Carclo Regulatory News (CAR)

15 January 2018

Carclo plc

Trading Update and Board Changes

Carclo plc ("Carclo" or the "Group"), the global manufacturing group, announces a trading update for the year ending 31 March 2018.

Trading update

The stronger second half performance across the Group, anticipated at the time of the Interim Results in November last year, is not now expected to be achieved. Accordingly, the Board now expects the Group's performance for the current financial year to be significantly lower than previously planned.

While the previously reported operational issues at Technical Plastics have been addressed, there has been an unexpected delay in the awarding of two large tooling and automation contracts. In addition, a large and long standing non-medical customer which had been indicating a strong second half for our moulded components has not yet increased its orders. The impact of these factors is such that the division's profit for the current year is now expected to be significantly below expectations.

Within LED Technologies, the Group's LED super car lighting business has performed as anticipated and new product launches have continued to be made on time. However, while the Wipac business has continued to operate well, delays in the award of three new contracts are expected to materially reduce the division's profit for the current year. It is still anticipated that Wipac will be successful in winning a number of these programmes despite the uncertainty on timing.

The Board expects the Group's profits for the year ending 31st March 2018 to be significantly lower than its previous expectations. In addition, as a consequence of some of these delayed projects and lower customer orders, the Board has now reduced its profit expectations for the 2018/19 financial year albeit these revised expectations will still represent healthy year on year growth.

The Board recognises there is an ongoing reliance upon winning new tooling and automation contracts to drive profitability in Technical Plastics. However it is also cognisant that such reliance must be offset by higher and more sustainable underlying operating margins from existing business and therefore targeting improved margins has been an ongoing initiative. In view of the disappointing reduction in anticipated profitability for the current year, a more fundamental and urgent review of operating efficiencies and margins at this division is to be undertaken.

The Group's financing remains healthy and it continues to operate well within its banking covenants.

While this is a setback, the Board believes that the medium term outlook for the Group remains positive. The LED Technologies business is still expected to grow significantly, moving forwards as the previously awarded mid-volume programmes commence production from 2019, and the new medical programmes won in Technical Plastics are expected to underpin good growth in this division.

Board changes

The Board announces today that, after 14 years as Group Finance Director, Robert Brooksbank is leaving the Group on 31 March 2018 to pursue other career and business opportunities. The Board would like to thank Robert for his significant contribution to Carclo over this period and wish him well in the future. The Board is initiating the process to recruit a new finance director and in the meantime Richard Ottaway, Group Financial Controller and Company Secretary, will act as the Interim Chief Financial Officer from 1 April 2018 until a permanent successor is appointed.

In addition, the Board announces that Michael Derbyshire will retire from the Board at the Group's Annual General Meeting in July 2018 after nearly six years as Chairman and over 12 years as a Non-Executive Director. Michael has made a substantial contribution to the strategic direction of the Company and the Board thanks him and wishes him well for the future.

Mark Rollins, who joined the Board as Non-Executive Director on 1 January 2018, will become Chairman at the conclusion of the Annual General Meeting.

Notes to editors

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 remain 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.