Half-year Report

RNS Number : 0000I
Carclo plc
30 November 2022
 

Carclo plc

(Carclo or the Group)

 

Interim Report and Accounts

Half-year results for the six months ended 30 September 2022

Carclo, the global provider of value-adding engineered solutions for the life sciences, precision components, and specialised optics and aerospace industries, announces its results for the first six months of its financial year ending 31 March 2023 ("H1 23").

 

Highlights

Market environment

á High growth in our chosen markets, led by Life Science innovations and a revival in Aerospace after the lifting of Covid related air travel bans.

á Higher energy prices, labour and material costs have continued to fuel our cost inflation. Where possible, the Group has implemented price increases to mitigate the impact of these cost increases.

H1 Results

á Revenue grew strongly to £72.2m, up 23% compared to H1 2022, driven by growth with new and existing life sciences customers, forex tailwinds and price increases.

á Margins in our manufacturing operations fell as a result of cost inflation and a delay in the launch of two new product lines.

á Underlying operating profit at £3.6m was slightly below H1 2022 as higher revenue and forex tailwinds largely offset the impact of lower margins. On a constant currency basis, the underlying operating profit was down by £0.3m.

á Net debt including IFRS16 lease liabilities increased to £36.8m (31 March 2022: £32.4m) driven by increased working capital, additional growth capital investment, and the impact of movement in exchange rates on the translation of non-sterling denominated debt.

Strategy Ð Carclo 2025

á Our focus is on improving the Group's cash generation through improved asset utilisation and driving operational excellence throughout our manufacturing operations.

á Through this improved asset utilisation and operational improvement, we aim to deliver a sustainable 15% ROCE through the cycle.

á We are building a "One Carclo" culture of entrepreneurialism and collaboration across the group to establish Carclo as a destination for talent and career development.

Financing

á As previously announced on 5th September, we have agreed to a revised and extended funding arrangement with the Group's lending bank and the Pension Scheme. This arrangement provides access to ongoing bank facilities and visibility of pension deficit repair contributions to June 2025.

á Largely due to rising global interest rates, the Group forecasts limited headroom on its interest cover covenant in the near term. The Board is taking a number of actions to mitigate this.

Outlook

á Demand for the Group's products remains robust, but ongoing cost inflation is expected to exert downward pressure on margins throughout the second half and into the following year. As a result, the Board is expecting a second half performance similar to that of the first half.

á Increasing global interest rates are already impacting the cost of financing the Group and we expect this trend to continue, partly mitigated by our focus on cash management.

á The Board is positive about the medium to long term prospects for the Group, driven by structural growth drivers in our end-markets, our strong customer relationships and the opportunity to drive improved financial performance through a focus on operational excellence.

 

Frank Doorenbosch, Chief Executive Officer, said:

I am proud of Carclo's strong growth as the result of our position as the trusted partner of major blue-chip customers, operating in markets with robust demand. Our focus is now to capitalise on this growth, through operational excellence programmes and improved asset utilisation, to deliver an increased ROCE. The margin pressure, mainly caused by tightness in the labour market and inflation in both materials and energy costs is being offset by price increases where possible and enhanced investment in continuous improvement.  Our near-term focus is on cash generation and improved asset utilisation as we seek to reduce our cost of finance in an environment of increasing global interest rates.

Looking ahead, we are targeting a sustainable 15% ROCE through the cycle, and we believe our chosen market sectors will provide the opportunity to deliver strong organic growth over the long term.

 

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

£000


H1 2023

 

H1 2022

 

Change

 

 

 

 

 

 

 

Revenue


  72,151


  58,672


  13,479








Underlying operating profit


  3,593


  3,682


  (89)

Exceptional items


  (332)


  - 


  (332)

COVID-related US government grant income


  - 


  2,087


  (2,087)

Operating profit


  3,261


  5,769


  (2,508)








 

 

 

 

 

 

 

Profit on discontinued operations, net of tax


  - 


  693


  (693)








Underlying earnings per share - basic


1.5p


2.5p


-1.0p

Basic earnings per share - continuing operations


0.9p


6.5p


-5.6p








Net debt excluding leases


  (23,773)


  (21,613)


  (2,160)

Net debt


  (36,830)


  (28,371)


  (8,459)

IAS 19 retirement benefit deficit


  (24,928)


  (33,407)


  8,479








Underlying Operating Profit

 

 

 

 

 

 

Technical Plastics


  4,009


  4,784


  (775)

Aerospace


  673


  227


  446

Central


  (1,089)


  (1,329)


  240

Total


  3,593


  3,682


  (89)

Notes:

(1)  underlying results are those calculated before discontinued operations, separately disclosed items and exceptional items. A reconciliation to statutory figures is set out below.

Enquiries

Carclo

Frank Doorenbosch Ð Chief Executive Officer

01924 268040

FTI Consulting Nick Hasell / Susanne Yule

020 3727 1340

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 several risks and uncertainties that could cause actual events to differ materially from any expected future events or results referred to in these forward-looking statements.

Alternative performance measures

The alternative performance measures are defined in the financial review of the Annual Report and Accounts (ARA) for the year ended 31 March 2022, 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

Group revenue grew by 23.0% to £72.2m (H1 22: £58.7m), driven by a combination of strong demand, the impact of price increases and foreign exchange tailwinds.  At constant exchange rates, revenue increased by 14.0%.

Technical Plastics ('CTP') revenues rose 22.2% to £69.1m (H1 22: £56.6m), with growth of 12.9% at constant currency driven by strong demand in its key markets. 

The CTP business principally operates in three key market sectors: Life Sciences, Precision Components and Optics. The Life Science segment exhibited strong demand during the first half as we saw a growing adoption of life science analytics in the healthcare market, particularly in North America which continues to dominate the life science analytics market due to its advanced and developing healthcare infrastructure. Revenue growth came from both new and existing customers.

The Precision Components market continued to be held back by the supply of microprocessors for our customers' products which constrained demand.

Demand in our traditional optics market of eyecare and aftermarket car-lighting remains stable, and the business is now seeking to capture growth by expanding its in-house range of highly efficient LED lighting solutions.

CTP Design and Engineering (previously described as tooling) activity in the first half remained at a relatively high level, with revenue up 11.7% compared to the prior year of £10.2m (H1 22: £9.1m).  The high level of Design and Engineering activity experienced over the last 18 months is now being converted into increased manufacturing activity and this is anticipated to continue with the launch of the two new major product lines expected in the second half.  CTP manufacturing solutions first half revenue increased by 24.2% to £59.0m (H1 22: £47.5m).

The aerospace market continued to recover as aircraft manufacturers responded to increasing passenger numbers from the low levels during the height of the covid pandemic.  As a result, Aerospace first half revenues grew by 44.5% to £3.0m (H1 22: £2.1m).

Revenue (£000)

 

 H1 2023

 

H1 2022

 

Change

CTP Design & Engineering


  10,151


  9,084


  1,067

CTP Manufacturing Solutions


  58,982


  47,499


  11,483

Aerospace


  3,018


  2,089


  929

Total


  72,151


  58,672


  13,479

Group underlying operating profit fell slightly to £3.6m (H1 22: £3.7m) as increased revenues and the benefit of exchange rate tailwinds were offset by a drop in margins.  At constant exchange rates underlying operating profit fell by 8.9%.

CTP's underlying operating profit margin reduced from 8.5% to 5.8% largely driven by significant inflation across its major cost categories including energy, materials, labour and transport.  Prices have been increased where possible to mitigate the effect of these cost increases, but there is often a lag before the benefit of improved pricing feeds through to margins. CTP also incurred significant costs in the first half in developing the production lines for two new products, the launch of which has been delayed and is now expected in the second half. These reduced margins only partly offset increased revenues and the benefit of foreign exchange movement, resulting in CTP underlying operating profit being lower than the prior year at £4.0m (H1 22: £4.8m).

Aerospace operating margins strengthened further to 22.3% (H1 22: 10.9%) as the business continued to focus on its niche products.  As a result the increased activity levels translated into strong growth in underlying operating profit, up 196.5% at £0.7m (H1 22: £0.2m).

Central costs decreased slightly by £0.2m to £1.1m mainly due to foreign exchange gains.

Finance costs increased by 14.8% to £1.6m (H1 22: £1.4m) as a result of increasing interest rates and higher net debt. Finance costs include net interest on the defined benefit pension liability of £0.3m (H1 22: £0.4m).

The Group incurred net exceptional operating costs of £0.3m in the period (H1 22: £nil), comprising £1.1m rationalisation costs relating mainly to the refinancing of the Group partly offset by a £0.8m gain on the sale and leaseback of the property in Tucson, Arizona, USA.

Group profit before tax was £1.7m (H1 22: £4.4m including £2.1m COVID-related US government grant income).

The income tax expense was £1.0m (H1 22: credit £0.4m benefitting from a £0.9m one-off re-recognition of UK deferred tax assets), and the underlying tax expense was £0.9m (H1 22: expense £0.5m). The effective tax rate was 59.5% (H1 22: credit 8.5%). The underlying effective tax rate was 43.8% (H1 22: expense 20.4%) due to a change in mix of the profits towards higher tax jurisdictions. 

Underlying earnings per share was 1.5 pence (H1 22: 2.5 pence). The statutory earnings per share for the period was 0.9 pence (H1 22: 7.5 pence).

 

Carclo 2025 Strategy

The strategic focus for the business is now to drive improved returns and cash flow.  We are implementing our Carclo 2025 plan: 'Focus and Value', which resets our operational model and is targeted to restore our margins, with the medium-term goal of delivering a through-cycle ROCE of 15%.  The key elements of the Carclo 2025 plan are:

á A focus on operational excellence throughout the business to increase efficiency and improve customer service.

á Increasing the utilisation of our asset base, in particular in the CTP business, with near-term investment focused on continuous improvement, delivering more predictable and higher returns.

á Targeting growth in less capital intensive areas of the business.

á Building a "One Carclo" culture of entrepreneurialism and collaboration across the group to establish Carclo as a destination for talent and career development.

Board changes

On 6 October 2022 the Board announced, with immediate effect, the appointment of Frank Doorenbosch as Chief Executive Officer of Carclo.  Frank had previously been appointed as a consultant to the Group for a period of up to twelve months from 6 June 2022 and accordingly since that date has been an Executive Director of Carclo.  On the same day Nick Sanders stood down as Executive Chair and became Non-Executive Chair until 5 November 2022 when he stepped down from the Board.

Joe Oatley was appointed as Non-Executive Chair with effect from 6 November 2022 and Eric Hutchinson, a Non-Executive Director and Chair of the Audit Committee, was appointed as Senior Independent Director and Chair of the Remuneration Committee with effect from 6 November 2022.

Phil White has given notice of his retirement and has stepped down from his role as Chief Financial Officer and as a Director of the Company with effect from 14 November 2022.  Phil will remain with the Company until his retirement in June 2023 in order to ensure a smooth transition to the new CFO.

The Board has announced the promotion of David Bedford to Chief Financial Officer and appointment as a Director of the Company with effect from 14 November 2022.  David joined Carclo in September 2022 as the Chief Financial Officer of the CTP Division.

Financial Position

Net debt excluding lease liabilities increased by £2.2m during the first half to £23.8m, and net debt increased by £4.4m to £36.8m which includes cash of £10.7m (31 March 2022: £12.3m).

Cash

The following table analyses the net cash outflow before and after the cash flows associated with debt and pension servicing.

Cash Flow Summary


H1 2023

£000

 

H1 2022

£000

Underlying EBITDA


7,512


6,863

Exceptional operating cash flows


(771)


-

Working capital movements


(4,718)


(3,323)

Capex (owned assets)


(1,035)


(3,529)

Sale proceeds


2,351


718

Tax


(652)


(486)

Other non-operating cashflow


78


(18)

Cash flows before debt and pension servicing


2,765


225






Pension deficit repair contributions


(1,589)


(1,502)

Lease debt servicing


(2,141)


(1,031)

Non-lease debt servicing


(1,782)


(3,031)

Cash flows for debt and pension servicing


(5,512)


(5,564)






Net decrease in cash and cash equivalents


(2,747)


(5,339)

 

Net cash outflow from operating activities during the first half was £1.3m (H1 22: net cash inflow £0.6m), comprising underlying EBITDA of £7.5m (H1 22: £6.9m), net working capital outflows of £4.7m (H1 22: outflow £3.3m), net pension contributions of £1.6m (H1 22: £1.5m), interest costs of £1.2m (H1 22: £1.0m), taxes of £0.7m (H1 22: £0.5m), exceptional rationalisation costs of £0.8m (H1 22: £nil) and £0.2m of other inflows (H1 22: £nil).

Net cash inflow from investing activities during the first half was £0.2m (H1 22: net cash outflow £2.8m) comprising mainly £1.1m proceeds from the disposal of part of the Tucson manufacturing site in a sale and leaseback transaction (H1 22: LED Technologies disposal proceeds £0.7m), less £1.0m of capital expenditure (H1 22: £3.5m).

Net cash outflow from financing activities during the first half was £1.5m (H1 22: £3.1m), comprising £1.8m repayment of lease liabilities (H1 22: £0.9m), net repayment of other borrowings £0.9m (H1 22: £2.2m) and £1.2m proceeds related to the financing element of the sale and leaseback of Tucson (H1 22: £nil).

A £1.1m foreign exchange gain on cash (H1 22: £0.2m), coupled with the £2.7m net cash outflow (H1 22: net cash outflow £5.3m) resulted in an overall £1.6m reduction in cash during the first half.

Debt

Debt increased by £2.8m during the first half of the financial year to £47.6m. It was reduced by £1.1m repayments of term loans, £1.8m repayments of lease liabilities and £0.4m net capitalisation of debt transaction costs. It was increased by £1.2m of new lease liabilities arising from the sale and leaseback of the Tucson manufacturing site, by £1.9m from other new leases and by £2.8m from adverse foreign exchange movements.

On 2 September 2022 the Group successfully refinanced with the Company's bank. The debt facilities available to the Group at 30 September 2022 comprise a fully drawn £3.5m revolving credit facility and term loans of £31.2m, denominated in sterling 14.9 million, in US Dollar 13.3 million and in Euro 4.9 million. Of the sterling loan £0.7m will be amortised by 31 March 2023, a further £1.4 million by 31 March 2024, a further £2.2 million by 31 Mar 2025 and the balance becomes payable by 30 June 2025.

Pensions

On 2 September 2022, the Group agreed to the 31 March 2021 triennial pension scheme valuation with an actuarial deficit of £82.8m and a revised schedule of contributions under which the deficit repair contributions payable are £3.9m in FY22, £3.8m in FY23 and £3.5m annually thereafter, plus additional contributions of 25% of any surplus of FY24 underlying EBITDA over £18m payable from 30 June 2024 to 31 May 2025, extending to 26% of any FY25 surplus payable from 30 June 2025 to 31 May 2026.

At 30 September 2022 the Group's IAS 19 pension deficit reduced to £24.9m (31 March 2022: £26.0m) driven by Company contributions in excess of the interest cost. Remeasurement gains during the first half of the financial year were £49.6m, due mainly to a significant change in the discount rate from 2.70% to 5.30%. These were offset by £49.8m 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 SchemeÕs growth assets, offset partially by an increase in corporate bond spreads. The estimated actuarial deficit at 30 September 2022 was £73.1m.

Dividend

Under the terms of its financing agreements the Company is not permitted to make a dividend payment to shareholders before June 2025.

Outlook

Demand for the Group's products remains robust but ongoing cost inflation is expected to persist throughout the second half and into the following year.  As a result, the Board is expecting a second half performance similar to that of the first half.

 

Increasing global interest rates are already impacting the cost of financing the Group and we expect this trend to continue, mitigated by our focus on cash management.

 

The Board is positive about the medium to long term prospects for the Group, driven by structural growth drivers in our end-markets, our strong customer relationships and the opportunity to drive improved financial performance through a focus on operational excellence.

Principal Risks and Uncertainties

In the Annual Report for the year ended 31 March 2022 a detailed review of the principal risks faced by the Group and how these risks were being managed was provided. We continue to face and proactively manage the risks and uncertainties in our business and, whilst the Board considers that these principal risks and uncertainties have not materially changed since the publication of the 2022 Annual Report, it is worth noting that:

á Supply chain and political disruption continues with inflation creating pressures on input costs, particularly energy and materials;

á Global interest rates have increased which has increased the Group's cost of financing putting pressure on interest cover covenants; and

á Increased exchange rate volatility, particularly relative to sterling, can impact the Group's reported profits earned in other currencies and the reported value of debt.

Going Concern

These interim financial statements have been prepared on a going concern basis as detailed in Note 1. Whilst the Board's base case forecasts show that the Group is able to operate within its available facilities and to meet its covenants as they fall due, the interest cover covenant headroom is limited, principally due to increases in interest rates, and manifestation of the above risks, individually or in combination, could lead to a breach of the Group's banking covenants.

The Board is taking actions including operational restructuring, cost savings, working capital management, debt reduction and interest reduction initiatives and it considers that whilst the potential benefits from these give some comfort that the downside risks can be mitigated there remains a material uncertainty that the interest cover covenant will be breached under reasonable downside risk scenarios.

The Group is engaging with the bank with a view to a temporary easement of the interest cover covenant. Whilst the Board is hopeful that such an easement will be granted, there is no guarantee and as such there is a material uncertainty over going concern due to the lack of forecast headroom on the interest cover covenant.

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 partiesÕ transactions and changes therein).

By order of the Board,

Frank Doorenbosch

David Bedford

Chief Executive Officer

Chief Financial Officer

29 November 2022

 

Reconciliation of non-GAAP financial measures - H1 23

£000

Underlying

Exceptional items

Statutory

Technical Plastics operating profit

  4,009

  457

  4,466

Aerospace operating profit

  673

  - 

  673

Central operating costs

  (1,089)

  (789)

  (1,878)

Operating profit

  3,593

  (332)

  3,261

Net finance expense

  (1,610)

  - 

  (1,610)

Profit before tax

  1,983

  (332)

  1,651

Income tax expense

  (869)

  (114)

  (983)

Profit for the period

  1,114

  (446)

  668

Basic earnings per share (pence)

1.5p

(0.6p)

0.9p

Glossary of Terms

CONSTANT CURRENCY

Retranslated at the prior half-yearÕs average exchange rate. Included to explain the effect of changing exchange rates during volatile times to assist the readerÕs 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

EBITDA

Profit before interest, tax, depreciation and amortisation

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

RETURN ON CAPITAL EMPLOYED (EXCLUDING PENSION LIABILITIES) (ÒROCEÓ)

Return on capital employed measures the underlying operating profit for the Group, including discontinued operations, as a percentage of average capital employed, calculated as the average of the opening equity plus net debt and pension liabilities, and closing equity plus net debt and pension liabilities.

 

Condensed consolidated income statement













Six months ended

 

Six months ended


Year ended













30 September

 

30 September

31 March













2022

 

2021


2022













unaudited

 

unaudited


audited





 

 

 

Notes

 

£000

 

£000


£000

Continuing operations:

 














Revenue

 








4


72,151

 

58,672


128,576



















 

 

 

 

 

 

 

 

 



 

 




Underlying operating profit

 









3,593

 

3,682


6,096

 

 











 





COVID related US government grant income





7


 

2,087


2,087

Exceptional items









6


(332)


-


  721

 






 

 




Operating profit




4


3,261

 

5,769


8,904

 

 
















Finance revenue









8


60

 

34


77

Finance expense









8


(1,670)

 

(1,437)


(3,066)













 

 




Profit before tax

 









1,651

 

4,366


5,915


















Income tax (expense) / credit








9


(983)

 

428


(809)













 

 




Profit after tax but before profit on discontinued operations

 








668

 

4,794


5,106


















Discontinued operations:









 

 

 

 


Profit on discontinued operations, net of tax


6


 

693

 

693













 

 




Profit for the period

 









668

 

5,487


5,799


















Attributable to:

 
































Equity holders of the parent company






668

 

5,487


5,799

Non-controlling interests

 









-

 

-


-













668

 

5,487


5,799


















Earnings per ordinary share






10







Basic - continuing operations




0.9

p

6.5

p

7.0 p

Basic - discontinued operations









p

0.9

p

0.9 p


















Basic











0.9

p

7.5

p

7.9 p


















Diluted - continuing operations









0.9

p

6.5

p

6.9 p

Diluted - discontinued operations









p

0.9

p

0.9 p


















Diluted











0.9

p

7.5

p

7.8p

 









 

Condensed consolidated statement of comprehensive income






































Six months ended

 

Six months ended


Year ended













30 September

 

30 September

31 March













2022

 

2021


2022













unaudited

 

unaudited


audited







 

 

 

 



£000


£000


£000


















Profit for the period

 









668

 

5,487


5,799


















Other comprehensive (expense) / income:






























Items that will not be reclassified to the income statement


























Remeasurement (losses) / gains on defined benefit scheme






(201)

 

2,730


8,480













 

 




Total items that will not be reclassified to the income statement


(201)

 

2,730


8,480


















Items that will or may in the future be classified to the income statement

























Foreign exchange translation differences




6,911

 

913


1,840

Net investment hedge











(1,971)

 

(205)


440

Deferred tax arising











(246)

 

236


(127)













 

 




Total items that are or may in future be classified to the income statement

 


4,694

 

944


2,153


















Other comprehensive income, net of income tax




4,493

 

3,674


10,633


















Total comprehensive income for the period





5,161

 

9,161


16,432


















Attributable to:

 
































Equity holders of the parent





5,161

 

9,161


16,432

Non-controlling interests










-

 

-


-

Total comprehensive income for the period







5,161

 

9,161


16,432


















 

Condensed consolidated statement of financial position



















30 September

 

30 September

31 March













2022

 

2021


2022













unaudited

 

unaudited


audited











Notes


£000


£000


£000

Non-current assets

 















Intangible assets









12


24,580

 

22,214


22,714

Property, plant and equipment




13


49,453

 

43,632


46,964

Deferred tax assets











1,469

 

1,500


1,403

Trade and other receivables









66

 

114


115

Total non-current assets

 









75,568

 

67,460


71,196

 

 















Current assets

 















Inventories











18,073

 

16,355


16,987

Contract assets











10,634

 

6,131


7,700

Trade and other receivables









22,648

 

23,172


19,702

Cash and cash deposits





17


10,724

 

10,394


12,347

Current tax assets











 

538


-

NonÐcurrent assets classified as held for sale





14


 

-   


266

Total current assets

 










62,079

 

56,590


57,002













 

 




Total assets

 










137,647

 

124,050


128,198


















Non-current liabilities

 















Loans and borrowings







18


43,583

 

36,014


41,804

Deferred tax liabilities











5,187

 

4,577


4,878

Contract liabilities











589

 

-


3,099

Trade and other payables






76

 


Retirement benefit obligations




15


24,928

 

33,407


25,979













 

 




Total non-current liabilities









74,363

 

73,998


75,760

 









 

 




Current liabilities

 















Loans and borrowings







18


3,971

 

2,751


2,948

Trade payables










12,938

 

12,895


13,399

Other payables











7,946

 

8,127


7,663

Current tax liabilities











504

 

534


170

Contract liabilities











8,175

 

8,654


3,755

Provisions











95

 

-


87

Total current liabilities







33,629

 

32,961


28,022













 

 




Total liabilities

 










107,992

 

106,959


103,782


















Net assets







29,655

 

17,091


24,416


















Equity

 















Ordinary share capital issued







20


3,671

 

3,671


3,671

Share premium











7,359

 

7,359


7,359

Translation reserve











12,180

 

6,277


7,486

Retained earnings











6,471

 

(190)


5,926

Total equity attributable to equity holders of the Company





29,681

 

17,117


24,442

Non-controlling interests


(26)

 

(26)


(26)

Total equity

 










29,655

 

17,091


  24,416








Condensed consolidated statement of changes in equity

 








Attributable to equity holders of the Company

 








Share

Share

Translation

Retained

 



Non-controlling

 

Total

 




capital

premium

reserve

earnings

 

Total

 

interests

 

equity

 




£000

£000

£000

£000

 

£000

 

£000

 

£000

 


















Current half year period - unaudited



























Balance at 1 April 2022

3,671

7,359

7,486

5,926

 

24,442

 

(26)

 

24,416

 


















Profit for the period

-

-

-

668

 

668

 

 

668

 


















Other comprehensive income:

 














Foreign exchange translation differences

-

-

6,911

 

6,911

 

 

6,911

 

Net investment hedge

-

-

(1,971)

 

(1,971)

 

 

(1,971)

 

Remeasurement gains on defined benefit scheme

-

-

-

(201)

 

(201)

 

 

(201)

 

Taxation on items above

-

-

(246)

 

(246)

 

 

(246)

 


















Total comprehensive income for the period

-

-

4,694

467

 

5,161

 

 

5,161

 


















Transactions with owners recorded directly in equity:

 














Share based payments

-

-

-

78

 

78

 

 

78

 




 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at 30 September 2022

3,671

7,359

12,180

6,471

 

29,681

 

(26)

 

29,655

 


















Prior half year period unaudited










 

Balance at 1 April 2021

3,671

7,359

5,333

(8,426)


7,937


(26)


7,911



















Profit for the period

 

-

-

-

5,487


5,487



5,487



















Other comprehensive income:

 














Foreign exchange translation differences

-

-

913


913



913


Net investment hedge


-

-

(205)

 

(205)


 

(205)


Remeasurement losses on defined benefit scheme

-

-

-

2,730


2,730



2,730


Taxation on items above


-

-

236


236



236



















Total comprehensive income for the period

-

-

944

8,217


9,161



9,161



















Transactions with owners recorded directly in equity:

 














Share based payments

-

-

-

19


19



19



















Balance at 30 September 2021

3,671

7,359

6,277

(190)


17,117


(26)


17,091


















 





 

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


































Condensed consolidated statement of changes in equity continued










 















Prior year - audited















 

Balance at 1 April 2021

3,671

7,359

5,333

(8,426)


7,937


(26)


7,911



















Profit for the period

 

-

-

-

5,799


5,799



5,799



















Other comprehensive income-

 














Foreign exchange translation differences

-

-

1,840


1,840



1,840


Net investment hedge


-

-

440


440



44


Remeasurement losses 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



















Balance at 31 March 2022

3,671

7,359

7,486

5,926


24,442


(26)


24,416


















 

Condensed consolidated statement of cash flows





















Six months ended

30 September

2022

unaudited

£000

 

Six months ended

30 September

2021

unaudited

£000


Year ended

31 March

2022

audited

£000













 














 














 







 

 

 

 

 

Notes

 



Cash generated from operations

 






16


512

 

2,020


6,780


















Interest paid











(1,198)

 

(983)


(2,502)

Tax paid











(652)

 

(486)


(1,309)













 

 




Net cash (used in) / from operating activities




(1,338)

 

551


2,969


















Cash flows from investing activities

 













Proceeds from sale of business, net of cash disposed






 

693 


693

Proceeds from sale of property, plant and equipment




13, 14


1,129

 

25 


20

Interest received











60

 

34


77

Purchase of property, plant and equipment






(976)

 

(3,514)


(4,804)

Purchase of intangible assets - computer software




(59)

 

(15)


(135)













 

 




Net cash from / (used in) investing activities






154

 

(2,777)


(4,149)


















Cash flows from financing activities

 













Drawings on new facilities










198

 

-


1,575

Proceeds from sale and leaseback of property, plant and equipment




14


1,222

 

-


1,410

Repayment of borrowings excluding lease liabilities






(1,145)

 

(2,247)


(2,282)

Repayment of lease liabilities










(1,838)

 

(866)


(3,196)













 

 




Net cash used in financing activities




(1,563)

 

(3,113)


(2,493)


















Net decrease in cash and cash equivalents






(2,747)

 

(5,339)


(3,673)

Cash and cash equivalents at beginning of period






12,347

 

15,485


15,485

Effect of exchange rate fluctuations on cash held





1,124

 

248


535


















Cash and cash equivalents at end of period



17


10,724

 

10,394


12,347







 

 










Notes to the accounts

 






























1.

Basis of preparation

 


The condensed consolidated half year report for Carclo plc ("Carclo" or "the Group") for the six months ended 30 September 2022 has been prepared on the basis of the accounting policies set out in the audited accounts for the year ended 31 March 2022 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 2022 which is available either on request from the Company's registered office, Unit 5, Silkwood Court, Ossett, WF5 9TP, or can be downloaded from the corporate website www.carclo-plc.com




The comparative figures for the financial year ended 31 March 2022 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 29 November 2022.  Copies are available from the corporate website.


The Group financial statements for the year ended 31 March 2022 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.


On 2 September 2022 the Group successfully refinanced with the Company's bank, HSBC, concluding a first amendment and restatement agreement relating to the multicurrency term and revolving facilities agreement dated 14 August 2020.  The debt facilities currently available to the Group comprise a term loan of £31.2 million, of which £0.7 million will be amortised by 31 March 2023, a further £1.4 million by 31 March 2024 and a further £2.2 million by 31 March 2025.  The balance becomes payable by the termination date, 30 June 2025.  At 30 September 2022, the term loans are denominated as follows: sterling 14.9 million, US Dollar 13.3 million and Euro 4.9 million.  The facility also includes a £3.5m revolving credit facility, denominated in sterling, maturing on 31 May 2025.


Net debt at 30 September 2022 was £36.8 million, rising from £32.4 million at 31 March 2022 (30 September 2021: £28.4 million), £2.9 million of the increase from March 2022 being the negative impact of foreign exchange on borrowings during the period.


A schedule of contributions is in place with the pension trustees being £3.5 million to be paid annually until 31 October 2040.  There are no additional contributions payable until the year ending 31 March 2025 when a contingent contribution mechanism becomes active.

 

 

The Group is subject to bank facility and pension scheme covenant tests, as described in note 1 of the Annual Report and Accounts for the year to 31 March 2022, which remain unchanged following the first amendment and restatement agreement.


Whilst the Board's base case forecast shows that the Group is able to operate within its available facilities and to meet its covenants as they fall due, the interest covenant headroom is limited.


The Directors have reviewed sensitivity testing modelling a range of severe downside scenarios.  These sensitivities attempt to incorporate identified risks set out in the Principal Risks and Uncertainties section of this report and in the Annual Report and Accounts for the year to 31 March 2022.


Severe downside sensitivities modelled included a range of scenarios modelling the financial effects of loss of business from: discrete sites, an overall fall in gross margin of 1% across the Group, a fall in Group sales of 5% matched by a corresponding fall in cost of sales of the same amount, margin reduction on discrete customers, exchange risk and interest rate risk.


Because the interest cover covenant headroom is limited, principally due to increases in interest rates, manifestation of the above risks, individually or in combination, could lead to a breach of the Group's banking covenants.


The Board is taking actions including operational restructuring, cost savings, working capital management, debt reduction and interest reduction initiatives and it considers that whilst the potential benefits from these give some comfort that the downside risks can be mitigated there remains a material uncertainty that the interest cover covenant will be breached under reasonable downside risk scenarios.


The Group is engaging with the bank with a view to a temporary easement of the interest cover covenant. Whilst the Board is hopeful that such an easement will be granted, there is no guarantee and as such there is a material uncertainty over going concern due to the lack of forecast headroom on the interest cover covenant.


















2.

Accounting policies

 















The accounting policies applied in these interim financial statements are the same as those applied in the Group's consolidated financial statements as at, and for the year ended 31 March 2022.  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 2022 but they are not expected to have a material effect on the Group's financial statements.

 

3.

Accounting estimates and judgements













The preparation of the interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses. In preparing these half year financial statements, the significant judgements made by management in applying the Group's accounting policies and the key source of estimation uncertainty were the same as those applied to the audited consolidated financial statements as at, and for the year ended, 31 March 2022 except for the following -


Going concern

 















Key judgement

 














When considering going concern, management have applied judgement over forecast profit, debt levels and interest rates, particularly base rates.


Impairment of assets

 















Key judgement

















Management has exercised judgement to determine that there are no indicators of impairment for intangible assets at 30 September 2022.

 

 

 

 













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 value-adding engineered solutions for the life science, optical and precision component industries. 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 in the prior period comparatives was a leader in the development of high power LED lighting for the premium automotive industry and was disposed of in the year to 31 March 2020 - see note 5.


 

Transfer pricing between business segments is set on an arm's length basis. Segmental revenues and results shown below are after the elimination

of transfers between business segments.  Those transfers are eliminated on consolidation.






 

 

 

 

 

 

 

 

 





 

 

 

 

 

 

 





Technical

Plastics

(continuing)

£000

 

 





Aerospace

(continuing)

£000

Central

(continuing)

£000

 

Group

Total

£000

 

 





 

 

 





 

 

 

The segment results for the six months ended 30 September 2022 were as follows:

 

 

 

 

 

 


Consolidated income statement








 














 

 

 External revenue

69,133

 

3,018

-

 

 72,151

 


 Expenses




(65,124)

 

(2,345)

(1,089)

 

(68,558)

 

 

 Underlying operating profit / (loss)

4,009

 

673

(1,089)

 

3,593

 


 Exceptional operating items



457

 

-

(789)

 

(332)

 

 






 

 

 

 

 

 

 

 

 Operating profit / (loss)

4,466

 

673

(1,878)

 

3,261

 

 













 


 Net finance expense










 (1,610)

 

 

 Income tax expense










(983)

 

 













 

 

 Profit for the period





 


 668

 

 













 


 Consolidated statement of financial position




 

 


Segment assets

 

 

 

 

128,967

5,355

3,325

137,647

 


 

 

 

 

 

 

 

 

 

 


Segment liabilities


 

 

 

(44,637)

(1,257)

(62,098)

(107,992)

 


 


 

 

 

 

 

 

 

 

 

Net assets

 

 

 

 

 

 

84,330

 

4,098

 

(58,773)

 

29,655

 

















 

Other segmental information











 


Capital expenditure on property, plant and equipment

 

2,628

231

2,859

 


Capital expenditure on computer software

 

 

 

27

32

59

 


Depreciation

 

 

 

3,664

117

33

3,814

 


Amortisation of computer software

 

 

 

20

50

70

 


Amortisation of other intangibles

 

 

 

35

35

 

















 


Disaggregation of revenue












 


Major products/service lines


 

Manufacturing






  58,982

  3,018


   - 

  62,000

 


Tooling

 

 

 

 

10,151

10,151

 





 

 

 

 

69,133

 

3,018

 

-

 

72,151

 

Timing of revenue recognition











 

Products transferred at a point in time

 

 

 

58,982

3,018

 

-

62,000

 

Products and services transferred over time

 

 

10,151

 

-

10,151

 





 

 

 

 

69,133

 

3,018

 

-

 

72,151

 

 

 

 







 

 

 

 

 

 

 






Technical







Total










Plastics (continuing)

  Aerospace (continuing)

Central (continuing)


(continuing operations)

Discontinued operations

Group  total






£000 


£000 


£000


£000


£000


£000



















The segment results for the six months ended 30 September 2021 were as follows:































Consolidated income statement






























External revenue

56,583



2,089


-


58,672



58,672



















Expenses




(51,799)


(1,862)


(1,329)


(54,990)


-

(54,990)



















Underlying operating profit / (loss)

4,784



227


(1,329)


3,682


-


3,682



















COVID related US government grant income

2,087



-


-


2,087


-


2,087



















Operating profit / (loss) before exceptional items


6,871



  227


(1,329)


5,769


-


5,769



















Exceptional operating items


  - 



  - 


  - 



-


  - 


















Operating profit / (loss)


6,871



227


(1,329)


5,769


-


5,769


















 Net finance expense










(1,403)


-


(1,403)


 Income tax expense










428


-


428



















Profit from operating activities after tax






4,794


-


4,794



















Profit on disposal of discontinued operations, net of tax Ð see note 5



-


693


693


Profit for the period







4,794


693


5,487















Consolidated statement of financial position












 















Segment assets



117,433



6,107


510


124,050


-

124,050


Segment Liabilities


(38,973)



(751)


(67,235)


(106,959)


-

(106,959)


 Net assets

 



78,460



5,356


(66,725)


17,091


-


 

17,091



















Other segmental information

 














Capital expenditure on property, plant and equipment

2,893



  29


   30






2,952


Capital expenditure on computer software

15



  -


-


15


-


15


Depreciation




2,950



114


 19


3,083


-


3,083


Amortisation of computer software

8



-


60


68


-


68


Amortisation of other intangibles


30







30




30



















Disaggregation of revenue

 














Major products/service lines

 














Manufacturing




47,499



2,089


-


49,588



49,588


Tooling




9,084



-


-


9,084

 


9,084






56,583



2,089


-


58,672



58,672



















Timing of revenue recognition

 














Products transferred at a point in time

47,499



2,089


-


49,588



49,588


Products and services transferred over time

   9,084



-


-


9,084

 


9,084



  56,583



2,089


-


58,672



58,672

 

 











 





Technical





Total










Plastics

Aerospace

Central


(continuing


Discontinued


Group

 





(continuing)

(continuing)

(continuing)

operations)


operations


total

 






£000


£000 

£000


£000


£000


£000

 


















 


The segment results for the year ended 31 March 2022 were as follows:







 


















 


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

 


















 


Disaggregation of revenue

 













 


Major products/service lines

 













 


Manufacturing




98,734


4,707

-


103,441


-


103,441

 


Tooling




25,135


-

-


25,135


-


25,135

 






123,869


4,707

-


128,576


-


128,576

 


















 


Timing of revenue recognition

 













 


Products transferred at a point in time


98,872


4,707

-


103,579


-


103,579

 


Products and services transferred over time


24,997


-

-


24,997


-


24,997

 






123,869


4,707

-


128,576


-


128,576

 

 

 













 

 











 

5.

Discontinued operations













 


















 


There were no new discontinued operations in the six months to 30 September 2022 or in either of the comparative periods.  Prior period proceeds were in respect to amounts received from the administrators of Wipac Ltd which was part of the former LED Technologies segment, classified as discontinued in the year to 31 March 2020.  Management does not expect to receive any further proceeds from the administrators of Wipac Ltd.

 


















 

6.

Exceptional items

 














 













Six months ended

 

Six months ended


Year ended

 












30 September

 

30 September

31 March

 













2022

 

2021


2022

 





 


 


 


 


£000


£000


£000

 


















 


Continuing operations












 


Rationalisation costs










(1,101)

 

-


(133)

 


Credit arising on the disposal of surplus properties - see note 14




769

 

-


-

 


Gain in respect of retirement benefits







 


854

 


















 


Total recognised in operating profit


(332)

 

-


721

 




 

 




 


Deferred tax credit Ð see note 9


-

 

893


-

 




 

 




 













(332)

 

893


721

 


















 


Discontinued operations












 


















 


Profit on disposal of discontinued operations - see note 5




-

 

693


693

 


















 













-

 

693


693

 


















 


Exceptional items


(332)

 

1,586


1,414

 


















 


Rationalisation costs during the six months ended 30 September 2022 relate to the restructuring and refinancing of the Group.  These include £0.6 million employee related costs in respect to restructuring of the Technical Plastics division, £0.4 million legal and professional costs and £0.1m pension scheme administration costs incurred to ensure successful refinancing with the Group's principal bank and the Group pension scheme.

 


The credit arising on the disposal of surplus properties in the period is the profit arising on the sale and leaseback arrangement of the Technical Plastics manufacturing site at Tucson, Arizona, USA, see note 14.




 


There were no exceptional items recognised in operating profit from continuing operations in the comparative six months ended 30 September 2021.  A £0.9 million deferred tax credit upon re-recognition of UK deferred tax assets was treated as exceptional in the six months ended 30 September 2021.  In the year ended 31 March 2022, £0.1 million rationalisation costs related to the restructuring and refinancing of the Group and a £0.9 million gain in respect to retirement benefits past service credit for the impact of introducing a Pension Increase Exchange option to members were recognised as exceptional items.

 


The profit on disposal of discontinued operations of £0.7 million presented in the comparative periods comprises proceeds received in those periods from the administrators of Wipac Ltd, see note 5.

 



 

7.

Government support for COVID-19

 



 


In April 2020, the Group received a loan under the Paycheck Protection Program, underwritten by the US government in support of COVID-19 for $2.9 million.  On 5 May 2021, notice of forgiveness of the loan was received from the Small Business Administration, resulting in its conversion from a loan to a grant and therefore its release to the condensed consolidated income statement.  As such, the full amount was recognised in the comparative periods within operating expenses in the income statement as a credit to off-set labour and variable COVID-19 related costs incurred. 

 



 


The credit recognised in respect to the COVID-19 related government grant was presented separately in the prior year comparatives on the face of the condensed consolidated income statement for clarity.

 



 

 

 

 












 

8.

Net finance expense

 














 












Six months ended

Six months ended 30 September


Year ended

 











30 September

31 March












2022

2021

2021

 





 


 


 


 

£000 

£000

£000 

 


















 


The expense recognised in the condensed consolidated income statement comprises:







 


















 


Interest receivable on cash and cash deposits

60

 

34


77

 


Interest payable on bank loans and overdrafts

(1,030)

 

(816)

(1,794)

 


Lease interest










(303)

 

(165)

(527)

 


Other interest










-

 

(92)


(18)

 


Net interest on the net defined benefit liability



(337)

 

(364)

(727)

 


















 


Net finance expense









(1,610)


(1,403)


(2,989)

 

 

9.

Income tax expense

 


























Six months ended

 

Six months ended


Year ended













30 September

 

30 September

31 March













2022

 

2021


2022













£000


£000


£000



















The (expense) / credit recognised in the condensed consolidated income statement comprises:

























Continuing operations































Current tax expense on ordinary activities







(795)

 

(465)


(1,470)


Deferred tax (expense) / credit on ordinary activities






(74)

 

-


661


Current tax expense on exceptional items




(114)

 

-


-


Exceptional deferred tax credit - recognition of deferred tax assets







-


893


-



















Total income tax (expense) / credit recognised in the condensed consolidated income statement



(983)

 

428


(809)




































The half year tax expense represents 59.5% of statutory profit before tax (6 months to 30 September 2021: tax credit: -8.5%) based on the estimated average effective tax rate on ordinary activities for the full year.  The prior period comparative included a deferred tax credit of £0.9 million which was recognised in the six months ended 30 September 2021 upon the recognition of £0.9 million deferred tax assets in respect of UK losses and capital allowances. 


The half year underlying effective tax rate amounts to 43.8% of underlying profit before tax and exceptional items (6 months to 30 September 2021: 20.4% after excluding the deferred tax credit of £0.9 million and before COVID government grant income).



















The Group's underlying effective tax rate is higher than the underlying UK tax rate of 19.0% (6 months to 30 September 2021: 19.0%) because the Group is earning a higher proportion of its profits in higher tax jurisdictions, due to withholding tax on dividends from certain tax jurisdictions and because additional deferred tax assets in respect to UK losses have not been recognised in the period.












Deferred tax assets and liabilities at 30 September 2022 have been calculated on the rates substantively enacted at the balance sheet date.  A change to the main UK corporation tax rate, set out in the Finance Bill 2021 was substantively enacted on 24 May 2021 with the main rate of corporation tax to become 25% from 1 April 2023.







 

 
















 

 










10.

Earnings per share

 
































The calculation of basic earnings per share is based on the profit attributable to equity holders of the parent company divided by the weighted average number of ordinary shares outstanding during the period.


The calculation of diluted earnings per share is based on profit attributable to equity holders of the parent company divided by the weighted average number of ordinary shares outstanding during the period (adjusted for dilutive options).


The following details the 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













2022

 

2021


2022







 

 

 

 

 

 

£000


£000


£000



















Profit after tax but before profit on discontinued operations



668

 

4,794


5,106



















Profit attributable to non-controlling interests


-

 

-


-













 

 





Profit attributable to ordinary shareholders from continuing operations



668

 

4,794


5,106



















Profit on discontinued operations, net of tax




-

 

693


693



















Profit after tax, attributable to equity holders of the parent




668

 

5,487


5,799















































Six months ended

 

Six months ended


Year ended













30 September

 

30 September

31 March













2022

 

2021


2022









 

 

 

 

Shares


Shares

 

Shares



















Weighted average number of ordinary shares in the period




73,419,193

 

73,419,193

73,419,193



















Effect of share options in issue









376,151

 

15,974


324,977



















Weighted average number of ordinary shares (diluted) in the period




73,795,344

 

73,435,167

73,744,170



















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

 

 

 


The following table reconciles the Group's profit to underlying profit used in the numerator in calculating underlying earnings per share:






























Six months ended

 

Six months ended


Year ended













30 September

 

30 September

31 March













2022

 

2021


2022







 

 

 

 

 

 

£000


£000


£000


Profit after tax, attributable to equity holders of the parent




668

 

5,487


5,799



















Continuing operations:













Exceptional - rationalisation and restructuring costs, net of tax




1,023

 

-


133


Exceptional credit arising on the disposal of surplus properties, net of tax




(577)

 

  -

 

-


Exceptional - gain in respect of retirement benefits, net of tax




-

 

-

 

(854)

 

Exceptional - recognition of UK deferred tax assets




  -


(893)

 

  -

 

COVID-related US government grant income, net of tax







-


(2,087)


(2,087)















Discontinued operations :













 

Exceptional - gain on disposal of discontinued operations, net of tax


-

 

(693)

 

(693)



















Underlying profit attributable to equity holders of the parent




1,114

 

1,814


2,298



















COVID related US government grant income, net of tax




-

 

  2,087


2,087



















Profit after tax but before exceptional items, attributable to equity holders of the parent


1,114

 

3,901


4,385



















Underlying operating profit - continuing operations




3,593

 

3,682


6,096







 

 





Finance revenue - continuing operations





60

 

34


77


Finance expense - continuing operations




(1,670)

 

(1,437)


(3,066)


Income tax (expense) / credit - continuing operations




(869)

 

428


(809)


Less: recognition of UK deferred tax assets - continuing operations


-

 

(893)


-



















Underlying profit attributable to equity holders of the parent - continuing operations


1,114

 

1,814


2,298


COVID related US government grant income, net of tax




-

 

2,087


2,087



















Profit after tax but before exceptional items - continuing operations


1,114

 

3,901


4,385



















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



















Six months ended

 

Six months ended


Year ended













30 September

 

30 September

31 March













2022

 

2021


2022









 

 

 

 

Pence


Pence

 

Pence



















Basic earnings per share - continuing operations




0.9

 

6.5


7.0


Basic earnings per share - discontinued operations




-

 

0.9


0.9



















Basic earnings per share





0.9

 

7.5


7.9



















Diluted earnings per share - continuing operations




0.9

 

6.5


6.9


Diluted earnings per share - discontinued operations




-

 

0.9


0.9



















Diluted earnings per share






0.9

 

7.5


7.9



















Underlying earnings per share - basic - continuing operations




1.5

 

2.5


3.1


Underlying earnings per share - basic - discontinued operations




-

 

-


-



















Underlying earnings per share - basic




1.5

 

2.5


3.1



















Underlying earnings per share - diluted - continuing operations




1.5

 

2.5


3.1


Underlying earnings per share - diluted - discontinued operations


-

 

-


-



















Underlying earnings per share - diluted




1.5

 

2.5


3.1



















Earnings per share before exceptional items - basic - continuing operations


1.5

 

5.3


6.0


Earnings per share before exceptional items - basic - discontinued operations


-

 

-


-



















Earnings per share before exceptional items - basic




1.5

 

5.3


6.0



















Earnings per share before exceptional items - diluted - continuing operations


1.5

 

5.3


6.0


Earnings per share before exceptional items - diluted - discontinued operations


-

 

-


-



















Earnings per share before exceptional items - diluted


1.5

 

5.3


6.0

 

 

 

 













11.

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 June 2025.


















12.

Intangible assets
































The movements in the carrying value of intangible assets are summarised as follows:




































Six months ended

 

Six months ended


Year ended













30 September

 

30 September

31 March













2022

 

2021


2022


 









 

 

£000


£000


£000



















Net book value at the start of the period






22,714

 

21,848


21,848



















Additions











59

 

15


135


Amortisation











(105)

 

(98)


(203)


Effect of movements in foreign exchange







1,912

 

449


934



















Net book value at the end of the period







24,580

 

22,214


22,714



















Included within intangible assets is goodwill of £23.8 million (31 March 2022 - £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 2022, the carrying value of goodwill was supported by value-in-use calculations. There has been no indication of subsequent impairment in the current financial period.



















Intangible assets also include customer-related intangibles of £0.3 million (31 March 2022: £0.3 million) and computer software of £0.5 million (31 March 2022: £0.5 million).


















 

13.

Property, plant and equipment






























The movements in the carrying value of property plant and equipment are summarised as follows:















Six months ended

 

Six months ended


Year ended













30 September

 

30 September

31 March













2022

 

2021


2022


 









 

 

£000


£000


£000



















Net book value at the start of the period







46,964

 

43,218


43,218



















Additions











2,859

 

2,952


9,708


Depreciation











(3,814)

 

(3,083)


(6,825)


Disposals











(207)

 

-


(20)


Reclassification of assets held for sale







(65)

 

-


(266)


Effect of movements in foreign exchange







3,716

 

545


1,149


Net book value at the end of the period







49,453

 

43,632


46,964



















Of the net book value at 30 September 2022, £27.0 million is land and buildings and £22.4 million is plant and equipment (31 March 2022:

£26.5 million and £20.5 million respectively).  Additions to 30 September 2022 were £1.3 million to land and buildings and £1.6 million to plant and equipment with disposals of £0.0 million and £0.2 million respectively.




Right-of-use assets
















Right-of-use assets related to lease agreements are presented within property, plant and equipment above. The movements are summarised as follows:






























Six months ended

 

Six months ended


Year ended













30 September

 

30 September

31 March













2022

 

2021


2022













£000


£000


£000


















Net book value at the start of the period



11,713

 

6,988


6,988



















Depreciation











(1,321)

 

(823)


(2,282)


Additions











2,002

 

196


6,818


Asset transferred to right-of-use assets from owned property, plant and equipment






372

 

-


-


Derecognition of right-of-use assets






(207)

 

-


-


Effect of movements in foreign exchange






1,020

 

90


189



















Net book value at the end of the period






13,579

 

6,451


11,713



















Of the net book value at 30 September 2022, £7.4 million is land and buildings and £6.2 million is plant and equipment (31 March 2022:

£6.7 million and £5.0 million respectively).  Additions to 30 September 2022 were £1.1 million to land and buildings and £0.9 million to plant

and equipment with disposals of £0.0 million and £0.2 million respectively.


£0.4 million has been reallocated from owned property, plant and equipment into right of use assets at net book value.  This relates to the Tucson property that was subject to a sale and leaseback arrangement in the period, see note 14.

14.Non-current assets classified as held for sale

 

 








Six months ended


Six months ended


Year ended

 

 








30 September


30 September


31 March

 

 








2022


2021


2022

 

 








£000


£000


£000

Land and buildings held for sale at the start of the period






266


  -


  -

Additions

 








  64


 

  -


266

Effect of movements in foreign exchange







  30


  -


  -

Disposals

 








(360)


  -


  -

 

 













Net assets held for sale at the end of the period







  -


  -


266

 

 














On 11 July 2022, the Group finalised a sale and leaseback arrangement of a Technical Plastics manufacturing site at Tucson, Arizona, USA for agreed consideration of $2.95 million less costs of $0.155 million (£2.351 million net).  A lease term of eight years and four months has been agreed and grants the Group the right to cancel any time after 1 October 2025, provided twelve months' notice is given.  At 30 September 2022 there is no reasonable certainty that the Group will exercise the break clause.



















The total net book value of the property amounted to £0.7 million at the date of disposal however only the proportion relating to the disposed useful economic life was classified as held for sale prior to disposal (£0.36 million).  The balance of £0.4 million that relates to the right of use asset remained in owned property, plant and equipment until completion when it was transferred into right of use assets.  The profit on the portion relating to the disposed useful economic life amounted to £0.8 million and has been classified as exceptional income - credit on disposal of surplus property in the condensed consolidated income statement.



































 

 








15.

Retirement benefit obligations



























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


The amounts recognised in the condensed consolidated statement of financial position in respect of the defined benefit scheme were as follows:






























Six months ended

 

Six months ended


Year ended













30 September

 

30 September

31 March













2022

 

2021


2022






£000


£000


£000


 

Present value of funded obligations




(128,079)

 

(203,198)

 

(181,759)






 

 





Fair value of scheme assets




103,151

 

169,791


155,780


Recognised liability for defined benefit obligations




(24,928)

 

(33,407)


(25,979)

 























Six months ended

 

Six months ended


Year ended













30 September

 

30 September

31 March


Movement in the net liability for defined benefit obligations recognised in the condensed consolidated statement of financial position:




2022

 

2021


2022





£000


£000


£000












 

Net liability for defined benefit obligations at the start of the period




(25,979)

 

(37,275)


(37,275)


 

Contributions paid




2,392

 

2,050


3,900


Net expense recognised in the condensed consolidated income statement


(1,140)

 

(939)


(1,084)


 

Remeasurement (losses) / gains recognised in other comprehensive income


  (201)

 

2,757


8,480


 

Net liability for defined benefit obligations at the end of the period




(24,928)

 

(33,407)


(25,979)
















Six months ended

 

Six months ended


Year ended













30 September

 

30 September

31 March













2022

 

2021


2022


Movements in the fair value of Scheme assets:




£000


£000


£000









T5d




 






Fair value of Scheme assets at the start of the period







155,780

 

167,379


167,379


 

Interest income




2,057

 

1,646


3,259


(Loss) / return on Scheme assets excluding interest income




(49,846)

 

4,667


(6,763)


 

Contributions by employer




2,392

 

2,050


3,900


 

Benefit payments




(6,429)

 

  (5,376)


(10,784)


 

Expenses paid











  (803)

 

(575)


(1,211)


 

Fair value of Scheme assets at the end of the period




103,151

 

169,791


155,780


















 


Actual (loss) / return on Scheme assets




(47,789)

 

6,313


(3,504)





































































 













 

 
















Six months ended 30 September

 

Six months ended 30 September

Year ended 31 March













 













2022

 

2021


2022


Movements in the present value of defined benefit obligations:




£000


£000


£000













 






Defined benefit obligation at the start of the period




181,759

 

204,654


204,654


Interest expense




2,394

 

2,010


3,986


Actuarial gains due to changes in demographic assumptions




-

 

-


(1,767)


Actuarial (gains) / losses due to changes in financial assumptions




(49,645)

 

1,910


(13,476)


Benefit payments




(6,429)

 

(5,376)


(10,784)


Past service credit




-

 

-


(854)


Defined benefit obligation at the end of the period




128,079

 

203,198


181,759

 


















 













Six months ended 30 September 2022


Six months ended 30 September 2021


Year ended 31 March 2022

 













 


 













 


 


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






 





 


Discount rate at period end




5.30%

 

2.00%


2.70%


Inflation (RPI) (non-pensioner)




3.55%

 

3.45%


3.70%


Inflation (CPI) (non-pensioner)




3.05%

 

2.95%


3.20%


Allowance for revaluation of deferred pensions of RPI or 5% p.a. if less


3.55%

 

3.45%


3.70%


Allowance for revaluation of deferred pensions of CPI or 5% p.a. if less


3.05%

 

2.95%


3.20%


Allowance for pension in payment increases of RPI or 5% p.a. if less




3.45%

 

3.35%


3.55%


Allowance for pension in payment increases of CPI or 3% p.a. if less




2.55%

 

2.40%


2.60%


Allowance for pension in payment increases of RPI or 5% p.a. if less, minimum 3% p.a.


3.75%

 

3.75%


3.85%


Allowance for pension in payment increases of RPI or 5% p.a. if less, minimum 4% p.a.


4.25%

 

4.25%


4.30%


















 


Life expectancy

 










  years

 

  years


years

 


Male (current age 45)










  19.7

 

  19.9


19.7

 


Male (current age 65)










  18.8

 

  19.0


18.8

 


Female (current age 45)









  22.0

 

  22.2


22.0

 


Female (current age 65)








  20.9


  21.0


20.9

 







 

 










 

 

16.

Cash generated from operations
















 

 







Six months ended

 

Six months ended


Year ended













30 September

 

30 September

31 March













2022

 

2021


2022






 

 

 

 

 

 

 

£000


£000


£000



















Profit for the period - continuing operations




668

 

4,794


5,106


Profit for the period - discontinued operations


-

 

693


693













 

 
















668

 

5,487


5,799


Adjustments for -

 















Pension scheme contributions net of administration costs settled by the Company


(1,869)

 

(1,787)


(3,258)


Pension scheme administration costs settled by the Scheme


280

 

285


569


Depreciation charge










3,814

 

3,083


6,825


Amortisation charge







105

 

98


203


Exceptional provision for staff costs







330

 

-


-


Exceptional gain in respect of retirement benefits


-

 

-


(854)


Conversion of COVID-19 government support loan to grant


-

 

(2,104)


(2,087)


Profit on business disposal







-

 

(693)


(693)


Exceptional profit on disposal of surplus property




(769)

 

-


-


Profit on disposal of other plant and equipment




-

 

(25)


-


Share based payment charge









78

 

24


73


Financial income











(60)

 

(34)


(77)


Financial expense









1,670

 

1,437


3,066


Taxation expense / (credit)








983

 

(428)


809













 

 





Operating cash flow before changes in working capital




5,230

 

5,343


10,375



















Changes in working capital

 














Decrease / (increase) in inventories




410

 

(3,534)


(3,816)


Increase in contract assets




(2,112)

 

(3,233)


(4,708)


(Increase) / decrease in trade and other receivables




(1,601)

 

(3,920)


42


(Decrease) / increase in trade and other payables




(2,669)

 

5,037


4,549


Increase in contract liabilities









1,254

 

2,327


338


Cash generated from operations




512

 

2,020


6,780



































17.

Cash and cash deposits

























As at

 

As at


As at













30 September

 

30 September

31 March













2022

 

2021


2022






 

 

 

 

 

 

 

£000


£000


£000



















Cash and cash deposits








10,724

 

10,394


12,347





























10,724

 

10,394


12,347


















The Group has a net UK multi-currency overdraft facility with a £nil net limit and a £12.5 million gross limit.  At 30 September 2022, Carclo plc's overdraft of £5.9 million (31 March 2022: £2.4 million) has been recognised within cash and cash deposits when consolidated.

 


















18.

Net debt

 

































Net debt comprises -



























As at

 

As at

30 September

2021

£000


As at












30 September

 

31 March













2022

 


2022






 

 

 

 

 

 

 

£000



£000



















Cash and cash deposits







10,724

 

10,394


12,347


Term loan











(30,722)

 

(29,893)

(30,260)


Revolving credit facility










(3,500)

 

(2,000)


(3,500)


Lease liabilities











(13,057)

 

(6,758)


(10,870)


Other loans











(275)

 

(114)


(122)



















Net debt











(36,830)

 

(28,371)

(32,405)



















On 2 September 2022 the Group successfully refinanced with the Company's bank, HSBC, concluding a first amendment and restatement agreement relating to the multicurrency term and revolving facilities agreement dated 14 August 2020.  The debt facilities currently available to the Group comprise a term loan of £31.2 million (31 March 2022: £30.3 million), of which £0.7 million will be amortised by 31 March 2023, a further £1.4 million by 31 March 2024 and a further £2.2 million by 31 March 2025.  The balance becomes payable by the termination date, 30 June 2025.

 

An arrangement fee of £0.5 million became payable on 2 September 2022 upon completion, has been deducted from the carrying value of the term loan and is to be settled quarterly over the subsequent twelve month period.

 

At 30 September 2022, the term loans are denominated as follows: sterling 14.9 million, US Dollar 13.3 million and Euro 4.9 million. The facility also includes a £3.5m (31 March 2022: £3.5 million) revolving credit facility, denominated in sterling, maturing on 31 May 2025.



















Reconciliation of movements of liabilities to cash flows arising from financing activities



























Term loan £000

Government

COVID-19 support loan

£000

Revolving credit facility £000


Lease liabilities

 000


Other loans  £000


Total £000



















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


-



-


-


569


24


593


Repayment of borrowings


(2,218)



-


-


 (866)


(20)


(3,104)






(2,218)



-


-


(297)


4


(2,511)



















Effect of changes in foreign exchange rates

   211



(17)


-


-


-


194



















Liability-related other changes














Conversion of loan to a grant

  -


(2,087)


-


-


-


(2,087)


Interest expense




  88



-


-


-


-


88






  88


(2,087)

 

-


-


-


(1,999)



















Equity-related other changes

  -



-


-


  -


  -


  -


Balance at 30 September 2021

29,893



-


2,000


6,758


114


38,765



















Changes from financing cash flows














Drawings on new facilities


  -



-


1,500


  -


51


1,551


Repayment of borrowings


  -



-


  -


(2,329)


(44)


(2,373)






  -



-


1,500


(2,329)


7


(822)



















 




Term loan £000

Government

COVID-19 support loan

£000

Revolving credit facility £000


Lease liabilities

 000


Other loans  £000


Total £000



















Effect of changes in foreign exchange rates

  229

 

 

-

 

  -

 

192

 

  1

 

  422



















Liability-related other charges














Drawings on new facilities




-


-


6,249


  -


6,249


Interest expense




  138



-


-


-


  -


138






  138



-


-


6,249


  -


6,387



















Equity-related other charges

  -



-


-


-


  -


  -



















Balance at 31 March 2022

30,260


 

-

 

3,500


10,870


122


44,752



















Changes from financing cash flows

 

 

 

 

 

 

 

 

 

 

 

 


Drawings on new facilities


  -

 

 

-

 

-

 

3,092

 

198

 

3,290


Transaction costs associated with the issue of debt

  (500)

 

 

-

 

-

 

  -

 

-

 

(500)


Repayment of borrowings


(1,100)

 

 

-

 

-

 

  (1,838)

 

  (45)

 

  (2,983)






(1,600)

 

 

-

 

-

 

1,254

 

153

 

(193)






 

 

 

 

 

 

 

 

 

 

 

 


Effect of changes in foreign exchange rates

  1,972

 

 

-

 

-

 

  933

 

-

 

2,905






 

 

 

 

 

 

 

 

 

 

 

 


Liability-related other changes

 

 

 

 

 

 

 

 

 

 

 

 


Interest expense - presented within exceptional items

  69

 

 

-

 

-

 

-

 

-

 

69


Interest expense - presented within finance expense

  21

 

 

-

 

-

 

  -

 

-

 

21






  90

 

 

-

 

-

 

-

 

-

 

90


 

 

 

 

 

 

 

 

 

 

 

 

 


Equity-related other charges

  -

 

 

-

 

-

 

-

 

-

 

-






 

 

 

 

 

 

 

 

 

 

 

 


Balance at 30 September 2022

30,722

 

 

  -

 

3,500

 

13,057

 

275

 

47,554


















19.

Financial instruments




























The fair value of financial assets and liabilities are not materially different from their carrying value.























There are no material items as required to be disclosed under the fair value hierarchy.






















 

 












20.

Ordinary share capital


























Number

 
















of shares

 

£000

 


















Ordinary shares of 5 pence each























 



 

 

 


Issued and fully paid at 30 September 2021, 31 March 2022 and 30 September 2022



73,419,193

 

3,671

 


 

 

 













 


 

 

 













21.

Related parties

 

































Identity of related parties













The Company has a related party relationship with its subsidiaries, its directors and executive officers and the Group pension scheme. There are no transactions that are required to be disclosed in relation to the Group's 60% dormant subsidiary Platform Diagnostics Limited.



















Transactions with key management personnel










On 6 October 2022 the Board announced, with immediate effect, the appointment of Frank Doorenbosch as Chief Executive Officer to Carclo plc.  Frank had previously been appointed as a consultant to the Group for a period of up to twelve months from 6 June 2022 and accordingly since that date has been an Executive Director of Carclo plc.  On the same day, Nick Sanders, stood down as Executive chair and became Non-Executive Chair until 5 November 2022 when the Board announced that Nick Sanders would be stepping down from his role as Non-Executive Chair and as a Director of the Company.



















The Board has appointed Joe Oatley as Non-Executive Chair with effect from 6 November 2022 and Eric Hutchinson, a Non-Executive Director and Chair of the Audit Committee, was appointed as Senior Independent Director and Chair of the Remuneration Committee with Effect from 6 November 2022.



















Phil White has given notice of his retirement and has stepped down from his role as Chief Financial Officer and as a Director of the Company with effect from 14 November 2022. Phil will remain with the Company until his retirement in June 2023 in order to ensure a smooth transition to the new CFO.  The Board has announced the promotion of David Bedford to Chief Financial Officer and appointment as a Director of the Company with effect from 14 November 2022.





During the period to 30 September 2022, the Group was billed £0.5 million (31 March 2022: £0.2 million) by Thingtrax, a company that offers intelligent manufacturing infrastructure as a service.  Frank Doorenbosch, a Carclo plc Executive Director since 6 June 2022, is also a Non-Executive Director of Thingtrax and, as such, the company is identified as a related party.  During the period to 30 September 2022, £0.3 million (31 March 2022: £0.1 million) has been recognised as a cost in the condensed consolidated income statement; a balance of £0.3 million remains on balance sheet as prepaid at 30 September 2022 and will be recognised in the second half of the year to 31 March 2023.




Key management personnel are considered to be the Executive Directors of the Group. Full details of directors' remuneration is disclosed in the Group's annual report. In the six months ended 30 September 2022, remuneration to current and former directors amounted to £0.434 million (six months ended 30 September 2021 - £0.219 million).




On 3 August 2022 P White, the Group's former Chief Financial Officer was granted 386,778 share options under the terms of the Carclo plc 2017 Performance Share Plan ("PSP") (30 September 2021: 386,778).  The options will vest at the end of a three-year period depending on the achievement of performance targets set out in the PSP rules and 204,992 are then subject to a further two-year holding period. The awards take the form of nil cost options, being an option under the PSP with a £nil exercise price.  Share price at date of award was 20.02 pence and fair value at date of award totalled £0.053 million (30 September 2021: 41.60 pence, £0.118 million respectively). 



















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 six months to 30 September 2022, incorporating both deficit recovery contributions and scheme expenses including PPF levy.  An additional payment of £0.35 million has also been made during the period under the schedule of contributions.



















Carclo incurred administration costs of £0.803 million during the period which has been charged to the consolidated income statement, including £0.124 million presented as exceptional costs, (30 September 2021: £0.575 million, of which £nil was presented as exceptional).  Of the administration costs, £0.524 million was paid directly by the scheme (30 September 2021: £0.285 million).  The total deficit reduction contributions and administration costs paid during the period was £2.4 million (30 September 2021: £2.1 million).


















22 .

Post balance sheet events

 































With the exception of those disclosed within note 21 Related parties, there are no events that have occurred since the period end that require disclosure in the report.



23.

Seasonality


































There are no specific seasonal factors which impact on the demand for products and services supplied by the Group, other than for the timing of holidays and customer shutdowns. These tend to fall predominantly in the first half of Carclo's financial year and, as a result, revenues and profits are usually higher in the second half of the financial year compared to the first half.






















 

INDEPENDENT REVIEW REPORT 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 2022 which comprises the condensed consolidated income statement, the condensed consolidated statement of comprehensive income, the condensed consolidated statement of financial position, the condensed consolidated statement of changes in equity, the consolidated cash flow statement and related notes.

 

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 September 2022 is not prepared, in all material respects, in accordance with UK adopted International Accounting Standard 34 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 (Revised), ÒReview 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 1, the annual financial statements of the Group are prepared in accordance with UK adopted IFRSs. 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'

 

Material Uncertainty relating to going concern

We draw attention to note 1 to the interim financial information which indicates that the directors have considered the Group's ability to operate within its available banking facilities and to meet the associated covenants as they fall due. In the base case forecasts the interest cover covenant headroom is limited, principally due to increases in interest rates, and a manifestation of the risks facing the Group, individually or in combination, could lead to a breach of the Group's banking covenants. These events and conditions, indicate the existence of a material uncertainly in respect of the Group's ability to continue as a going concern.

 

Our conclusion is not modified in this respect.

 

Responsibilities of directors

The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority.

 

In preparing the half-yearly 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.

 

AuditorÕs 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.

 

The purpose of our review work and to whom we owe our responsibilities

This report is made solely to the Company in accordance with the terms of our engagement letter to assist the Company in meeting the requirements of the DTR of the UK FCA. Our review has been undertaken so that we might state to the Company those matters we are required to state to it in this 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 reached.

 

Signed:

 

Mazars LLP

Chartered Accountants

30 Old Bailey

London EC4M 7AU

Date: 29 November 2022 

Notes:

(a) The maintenance and integrity of the Carclo plc web site is the responsibility of the directors; the work carried out by us does not involve consideration of these matters and, accordingly, we accept no responsibility for any changes that may have occurred to the interim report since it was initially presented on the web site.

(b) Legislation in the United Kingdom governing the preparation and dissemination of financial information may differ from legislation in other jurisdictions.

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