million and in Euro 4.9 million. Of
the sterling loan, £1.3 million will be amortised by 31 March 2025, a further
£3.8 million in the period between 31 May 2025 and 30 November 2025, before
the balance, along with that of the US Dollar and the Euro loan balances
become payable by the termination date, 31 December 2025. The facility also
includes a £3.5 million revolving credit facility, denominated in sterling,
maturing 31 December 2025 (31 March 2024: £3.5 million).
The revolving credit facility had an amount drawn of £2.0 million at 30
September 2024 (31 March 2024: £0.3 million).
Refinancing
The group is currently refinancing its debt facilities to obtain new committed
facilities for a three-year term. The funding is to facilitate the change
strategy for Carclo to enable the elevation of future performance by funding
investment in the business automation to achieve greater efficiency and
thereby increase capacity.
Pensions
The statutory accounting method of valuing the Group pension scheme deficit
under IAS 19 resulted in net liability of £37.9 million at 30 September 2024
(31 March 2024: £37.2 million). Remeasurement gains during the first half
of the financial year were £1.9 million, due mainly to a change in the
discount rate from 4.85% to 4.95%. These were offset by £2.9 million adverse
asset return experience over the period due to the Scheme's liability-driven
investments being designed to hedge the larger actuarial liabilities and
therefore being over-hedged relative to the IAS 19 liabilities and due to
falls in the Scheme's growth assets, offset partially by an increase in
corporate bond spreads. Further, a GMP equalisation past service cost of
£1.0 million was recognised as an exceptional item in the period to 30
September 2023.
Over the period, the Group's contributions to the scheme were £1.5 million
(HY24: £1.8 million).
The most recent triennial actuarial valuation of the Group pension scheme was
carried out as at 31 March 2021. This reported a significantly reduced
actuarial technical deficit of £82.8 million (previously £90.4 million based
upon the 31 March 2018 valuation). There is a Triennial Revaluation as at 31
March 2024 underway which is expected to conclude by 31 March 2025.
Dividend
Under the terms of its financing agreements the Company is not permitted to
make a dividend payment to shareholders up to the period ending 31 December
2025.
Outlook
The Life Sciences market is expected to remain stable in the near term, with
growth anticipated to outpace GDP over the medium term. The aerospace market
is also expected to remain robust. The recent accelerated and cost-effective
closure of the Tucson site, combined with steady progress in our US
restructuring efforts, further bolsters our operational foundation in our CTP
Division.
In the Speciality Division, we have strengthened our position in aerospace,
particularly in precision machined components, providing opportunities for
future market share growth.
These factors, along with our solid HY25 performance, provide the Board with
increasing confidence in meeting its full-year expectations. The strategic
changes underway are building a strong foundation for sustained performance
improvement and we are confident that we remain on track to achieve our
long-term strategic goals.
Principal Risks and Uncertainties
In the Annual Report for the year ended 31 March 2024 Carclo provided a
detailed review of the principal risks faced by the Group and how these risks
were being managed. The Group continues to face and proactively manage the
risks and uncertainties in our business and, whilst the Board considers that
these principal risks and uncertainties have not materially changed since the
publication of the 2024 Annual Report, it is worth noting that the following
risks remain particularly relevant for the remainder of the financial year:
· Given the current global geopolitical environment, supply chain
and political disruption risk is enhanced putting pressure on both material
and utility supply and also demand for products.
· Whilst customer concentration continues to be a principal risk,
there continues to be a close partnership between Carclo and its blue-chip
customers.
· Global interest rates remain high which continues to demand a
significant cash outflow.
Mitigating actions being taken include:
· Strengthening procurement management to improve supply chain
logistics and lower input costs;
· Pursuing operating efficiencies to lower the cost of
production;
· Increasing asset utilisation to create additional capacity for
customers who demand higher volumes of existing products;
· Increasing flexibility to transfer products between manufacturing
sites;
· Marketing to win new customers and;
· Focus on debt reduction to mitigate the interest burden that
faces the Group.
Going Concern
These interim financial statements have been prepared on a going concern basis
as detailed in Note 1. The Board's forecasts show that the Group can operate
within its available facilities and meet its covenants as they fall due.
Responsibility Statement
We confirm to the best of our knowledge:
a. the condensed consolidated set of financial statements has been
prepared in accordance with IAS 34 Interim Financial Reporting;
b. the interim management report includes a fair review of the
information required by DTR 4.2.7R (indication of important events during the
first six months and description of principal risks and uncertainties for the
remaining six months of the year); and
c. the interim management report includes a fair review of the
information required by DTR 4.2.8R (disclosure of related party transactions
and changes therein).
By order of the Board,
Frank Doorenbosch Eric Hutchinson
Chief Executive Officer Chief Financial Officer
4 December 2024
Glossary of Terms
CASH CONVERSION RATE Cash generated from operations divided by EBITDA as defined below
CONTRIBUTION MARGIN Key performance indicator used by management internally, defined as
manufacturing revenue less direct costs
CONSTANT CURRENCY Prior period translated at the current period's average exchange rate.
Included to explain the effect of changing exchange rates during volatile
times to assist the reader's understanding
EBIT Profit before interest and tax
EBITDA Profit before interest, tax, depreciation, and amortisation
FIXED ASSET UTILISATION RATIO Trailing twelve months (defined below) revenue from continuing operations
divided by tangible fixed assets at period end date
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 CASH FLOW Cash generated from operations, add back pension contributions net of pension
administration costs and cash from exceptional items, less total capex and net
interest paid
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 revenue
RETURN ON CAPITAL EMPLOYED ("ROCE") Trailing twelve months (defined below) underlying operating profit for the
Group as a percentage of assets employed, defined as working capital plus
tangible assets at period end date
TRAILING TWELVE MONTHS ("TTM") Previous twelve months from period end date. Used to present a more
meaningful comparative
UNDERLYING Adjusted to exclude all exceptional items
UNDERLYING EBIT Profit before interest and tax adjusted to exclude all exceptional items
UNDERLYING EBITDA Profit before interest, tax, depreciation, and amortisation adjusted to
exclude all exceptional items
UNDERLYING EARNINGS PER SHARE Earnings per share adjusted to exclude all exceptional items
UNDERLYING OPERATING PROFIT Operating profit adjusted to exclude all exceptional items
UNDERLYING PROFIT BEFORE TAX Profit before tax adjusted to exclude all exceptional items
UNDERLYING RETURN ON SALES Underlying operating profit, as defined above, as a percentage of revenue from
continuing operations
Condensed consolidated income statement
Notes Six months ended Six months ended Year ended
30 September 30 September 31 March
2024 2023 2024
Unaudited Unaudited Audited
£000 £000 £000
Continuing operations:
Revenue 4 60,957 66,921 132,672
Underlying operating profit 3,445 2,232 6,647
Exceptional items 5 (973) (2,095) (4,857)
Operating profit 4 2,472 137 1,790
Finance revenue 6 279 283 424
Finance expense 6 (2,842) (2,918) (6,011)
Loss before tax (91) (2,498) (3,797)
Income tax (expense) / credit 7 (516) 330 498
Loss for the period (607) (2,168) (3,299)
Attributable to:
Equity holders of the parent company (607) (2,168) (3,299)
Non-controlling interests - - -
(607) (2,168) (3,299)
Loss per ordinary share 8
Basic (0.8) p (3.0) p (4.5)p
Diluted (0.8) p (3.0) p (4.5)p
Condensed consolidated statement of comprehensive income
Notes Six months ended Six months ended Year ended
30 September 30 September 31 March
2024 2023 2024
Unaudited Unaudited Audited
£000 £000 £000
Loss for the period (607) (2,168) (3,299)
Other comprehensive (expense) / income:
Items that will not be reclassified to the income statement
Remeasurement losses on defined benefit scheme 12 (905) (1,719) (2,668)
Total items that will not be reclassified to the income statement (905) (1,719) (2,668)
Items that are or may in the future be classified to the income statement
Foreign exchange translation differences (2,018) (696) (2,387)
Net investment hedge 728 (94) 332
Deferred tax arising (48) 1 33
Total items that are or may in future be classified to the income statement (1,338) (789) (2,022)
Other comprehensive expenses net of income tax (2,243) (2,508) (4,690)
Total comprehensive expense for the period (2,850) (4,676) (7,989)
Attributable to:
Equity holders of the parent (2,850) (4,676) (7,989)
Non-controlling interests - - -
Total comprehensive expense for the period (2,850) (4,676) (7,989)
Condensed consolidated statement of financial position
Notes 30 September
30 September 2023 31 March
2024 Unaudited 2024
Unaudited £000 Audited
£000 £000
Non-current assets
Intangible assets 10 21,476 23,136 22,197
Property, plant and equipment 11 35,700 43,776 40,071
Deferred tax assets 1,084 1,732 864
Total non-current assets 58,260 68,644 63,132
Current assets
Inventories 11,678 12,510 11,289
Contract assets 1,531 3,503 1,663
Trade and other receivables 18,465 19,578 18,800
Cash and cash deposits 14 7,344 7,185 5,974
Current Tax assets - - 82
Total current assets 39,018 42,776 37,808
Total assets 97,278 111,420 100,940
Current liabilities
Loans and borrowings 15 7,571 6,102 6,753
Trade payables 9,298 11,401 10,005
Other payables 10,371 8,878 7,485
Current tax liabilities 410 93 564
Contract liabilities 2,565 4,364 2,998
Provisions 111 96 721
Total current liabilities 30,326 30,934 28,526
Non-current liabilities
Loans and borrowings 15 25,022 30,583 28,678
Deferred tax liabilities 3,113 4,693 2,890
Contract liabilities - 1,458 -
Trade and other payables 102 124 -
Retirement benefit obligations 12 37,878 36,683 37,186
Total non-current liabilities 66,115 73,541 68,754
Total liabilities 96,441 104,475 97,280
Net assets 837 6,945 3,660
Equity
Ordinary share capital issued 17 3,671 3,671 3,671
Share premium 7,359 7,359 7,359
Translation reserve 5,883 8,454 7,221
Retained earnings (16,050) (12,513) (14,565)
Total equity attributable to equity holders of the Company 863 6,971 3,686
Non-controlling interests (26) (26) (26)
Total equity 837 6,945 3,660
Condensed consolidated statement of changes in equity
Attributable to equity holders of the Company
Share Share Translation Retained Total Non-controlling Total
capital premium reserve earnings £000 interests equity
£000 £000 £000 £000 £000 £000
Current half year period - unaudited
Balance at 1 April 2024 3,671 7,359 7,221 (14,565) 3,686 (26) 3,660
Loss for the period - - - (607) (607) - (607)
Other comprehensive (expense) / income -
Foreign exchange translation differences - - (2,018) - (2,018) - (2,018)
Net investment hedge - - 728 - 728 - 728
Remeasurement losses on defined benefit scheme - - - (905) (905) - (905)
Taxation on items above - - (48) - (48) - (48)
Total comprehensive expense for the period - - (1,338) (1,512) (2,850) - (2,850)
Transactions with owners recorded directly in equity -
Share based payments - - - 27 27 - 27
Balance at 30 September 2024 3,671 7,359 5,883 (16,050) 863 (26) 837
Prior half year period - unaudited
Balance at 1 April 2023 7,359 9,243 (8,641) 11,632 (26) 11,606
3,671
Loss for the period - - - (2,168) (2,168) - (2,168)
Other comprehensive (expense) / income -
Foreign exchange translation differences - - (696) - (696) - (696)
Net investment hedge - - (94) - (94) - (94)
Remeasurement losses on defined benefit scheme - - - (1,719) (1,719) - (1,719)
Taxation on items above - - 1 - 1 - 1
Total comprehensive expense for the period - - (789) (3,887) (4,676) - (4,676)
Transactions with owners recorded directly in equity -
Share based payments - - - 15 15 - 15
Balance at 30 September 2023 3,671 7,359 8,454 (12,513) 6,971 (26) 6,945
Attributable to equity holders of the Company
Share Share Translation Retained Total Non-controlling Total
capital premium reserve earnings £000 interests equity
£000 £000 £000 £000 £000 £000
Prior year period - audited
Balance at 1 April 2023 3,671 7,359 9,243 (8,641) 11,632 (26) 11,606
Loss for the year - - - (3,299) (3,299) - (3,299)
Other comprehensive (expense) / income -
Foreign exchange translation differences - - (2,387) - (2,387) - (2,387)
Net investment hedge - - 332 - 332 - 332
Remeasurement losses on defined benefit scheme - - - (2,668) (2,668) - (2,668)
Taxation on items above - - 33 - 33 - 33
Total comprehensive expense for the period - - (2,022) (5,967) (7,989) - (7,989)
Transactions with owners recorded directly in equity -
Share based payments - - - 43 43 - 43
Balance at 31 March 2024 3,671 7,359 7,221 (14,565) 3,686 (26) 3,660
Condensed consolidated statement of cash flows
Notes 30 September 30 September 31 March
2024 2023 2024
Unaudited Unaudited Audited
£000 £000 £000
Cash generated from operations 13 7,255 12,882 18,587
Interest paid (2,051) (2,204) (4,193)
Tax paid (633) (719) (1,056)
Pension scheme contributions net of Company settled administration costs (1,187) (1,443) (2,972)
Net cash from operating activities 3,384 8,516 10,366
Cash flows from / (used in) investing activities
Proceeds from sale of intangible assets - - 212
Proceeds from sale of property, plant and equipment 65 225 -
Interest received 279 283 424
Purchase of property, plant and equipment (270) (2,142) (2,937)
Purchase of intangible assets (49) (77) (95)
Net cash from / (used in) investing activities 25 (1,711) (2,396)
Cash flows from / (used in) financing activities
Drawings on existing and new facilities 1,700 74 -
Refinancing costs capitalised (150) (50) (100)
Repayment of borrowings excluding lease liabilities (975) (7,868) (8,190)
Repayment of other loan facilities (48) (103) (192)
Repayment of lease liabilities (2,149) (2,060) (3,659)
Net cash used in financing activities (1,622) (10,007) (12,141)
Net increase / (decrease) in cash and cash equivalents 1,787 (3,202) (4,171)
Cash and cash equivalents at beginning of period 5,974 10,354 10,354
Effect of exchange rate fluctuations on cash held (417) 33 (209)
Cash and cash equivalents at end of period 14 7,344 7,185 5,974
Notes to the accounts
Basis of preparation
The condensed consolidated half year report for Carclo plc ("Carclo" or "the
Group") for the six months ended 30 September 2024 has been prepared on the
basis of the accounting policies set out in the audited accounts for the year
ended 31 March 2024 and in accordance with the Disclosure and Transparency
Rules of the UK Financial Conduct Authority and the requirements of UK adopted
International Accounting Standard 34, 'Interim Financial Reporting'.
The financial information is unaudited.
The half year report does not constitute financial statements and does not
include all the information and disclosures required for full annual
statements. It should be read in conjunction with the annual report and
financial statements for the year ended 31 March 2024 which is available
either on request from the Company's registered office, 47 Wates Way, Mitcham,
Surrey, CR4 4HR, or can be downloaded from the corporate website
www.carclo-plc.com (http://www.carclo-plc.com) .
The comparative figures for the financial year ended 31 March 2024 are not the
Company's complete statutory accounts for that financial year. Those
accounts have been reported on by the Company's auditors and delivered to the
Registrar of Companies. The report of the auditors was (i) unqualified, (ii)
did not include a reference to any matters which the auditors drew attention
by way of emphasis without qualifying their report and (iii) did not contain
statements under Section 498 (2) of the Companies Act 2006.
The half year report was approved by the Board of Directors on 4 December
2024. Copies are available from the corporate website.
The Group financial statements for the year ended 31 March 2024 have been
prepared and approved by the Directors in accordance with UK-adopted
international accounting standards.
Going concern
These interim financial statements have been prepared on the going concern
basis.
The Directors have reviewed cash flow and covenant forecasts to cover the
twelve-month period from the date of the approval of these condensed interim
financial statements considering the Group's available debt facilities and the
terms of the arrangements with the Group's bank and the Group pension scheme.
The debt facilities currently available to the Group comprise a term loan of
£22.3 million, of which £1.3 million will be amortised by 31 March 2025, a
further £3.8 million in the period between 31 May 2025 and 30 November 2025,
before the balance becomes payable by 31 December 2025. At 30 September
2024, the term loans are denominated as follows: sterling 8.2 million, US
Dollar 13.3 million and Euro 4.9 million. The facility also includes a £3.5
million revolving credit facility, denominated in sterling, maturing on 31
December 2025. The revolving credit facility had an amount drawn of £2.0
million at 30 September 2024 (31 March 2024: £0.3 million). Net debt at 30
September 2024 was £25.2 million, a significant decrease from £29.5 million
at 31 March 2024 (30 September 2023: £29.5 million).
A schedule of contributions is also in place with the pension trustees with an
agreed £3.5 million to be paid annually until 31 October 2039.
Additional contributions also agreed are 26% of any surplus of 2024/25
underlying EBITDA over £18.0 million payable from 30 June 2025 to 31 May
2026.
The Group is subject to bank facility covenant tests, as described in note 1
of the Annual Report and Accounts for the year to 31 March 2024.
The Group is subject to a number of key risks and uncertainties, as detailed
in the Principal risks and uncertainties section on pages 37 to 42 of the
Annual Report and Accounts for the year to 31 March 2024. Mitigation actions
are also considered in this section. These risks and uncertainties have been
considered in the base case and severe downside sensitivities and have been
modelled accordingly.
The base case forecast includes assumptions around sales, margins, working
capital and interest rates. The sensitivity analysis has considered the risks
facing the Group and has modelled the impact of each in turn, as well as
considering the impact of aggregating certain risk types, and shows that the
Group is able to operate within its available facilities and meet its agreed
covenants as they arise.
Severe downside sensitivities modelled included a range of scenarios modelling
the financial effects of: loss of business from discrete sites, an overall
fall in gross margin of 1% across the Group, a fall in Group revenue of 3%
matched by a corresponding fall in cost of sales of the same amount, and
interest rate risk. Under these scenarios the Group would continue to meet
minimum covenant requirements, although with minimal headroom under these
scenarios in the next twelve months. The downside testing did not allow for
the benefit of any action that could be taken by management to mitigate the
impact of the scenarios. Using the base case forecast the minimal underlying
operating profit headroom, observed on the underlying interest cover, would be
£0.8 million. This suggests that a £16.0 million drop in revenue or a 12%
drop in underlying operating profit would result in a breach of covenants.
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 and will be able to adhere to the
covenant tests to which it is subject throughout at least the twelve-month
period from the date of signing the interim financial statements. The Group is
in negotiation with lenders on the terms for the refinancing of its debt
facilities to obtain new committed facilities for a three-year term. The
funding is to facilitate the change strategy for Carclo to enable the
elevation of future performance by funding investment in the business
automation to achieve greater efficiency and thereby increase capacity.
Accordingly, these interim financial statements are prepared on a going
concern basis.
Accounting policies
The accounting policies applied in these interim financial statements are the
same as those applied in the Group's consolidated financial statements as at,
and for the year ended 31 March 2024. Certain new standards, amendments and
interpretations to existing standards have been published that are mandatory
for the Group's accounting period beginning on 1 April 2024 but they are not
expected to have a material effect on the Group's financial statements.
Accounting estimates and judgements
The preparation of the interim financial statements requires management to
make judgements, estimates and assumptions that affect the application of
accounting policies and the reported amounts of assets and liabilities, income
and expenses. In preparing these half year financial statements, the
significant judgements made by management in applying the Group's accounting
policies and the key source of estimation uncertainty were the same as those
applied to the audited consolidated financial statements as at, and for the
year ended, 31 March 2024.
Segment reporting
The Group is organised into two, separately managed, business segments - CTP
and Speciality. 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). Since 31 March
2024, the Group's Aerospace division has been combined with the Specialised
Optics business to form the Speciality segment. This move leverages
Aerospace's established expertise and leadership to strengthen Optics' focus
on short-series, value-added solutions in niche markets and will maximise
synergies for both businesses. Previously, the Specialised Optics business
was operated as part of the CTP UK business and was hence part of the CTP
segment. The prior period comparatives for 30 September 2023 and 31 March
2024 have been restated to reflect this change. There is no change to the
Group total in either period.
The CTP segment supplies value-adding engineered solutions from mould design,
automation, and production to assembly and printing, for the life science and
precision component industries. This business operates internationally in a
fast growing and dynamic market underpinned by rapid technological
development.
The Speciality segment delivers precise and durable components for the safety
and performance of aircraft manufacturing, aerospace and optical industries.
The Central costs relate to the cost of running the Group, plc and non-trading
companies.
CTP Speciality Central Group
£000 £000 £000 Total
£000
The segment results for the six months ended 30 September 2024 were as
follows:
Consolidated income statement
Continuing operations:
External revenue 53,968 6,989 - 60,957
External expenses (49,521) (5,603) (2,388) (57,512)
Underlying operating profit / (loss) 4,447 1,386 (2,388) 3,445
Exceptional operating items 378 - (1,351) (973)
Operating profit / (loss) 4,825 1,386 (3,739) 2,472
Net finance expense (2,563)
Income tax expense (516)
Loss for the period (607)
Consolidated statement of financial position
Segment assets 87,420 8,739 1,119 97,278
Segment liabilities (29,245) (2,738) (64,458) (96,441)
Net assets / (liabilities) 58,175 6,001 (63,339) 837
Other segmental information
Capital expenditure on property, plant and equipment 249 34 - 283
Capital expenditure on computer software - - 49 49
Depreciation 3,304 206 51 3,561
Reversal of impairment of property, plant and equipment 143 - - 143
Amortisation of intangibles 5 6 33 44
Disaggregation of revenue
Major products/service lines
Manufacturing Solutions 46,795 6,989 - 53,784
Design & Engineering 7,173 - - 7,173
53,968 6,989 - 60,957
Timing of revenue recognition
Products transferred at a point in time 46,795 6,989 - 53,784
Products and services transferred over time 7,173 - - 7,173
53,968 6,989 - 60,957
Restated* Central Group
Restated* Speciality £000 Total
CTP £000 £000
£000
The segment results for the six months ended 30 September 2023 were as
follows:
Consolidated income statement
Continuing operations:
External revenue 60,949 5,972 - 66,921
Expenses (57,445) (4,787) (2,457) (64,689)
Underlying operating profit / (loss) 3,504 1,185 (2,457) 2,232
Exceptional operating items (841) (50) (1,204) (2,095)
Operating profit / (loss) 2,663 1,135 (3,661) 137
Net finance expense (2,635)
Income tax credit 330
Loss for the period (2,168)
Consolidated statement of financial position
Segment assets 100,026 8,933 2,461 111,420
Segment Liabilities (37,789) (2,373) (64,313) (104,475)
Net assets / (liabilities) 62,237 6,560 (61,852) 6,945
Other segmental information
Capital expenditure on property, plant and equipment 3,124 608 154 3,886
Capital expenditure on computer software - - 77 77
Depreciation 3,609 226 41 3,876
Impairment of property, plant and equipment 1,006 - - 1,006
Amortisation of intangible assets 10 40 35 85
Disaggregation of revenue
Major products/service lines
Manufacturing Solutions 49,632 5,967 - 55,599
Design & Engineering 11,317 5 - 11,322
60,949 5,972 - 66,921
Timing of revenue recognition
Products transferred at a point in time 49,632 5,967 - 55,599
Products and services transferred over time 11,317 5 - 11,322
60,949 5,972 - 66,921
* Since 31 March 2024, the Group's Aerospace division has been combined with
the Specialised Optics business to form the Speciality segment. Previously,
the Specialised Optics business was part of the CTP segment. Prior period
comparatives have been restated to reflect this change.
Restated* Restated* Central Group
CTP Speciality £000 Total
£000 £000 £000
The segment results for the year ended 31 March 2024 were as follows:
Consolidated income statement
Continuing operations:
External revenue 121,773 10,899 - 132,672
Expenses (112,676) (8,880) (4,469) (126,025)
Underlying operating profit / (loss) 9,097 2,019 (4,469) 6,647
Exceptional operating items (3,014) (295) (1,548) (4,857)
Operating profit / (loss) 6,083 1,724 (6,017) 1,790
Net finance expense (5,587)
Income tax credit 498
Loss for the period (3,299)
Consolidated statement of financial position
Segment assets 91,014 8,241 1,685 100,940
Segment liabilities (31,018) (2,449) (63,813) (97,280)
Net assets / (liabilities) 59,996 5,792 (62,128) 3,660
Other segmental information
Capital expenditure on property, plant and equipment 6,701 620 166 7,487
Capital expenditure on computer software - - 95 95
Depreciation 7,158 519 92 7,769
Impairment of property, plant and equipment 1,892 - - 1,892
Amortisation of intangible assets 93 - 70 163
Disaggregation of revenue
Major products/service lines
Manufacturing Solutions 100,203 10,899 - 111,102
Design & Engineering 21,570 - - 21,570
121,773 10,899 - 132,672
Timing of revenue recognition
Products transferred at a point in time 100,372 10,899 - 111,271
Products and services transferred over time 21,401 - - 21,401
121,773 10,899 - 132,672
* Since 31 March 2024, the Group's Aerospace division has been combined with
the Specialised Optics business to form the Speciality segment. Previously,
the Specialised Optics business was part of the CTP segment. Prior period
comparatives have been restated to reflect this change.
Exceptional items
Six months ended Six months ended Year ended
30 September 30 September 31 March
2024 2023 2024
£000 £000 £000
Continuing operations
Rationalisation credit / (costs) 310 (817) (3,360)
Refinancing costs (1,284) (154) (433)
Settlement credit in respect to legacy claims 1 292 284
Past service cost in respect to retirement benefits - (1,020) (1,020)
Net costs arising from cancellation of future supply agreement - (396) (188)
Doubtful debt and related inventory provision - - (140)
Exceptional items recognised in operating profit (973) (2,095) (4,857)
The cash element of exceptional items is a net outflow of £1.9 million (HY24:
£0.4 million, FY24 £0.6 million).
Rationalisation credit £0.3 million from continuing operations during the six
months ended 30 September 2024 relates to the restructuring of the Group.
This is primarily costs and credits arising from the USA facility closures as
part of the turnaround plan and includes the following: £0.5 million
employee related costs for severance and retention bonuses, £0.6 million
other closure related costs including costs to relocate machinery and
equipment, less £1.0 million of balance sheet credits. The credits are
£0.7 million provisions and liabilities released following surrender of the
leased properties at the Tucson, Arizona facility and £0.3 million for the
reversal of asset provisions booked at 31 March 2024 no longer required (£0.2
million plant and equipment, see note 11 and £0.1 million inventory
provision). Prior period costs were similar in nature, including a combination
of employee redundancy costs, site closure provisions and asset impairments.
During the period to 30 September 2024, the Group has incurred £1.3 million
of costs towards refinancing of the bank debt facilities, this is expected to
be completed in the fourth quarter of the current financial year.
Credits in the current and prior periods on settlement of legacy claims is the
release of provisions booked for specific claims that have not been fully
utilised following final settlement.
During the prior period the trustees of the Carclo Group Pension Scheme
identified that a group of members required an adjustment to their benefits in
respect of the requirement to provide equal benefits to males and females
following the Barber judgment in 1990. In summary, the adjustment consisted
of decreasing the normal retirement age from 65 to 60 for some members'
benefits for some elements of service after 17 May 1990. This resulted in
additional liabilities in the Scheme which were accounted for as a £1.0
million past service cost in the income statement (approximately 0.8% of
liabilities).
Prior period net costs arising from cancellation of future supply agreement
relate to an OEM customer who gave notice in December 2022. There have been
no further costs in the current period.
In the financial year to March 2023, a customer of the CTP division provided
notice that it would cease to operate. Provision was made at the time for
assets not expected to be recovered through credit insurance with a final
provision being recognised in the prior period.
Net finance expense
Six months ended Six months ended Year ended
30 September 30 September 31 March
2024 2023 2024
£000 £000 £000
Continuing operations:
The net expense recognised in the condensed consolidated income statement
comprises:
Interest receivable on cash and cash deposits 242 283 424
Other interest receivable 37 - -
Interest payable on bank loans and overdrafts (1,446) (1,559) (3,141)
Lease interest (379) (422) (1,042)
Other interest payable (139) (118) (2)
Net interest on the net defined benefit liability (878) (819) (1,826)
Net finance expense (2,563) (2,635) (5,587)
Income tax (expense) / credit
Six months ended Six months ended Year ended
30 September 30 September 31 March
2024 2023 2024
£000 £000 £000
Continuing operations:
The (expense) / credit recognised in the condensed consolidated income
statement comprises:
Current tax expense on ordinary activities (426) (701) (1,175)
Deferred tax credit on ordinary activities 50 772 1,673
Current tax (expense) / credit on exceptional items (140) 259 -
Total income tax (expense) / credit recognised in the condensed consolidated (516) 330 498
income statement
The half year tax expense represents -567.0% of statutory loss before tax (6
months to 30 September 2023: tax credit 13.2%) based on the estimated average
effective tax rate on ordinary activities for the full year. The half year
effective tax rate is greater than the UK underlying tax rate of 25% because
losses are not recognised in the UK for deferred tax purposes, withholding tax
is payable on dividends and royalties from certain tax jurisdictions and
because of the proportion of taxable profits achieved in the 6 months to 30
September 2024 compared to full year forecast (on which the ETR is based).
The half year underlying effective tax rate amounts to 42.6% of underlying
loss before tax and exceptional items (6 months to 30 September 2023: 17.7%
credit). The Group's underlying effective tax rate is higher than the
underlying UK tax rate of 25.0% because of the reasons given above but by a
lesser extent because of a net exceptional credit in tax paying
jurisdictions.
Deferred tax assets and liabilities at 30 September 2024 have been calculated
on the rates substantively enacted at the balance sheet date. The main rate
of corporation tax became 25% from 1 April 2023. Overseas taxes are
calculated at the rates prevailing in the respective jurisdictions.
(Loss) / earnings per share
Continuing operations:
The calculation of basic (loss) / earnings per share is based on the loss
attributable to equity holders of the parent company divided by the weighted
average number of ordinary shares outstanding during the period.
The calculation of diluted (loss) / earnings per share is based on the loss
attributable to equity holders of the parent company divided by the weighted
average number of ordinary shares outstanding during the period (adjusted for
dilutive options).
The following details the result and average number of shares used in
calculating the basic and diluted earnings per share:
Six months ended Six months ended Year ended
30 September 30 September 31 March
2024 2023 2024
£000 £000 £000
Loss after tax (607) (2,168) (3,299)
Loss attributable to non-controlling interests - - -
Loss after tax, attributable to equity holders of the parent (607) (2,168) (3,299)
Six months ended Six months ended Year ended
30 September 30 September 31 March
2024 2023 2024
£000 £000 £000
Weighted average number of ordinary shares (basic) in the period 73,419,193 73,419,193 73,419,193
Effect of dilutive share options in issue(1) 15,974 15,974 15,974
Weighted average number of ordinary shares (diluted) in the period for loss 73,435,167 73,435,167 73,435,167
per share calculation
Effect of dilutive share options in issue 1,557,500 - 817,049
Weighted average number of ordinary shares (diluted) in the period for 74,992,667 73,435,167 74,252,216
underlying earnings per share calculation
(1) There are 15,974 vested share options outstanding that are yet to be
issued. 1,557,500 of share options granted on 21 September 2023 have been
excluded from the calculation of weighted average number of dilutive earnings
per share in the current period as they are antidilutive. These options
could potentially dilute basic earnings per share in the future.
In addition to the above, the Company also calculates earnings / (loss) per
share based on underlying profit / (loss) as the Board believe this provides a
more useful comparison of business trends and performance. Underlying profit
/ (loss) is defined as profit / (loss) before impairments, rationalisation
costs, one-off retirement benefit effects, exceptional bad debts, business
closure costs, litigation costs, other one-off costs and the impact of
property and business disposals, net of attributable taxes.
The following table reconciles the Group's loss to underlying profit/(loss)
used in the numerator in calculating underlying earnings/(loss) per share:
Six months ended Six months ended Year ended
30 September 30 September 31 March
2024 2023 2024
£000 £000 £000
Loss after tax, attributable to equity holders of the parent (607) (2,168) (3,299)
Exceptional - rationalisation (credit) / costs, net of tax (118) 890 2,690
Exceptional - past service cost in respect to retirement benefits - 1,020 1,020
Exceptional - refinancing costs, net of tax 1,232 - 433
Exceptional - net costs arising from cancellation of future supply agreement, - 218 146
net of tax
Exceptional - settlement credit in respect to legacy claims, net of tax (1) (292) (284)
Exceptional - doubtful debt and related inventory provision, net of tax - - 109
Profit / (loss) after tax but before exceptional items, attributable to equity 506 (332) 815
holders of the parent
Underlying operating profit 3,445 2,232 6,647
Finance revenue 279 283 424
Finance expense (2,842) (2,918) (6,011)
Income tax (expense) / credit (376) 71 (245)
Profit / (loss) after tax but before exceptional items - continuing operations 506 (332) 815
Six months ended Six months ended Year ended
30 September 30 September 31 March
2024 2023 2024
£000 £000 £000
The following table summarises the (loss) / earnings per share figures based
on the above data:
Basic loss per share (0.8) (3.0) (4.5)
Diluted loss per share (0.8) (3.0) (4.5)
Underlying earnings per share - basic 0.7 (0.5) 1.1
Underlying earnings per share - diluted 0.7 (0.5) 1.1
Dividends paid and proposed
No dividends were paid in the period or the comparative periods.
Under the terms of the amended and restated bank facilities agreement, the
Group is not permitted to make a dividend payment to shareholders up to the
period ending 31 December 2025.
Intangible assets
The movements in the carrying value of intangible assets are summarised as
follows:
30 September 31 March
30 September 2023 2024
2024 £000 £000
£000
Net book value at the start of the period 22,197 23,463 23,463
Additions 49 77 95
Disposals - - (212)
Amortisation (44) (85) (163)
Effect of movements in foreign exchange (726) (319) (986)
Net book value at the end of the period 21,476 23,136 22,197
Included within intangible assets is goodwill of £21.3 million (31 March 2024
- £22.0 million). The carrying value of goodwill is subject to annual
impairment tests by reviewing detailed projections of the recoverable amounts
from the underlying cash generating units. At 31 March 2024, the carrying
value of goodwill was supported by value-in-use calculations. There has been
no indication of subsequent impairment in the current financial period.
Property, plant and equipment
The movements in the carrying value of property, plant and equipment are
summarised as follows:
30 September 30 September 31 March
2024 2023 2024
£000 £000 £000
Net book value at the start of the period 40,071 45,321 45,321
Additions 283 3,886 7,487
Depreciation (3,561) (3,876) (7,769)
Disposals (77) (384) (706)
Impairment arising on site rationalisation (66) (1,006) (1,966)
Reversal of impairment 209 - 74
Reassessment of lease term - - (1,310)
Effect of movements in foreign exchange (1,159) (165) (1,060)
Net book value at the end of the period 35,700 43,776 40,071
Of the net book value at 30 September 2024, £20.2 million is land and
buildings and £15.5 million is plant and equipment (31 March 2024: £23.3
million and £16.7 million respectively). Additions to 30 September 2024
were £0.1 million to land and buildings and £0.2 million to plant and
equipment, disposals were land and buildings £nil and plant and equipment
£0.1 million.
The impairment to right of use assets relates to two leased properties.
Firstly, one of the properties at Tucson, Arizona, USA which has now been
surrendered following exit from the site, and secondly the Ossett, UK property
which has been vacated following the move of the Carclo plc registered office
from Ossett to Mitcham, UK. The value in use of these properties is £nil at
30 September 2024, the cost has been recognised as part of exceptional
rationalisation costs.
In the prior year, the Group announced the intended closure of the Tucson,
Arizona, USA facility which led to impairment of certain assets at that site
at 31 March 2024. This site has now been closed and the plant and equipment
either sold, scrapped or transferred to the site at Latrobe, Pennsylvania, USA
for continued use in the business. The impairment previously recognised
against any assets either sold or transferred has been reversed in the 6
months to 30 September 2024. Those assets transferred to Latrobe will
continue to be depreciated as normal. This has been recognised as a credit
within exceptional rationalisation costs in the income statement.
Included within plant and equipment are assets valued at fair value less costs
to dispose (FVLCD) totalling £0.5 million ($0.65 million), this was
determined in the prior reporting period, resulting in an impairment being
recognised in that period. There has been no change in the period to 30
September 2024 and therefore this is an approximation for historical cost at
that date. FVLCD uses an estimate of the value which would be expected to be
received from a third party in a sale of the asset, net of estimated sale
costs. This valuation is a level 3 measurement which is based on inputs
which are normally unobservable to market participants, including offers
received and management's experience of selling similar assets.
Right-of-use assets
Right-of-use assets related to lease agreements are presented within property,
plant and equipment above. The movements are summarised as follows:
30 September 30 September 31 March
2024 2023 2024
£000 £000 £000
Net book value at the start of the period 11,120 12,451 12,451
Additions 24 2,063 4,561
Depreciation (1,506) (1,701) (3,452)
Asset transferred to right-of-use assets from owned property, plant and - - 732
equipment
Derecognition of right-of-use assets - (93) (95)
Reassessment of lease term - - (1,310)
Impairment to right-of-use assets (66) (861) (1,582)
Effect of movements in foreign exchange (312) 30 (185)
Net book value at the end of the period 9,260 11,889 11,120
Of the net book value at 30 September 2024, £3.9 million is land and
buildings and £5.4 million is plant and equipment (31 March 2024: £4.9
million and £6.2 million respectively). Additions during the period to 30
September 2024 were to plant and equipment with impairment of £0.1 million,
as described above. The impairment to right of use assets relates to two
leased properties that are no longer in use.
Retirement benefit obligations
The Group operates a defined benefit UK pension scheme which provides pensions
based on service and final pay. Outside of the UK, retirement benefits are
determined according to local practice and funded accordingly.
The amounts recognised in the condensed consolidated statement of financial
position in respect of the defined benefit scheme were as follows:
30 September
2024 30 September 31 March
£000 2023 2024
£000 £000
Present value of funded obligations (126,688) (125,038) (130,420)
Fair value of scheme assets 88,810 88,355 93,234
Recognised liability for defined benefit obligations (37,878) (36,683) (37,186)
30 September 30 September 31 March
2024 2023 2024
£000 £000 £000
Movement in the net liability for defined benefit obligations recognised in
the condensed consolidated statement of financial position:
Net liability for defined benefit obligations at the start of the period (37,186) (34,493) (34,493)
Contributions paid 1,458 1,750 3,500
Net expense recognised in the condensed consolidated income statement (1,245) (2,221) (3,525)
Remeasurement losses recognised in other comprehensive income (905) (1,719) (2,668)
Net liability for defined benefit obligations at the end of the period (37,878) (36,683) (37,186)
30 September 30 September 31 March
2024 2023 2024
£000 £000 £000
Movements in the fair value of Scheme assets:
Fair value of Scheme assets at the start of the period 93,234 99,598 99,598
Interest income 2,189 2,362 4,789
Loss on Scheme assets excluding interest income (2,854) (9,576) (2,962)
Contributions by employer 1,458 1,750 3,500
Benefit payments (4,850) (5,397) (11,012)
Expenses paid (367) (382) (679)
Fair value of Scheme assets at the end of the period 88,810 88,355 93,234
Actual (loss) / gain on Scheme assets (665) (7,214) 1,827
30 September 30 September 31 March
2024 2023 2024
£000 £000 £000
Movements in the present value of defined benefit obligations:
Defined benefit obligation at the start of the period 130,420 134,091 134,091
Interest expense 3,067 3,181 6,615
Actuarial loss due to scheme experience - - 1,308
Actuarial gain due to changes in demographic assumptions - - (2,187)
Actuarial (gain) / loss due to changes in financial assumptions (1,949) (7,857) 585
Benefits paid (4,850) (5,397) (11,012)
Past service cost - 1,020 1,020
Defined benefit obligation at the end of the period 126,688 125,038 130,420
30 September 30 September 31 March
2024 2023 2024
The principal actuarial assumptions at the balance sheet date (expressed as
weighted averages) were:
Discount rate at period end 4.95% 5.55% 4.85%
Inflation (RPI) (non-pensioner) 3.15% 3.30% 3.30%
Inflation (CPI) (non-pensioner) 2.65% 2.80% 2.80%
Allowance for revaluation of deferred pensions of RPI or 5% p.a. if less 3.15% 3.30% 3.30%
Allowance for revaluation of deferred pensions of CPI or 5% p.a. if less 2.65% 2.80% 2.80%
Allowance for pension in payment increases of RPI or 5% p.a. if less 2.95% 3.10% 3.05%
Allowance for pension in payment increases of CPI or 3% p.a. if less 2.05% 2.20% 2.15%
Allowance for pension in payment increases of RPI or 5% p.a. if less, minimum 3.70% 3.75% 3.75%
3% p.a.
Allowance for pension in payment increases of RPI or 5% p.a. if less, minimum 4.30% 4.30% 4.30%
4% p.a.
Life expectancy years years years
Male (current age 45) 18.3 18.7 18.3
Male (current age 65) 17.4 17.8 17.4
Female (current age 45) 21.2 21.6 21.2
Female (current age 65) 20.1 20.4 20.1
Cash generated from operations
Notes Six months ended
30 September Six months ended Year ended
2024 30 September 31 March
£000 2023 2024
£000 £000
Continuing operations:
Loss for the period (607) (2,168) (3,299)
Adjustments for -
Pension scheme administration costs settled by the Scheme 96 75 151
Depreciation charge 11 3,561 3,876 7,769
Amortisation charge 10 44 85 163
Exceptional rationalisation (credit) / costs - net (973) (57) 2,212
Exceptional past service cost in respect to retirement benefits - 1,020 1,020
Exceptional refinancing costs - - 125
Exceptional costs arising from cancellation of future supply agreement - 1,027 1,034
Exceptional settlement in respect to legacy claims 5 (1) (292) (283)
Exceptional doubtful debt and related inventory provision - - 140
Loss / (profit) disposal of property, plant and equipment 12 (14) (17)
Share based payment charge 27 15 43
Financial income 6 (279) (283) (424)
Financial expense 6 2,842 2,918 6,011
Taxation expense / (credit) 7 516 (330) (498)
Operating cash flow before changes in working capital 5,238 5,872 14,147
Changes in working capital
(Increase) / decrease in inventories (570) 2,429 3,427
Decrease in contract assets 52 2,306 3,985
(Increase) / decrease in trade and other receivables (192) 2,111 2,128
Increase / (decrease) in trade and other payables 3,150 (1,006) (3,294)
(Decrease) / increase in contract liabilities (303) 1,170 (1,629)
Decrease in provisions (120) - (177)
Cash generated from operations 7,255 12,882 18,587
Cash and cash deposits
30 September 30 September 31 March
2024 2023 2024
£000 £000 £000
Cash and cash deposits 7,344 7,185 5,974
The Group has a net UK multi-party, multi-currency overdraft facility with a
£nil net limit and a £12.5 million gross limit per party. At 30 September
2024, Carclo plc's overdraft of £7.4 million (31 March 2024: £4.5 million)
has been recognised within cash and cash deposits when consolidated due to a
legal right of off-set under a UK net overdraft arrangement. The Group
intends to realise the asset and settle the liability simultaneously.
Net debt
30 September 30 September 31 March
2024 2023 2024
£000 £000 £000
Net debt comprises -
Cash and cash deposits 7,344 7,185 5,974
Term loan (21,960) (24,695) (23,682)
Revolving credit facility (2,000) - (300)
Lease liabilities (8,405) (11,662) (11,167)
Other loans (228) (328) (282)
Net debt (25,249) (29,500) (29,457)
The debt facilities currently available to the Group comprise a term loan of
£22.3 million (31 March 2024: £24.0 million), of which £1.3 million will be
amortised by 31 March 2025, £3.8 million will be amortised in the period
between 31 May 2025 and 30 November 2025, before the balance becomes payable
by the termination date, which on 5 July 2024 was successfully extended to 31
December 2025.
Reconciliation of movements of liabilities to cash flows arising from
financing activities
Term loan Revolving credit facility Lease liabilities Other loans Total
£000 £000 £000 £000 £000
Balance at 31 March 2023 28,950 3,500 11,870 394 44,714
Changes from financing cash flows
Drawings on new facilities - - 1,841 74 1,915
Transaction costs associated with the issue of debt (100) - - - (100)
Repayment of borrowings (4,350) (3,500) (2,060) (121) (10,031)
(4,450) (3,500) (219) (47) (8,216)
Effect of changes in foreign exchange rates 95 - 11 (19) 87
Liability-related other changes
Amortisation of transaction costs 100 - - - 100
100 - - - 100
Equity-related other changes - - - - -
Balance at 30 September 2023 24,695 - 11,662 328 36,685
Changes from financing cash flows
Drawings on existing and new facilities - 300 (1,841) (21) (1,562)
Repayment of borrowings (700) - (1,599) (11) (2,310)
(700) 300 (3,440) (32) (3,872)
Effect of changes in foreign exchange rates (427) - (240) (14) (681)
Liability-related other changes
Drawings on new facilities - - 4,583 - 4,583
Reassessment of lease liability - - (1,349) - (1,349)
Termination of facilities - - (49) - (49)
Amortisation of transaction costs 114 - - - 114
114 - 3,185 - 3,299
Equity-related other changes - - - - -
Balance at 31 March 2024 23,682 300 11,167 282 35,431
Changes from financing cash flows
Drawings on existing facilities - 1,700 - - 1,700
Transaction costs associated with the issue of debt (150) - - - (150)
Repayment of borrowings (975) - (2,149) (48) (3,172)
(1,125) 1,700 (2,149) (48) (1,622)
Effect of changes in foreign exchange rates (728) - (346) (6) (1,080)
Liability-related other changes
Drawings on new facilities - - 24 - 24
Termination of facilities - - (291) - (291)
Amortisation of transaction costs 131 - - - 131
131 - (267) - (136)
Equity-related other changes - - - - -
Balance at 30 September 2024 21,960 2,000 8,405 228 32,593
Financial instruments
The fair value of financial assets and liabilities are not materially
different from their carrying value.
Except as described in note 11, there are no material items as required to be
disclosed under the fair value hierarchy.
Ordinary share capital
Number £000
of shares
Ordinary shares of 5 pence each
Issued and fully paid at 30 September 2023, 31 March 2024 and 30 September 73,419,193 3,671
2024
Related parties
Identity of related parties
The Company has a related party relationship with its subsidiaries, its
directors and executive officers and the Group pension scheme. There are no
transactions that are required to be disclosed in relation to the Group's 64%
dormant subsidiary Platform Diagnostics Limited.
Transactions with key management personnel
On 17 April 2024, the Board announced the appointment of Natalia Kozmina as a
Non-Executive Director of the Board with effect from 22 April 2024. Natalia
is a member of the Audit and Risk, Remuneration, and Nomination Committees and
has chaired the Remuneration Committee since 1 May 2024.
During the period to 30 September 2024, the Group was billed £0.4 million (30
September 2023: £0.5 million) by Thingtrax, a company that offers intelligent
manufacturing infrastructure as a service. Frank Doorenbosch, a Carclo plc
Executive Director, is also a Non-Executive Director of Thingtrax and, as
such, the company is identified as a related party. In the six months to 30
September 2024, £0.3 million (30 September 2023: £0.3 million) has been
recognised as a cost in the condensed consolidated income statement; a balance
of £0.1 million remains on balance sheet as prepaid at 30 September 2024 and
will be recognised as an expense in the second half of the year to 31 March
2025.
Key management personnel are considered to be the Executive and Non-Executive
Directors of the Group. Full details of Directors' remuneration are disclosed
in the Group's annual report. In the six months ended 30 September 2024,
remuneration to current and former Directors amounted to £0.44 million (six
months ended 30 September 2023: £0.41 million).
Group pension scheme
A third-party professional firm is engaged to administer the Group pension
scheme (the Carclo Group Pension Scheme). The associated investment costs are
borne by the scheme in full. It has been agreed with the trustees of the
pension scheme that, under the terms of the recovery plan, the scheme would
bear its own administration costs.
Core contributions of £0.292 million per month have been made during the
period to 30 September 2024, incorporating both deficit recovery contributions
and scheme expenses including PPF levy.
Carclo incurred administration costs of £0.367 million during the period
which has been charged to the consolidated income statement, including £0.095
million presented as exceptional costs, (30 September 2023: £0.382 million,
of which £0.011 million was presented as exceptional). Of the
administration costs, £0.096 million was paid directly by the scheme (30
September 2023: £0.075 million). The total deficit reduction contributions
and administration costs paid during the period was £1.458 million (30
September 2023: £1.750 million).
Post balance sheet events
As at the date of this interim report, the Directors confirm that there have
been no material post balance sheet events that would require adjustment to,
or disclosure in, these financial statements.
Seasonality
There are no specific seasonal factors which impact on the demand for products
and services supplied by the Group, other than for the timing of holidays and
customer shutdowns. These tend to fall predominantly in the first half of
Carclo's financial year and, as a result, revenues and profits are usually
higher in the second half of the financial year compared to the first half.
Independent review report to Carclo plc
Conclusion
We have been engaged by Carclo Plc ("the Company") to review the condensed set
of financial statements in the half-yearly financial report for the six months
ended 30 September 2024 which comprises the condensed consolidated income
statement, the condensed consolidated statement of comprehensive income, the
condensed consolidated statement of financial position, the condensed
consolidated statement of cash flows, the condensed consolidated statement of
changes in equity and related explanatory notes.
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the interim
financial report for the six months ended 30 September 2024 is not prepared,
in all material respects, in accordance with UK adopted International
Accounting Standard 34, 'Interim Financial Reporting', and the Disclosure
Guidance and Transparency Rules of the United Kingdom's Financial Conduct
Authority.
Basis for Conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410, "Review of Interim Financial Information Performed by
the Independent Auditor of the Entity" issued for use in the United Kingdom. A
review of interim financial information consists of making enquiries,
primarily of persons responsible for financial and accounting matters, and
applying analytical and other review procedures. A review is substantially
less in scope than an audit conducted in accordance with International
Standards on Auditing (UK) and consequently does not enable us to obtain
assurance that we would become aware of all significant matters that might be
identified in an audit. Accordingly, we do not express an audit opinion.
As disclosed in note 2, the annual financial statements of the group are
prepared in accordance with UK adopted International Accounting Standards. The
condensed set of financial statements included in this half-yearly financial
report has been prepared in accordance with UK adopted International
Accounting Standard 34, "Interim Financial Reporting".
Conclusions Relating to Going Concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis of Conclusion section of this report,
nothing has come to our attention to suggest that management have
inappropriately adopted the going concern basis of accounting or that
management have identified material uncertainties relating to going concern
that are not appropriately disclosed.
This conclusion is based on the review procedures performed in accordance with
this ISRE, however future events or conditions may cause the entity to cease
to continue as a going concern.
Responsibilities of directors
The directors are responsible for the preparation and fair presentation of
this interim financial report in accordance with UK adopted International
Accounting Standard 34, 'Interim Financial Reporting', and the Disclosure
Guidance and Transparency Rules of the United Kingdom's Financial Conduct
Authority.
In preparing the interim financial report, the directors are responsible for
assessing the company's ability to continue as a going concern, disclosing, as
applicable, matters related to going concern and using the going concern basis
of accounting unless the directors either intend to liquidate the company or
to cease operations, or have no realistic alternative but to do so.
Auditor's Responsibilities for the review of the financial information
In reviewing the half-yearly report, we are responsible for expressing to the
Company a conclusion on the condensed set of financial statement in the
half-yearly financial report. Our conclusion, including our Conclusions
Relating to Going Concern, are based on procedures that are less extensive
than audit procedures, as described in the Basis for Conclusion paragraph of
this report.
Use of the review report
This report is made solely to the Company in accordance with International
Standard on Review Engagements (UK) 2410 issued by the Financial Reporting
Council and our Engagement Letter. Our work has been undertaken so that we
might state to the Company those matters we are required to state to them in
an independent review report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other
than the Company, for our review work, for this report, or for the conclusions
we have formed.
Forvis Mazars LLP
Chartered Accountants
30 Old Bailey
London
EC4M 7AU
4 December 2024
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