Carclo Regulatory News (CAR)

30 March 2017

Carclo PLC

("Carclo", the "Company" or the "Group")

Acquisition of FLTC (Europe) a.s.

Carclo announces that its UK subsidiary, Carclo Overseas Holdings LTD. ("COHL"), has acquired FLTC (Europe) a.s. ("FLTC") for an initial consideration of CZK 27.0 million (approximately £0.9 million) in cash (the "Completion Consideration") plus further deferred consideration of up to CZK16.2 million (approximately £0.5 million) in cash (the "Deferred Consideration"), which is subject to the satisfaction of certain performance criteria (the "Acquisition"). The Completion Consideration is subject to a cash and working capital adjustment of up to CZK 45.4 million (approximately £1.45 million) (the "Cash and Working Capital Adjustment"). An initial Cash and Working Capital Adjustment payment of CZK 41.3 million (approximately £1.32 million) was made upon completion of the Acquisition ("Completion"), of which CZK 29.5 million (approximately £0.94 million) represented cash held by FLTC at the time of Completion. A final Cash and Working Capital Adjustment payment will be made subsequent to Completion.

FLTC is an independent automotive design company based in Ostrava, Czech Republic and employs 35 designers, electronics and CAD engineers solely focussed on automotive LED lighting design. FLTC has been a major supplier to Carclo's subsidiary, Wipac Limited ("Wipac"), for the last three years and Wipac accounted for approximately one third of FLTC's sales in the year ended December 2016. FLTC is known and respected by several of Wipac's key customers both through their direct relationships as well as through their work for the Group. FLTC will be integrated into Wipac's business and will transition its activities away from third party contracts and instead work exclusively to deliver Wipac customers' projects.

The Deferred Consideration of up to CZK 16.2 million (approximately £0.5 million) is due for payment in two instalments on the second and fourth anniversaries of the Completion date (30 March 2017) subject to seven former shareholders continuing to be employed by the Company. For the year ended 31 December 2016, FLTC reported unaudited turnover of CZK49.2 million (approximately £1.58 million), unaudited profit before tax of CZK 11.5 million (approximately £0.38 million), unaudited net assets of CZK 46.7 million (approximately £1.50 million) and unaudited gross assets of CZK 51.1 million (approximately £1.64 million).

The Board expects the acquisition of FLTC to result in a modest improvement in Group profitability in the first full year following Completion given FLTC's lower cost base compared to Wipac's equivalent design resources in the UK.

Moreover the Board believes the Acquisition will act as a further catalyst in its stated strategy of rapidly expanding its Wipac LED lighting operations into both the low volume and mid volume prestige car markets.

The Completion Consideration has been fully funded utilising the Group's short-term debt facilities.

The Board confirms that the Group continues to trade in line with its expectations for the year ending 31 March 2017.

Chris Malley, Chief Executive of the Company, said:

"The acquisition of FLTC adds significant skills and capabilities to our Wipac business and will provide us with both an immediate step up in design capability as well as a base to further expand our design resources in the Czech Republic. Whilst we have been expanding our UK based talent pool considerably over the last few years through a combination of recruitment and training, the rate of growth that we project at Wipac would have been constrained by the level of available UK resources. Having worked closely with FLTC for over three years, we are confident that we can seamlessly integrate their talented people into our business thus adding critical design capacity to support our future growth plans while adding additional expertise. We also believe that having a footprint in continental Europe, and specifically in the heart of the Czech Republic's automotive industry, will place us in an excellent position to further grow our Wipac brand. We are delighted to be strengthening our relationship with the FLTC team."

Ends

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About Carclo

Carclo plc is a public company whose shares are quoted on the Main Market of the London Stock Exchange.

Carclo's strategy is to develop and expand its key manufacturing assets in markets where there are significant further opportunities to drive shareholder value. To enhance profit margins and support its customers, the group has been investing across its global footprint.

Approximately three fifths of group revenues are generated from the supply of fine tolerance, injection moulded plastic components, mainly for medical products. The balance of group revenue is derived mainly from the design and supply of specialised injection moulded LED based lighting systems to the premium automotive industry.