Carclo Regulatory News (CAR)

16 May 2016

Carclo plc

("Carclo" or the "Group")

Intended Exit from Carclo Diagnostics Solutions ("CDS")

On 12th April 2016, as part of the Group's Year End Trading Update, the Board confirmed that it had commenced discussions with potential commercial partners and appointed advisors to engage with more strategic collaborators regarding the optimal way to develop the opportunities within Carclo Diagnostics Solutions ("CDS"). The Board considered the feedback from these parties would be pivotal in concluding the appropriate strategy for the CDS business and optimising shareholder value.

The broad review process undertaken has explored a wide range of potential strategic options, including commercial partnerships, co-investments or divestment, with a diverse range of potential parties. In addition the Board has investigated all other appropriate funding options for an independent CDS business outside of the Carclo Group.

This review process has now completed. The key feedback pointed to the need to develop a wider range of assays which would require an increasing level of future investment and concerns around the cost to and timings of market take up and, consequently, the certainty of future commercialisation. The review did not identify a credible strategic option to take CDS forward or new investors.

In considering the findings and conclusions from this review process, the Board has been mindful of the Group's overall financial resources and its primary objective to pursue and support, with capital investment, the identified future growth opportunities presented by the Group's two main divisions, Technical Plastics and LED Technologies. The Board views the excellent growth prospects in both these divisions as the key drivers of Group future performance and the longer term creation of shareholder value.

Accordingly, the Board has concluded that it should discontinue its investment in CDS, currently c.£1.5 million per annum. As a result of this decision, the Board has determined that the carrying value of the intangible assets relating to CDS held on the Group's balance sheet, being c.£4.9 million at 31st March 2016, should be fully impaired in the financial statements for the year ended 31st March 2016. This non-cash impairment cost will be disclosed as an exceptional write down in these financial statements. Furthermore the Board expects to incur an eventual closure expense of c.£1.0 million, being a combination of non-cash and cash costs during the year ending 31st March 2017. The Group intends to absorb the CDS Intellectual Property Rights within the Technical Plastics Division whilst it explores options to sell or license these Rights should appropriate parties be identified.

As previously announced, Carclo will report its preliminary results for the year ended 31 March 2016 on 7 June 2016.

Chris Malley, Carclo CEO, commented:

"The Group's core focus and growth opportunities sit within our two main divisions, Technical Plastics and LED Technologies, both of which are performing well and have excellent and exciting prospects.

"While CDS' technical progress has been consistent with our published roadmap, the Board considers that now is the appropriate time to withdraw funding from this business, given the uncertainty over its future commercial success and the financial commitment required to take it forward."

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Note to Editors

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

Carclo's strategy is to develop and expand its key manufacturing assets where there remain significant further opportunities to drive value. To enhance profit margins the group has been investing in new technologies.

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