Last checked at 10 Jun 2008 07:00
| For immediate release | 10 June 2008 |
Carclo plc
("Carclo")
The financial highlights for the year to 31 March 2008 are summarised below:
Underlying operating profits up 19.1% primarily due to an excellent performance in Precision Products
Continued good growth in medical and specialist moulding in Technical Plastics
Underlying EPS increased by 38.2% to 10.5 pence
Final dividend increased by 8.3% to 1.3 pence per share
Conductive Inkjet Technology starting to generate revenues
New five year bank facilities agreed in the year under review
Commenting on the results, Christopher Ross, chairman said:
"The group is very well placed to make further progress in the new financial year. Indeed, the new year has started well.
The industry sectors served by Carclo such as medical and aerospace are resilient and less likely to be impacted by the current uncertainties facing the world economy. The medical and specialist businesses within Technical Plastics continue to win new work and the order book within Precision Products underpins our confidence in the medium term.
Our investment in new technologies is starting to generate revenues and we anticipate good sales growth from Conductive Inkjet Technology in the coming year.
The board is confident that the strategic focus of the group will continue to deliver good progress."
Enquiries
| Carclo plc | |
| Ian Williamson, Chief Executive | |
| Robert Brooksbank, Finance Director | 01924 268040 |
| Weber Shandwick Financial | 020 7067 0700 |
| Richard Hews | |
| James White |
A presentation for analysts will be held at 9.30 a.m. on 10 June 2008 at the offices of Weber Shandwick Financial, Fox Court, 14 Gray's Inn Road, London WC1X 8WS
Notes to editors
Carclo plc is a global supplier of technical plastic components. It is a public company whose shares are quoted on the London Stock Exchange.
75% of sales are derived from the supply of fine tolerance, injection moulded plastic components, which are used in medical, automotive, telecom and electronics products. This business, Carclo Technical Plastics, operates internationally in a fast growing and dynamic market underpinned by rapid technological development.
25% of sales are derived from the supply of manufactured systems to the automotive and aerospace industries.
Carclo's strategy is to grow the specialist businesses, expand in low cost regions and to invest in new technologies and proprietary know-how.
Chairman's statement
Overview
The year to 31 March 2008 was one of further excellent progress for Carclo:
Underlying operating profits from continuing operations improved by nearly 20%, led by an excellent performance in Precision Products
Continued good growth in medical and specialist moulding improving the quality of the Technical Plastics business
Investment in new technologies continues with Conductive Inkjet Technology starting to generate revenues
New five year bank facilities agreed on excellent terms
Final dividend increased by 8.3% to 1.3 pence per share
Underlying operating profits from continuing operations, before exceptional charges, increased by 19.1% to £5.7 million. The Precision Products division had a particularly good year, increasing its profits by £1.0 million to £3.3 million. The Technical Plastics division also performed well. Sales and profits were modestly ahead of the prior year but margin progression was held back by transition costs. The mix of business continues to improve with more secure medical work replacing lower quality automotive business which will underpin margin improvement going forward.
The improved profitability resulted in underlying earnings per ordinary share ("EPS") increasing by 38.2% to 10.5 pence (2007 - 7.6 pence). The group's profit before tax was reduced by £1.3 million of exceptional charges compared to a net exceptional credit of £2.6 million in the prior year (which benefitted from £3.7 million of property profits). As a result, profit before tax was £4.5 million (2007 - £7.2 million) and basic EPS was 7.7 pence (2007 - 12.1 pence).
Cash flow and funding
The group has achieved a secure and certain position over its funding. New £20.0 million five year term loan facilities were secured on terms comparable to the facilities they replaced. This has allowed the group to focus on developing its core medical and specialist businesses, to invest further in new technologies and to resume business acquisitions.
Net debt at 31 March 2008 was £13.7 million (2007 - £12.8 million).
Dividend
The board is recommending a final dividend of 1.3 pence, an increase of 8.3% on the prior year. This gives a total dividend for the year of 1.9 pence per share (2007 - 1.6 pence per share).
Subject to shareholder approval, dividend payments will be posted on 11 September 2008 to shareholders on the register at close of business on 8 August 2008. The shares will be traded excluding the right to the dividend from 6 August 2008.
Employees
I would like to thank all those employed by us in the year under review for their significant contribution.
Outlook
The group is very well placed to make further progress in the new financial year. Indeed, the new year has started well.
The industry sectors served by Carclo such as medical and aerospace are resilient and less likely to be impacted by the current uncertainties facing the world economy. The medical and specialist businesses within Technical Plastics continue to win new work and the order book within Precision Products underpins our confidence in the medium term.
Our investment in new technologies is starting to generate revenues and we anticipate good sales growth from Conductive Inkjet Technology in the coming year.
The board is confident that the strategic focus of the group will continue to deliver good progress.
Christopher Ross
10 June 2008
Chief executive's review
Strategic overview
Longer term shareholders will forgive me for again commencing this review with the words "our strategy is clear and it is working".
Our strategy is:
to grow our specialist businesses including medical plastics and LED lighting
The last year has been particularly successful for our medical plastics business. We have won significant new contracts backed by longer term supply commitments. Additionally customers with whom we have long term relationships such as Axis-Shield plc and Siemens Healthcare Diagnostics are now generating significant revenues for our medical business. With medical well established as the driver of growth, we are now taking the last steps in our long running restructuring programme with the exit from lower margin automotive moulding.
Our LED optics and lighting businesses are also growing strongly. We are enjoying compound growth of 40.0% in our LED optics business and have our eyes set on market leadership. Our LED lighting business - serving the supercar market - has had a truly exceptional year in terms of contract wins. At Wipac, we have increased the design resource from 3 to 15 CAD workstations in the last 12 months - all funded by customer development contracts. This business will deliver several years of good growth as these new premium vehicles are launched.
to continue our expansion in low cost regions
Our wholly owned operations in the Czech Republic and China are now substantial with a fifth of our underlying operating profits earned in low cost regions. We also have three very successful manufacturing partners in Hungary, China and Taiwan producing products for us under contract. This gives us tremendous flexibility in sourcing and distribution. In India we are planning to establish a small assembly operation to support one of our global customers.
to increase our investment in new technologies and proprietary know-how
Our investment is now firmly focused on Conductive Inkjet Technology ("CIT") and Platform Diagnostics Limited. Technical and commercial progress at CIT has been excellent and this coming year should see good revenue growth. CIT has opportunities across a broad spectrum of very large markets and the key challenge for the Carclo board is to deliver the value of this growth potential to Carclo shareholders.
This strategy has positioned Carclo in markets with excellent long term growth potential. We have the security of long term supply contracts and good visibility of future growth in an increasing proportion of our business. The end markets for our products and services are also quite defensive and will be less affected by the economic uncertainty facing the global economy.
Our profits have recovered strongly in the last couple of years and there is still further recovery to come as the operating margins in Technical Plastics continue to improve. At the same time, the superior growth opportunities in medical and LED lighting will drive profitability growth for a number of years to come. Added to this, CIT is set to add a step change to earnings in the medium term.
Operating review
| Carclo Technical Plastics | Carclo Precision Products | |||
| 2008 | 2007 | 2008 | 2007 | |
| Turnover - continuing operations | £59.5m | £58.7m | £22.3m | £19.6m |
| Underlying operating profit * | £3.7m | £3.5m | £3.3m | £2.3m |
| Net assets | £43.4m | £44.5m | £8.9m | £7.6m |
| Underlying operating margin | 6.2% | 6.0% | 15.0% | 11.6% |
| Return on capital employed * | 8.6% | 8.0% | 37.4% | 29.8% |
| Average number of employees | 910 | 877 | 214 | 198 |
| * before rationalisation costs and exceptional bad debts | ||||
Carclo Technical Plastics
Underlying operating profits in Carclo Technical Plastics increased by 4.9% to £3.7 million on sales slightly up on last year at £59.5 million (2007 - £58.7 million). The operating margin increased to 6.2% (2007 - 6.0%) with the division benefiting from the better margins in our medical and optical businesses. Profit progression was held back by transitional costs associated with the integration of new business and the reorganisation of the Slough facility.
We continue to win significant new contracts in our medical business. During the year we were nominated as development and production partner for two new inhaler programmes with very significant volume potential. As already reported, our largest customer in medical diagnostics elected to sole source all of its single-use components from Carclo. This represents a tremendous vote of confidence in our global business strategy. We continue to win significant new customers in the medical diagnostics field.
In Shanghai we commissioned new clean room assembly facilities which contributed to a near doubling of our capacity in China.
Over the last few years, as the medical and specialist businesses have grown, we have been reducing our exposure to automotive and telecom markets. By carefully managing this transition we have been able to redeploy assets and refurbish facilities with only modest capital expenditure. The moulding of components for automotive markets accounted for less than 20% of division sales last year and, not surprisingly, these sales generate the lowest margins in the division. With medical growing strongly, we plan to exit from almost all of our remaining automotive business during the current year. This will make space to absorb the new contracts we have won in the last year. One small facility in the UK is likely to close.
These actions - long anticipated and planned - represent the final step to achieve our clearly stated objective of returning the division to double-digit operating margins.
Carclo Precision Products
Underlying operating profits in Carclo Precision Products increased by 47.7% to £3.3 million on sales of £22.3 million (2007 - £19.6 million). The performance of the smaller aerospace and engineering business was satisfactory. The improvement came from our specialist automotive products business - Wipac. The operating margin at 15.0% in this division is excellent.
Wipac has two business units - communications and specialist lighting. The communications business provides antennas and cables principally to Ford. This is a stable business which is not expected to grow in the longer term, although in the year it did benefit from a temporary surge in demand for technically more sophisticated multiband antennas. The specialist lighting business designs and produces highly styled lights for luxury supercars. These lights are now mostly based on high-power LED technology where Carclo has a leading position in the supply of optics and the design of LED light engines. It is the specialist lighting business which is driving the growth of Wipac.
In the last year we have won design and development contracts for new vehicle platforms with a total value of £7.5 million. At the target volumes Wipac will enjoy product sales totalling £20.0 million over the typical 5 year life of the vehicles. As these vehicles are launched from 2009 onwards, this will drive growth in Wipac for some years to come. Last year was exceptional in terms of contract awards but quote activity continues to be very strong.
We took the first steps last year to exploit our niche technology in the automotive aftermarket - we launched the world's first LED driving light, we acquired the UK's leading distributor of aftermarket lights and next month we will launch a stunning Daytime Running Light based on our LED technology.
Technology investments
Conductive Inkjet Technology ("CIT")
This was the transitional year for CIT. At the start of the year CIT was still primarily an R & D company - 72% owned by Carclo - developing applications of its proprietary catalytic inks in selected markets. CIT is now a wholly owned Carclo subsidiary, with its own production and development facilities, and with proven products and solutions across an ever expanding applications universe.
The main focus of technical development has been the MetalJet 6000 high speed roll to roll print line. This equipment will produce RFID antennas in high volumes, aiming to be at the lowest component and capital cost. The prototype MetalJet 6000, produced with our original partner, did not have sufficient print accuracy for UHF antennas. For the production MetalJet 6000 we have teamed with Inca Digital Printers Limited (based in Cambridge) and FUJIFILM Dimatix Inc to produce a printer with greatly improved resolution and accuracy. The need to change partner has caused a slight delay but the new printer will be installed in CIT's facility in June 2008.
First contracts have already been negotiated for product supply. The highest volume contract is for a combined RFID antenna and sensor used to monitor temperature in transit by logistics companies. We have also signed a collaboration agreement with a major Korean conglomerate for the supply of RFID antennas and MetalJet 600i prototyping equipment. This agreement envisages the sale of a full scale MetalJet 6000 line in 2009 and will give us a strong foothold in the Asian markets.
In addition to the MetalJet 600i for RFID applications, we have sold two further MetalJet 2000 systems for photovoltaic research, and a MetalJet 4000 for the flat panel display market. There are now seven companies and institutions working under license from CIT in various application fields.
We have now completed our first stage programme with Cambridge Display Technology Limited ("CDT") for mobile phone displays which was funded by the Department of Business, Enterprise & Regulatory Reform ("BERR", formerly the DTI). The encouraging results have enabled us to secure joint funding with CDT of £0.9 million from BERR, to develop scalable manufacture of electrodes for OLED devices including displays, lighting and photovoltaics. This 18 month programme will commence in June 2008. Meanwhile, our BERR funded programme with Epigem Limited to create alternatives to transparent ITO electrodes for flexible OLEDs has started off very well and early results are extremely positive.
With several customers we are evaluating the use of our fine line technology to produce capacitive touch screen devices. Our technology offers significant cost and performance benefits over the existing process of patterning of ITO and relies predominantly on existing manufacturing equipment, thus reducing barriers to entry into this high growth area.
Our developments within photovoltaics have continued and we have now increased our levels of co-operation and development to encompass Europe's leading solar cell research facility as well as a leading plating equipment manufacturer. Our focus of development is on rigid silicon based etchants and dopants using inkjet deposition methods. We anticipate completion of our development phase by the end of 2008.
We have a number of advanced projects for medical sensors. For one customer, we have adapted our catalyst technology for flexographic printing opening up several further opportunities for high volume manufacture where inkjet is not appropriate.
CIT is set to generate good revenue growth in this coming year.
Platform Diagnostics Limited ("PDL")
PDL has had a good first year. We now have a working assay based on Capillary Agglutination Technology and we are reviewing the commercialisation plan for this assay with our partner, BBI Holdings plc. We are working with a number of other companies to develop products for the Point Of Care diagnostic market. There is an increasing recognition in this emerging market of our unique capabilities in micro-moulding, surface coatings and optics.
Ian Williamson
10 June 2008
Finance director's review
Financial summary
| 2008 £million | 2007 £million | |
| Turnover - continuing | 81.3 | 78.0 |
| Divisional operating profit | 7.1 | 5.8 |
| Unallocated | (1.4) | (1.0) |
| Underlying operating profit from continuing operations | 5.7 | 4.8 |
| Exceptional items | (1.3) | 2.6 |
| Net interest | 0.1 | (0.2) |
| Profit before tax | 4.5 | 7.2 |
| Taxation | - | (0.7) |
| (Loss) / profit on disposal of discontinued operations | (0.2) | 0.2 |
| Profit attributable to ordinary shareholders | 4.3 | 6.7 |
| Ordinary dividend | (1.0) | (0.7) |
| Surplus for the year | 3.3 | 6.0 |
| Divisional operating margin from continuing operations | 8.7% | 7.4% |
| Basic earnings per share | 7.7p | 12.1p |
| Underlying earnings per share | 10.5p | 7.6p |
Turnover from continuing operations increased by 4.2% to £81.3 million (2007 - £78.0 million) and this primarily reflects the strong performance by Wipac within our Precision Products division. Although the weaker US dollar reduced reported turnover and profits in our US operations, this currency impact was broadly mitigated by the affect of the strengthening Czech Koruna on reported sales and profits in our Czech Republic operation.
Underlying operating profit from continuing operations was £5.7 million (2007 - £4.8 million). Divisional operating profit increased by £1.3 million to £7.1 million (2007 - £5.8 million). However, unallocated costs of £1.4 million (2007 - £1.0 million) were higher mainly due to a reduction in group rental income as a result of the property disposals that were completed in the prior year.
Profit before tax was £4.5 million (2007 - £7.2 million), however, it should be noted that last year's profit before tax included a £3.7 million profit from the disposal of group properties. Included in the profit before tax is a £1.1 million (2007 - £1.1 million) pensions net financing credit based on the requirements of IAS 19 "Employee Benefits". Rationalisation costs amounted to £1.2 million (2007 - £0.6 million) and the majority of these costs related to the re-organisation of our Slough facility in order to transfer a number of its larger programmes to lower cost facilities within the group.
Group net debt was £13.7 million (2007 - £12.8 million) at the year end. This provides an acceptable level of headroom on the group's new £20.0 million revolving credit facilities. Net bank interest payable was £1.0 million (2007 - £1.3 million). As expected, financing costs reduced this year due to the lower average level of borrowings and despite the impact of higher LIBOR rates.
The group tax charge for the year is nil (2007 - £0.7 million). The reduction in the tax charge is due to a prior year deferred tax credit which has occurred as a result of the utilisation of previously unrecognised capital losses to offset taxable profits. The group expects to continue to benefit from the use of prior year losses and consequently we do not expect the effective tax rate to normalise for a few years. No UK tax was payable during the year although the group did make a tax payment in the Czech Republic.
The group booked a loss on disposal of discontinued operations of £0.2 million (2007 - a net profit of £0.2 million). This relates primarily to the write down of deferred consideration in respect of the disposal of the group's CTP Gills Cables Limited business in 2006 for which it is now anticipated that no further consideration will be received.
The profit attributable to ordinary shareholders was £4.3 million (2007 - £6.7 million). The board is recommending an increased final dividend for the year of 1.3 pence per ordinary share.
Net debt and gearing
| 2008 £million | 2007 £million | |
| Underlying cash flow | 9.3 | 6.0 |
| Interest and tax | (1.2) | (1.5) |
| Capital expenditure | (3.7) | (2.3) |
| Free cash flow | 4.4 | 2.2 |
| Pension payments above regular cost | (1.4) | (2.0) |
| Other non recurring | (0.9) | 6.2 |
| Issue of share capital | - | 0.3 |
| Equity dividends | (0.9) | (0.7) |
| Cash flow available for corporate activities | 1.2 | 6.0 |
| Development expenditure | (1.2) | (1.2) |
| Acquisitions and disposals | (0.9) | 2.1 |
| Exchange movement | - | 1.1 |
| (Increase) / decrease in net debt in year | (0.9) | 8.0 |
Net debt comprises interest bearing loans and borrowings less cash and cash deposits.
Net borrowing increased in the year by £0.9 million to £13.7 million (2007 - £12.8 million). This represents gearing of 27.6% (2007 - 27.3%) after excluding the net pension surplus.
Underlying cash flow from operations was up sharply at £9.3 million (2007 - £6.0 million). This reflects a reduction in group working capital of £0.4 million over the year despite the increase in turnover and various programme transfers in the UK businesses. Group capital expenditure was £3.7 million (2007 - £2.3 million) representing 111.9% of the total group depreciation charge (2007 - 77.5%). This is the first year for a number of years that group capital expenditure has exceeded depreciation and this is a result of the expansion of the group's clean room facilities in its medical businesses. Free cash flow doubled to £4.4 million (2007 - £2.2 million).
Pension contributions of £1.4 million (2007 - £2.0 million) above the regular pension cost were made during the year. Other non-recurring cash outflows of £0.9 million predominantly related to the re-organisation of the Slough facility.
Development expenditure of £1.2 million (2007 - £1.2 million) represents the capitalised cost of research and development expenditure on Conductive Inkjet Technology during the year.
There was a net cash outflow of £0.9 million for the acquisition and disposal of businesses during the year.
Property and business disposals
The group received £1.0 million of deferred consideration, before costs, relating to the disposal of its ECC Card Clothing businesses in June 2005. The group has received a total of £1.6 million of a maximum deferred consideration payable of £1.7 million in relation to this disposal.
No surplus property disposals were completed by the group during the year and at the year end the group had surplus properties with a net book value of £1.3 million. The group has recently sold for £0.8 million its Prospect Mills site in Cleckheaton, West Yorkshire, which had a net book value of £0.5 million. Our remaining surplus property, with a book value of £0.8 million, is expected to be sold in the current financial year.
Ultra acquisition
During the year the group acquired the business and assets of Ultra Auto Cosmetics ("Ultra"),
a leading distributor of aftermarket automotive lighting. The cash consideration paid of
£1.4 million was based on an agreed premium to the net asset value of the business (excluding the trade debtor book). Further deferred consideration of up to £0.25 million is payable dependent on the performance of the business over the next year.
Conductive Inkjet Technology ("CIT")
The total investment in research and development by CIT made during the year was £1.2 million and these development costs have been capitalised. In addition, capital expenditure of
£0.2 million was required on plant and equipment to develop the contract manufacturing and clean room facilities at our Cambridge site. The group balance sheet now includes intangible assets totalling £11.4 million which relate to CIT. Of this amount £4.4 million relates to capitalised research and development costs funded by Carclo over the last four years to drive progress forward on this project. The balance of £7.0 million is assigned to the fair value of patents and goodwill which arises from the accounting treatment of the acquisitions of the minority holdings from our original joint venture partner. During the year CIT generated revenues of £67,000 against which £45,000 of amortisation was charged and this reflects the commencement of the commercialisation of the CIT technology.
The remaining minority shareholding in CIT was acquired during the financial year. The consideration paid to Xennia Technology Limited ("Xennia") for its 25.6% shareholding was £1.32 million, and the initial consideration of £1.07 million was in the form of 869,565 newly issued Carclo ordinary shares and £0.1 million cash. A further cash payment of £0.25 million was made to Xennia for transitional technical support and the release of certain intellectual property rights. Additionally, deferred consideration of a maximum of £0.75 million is payable in cash dependant on the performance of CIT in the period to 31 March 2010.
Financing
The group completed its re-financing early in the financial year before conditions in the credit market began to deteriorate. New medium term loans totalling £20.0 million were formalised with two banks on terms similar to the group's previous facilities. In addition to the five year multi-currency revolving credit facilities, the group also agreed total bank overdraft facilities of £10.5 million. As part of the re-financing agreement the group has provided the banks with security over the current assets of its three main UK trading subsidiaries. As at 31 March 2008 the value of this security was £18.5 million and this represents a substantial reduction in the level of securitisation compared to the previous financing arrangement.
As at 31 March 2008 total drawings on the medium term loan facilities were £14.3 million.
Pensions
The IAS 19 operating charge to income for the year was £0.7 million (2007 - £0.6 million). The small increase in this charge has occurred despite falling employer cash contributions and this is due to the revised assumptions used for contribution rates following the results of the actuarial valuation last year. The IAS 19 financing credit, which represents the difference between the expected return on plan assets and the financing charge on the pension scheme liability was £1.1 million (2007 - £1.1 million).
Under IAS 19 the aggregate pension deficit/surplus must be reflected in the group balance sheet. As at 31 March 2008 the IAS 19 surplus was a net £0.6 million (2007 - a deficit of
£8.4 million, net of deferred tax). The schemes have moved into surplus under IAS 19 due to a significant increase in the corporate bond yield which is used to discount the scheme liability.
As part of the agreed funding plan the group has now formalised the grant of security over freehold UK property assets with a current market value of approximately £10.0 million.
At the group's request the trustees of the two group pension schemes have completed the merger of the two schemes and this should reduce ongoing scheme administration costs.
Robert Brooksbank
10 June 2008
Consolidated income statement
year ended 31 March
| 2008 | 2007 | |||||||
| Continuing operations £000 | Discontinued operations £000 | Total £000 | Continuing operations £000 | Discontinued operations £000 | Total £000 | |||
| Revenue | 81,274 | - | 81,274 | 78,030 | 1,025 | 79,055 | ||
| Underlying operating profit | ||||||||
| Operating profit before exceptional costs | 5,713 | - | 5,713 | 4,797 | 22 | 4,819 | ||
| - rationalisation costs | (1,244) | - | (1,244) | (593) | - | (593) | ||
| - exceptional bad debts | (93) | - | (93) | - | - | - | ||
| After exceptional costs | 4,376 | - | 4,376 | 4,204 | 22 | 4,226 | ||
| Operating profit | 4,376 | - | 4,376 | 4,204 | 22 | 4,226 | ||
| Site closure costs | - | - | - | (561) | - | (561) | ||
| Profit on sale of properties | - | - | - | 3,722 | - | 3,722 | ||
| Profit before financing costs | 4,376 | - | 4,376 | 7,365 | 22 | 7,387 | ||
| Finance revenue | 246 | - | 246 | 355 | 7 | 362 | ||
| Finance expense | (1,267) | - | (1,267) | (1,691) | - | (1,691) | ||
| Other finance revenue - retirement benefits | 10,422 | - | 10,422 | 9,996 | - | 9,996 | ||
| Other finance expense - retirement benefits | (9,275) | - | (9,275) | (8,865) | - | (8,865) | ||
| Profit before tax | 4,502 | - | 4,502 | 7,160 | 29 | 7,189 | ||
| Income tax expense | - | - | - | (713) | (2) | (715) | ||
| Profit after tax but before profit / (loss) on discontinued operations | 4,502 | - | 4,502 | 6,447 | 27 | 6,474 | ||
| Profit on disposal of discontinued operation, net of tax | - | - | - | - | 342 | 342 | ||
| Loss on disposal of discontinued operation, net of tax | - | (250) | (250) | - | (173) | (173) | ||
| Profit / (loss) after tax | 4,502 | (250) | 4,252 | 6,447 | 196 | 6,643 | ||
| Attributable to: | ||||||||
| Equity holders of the parent | 4,543 | (250) | 4,293 | 6,504 | 196 | 6,700 | ||
| Minority interest | (41) | - | (41) | (57) | - | (57) | ||
| Profit / (loss) for the period | 4,502 | (250) | 4,252 | 6,447 | 196 | 6,643 | ||
| Earnings per ordinary share | ||||||||
| Basic | 8.1 p | (0.4) p | 7.7 p | 11.7 p | 0.4 p | 12.1 p | ||
| Diluted | 8.0 p | (0.4) p | 7.6 p | 11.5 p | 0.3 p | 11.8 p | ||
| Dividend per ordinary share | ||||||||
| Arising in respect of the year | 1.9 p | 1.6 p | ||||||
| Paid in the year | 1.6 p | 1.2 p | ||||||
Consolidated statement of recognised income and expense
year ended 31 March
| 2008 £000 | 2007 £000 | |||||
| Foreign exchange translation differences | 2,493 | (643) | ||||
| Net gain on hedge of net investment in foreign subsidiary | - | 22 | ||||
| Actuarial gains on defined benefit schemes | 10,339 | 7,651 | ||||
| Taxation on items taken directly to equity | (3,300) | (2,296) | ||||
| Income and expense recognised directly in equity | 9,532 | 4,734 | ||||
| Profit for the period | 4,252 | 6,643 | ||||
| Total recognised income and expense for the period | 13,784 | 11,377 | ||||
| Attributable to: | ||||||
| Equity holders of the parent | 13,825 | 11,434 | ||||
| Minority interest | (41) | (57) | ||||
| Total recognised income and expense for the period | 13,784 | 11,377 | ||||
Consolidated balance sheet
as at 31 March
| 2008 £000 | 2007 £000 | |||
| Assets | ||||
| Intangible assets | 28,934 | 25,365 | ||
| Property, plant and equipment | 25,429 | 24,585 | ||
| Investments | 265 | 52 | ||
| Deferred tax assets | 2,273 | 5,092 | ||
| Retirement benefit asset | 857 | - | ||
| Other receivables | - | 150 | ||
| Total non current assets | 57,758 | 55,244 | ||
| Inventories | 9,661 | 8,227 | ||
| Trade and other receivables | 16,632 | 18,243 | ||
| Cash and cash deposits | 7,785 | 2,875 | ||
| Assets classified as held for sale | 1,271 | 842 | ||
| Total current assets | 35,349 | 30,187 | ||
| Total assets | 93,107 | 85,431 | ||
| Liabilities | ||||
| Interest bearing loans and borrowings | 14,684 | 4,877 | ||
| Deferred tax liabilities | 3,785 | 3,642 | ||
| Retirement benefit obligations | - | 12,061 | ||
| Other payables | 1,000 | - | ||
| Total non current liabilities | 19,469 | 20,580 | ||
| Trade and other payables | 14,078 | 13,691 | ||
| Current tax liabilities | 1,919 | 1,694 | ||
| Dividends payable | 339 | 222 | ||
| Interest bearing loans and borrowings | 6,847 | 10,803 | ||
| Total current liabilities | 23,183 | 26,410 | ||
| Total liabilities | 42,652 | 46,990 | ||
| Net assets | 50,455 | 38,441 | ||
| Equity | ||||
| Ordinary share capital issued | 2,859 | 2,815 | ||
| Share premium | 3,916 | 3,002 | ||
| Other reserves | 3,669 | 3,670 | ||
| Translation reserve | 3,351 | 858 | ||
| Retained earnings | 36,660 | 26,900 | ||
| Total equity attributable to equity holders of the parent | 50,455 | 37,245 | ||
| Minority interest | - | 1,196 | ||
| Total equity | 50,455 | 38,441 | ||
Consolidated statement of cash flows
year ended 31 March
| 2008 £000 | 2007 £000 | |||
| Cash flows from operating activities | ||||
| Profit before financing costs and taxation | 4,376 | 7,387 | ||
| Adjustments for: | ||||
| Pension fund contributions in excess of service costs | (1,432) | (1,990) | ||
| Depreciation charge | 3,152 | 2,977 | ||
| Amortisation of intangible assets | 112 | 103 | ||
| Exceptional bad debt provision | 93 | - | ||
| Profit on disposal of property | - | (3,722) | ||
| Profit on disposal of other plant and equipment | (4) | (94) | ||
| Write down of assets charged to rationalisation costs | 150 | - | ||
| Cash flows on closures less than charge in the income statement | - | 127 | ||
| Share based payment charge | 128 | 196 | ||
| Operating profit before changes in working capital | 6,575 | 4,984 | ||
| Changes in working capital (excluding the effects of acquisition and disposal of subsidiaries) | ||||
| Increase in inventories | (436) | (744) | ||
| Decrease / (Increase) in trade and other receivables | 827 | (1,859) | ||
| (Decrease) / increase in trade and other payables | (24) | 552 | ||
| Cash generated from operations | 6,942 | 2,933 | ||
| Interest paid | (1,344) | (1,728) | ||
| Tax paid | (131) | (154) | ||
| Net cash from operating activities | 5,467 | 1,051 | ||
| Cash flows from investing activities | ||||
| Proceeds from sale of property, plant and equipment | 47 | 7,314 | ||
| Interest received | 264 | 370 | ||
| Disposal of subsidiaries, net of cash disposed of and related costs | (100) | 1,261 | ||
| Receipt of deferred consideration, net of related costs | 937 | 403 | ||
| Proceeds from sale of investments | 2 | 2 | ||
| Acquisition of business undertaking | (1,406) | - | ||
| Acquisition of minority interest | (148) | - | ||
| Acquisition of property, plant and equipment | (3,571) | (2,283) | ||
| Acquisition of intangible assets - computer software | (89) | (42) | ||
| Acquisition of trade investment | (215) | (43) | ||
| Development expenditure | (1,244) | (1,180) | ||
| Repayment of loan by jointly controlled entities | - | 390 | ||
| Net cash from investing activities | (5,523) | 6,192 | ||
| Cash flows from financing activities | ||||
| Proceeds from the issue of share capital | 6 | 260 | ||
| Drawings on term loan facilities | 18,216 | - | ||
| Repayment of borrowings | (17,288) | (12,395) | ||
| Payment of finance lease liabilities | (1) | (8) | ||
| Dividends paid | (890) | (661) | ||
| Net cash from financing activities | 43 | (12,804) | ||
| Net decrease in cash and cash equivalents | (13) | (5,561) | ||
| Cash and cash equivalents at beginning of period | 991 | 6,734 | ||
| Effect of exchange rate fluctuations on cash held | 161 | (182) | ||
| Cash and cash equivalents at end of period | 1,139 | 991 | ||
| Cash and cash equivalents comprise: | ||||
| Cash and cash deposits | 7,785 | 2,875 | ||
| Bank overdrafts | (6,646) | (1,884) | ||
| 1,139 | 991 |
Notes
Segment reporting
At 31 March 2008, the group is organised into two main business segments: Technical Plastics and Precision Products.
The primary segment reporting format is determined to be business segments as the group's risks and returns are affected predominantly by differences in the products and services provided. Secondary information is reported geographically. The operating business segments are organised and managed separately.
The Technical Plastics segment supplies fine tolerance, injection moulded plastic components, which are used in medical, telecom and electronics products. This business operates internationally in a fast growing and dynamic market underpinned by rapid technological development.
The Precision Products segment supplies systems to the automotive and aerospace industries.
Discontinued operations relate to the disposal of the group's automotive control cables business on 12 May 2006.
Transfer pricing between business segments is set on an arm's length basis. Segmental revenues and results include transfers between business segments. Those transfers are eliminated on consolidation.
The group's geographical segments are based on the location of the group's assets. Sales to external customers disclosed in geographical segments are based on the geographical location of its customers.
Analysis by business segment
The segment results for the year ended 31 March 2008 were as follows:
| Technical Plastics £000 | Precision Products £000 | Unallocated £000 | Eliminations £000 | Continuing total £000 | Discontinued £000 | Group total £000 | |
| Income statement | |||||||
| Total revenue | 59,460 | 22,255 | 67 | (508) | 81,274 | - | 81,274 |
| Less inter-segment revenue | (508) | - | - | 508 | - | - | - |
| Total external revenue | 58,952 | 22,255 | 67 | - | 81,274 | - | 81,274 |
| Expenses | (55,237) | (18,907) | (1,417) | - | (75,561) | - | (75,561) |
| Underlying operating profit | 3,715 | 3,348 | (1,350) | - | 5,713 | - | 5,713 |
| Rationalisation costs | (1,078) | (6) | (160) | - | (1,244) | - | (1,244) |
| Exceptional bad debts | (45) | - | (48) | - | (93) | (93) | |
| Operating profit before financing costs | 2,592 | 3,342 | (1,558) | - | 4,376 | - | 4,376 |
| Net finance costs | 126 | - | 126 | ||||
| Tax | - | - | - | ||||
| Profit after tax | 4,502 | - | 4,502 | ||||
| Balance sheet | |||||||
| Investments | - | - | 265 | - | 265 | - | 265 |
| Property, plant and equipment | 19,022 | 5,415 | 992 | - | 25,429 | - | 25,429 |
| Intangible assets | 16,469 | 985 | 11,480 | - | 28,934 | - | 28,934 |
| Retirement benefit asset | - | - | 857 | - | 857 | - | 857 |
| Other segment assets | 17,523 | 7,813 | 3,230 | - | 28,566 | - | 28,566 |
| Assets classified as held for sale | - | - | 1,271 | - | 1,271 | - | 1,271 |
| Cash and cash deposits | 2,457 | 1,663 | 3,665 | - | 7,785 | - | 7,785 |
| Total assets | 55,471 | 15,876 | 21,760 | - | 93,107 | - | 93,107 |
| Trade and other payables | 8,482 | 4,264 | 2,332 | - | 15,078 | - | 15,078 |
| Dividends payable | - | - | 339 | - | 339 | - | 339 |
| Tax liabilities | (1,796) | 800 | 6,700 | - | 5,704 | - | 5,704 |
| Interest bearing loans and borrowings | 5,376 | 1,869 | 14,286 | - | 21,531 | - | 21,531 |
| Total liabilities | 12,062 | 6,933 | 23,657 | - | 42,652 | - | 42,652 |
| Net assets | 43,409 | 8,943 | (1,897) | - | 50,455 | - | 50,455 |
| Other segmental information
| |||||||
| Capital expenditure on property, plant and equipment | 2,244 | 576 | 681 | - | 3,501 | - | 3,501 |
| Capital expenditure on computer software | 14 | 43 | 32 | - | 89 | - | 89 |
| Depreciation | 2,533 | 503 | 116 | - | 3,152 | - | 3,152 |
| Amortisation of computer software | 12 | 20 | 24 | - | 56 | - | 56 |
Analysis by business segment
The segment results for the year ended 31 March 2007 were as follows:
| Technical Plastics £000 | Precision Products £000 | Unallocated £000 | Eliminations £000 | Continuing total £000 | Discontinued £000 | Group total £000 | ||
| Income statement | ||||||||
| Total revenue | 58,664 | 19,595 | - | (229) | 78,030 | 1,025 | 79,055 | |
| Less inter-segment revenue | (201) | (28) | - | 229 | - | - | - | |
| Total external revenue | 58,463 | 19,567 | - | - | 78,030 | 1,025 | 79,055 | |
| Expenses | (54,922) | (17,300) | (1,011) | - | (73,233) | (1,003) | (74,236) | |
| Underlying operating profit | 3,541 | 2,267 | (1,011) | - | 4,797 | 22 | 4,819 | |
| Rationalisation costs | (153) | (239) | (201) | - | (593) | - | (593) | |
| Operating profit | 3,388 | 2,028 | (1,212) | - | 4,204 | 22 | 4,226 | |
| Site closure costs | (561) | - | - | - | (561) | - | (561) | |
| Profit on sale of properties | - | - | 3,722 | - | 3,722 | - | 3,722 | |
| Profit before financing costs | 2,827 | 2,028 | 2,510 | - | 7,365 | 22 | 7,387 | |
| Net finance costs | (205) | 7 | (198) | |||||
| Tax | (713) | (2) | (715) | |||||
| Profit after tax | 6,447 | 27 | 6,474 | |||||
| Balance sheet | ||||||||
| Investments | - | - | 52 | - | 52 | - | 52 | |
| Property, plant and equipment | 18,526 | 5,396 | 663 | - | 24,585 | - | 24,585 | |
| Intangible assets | 15,061 | 21 | 10,283 | - | 25,365 | - | 25,365 | |
| Other segment assets | 18,228 | 5,975 | 7,557 | (48) | 31,712 | - | 31,712 | |
| Assets classified as held for sale | - | - | 842 | - | 842 | - | 842 | |
| Cash and cash deposits | 2,425 | 22 | 428 | - | 2,875 | - | 2,875 | |
| Total assets | 54,240 | 11,414 | 19,825 | (48) | 85,431 | - | 85,431 | |
| Trade and other payables | 8,974 | 3,141 | 1,624 | (48) | 13,691 | - | 13,691 | |
| Dividends payable | - | - | 222 | - | 222 | - | 222 | |
| Tax liabilities | (1,496) | 21 | 6,811 | - | 5,336 | - | 5,336 | |
| Interest bearing loans and borrowings | 2,242 | 639 | 12,799 | - | 15,680 | - | 15,680 | |
| Retirement benefit obligations | - | - | 12,061 | - | 12,061 | - | 12,061 | |
| Total liabilities | 9,720 | 3,801 | 33,517 | (48) | 46,990 | - | 46,990 | |
| Net assets | 44,520 | 7,613 | (13,692) | - | 38,441 | - | 38,441 | |
| Other segmental information | ||||||||
| Capital expenditure on property, plant and equipment | 1,766 | 460 | 119 | - | 2,345 | - | 2,345 | |
| Capital expenditure on computer software | 27 | 10 | 5 | - | 42 | - | 42 | |
| Depreciation | 2,390 | 462 | 92 | - | 2,944 | 33 | 2,977 | |
| Amortisation of computer software | 62 | 11 | 30 | - | 103 | - | 103 | |
Analysis by geographical segment by destination
The analysis of revenue by geographical destination for the year ended 31 March 2008 was as follows:
| United Kingdom £000 | North America £000 | Rest of world £000 | Group total £000 | |||
| Total external revenue | 33,540 | 17,891 | 29,843 | 81,274 | ||
| Less revenue attributable to discontinued operations | - | - | - | - | ||
| Revenue from continuing operations | 33,540 | 17,891 | 29,843 | 81,274 | ||
The analysis of revenue by geographical destination for the year ended 31 March 2007 was as follows:
| United Kingdom £000 | North America £000 | Rest of world £000 | Group total £000 | |||
| Total external revenue | 34,000 | 17,990 | 27,065 | 79,055 | ||
| Less revenue attributable to discontinued operations | (477) | (96) | (452) | (1,025) | ||
| Revenue from continuing operations | 33,523 | 17,894 | 26,613 | 78,030 | ||
Analysis by geographical segment by origin
The business operates in three main geographical regions - the United Kingdom, North America and in lower cost regions such as the Czech Republic and China.
The analysis of results by geographical origin for the year ended 31 March 2008 was as follows:
| United Kingdom £000 | North America £000 | Rest of world £000 | Group total £000 | ||
| Revenue | |||||
| Total external revenue | 57,806 | 13,814 | 9,654 | 81,274 | |
| Less revenue attributable to discontinued operations | - | - | - | - | |
| Revenue from continuing operations | 57,806 | 13,814 | 9,654 | 81,274 | |
| Other segment information | |||||
| Segment assets | 26,964 | 11,457 | 13,931 | 52,352 | |
| Unallocated assets | (1,897) | - | - | (1,897) | |
| Net assets | 25,067 | 11,457 | 13,931 | 50,455 | |
| Capital expenditure on property, plant and equipment | 2,484 | 836 | 181 | 3,501 | |
| Capital expenditure on computer software | 75 | 14 | - | 89 | |
| Depreciation | 2,130 | 545 | 477 | 3,152 | |
| Amortisation of computer software | 44 | 12 | - | 56 |
The analysis of results by geographical origin for the year ended 31 March 2007 was as follows:
| United Kingdom £000 | North America £000 | Rest of world £000 | Group total £000 | |
| Revenue | ||||
| Total external revenue | 58,719 | 14,667 | 5,669 | 79,055 |
| Less revenue attributable to discontinued operations | (1,025) | - | - | (1,025) |
| Revenue from continuing operations | 57,694 | 14,667 | 5,669 | 78,030 |
| Other segment information | ||||
| Segment assets | 29,371 | 11,109 | 11,653 | 52,133 |
| Unallocated assets | (13,692) | - | - | (13,692) |
| Net assets | 15,679 | 11,109 | 11,653 | 38,441 |
| Capital expenditure on property, plant and equipment | 1,567 | 497 | 281 | 2,345 |
| Capital expenditure on computer software | 14 | 28 | - | 42 |
| Depreciation | 2,158 | 491 | 328 | 2,977 |
| Amortisation of computer software | 41 | 62 | - | 103 |
Notes
1. The financial statements set out above do not constitute the company's statutory accounts for the years ended 31 March 2008 and 31 March 2007, but are derived from those accounts. Statutory accounts for the year ended 31 March 2007 have been delivered to the Registrar of Companies and those for the year ended 31 March 2008 will be delivered following the company's annual general meeting.
2. The auditors have reported on those accounts; their report was (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under S 237 (2) or S 237 (3) of the Companies Act 1985.