Interim Results

Carclo plc

Interim Results for the Six Months ended 30 September 2000

Highlights


* Sales from continuing operations increased by 7.5% to £83.1m (1999: £77.3m).

* Underlying operating profits from continuing operations rose by 16% to £7.0m (1999: £6.0m).

* Strong profits recovery in the Specialist Wire Division.

* Carclo Technical Plastics made good progress with growth in products for mobile phones. 

* Underlying earnings per share increased by 4% to 7.1p (1999: 6.8p).

* Exit from commodity wire products completed.

* Acquisition of Alan Group provides further global opportunities for the Technical Plastics Division.



Commenting on the results, George Kennedy, Chairman, said: 

'We remain confident that the group is well placed to deliver underlying growth.'






For further information please contact:

Carclo plc
Ian Williamson, Chief Executive	       On 4 December: 020 7475 2112   	
Chris Mawe, Finance Director	 Thereafter: 01924 330500

Golin/Harris Ludgate 
Richard Hews	020 7253 2252									
Trish Featherstone



Chairman's Statement

Overview

Sales in the six months to 30 September 2000 from our continuing operations increased by 7.5% to £83.1million compared to the equivalent period last year. Underlying operating profits on the same basis increased by over 16%, with both divisions making progress.

The technical plastics division, which benefited from increased sales of telecommunication components, contributed all of the revenue growth. Operating profits increased by 7.6% and, despite continuing pressure on selling prices and increased polymer prices, operating margins were broadly maintained.

The specialist wire division reported sales of £21.0million in the half year, in line with the same period last year. Operating profits were, however, 25.5% ahead and margins have increased reflecting the continuing recovery in card clothing and the successful withdrawal from lower margin commodity wire products.

Profit before tax of £4.5million is stated after exceptional charges totalling £0.9million relating to the closure of Lee Smith Wires and the sale of our wire rope businesses. Basic earnings per share were down slightly from 5.9p last year to 5.4p this year due to the one off charges noted above. The progress of the group is better measured by underlying earnings per share, eliminating one off charges and goodwill. This shows an increase of 4.4% to 7.1p reflecting underlying growth in technical plastics and recovery in specialist wire which has compensated for the overall dilutive effect of the Lee Steel Strip disposal in November 1999.

Financial Position

Net debt at 30 September 2000 was £35.9million, an increase of £7.8million since 31 March 2000. This represents a gearing level of 49% with underlying interest cover of 5.9 times. Core debt within Carclo traditionally peaks in September due to the payment of both an interim and final dividend totalling £6.0million in the first half. 

The group has continued to invest in growth opportunities and capital expenditure in the period was 1.4 times depreciation.  In total £6.0million was expended on capital of which £1.9million related to new production facilities within the technical plastics division. An earn out payment totalling £3.8million was paid in the period to the former owners of CTP Carrera. This was matched by the proceeds from the sale of the wire rope businesses.

At 30 September 2000 cash and unutilised assured medium term facilities totalled £65million, sufficient to fund further acquisitions and the significant organic growth opportunities in the technical plastics division. 

Dividend

Your board has declared an interim dividend of 3.44p per ordinary share, unchanged on the same period last year. Dividend warrants will be posted on 6 April 2001 to shareholders on the register on 2 March 2001.


Operating Review

Technical plastics benefited from its exposure to growth markets, especially mobile phones and data communications. Growth in these markets more than compensated for the continuing difficult trading environment for UK based manufacturers.

The teletronics operations performed well, benefiting from high mobile phone sales. However, this sector has shown some volatility in recent months and accordingly the strong growth experienced in the first half will not continue into the second half of the current financial year.

The automotive operations experienced pricing pressures resulting in reduced profits despite modestly increased volumes. With new products scheduled to come on stream in the second half, we remain confident that the automotive companies will deliver a creditable performance for the full year.

The optical-medical operations reported an improved performance. Our optical business returned to profit in the first half but the second half will be affected by the planned move to a new facility. Our medical products operations performed extremely well. 

CTP Carrera again delivered excellent results with operating margins over 15%. A new production facility has been commissioned in Latrobe, Pennsylvania.

The specialist wire division reported a substantial improvement in profitability in the period. The card clothing operations continued the positive trend which began during the second half of last year and have benefited from improvements in productivity. 

The other specialist wire companies performed at similar levels to last year with the exception of the Lee Smith Wires business which slipped back into losses during the first half. Regrettably, with no return to profitability in sight, we will close this low margin business during the second half of the current year. The charge arising in respect of this  closure will be up to £1.2million of which £0.9million has been charged in the first half due to the write down of the assets of that business and associated redundancy costs. 

The Alan Group

We have today announced the acquisition of the Alan Group, a leader in precision toolmaking and moulding for the teletronics connector industry. The consideration is £8.4million including debt assumed. The business has three operations in the UK and a new state of the art facility in Shanghai, China. The Alan Group had sales of £7.7million and earnings before interest of £1.6million in the year to 31 March 2000.

The acquisition is an excellent strategic fit with Carclo, opening up synergistic opportunities via its existing customer base, its excellent reputation as a leading precision toolmaker and its world class manufacturing capability in China.  This acquisition is the next step in our strategy of building a global technical plastics group. We plan to make further acquisitions to build upon the strong technical capability of our group and to enhance our global coverage.


Outlook

The trading performance in the first half of the current year has been in line with our expectations. We benefited from significant growth in mobile phone products. In the last few weeks it has become clear that mobile phone manufacturers have entered a turbulent period and we have experienced both new product cancellations and early termination of some established programmes. This will have a modest impact on our second half. However, whilst volatile, the telecom market remains high growth and our involvement in new programmes for next year underpins our confidence in this market.

New automotive product developments are set to come on stream in the second half and additional technical plastics capacity in the US and UK will enable us to exploit organic growth opportunities.

The specialist wire division is continuing on the path to recovery and further improvements are being seen as we enter the second half.

We remain confident that the group is well placed to deliver underlying growth.


George Kennedy
Chairman
4 December 2000


Consolidated profit and loss account (unaudited)



Half year ended 30 September 2000
£'000

Half year ended 30 September 1999
£'000

Year ended 
31 March 2000
£'000
Turnover

   Continuing operations
- ongoing
83,101

77,330

159,772







   Discontinued

5,567

21,491

31,521


88,668

98,821

191,293
Operating profit






   Continuing operations
- ongoing - before rationalisation costs
7,022

6,042

13,243

                 - rationalisation costs
(190)

(139)

(1,101)

                 - after rationalisation costs
6,832

5,903

12,142







   Discontinued

172

1,335

2,026


7,004

7,238

14,168
   Goodwill amortisation

(472)

(363)

(748)
Operating profit

6,532

6,875

13,420
   Disposal of subsidiary undertaking
     (46)

-

(3,875)
   Loss on termination of operations
(852)

(251)

(538)
   Profit on sale of properties

97

-

-






Profit before interest
5,731

6,624

9,007
   Net interest payable

1,224

1,686

3,012
Profit on ordinary activities before taxation
4,507

4,938

5,995
   Taxation
1,578

1,580

3,484
Profit on ordinary activities after taxation
2,929

3,358

2,511
   Preference dividends (non equity)
-

32

32
Profit attributable to ordinary shareholders
2,929

3,326

2,479
   Ordinary dividends
1,885

1,928

6,016
Retained profit for the period
1,044

1,398

(3,537)
Earnings per ordinary share





   Basic
5.4p

5.9p

4.4p
   Underlying
7.1p

6.8p

14.9p
Dividend per ordinary share
3.44p

3.44p

11.00p
Statement of total recognised gains and losses
Profit on ordinary activities after taxation for the period
2,929

3,358

2,511
Exchange losses on the translation of overseas assets
(216)

(42)

(216)
Total gains and losses recognised since last annual report
2,713

3,316

2,295

Notes:
1. The financial information in this document has been prepared on the basis of the accounting policies set out in the audited accounts for the year ended 31 March 2000. This financial information was approved by the directors on 4 December 2000.
2. The financial information is unaudited but has been reviewed by the auditors and their report to the company is set out on page 7.
3. The results for the year ended 31 March 2000 are an abridged version of the company's full accounts which have been filed with the Registrar of Companies, on which the company's auditors reported without qualification.
4. The amount shown for estimated taxation for the half year ended 30 September 2000 represents 35% of the profit on ordinary activities before taxation (30 September 1999 - 32%).
5. Earnings per ordinary share at 30 September 2000 have been calculated by dividing the profit attributable to ordinary shareholders of £2,929,000 by the weighted average number of ordinary shares in issue of 54,694,191.
6. Copies of the Interim Report will be posted to shareholders on 8 December 2000 and are available from the company's  registered office, Ploughland House, P.O. Box 14, 62 George Street, Wakefield, WF1 1ZF

Consolidated balance sheet (unaudited)


30 September 2000

30 September 1999
31 March 2000

£'000

£'000

£'000
£'000
£'000
£'000
Fixed assets








   Intangible assets
19,687



19,517

20,008

   Tangible assets
58,030



69,610

57,918

   Investments
1,383



169

1,072




79,100


89,296

78,998
Current assets








   Stocks
17,396



24,653

19,884

   Debtors
37,159



45,212

40,332

   Pensions prepayment                                      due after more than one year
11,393




11,059

11,106

   Cash at bank and in hand
10,669



5,601

11,672


76,617



86,525

82,994

Creditors-amounts falling due within one year








Bank loans and  overdrafts
9,649



13,244

8,935

   Trade and other creditors
26,510



34,698

35,175

   Taxation
1,239



1,892

1,031

   Dividends
1,882



1,980

6,016


39,280



51,814

51,157

Net current assets


37,337


34,711

31,837
Total assets less current liabilities

116,437


124,007

110,835
Creditors-amounts falling due after more than one year

36,589


47,337

32,051
Provisions for liabilities and charges

6,074


7,086

5,890
Total net assets

73,774


69,584

72,894
Capital and reserves







   Called up share capital

2,790


2,838

2,788
   Share premium

41,772


41,722

41,722
   Revaluation reserve

2,063


2,195

2,080
   Other reserves

1,134


1,084

1,134
   Profit and loss account

26,015


21,745

25,170
Shareholders' funds

73,774


69,584

72,894
Ordinary shareholders' funds per share

132p


123p

131p

Cash flow statement



Half year ended 
30 September 2000
£'000

Half year ended 
30 September 1999
£'000


Year ended 31 March 2000
£'000

Cashflow from operating activities
7,705

7,705

18,908
   Returns on investments and servicing of finance
(1,439)

(1,701)

(3,059)
   Taxation
(1,117)

(880)

(2,937)
   Capital expenditure and financial investment
(6,245)

(6,467)

(9,565)
   Acquisitions and disposals
121

(11,035)

10,318
   Equity dividends paid
(6,020)

(6,163)

(6,183)
Cash (outflow)/inflow before use of liquid resources and funding

(6,995)


(18,541)


 7,482
Financing





   Issue of shares
52

-

-
   Repurchase of own shares
-

(608)

(1,817)
   Increase in debt
5,590

15,203

1,254
   Capital element of finance lease rentals
(361)

(480)

(994)
(Decrease)/increase in cash in period	
(1,714)

(4,426)

5,925


Half year ended 
30 September 2000
£'000

Half year ended 
30 September 1999
£'000


Year ended 31 March 2000 
£'000

Reconciliation of net cash flow to movement in net debt





   (Decrease)/increase in cash in period
(1,714)

(4,426)

5,925
   Cash inflow from increase in debt and lease financing
(5,229)

(14,723)

(260)
Change in net debt resulting from cash flows
(6,943)

(19,149)

5,665






   Exchange movement
(859)

236

336
   Loans and finance leases acquired with subsidiary
      Undertaking

-


(2,317)


(2,367)
Movement in net debt in period
(7,802)

(21,230)

3,634






   Net debt at beginning of period
(28,115)

(31,749)

(31,749)
Net debt at end of period
(35,917)

(52,979)

(28,115)







Half year ended 
30 September 2000
£'000

Half year ended
 30 September 1999
£'000


Year ended 31 March 2000 
£'000

Reconciliation of operating profit to operating cash flows




Operating profit
6,532

6,875

13,420
Goodwill amortisation
472

363

748
Depreciation charges
4,211

5,106

9,539
Amortisation of own shares
15

18

30
Loss/(profit) on sale of tangible fixed assets
44

(166)

13
Cash flow relating to exceptional reorganisation
-

(251)

(538)
Decrease in stocks
430

224

491
Decrease/(increase) in debtors
1,445

(3,337)

(7,028)
(Decrease)/increase in creditors
(5,444)

(1,127)

2,233
Net cash inflow from operating activities
7,705

7,705

18,908


Group turnover and operating profit


Half year ended 
30 September 2000

Half year ended
30 September 1999

Year ended
31 March 2000


Turnover £'000

Operating profit 
£'000


Turnover
£'000

 Operating profit
£'000


Turnover
£'000

Operating profit
£'000
Class of business











   Continuing operations











   Ongoing











   Technical plastics division
62,063

5,757

56,189

5,351

116,573

11,000
   Specialist wire division
21,038

1,614

21,141

1,286

43,199

3,462












   
83,101

7,371

77,330

6,637

159,772

14,462
   Rationalisation costs (note 1)


(190)



(139)



(1,101)
   
83,101

7,181

77,330

6,498

159,772

13,361












   Discontinued operations
5,567

172

21,491

1,339

31,521

2,151
   Rationalisation costs 


-



(4)



(125)

88,668



98,821



191,293


Divisional operating profit


7,353



7,833



15,387
   Central administration costs


(499)



(575)



(1,179)
   Pension cost:- 











        - regular cost
(1,269)



(1,340)



(2,590)
        - credit in respect of surplus

1,419



1,320



2,550
   Goodwill amortisation (note 2)


(472)



(363)



(748)
Group operating profit


6,532



6,875



13,420
Geographical segment - by destination










   United Kingdom
48,034



50,992



100,708


   Rest of Europe
13,047



18,182



33,470


   Rest of World
27,587



29,647



57,115



88,668



98,821



191,293



Notes:
1. The rationalisation costs in the half  year relate to both divisions.
2. Goodwill amortisation relates to the technical plastics division.

Reconciliation of movements in shareholders' funds


Half year ended
30 September 2000
£'000
Half year ended
30 September 1999
£'000
Year ended
31 March 2000
£'000
Profit on ordinary activities after taxation for
   the period

2,929


3,358


2,511
Dividends

1,885

1,960

6,048


1,044

1,398

(3,537)






Other recognised losses relating to the period 
(216)

(42)

(216)
Goodwill reinstated

-

-

9,628
New share capital issued

52

1,552

1,552
Share buy back

-

(608)

(1,817)


880

2,300

5,610
Opening shareholders' funds

72,894

67,284

67,284
Closing shareholders' funds

73,774

69,584

72,894




Report of the auditors
To Carclo plc

Introduction
We have been instructed by the company to review the financial information set out on pages 3 to 6 and we have read the other information contained in the interim report and considered whether it contains any apparent misstatements or material inconsistencies with the financial information.

Directors' responsibilities
The interim report, including the financial information contained therein, is the responsibility of, and has been approved by the directors.  The Listing Rules of the Financial Services Authority require that the accounting policies and presentation applied to the interim figures should be consistent with those applied in preparing the preceding annual accounts except where any changes, and the reasons for them, are disclosed.

Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/4 issued by the Auditing Practices Board.  A review consists principally of making enquiries of management and applying analytical procedures to the financial information and underlying financial data and based thereon, assessing whether the accounting policies and presentation have been consistently applied unless otherwise disclosed.  A review excludes audit procedures such as tests of controls and verification of assets, liabilities and transactions.  It is substantially less in scope than an audit performed in accordance with Auditing Standards and therefore provides a lower level of assurance than an audit.  Accordingly we do not express an audit opinion on the financial information.

Review conclusion
On the basis of our review we are not aware of any material modifications that should be made to the financial information as presented for the six months ended 30 September 2000.

Ernst & Young
Chartered Accountants
Leeds
4 December 2000


Financial Calendar


Interim ordinary dividend for 2001 payable
to members on the register on 2 March 2001						6 April 2001

Ex-dividend date					         			    28 February 2001

Preliminary announcement of the results for
the year ending 31 March 2001				         			           18 June 2001


Registered office:

PloughlandHouse
P O Box 14
62 George Street
WAKEFIELD
WF1 1ZF

Telephone:	[phone]
Fax:		[phone]
Web site:	www.carclo-plc.com
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