Earnings Release • Jun 11, 2013
Earnings Release
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RNS Number : 7110G
Carclo plc
11 June 2013
For immediate release 11 June 2013
Carclo plc
("Carclo" or "the group")
Carclo plc, the technology led plastics group, today announces its full year results for the year ended 31 March 2013.
Highlights
· Revenue decreased by 7.2% to £86.5 million reflecting the previous year's withdrawal from our volume automotive antenna business at Wipac
· Divisional operating profit was £7.7 million (2012 - £8.0 million) and underlying operating profit from continuing operations was in line with expectations at £6.2 million (2012 - £6.6 million)
· Net debt reduced from £18.0 million to £9.2 million in the year following the equity fund raising and receipt of the $10.0 million prepayment from Atmel Corporation ("Atmel")
· Total dividend increased by 6.3% to 2.55 pence per share
· Conductive Inkjet Technology ("CIT") shipped its first commercial touch screen products in the year and has achieved design wins for multiple products to further tier 1 customers
· Continuing technical progress at Carclo Diagnostic Solutions ("CDS") across all of its micropoc platforms is expected to result in commercial partnerships over the next twelve months
Commenting on the results, Michael Derbyshire, chairman said -
"Carclo produced a solid financial performance and made encouraging strategic progress during the year ended 31 March 2013.
With a newly constituted board in place, CIT set to contribute substantially and the core businesses in good shape, we are confident that the group will make significant progress in the coming year."
Enquiries
Carclo plc 020 7067 0700 (today)
Chris Malley, chief executive 01924 268040 (thereafter)
Robert Brooksbank, finance director
Weber Shandwick Financial 020 7067 0700
Nick Oborne
Stephanie Badjonat
A presentation for analysts will be held at 9.30 a.m. on 11 June 2013 at the offices of Weber Shandwick Financial, 2 Waterhouse Square, 140 Holborn, London EC1N 2AE.
Notes to editors
About Carclo
Carclo plc is a technology led plastics group. It is a public company whose shares are quoted on the London Stock Exchange.
Approximately three fifths of revenues are derived from the supply of fine tolerance, injection moulded plastic components, which are used in medical, optical and electronics products. This business, Carclo Technical Plastics, operates internationally in a fast growing and dynamic market underpinned by rapid technological development.
Approximately two fifths of revenues are derived from the supply of specialised precision components to the premium automotive and aerospace industries and LED optics for a wide range of end applications. Carclo is a leader in the development of high power LED lighting for supercars.
Carclo's strategy is to develop new technologies and products to drive future growth. Its investment in Conductive Inkjet Technology is at the heart of the newly emerging market for very low cost printed electronics.
Forward looking statements
Certain statements made in this announcement are forward looking statements. Such statements are based on current expectations and are subject to a number of risks and uncertainties that could cause actual events to differ materially from any expected future events or results referred to in these forward looking statements.
Carclo produced a solid financial performance and made encouraging strategic progress during the year ended 31 March 2013. Group revenue and profit from operations before exceptional items benefitted from a strong second half as expected. The highlights for the year were -
Financial highlights
· Revenue decreased by 7.2% to £86.5 million reflecting the previous year's withdrawal from our volume automotive antenna business at Wipac
· Divisional operating profit was £7.7 million (2012 - £8.0 million) and underlying operating profit from continuing operations was £6.2 million (2012 - £6.6 million)
· Exceptional charge of £0.7 million (2012 - £1.8 million net exceptional charge) due mainly to £0.4 million of litigation costs in our claim against Uni-Pixel Inc.
· The effect of exceptional items was to reduce profit after tax from £4.6 million to £4.2 million and basic earnings per share from 7.5 pence to 6.6 pence
· Underlying basic earnings per share reduced from 9.7 pence to 7.4 pence
· Group capital expenditure was £8.7 million reflecting significant investment in our growth businesses
· Despite this high capital expenditure incurred and the cash cost of developing our technology businesses, net debt reduced from £18.0 million to £9.2 million in the year following the equity fund raising and receipt of the $10.0 million prepayment from our partner Atmel Corporation ("Atmel")
· Total dividend increased by 6.3% to 2.55 pence per share
Strategic and Operational highlights
· Conductive Inkjet Technology ("CIT") shipped its first commercial touch screen products in the year with the technology being used in the ASUS MeMO Pad tablet as well as in an unnamed Asian manufactured smartphone. Focus remains on fine line technology with the new Cambridge facility becoming operational in May 2013. Design wins for multiple products to further tier 1 customers have been achieved
· Continuing technical progress at Carclo Diagnostic Solutions ("CDS") across all of its micropoc platforms is expected to result in commercial partnerships over the next twelve months
· In Technical Plastics, after a short period of weak demand at the turn of the calendar year, schedules returned to normal. We have won a number of new medical device programmes and are confident of returning the business back to growth. We are investing $5.8 million in our Latrobe USA facility and this will provide a platform for further expansion
· In LED Technologies Wipac has had a good year, benefitting from further contract wins in supercar lighting, with more in the pipeline. The LED Optics business is starting to see growth again as we refocus in this segment
· Precision Engineering has continued to generate good profits from its established niche businesses and should enjoy further modest growth
The proposed final dividend of 1.75 pence per share brings the total dividend for the year to 2.55 pence per share (2012 - 2.4 pence). This represents an increase of 6.3% and further emphasises the solid financial performance for the year and the board's confidence in the group's prospects.
I would like to thank all those employed by Carclo in the year under review for their substantial contribution in a very competitive environment.
The year has been a transitional one for the board with the retirement of Ian Williamson in March as chief executive and his replacement by Chris Malley. Earlier in the year, Christopher Ross retired at the AGM, leading to my appointment as chairman. In addition, we took the opportunity to strengthen the board's experience in the technology sector with the appointment of Robert Rickman as a new non executive director. We thank Ian and Christopher for their long, dedicated and successful service and are confident that they have laid excellent foundations on which the new board can build. We are fortunate to have such a strong board which is committed to driving Carclo forwards strategically, operationally and financially in the coming years.
In May this year we commissioned the new CIT facility at Cambridge. Our new high speed coating line will shortly be in production with resources now fully in place for the planned rollout of the XSense™ product. Our partner, Atmel, has recently described the size of the opportunity and reported the positive customer reaction and feedback to this highly innovative product. This was also demonstrated by the receipt of the 2013 CES Innovations Award in the Embedded Technologies category given at the world's largest consumer technology tradeshow. We are confident that we will see a strong contribution from CIT in the coming financial year driving significant and sustained revenue growth for the group.
We have also achieved significant technical advances on the micropoc platforms within Carclo Diagnostic Solutions. In order to extend micropoc's reach and appropriateness to the Point-of-Care industry, we increased the scope of our development to further integrate the technologies within our platforms and demonstrate these platforms across a number of end use applications. This approach will strengthen our ability to deliver strong commercial engagements across a broader customer base.
Although Technical Plastics did not make the progress that we expected last year, our investment in additional facilities in the USA and the opportunities we are seeing for our new facility in India should result in good growth for future years.
The recently formed LED Technologies division, including our niche supercar lighting business, has achieved further programme wins which will enable this division to continue to expand.
Precision Engineering, which consists primarily of our aerospace businesses, has continued to produce good profit and cash generation and should again move forward this year.
With a newly constituted board in place, CIT set to contribute substantially and the core businesses in good shape, we are confident that the group will make significant progress in the coming year.
Michael Derbyshire
11 June 2013
Strategy
A focus on long-term technology opportunities has been a consistent feature of the group's strategy over recent years. Our investment in Conductive Inkjet Technology ("CIT") is now starting to deliver on its promise with recent announcements of multi programme tier one touch screen design wins from our commercial partner, Atmel Corporation ("Atmel"). The development of Carclo Diagnostic Solutions ("CDS") is now at a critical juncture and the project is now ready to move to the commercialisation stage on a number of its key platforms. Our medical and optical businesses within Technical Plastics and the supercar lighting business within LED Technologies are finding new growth opportunities and are well positioned for expansion in their respective markets. Moving forward, we will focus on delivering on the potential of these technology businesses, whilst at the same time maximising the return and delivering on growth opportunities within our operating businesses.
My predecessor, Ian Williamson, has stated in previous annual reports how CIT can transform the group. The commercialisation of the CIT Fine Line Technology ("FLT") has taken longer than originally anticipated, however the electronics industry that we serve is dynamic and complex and we believe that the additional time taken has enabled a more robust and competitive product to be developed to address the specific requirements of the market. We now believe we have the best solution to the capacitive touch sensor circuit in the industry, offering both the best dynamic and optical performance across a wide range of device resolutions and sizes. Our partnership with Atmel is strong and together we expect to become a major player in this $5 billion industry. On this basis, I concur with my predecessor's belief that the FLT opportunity is substantial and even moderate success will have a dramatic effect on Carclo's future revenues and profitability.
As the CDS project has achieved its technical milestones, we have found that the range of Point-of-Care applications for which these devices are suited is wider than that originally envisaged. As part of our commercialisation planning we have therefore undertaken a full market study to identify which of the many opportunities should be prioritised. Whilst we maintain several key commercial engagements, it is critical that we focus our resources on the most promising applications.
Within Technical Plastics we have initiated an expansion programme within our primary US facility in Latrobe, Pennsylvania. This will create extended cleanroom manufacturing capabilities which will service newly won contracts and allow this business to further expand as the group's medical customers see global growth across their own product lines. Our investment in growth in this facility will reach $5.8 million with the additional plant due to be fully operational by the end of 2013. We are also investing in additional sales resources across our global Technical Plastics operations as we see further opportunities to partner with global customers and increase utilisation of our existing facilities.
The LED Technologies division is now integrated into a single management structure. Wipac has performed well and we have been nominated to design and manufacture a number of new high profile supercar LED lighting programmes. We have continued to receive positive feedback from our global customers who see our design strength and engineering and manufacturing performance as leading edge within the supercar lighting sector. The LED optics business was restructured following a period of revenue stagnation and product commoditisation in the market. We are pleased to report that we exited the year with new project wins for our custom optics and we believe that we will see sustainable growth within this sector.
The Precision Engineering division has again performed strongly. Our aerospace businesses in Scotland and France have continued to gain new business on aircraft in current production as older aircraft have been retired, and this will secure further growth into the future.
Business in detail
Conductive Inkjet Technology
We shipped the first two commercial touch products in December 2012. We believe that these products represented a world first for a non- ITO based sensor to be used in the mobile phone and tablet computer sectors. The use of XSense ™ within the 7" ASUS MeMO Pad tablet programme represented a breakthrough and created a strong reference platform. Along with our partner, Atmel, we have been scaling up processes and systems and have been validating our product with key target customers in readiness for high volume programmes launching in the second half of 2013. Our validation exercise has spanned multiple customers and supply chain partners and has covered a range of different methods of touch module design. Whilst we acknowledge that there have been delays in the rollout of our FLT touch sensor technology versus initial estimates, the fact is that our latest product is unrecognisable from that which we first developed in respect of its technical construction, features and consequent optical performance. Optical and electrical design have been developed so that our materials are applicable to the whole touch sector. Whilst there is much said about other companies within the ITO alternative sector, we have remained focussed on our own product development and have created a solution which we believe is superior in every regard to competitor metal mesh technologies. We have also been investing in further technology developments which will enable our materials to be applicable to the developing needs of the industry that we serve. These improvements include even higher optical performance as screen resolutions increase, highly flexible materials for curved displays and roll-to-roll production of these displays, as well as products suitable for in-cell applications and in-mould insertion and products built on a range of optically optimised substrates. Whilst the delays in commercialisation have been frustrating, they do reflect the challenges of customer acceptance and new technology validation in this industry. The learning curve that we have followed will be applicable to other would be entrants into this sector and as such we would expect these issues to represent significant barriers and delays to their entry. The growth in the use of touch devices represents a significant opportunity for our product. Regardless of operating system platform, this sector is growing fast and we are in a strong position to take a sizeable share of the market. During the ramp-up phase of new technologies it is notoriously difficult to predict revenues; we have estimated revenue in the range of £8.0 million to £12.0 million for CIT in the current financial year, the majority of which is related to the XSense ™ programme.
The investment in our new Cambridge production facility is on track and it is now operational. This £3.5 million investment includes the addition of a new high speed coating line which is in the final stages of validation. This line's performance has already exceeded expectations and it is capable of manufacturing in excess of 3.0 million square metres per annum of FLM base material which is subsequently converted into touch sensors both on site and by our partner. Our FLT business will relocate entirely to our new facility this summer thereby freeing up the original facility and its cleanrooms to our Printed Electronics and R&D activities.
Within the coming year we will create a separate Printed Electronics business within CIT. We have a number of pre-existing customers and will add further capabilities in order to pursue our strategy of fully commercialising these novel and low cost printed electronic circuits.
Our work in developing electrodes for use in flexible organic photovoltaics and lighting devices has continued. Whilst both of these development projects have been successful, the markets for these applications are currently immature but have potential for huge growth in the medium term. We intend to pursue further commercial agreements in these areas to ensure that our solutions are driven by the needs of the industry.
Carclo Diagnostic Solutions
Having established the company and its Daresbury laboratory facilities last year, we have invested a further £0.7 million to continue the development of our three platforms of Micropoc-lite, Micropoc-cat and Micropoc-pro. These platforms have been designed to offer a simple and low cost solution for the high growth Point-of-Care diagnostic market. Whilst our effort has continued to be on the creation of generic device platforms, in parallel we have been developing demonstrable prototype devices in the areas of Blood Coagulation testing and Enzyme-linked immunosorbent assays (ELISA tests). These two test types span the more complex platforms of Cat and Pro respectively. Our strategy has been modified since last year as we now believe that credible commercial partnerships are best achieved through demonstration of well-developed devices rather than device concepts. Although this extension in our scope of development has resulted in an extended timeframe to achieve commercialisation, it facilitates more cogent commercial engagement.
We remain excited about CDS and its potential to generate long-term partnerships which would include the creation of manufacturing licenses for our Technical Plastics division. As one of the world's leading contract manufacturers of high volume medical devices, we are well placed to create long-term partnerships with a wide range of leading medical device OEMs.
Operating margin was lower than the prior year due predominantly to an inefficient start-up on several new complex programmes, which are now running well, as well as the impact of price reductions for a number of our key medical device customers as part of the negotiations to extend and expand long standing contracts to ensure future stability. We have taken steps to mitigate these price downs through efficiency improvements, but this highlights the need to increase utilisation of the division's assets from new and existing customers in order to maintain and improve operating margins towards our long term target of 10%.
We are confident in our ability to grow this division and increase our operating margins over the coming years.
LED Technologies
This is the first year of reporting our LED Technologies division which represented 26.7% of group revenue in the year. This division was formed by bringing together our two LED businesses, Wipac and LED Optics, following Wipac's withdrawal from volume automotive antennas and cables in 2012. The creation of a single division has simplified its structure and has created management and technical design synergies. Our Wipac LED supercar lighting business continued to perform very well in the year. The business has become recognised across its customer base as both an innovator and high quality manufacturing partner. During the year, Wipac developed a class leading LED dip beam light that has been tested by several of the leading supercar brands and has out-performed all other market offerings. We anticipate this project will lead to further design wins.
The LED Optics business had a flat year, but we have recently won additional new contracts with major LED OEMs and expect to reposition it back onto a growth trajectory. This growth will come from a range of new high precision optical parts, predominantly used in lighting modules. We have seen a trend of industry consolidation within the volume LED module sector and this is well suited to our global footprint. Our LED street lighting module has created keen interest from prospective customers; however the fragmented market has made this a challenging area to achieve commercial traction as yet. We are continually investigating alternative strategies to expand our LED module business as we still see strong opportunities for growth in niche areas.
Precision Engineering
This division supplies control cables and high precision machined components, predominantly to the European civil aviation industry, and benefits from our many years of experience in this sector. We have excellent relationships with our key customers and the division's quality and on-time delivery performance have been strong throughout the year. We believe that there are growth prospects for this division through our offering of fast turnaround high quality components and that we can sustain our operating margins. This business continues to be profitable and cash generative.
| 2013 £million |
2012 £million |
|
| Revenue | 86.5 | 93.3 |
| Divisional operating profit | 7.7 | 8.0 |
| Unallocated | (1.5) | (1.4) |
| Underlying operating profit from continuing operations | 6.2 | 6.6 |
| Exceptional items | (0.7) | (1.8) |
| Net bank interest | (0.6) | (0.6) |
| IAS 19 net financing credit | 0.1 | 1.3 |
| Profit before tax | 5.0 | 5.5 |
| Income tax expense | (0.8) | (0.9) |
| Loss on discontinued operations | (0.1) | (0.0) |
| Profit attributable to ordinary shareholders | 4.1 | 4.6 |
| Ordinary dividend paid or declared | (1.6) | (1.4) |
| Surplus for the year | 2.5 | 3.2 |
| Divisional operating margin from continuing operations | 8.9% | 8.6% |
| Basic earnings per share | 6.5p | 7.5p |
| Underlying earnings per share | 7.4p | 9.7p |
Group turnover in the year was £86.5 million (2012 - £93.3 million) and the £6.8 million reduction was mainly due to the withdrawal from the volume automotive cable and antenna business in the prior financial year which reduced revenues in LED Technologies to £23.1 million (2012 - £31.0 million). Revenues in Technical Plastics increased slightly to £57.1 million (2012 - £56.9 million) and revenues in Precision Engineering also increased slightly to £7.5 million (2012 - £7.4 million).
Divisional operating profit was £7.7 million (2012 - £8.0 million) and underlying operating profit from continuing operations was £6.2 million (2012 - £6.6 million). Unallocated costs, which predominantly comprise head office costs, were £1.5 million (2012 - £1.4 million). As anticipated, both Technical Plastics and LED Technologies generated substantially greater operating profits in the second half of the year than in the first half of the year.
Profit before tax was £5.0 million (2012 - £5.5 million) after an exceptional charge of £0.7 million (2012 - net exceptional charge of £1.8 million), the majority of which relates to the legal fees incurred in respect of the group's litigation claim against Uni-Pixel Inc.
Net bank interest at £0.6 million (2012 - £0.6 million) was the same as in the prior year with the effect of lower average levels of net debt offset by the impact of higher average LIBOR rates. The net pensions financing credit under the provisions of IAS 19 "Employee Benefits" was £0.1 million (2012 - £1.3 million) and this substantial reduction was due to the increase in the IAS 19 pensions deficit as at 31 March 2012.
The group tax charge for the year was £0.8 million (2012 - £0.9 million). This equates to an effective tax rate of 16.4% which compares to the current UK corporation tax rate of 24%. The lower effective rate is due to the impact of the future reduction in the corporation tax rate on deferred tax and the recognition of prior period losses.
Net debt and gearing
| 2013 £million |
2012 £million |
|
| Underlying cash flow | 13.7 | 12.0 |
| Interest and tax | (1.5) | (1.3) |
| Capital expenditure | (8.2) | (4.2) |
| Free cash flow | 4.0 | 6.5 |
| Pension payments | (1.6) | (1.6) |
| Non recurring | (0.6) | 0.4 |
| Proceeds from issue of share capital | 12.8 | 0.1 |
| Performance share plan awards | (0.2) | (0.1) |
| Equity dividends | (1.5) | (1.4) |
| Cash flow from corporate activities | 12.9 | 3.9 |
| Development expenditure | (3.8) | (2.6) |
| Acquisitions and disposals | (0.1) | (0.6) |
| Exchange movement | (0.2) | 0.4 |
| Decrease in net debt in year | 8.8 | 1.1 |
Net debt comprises interest bearing loans and borrowings less cash and cash deposits.
Group net debt reduced to £9.2 million at 31 March 2013 (2012 - £18.0 million). This represents gearing of 11.9% (2012 - 28.8%) after excluding the net pension deficit. The increase in underlying cash flow was due to the receipt of the $10.0 million prepayment from our partner Atmel Corporation at the end of the financial year. On a like for like basis underlying cash flow was £7.1 million and the reduction on the prior year largely related to an increase in working capital due mainly to higher levels of sub contract tooling activity.
Group capital expenditure in cash terms was £8.2 million (2012 - £4.2 million) representing 229.2% of the total group depreciation charge (2012 - 121.9%). This much higher level of capital investment reflects the increased investments in capacity in Technical Plastics to support growth in the US and India as well as the capital cost of the new high speed coating line, clean rooms and ancillaries at CIT's new Cambridge facility.
Pension contributions of £1.6 million (2012 - £1.6 million) were made during the year. This amount was made up of £1.0 million in respect of the annual recovery plan payment and £0.6 million of scheme administration costs, including the annual Pension Protection Fund levy, which are borne by the company.
Development expenditure of £3.8 million (2012 - £2.6 million) was capitalised during the year. £2.9 million of this related to CIT whilst £0.9 million related to CDS and PDL.
Group cash flow benefitted significantly from the equity placing which was completed in July 2012 and which raised net proceeds of £12.6 million for further investment in the group's technology businesses and to reduce group indebtedness.
Group debt is expected to increase during the current financial year as the $10.0 million prepayment from Atmel is released against sales of product during the period.
As at 31 March 2013 the group's net debt was £9.2 million. The group has total bank facilities of £31.5 million, which include committed facilities of £20.0 million which expire in November 2015. These committed facilities, which were drawn to £18.3 million as at 31 March 2013, are well priced in the current market. The two main covenants in the facility agreements are interest cover and the ratio of net debt to EBITDA and the group has a comfortable level of headroom on both of these covenants as at 31 March 2013. Under the facility agreements the group's banks have security in the form of guarantees from certain group companies and fixed and floating charges over the current assets of the group's three main UK trading subsidiaries.
As at 31 March 2013 the group pension scheme deficit, as calculated under IAS 19 "Employee Benefits", was £11.9 million, net of deferred tax (2012 - £17.2 million). The defined benefit pension liability increased to £185.9 million (2012 - £172.8 million) primarily due to a 0.5% reduction in the discount rate assumption since the previous period end, reflecting a material reduction in corporate bond yields. However, this was more than offset by a substantial increase in the fair value of the plan assets to £170.5 million (2012 - £150.2 million) due to positive investment performance in the equity markets.
The group income statement reflects an IAS 19 financing credit of £0.1 million (2012 - £1.3 million). This financing credit represents the excess of the expected return on the pension scheme assets over the interest charged on the pension scheme liability. During the current financial year the significant changes to the IAS 19 standard will result in a financing charge of approximately £0.7 million. In addition, the new provisions require that the costs of administering the scheme are charged directly to profit.
The cash cost of the pension scheme to the group during the financial year was £1.6 million. This includes the annual recovery plan contribution of £1.0 million and scheme administration costs of £0.6 million. Based on the scheme triennial valuation at 31 March 2012, the group has now agreed a new recovery plan with the scheme trustees and under this plan additional annual contributions will remain at around £1.0 million (indexed annually at 2.9%) for the remaining recovery plan period of 12 years. At 31 March 2013 group properties with a net book value of £6.5 million and cash of £1.2 million were subject to a registered charge in favour of the group pension scheme, however, under the recent funding agreement with the trustees the £1.2 million of cash will now be released from this security arrangement.
Conductive Inkjet Technology
During the year CIT generated revenues of £0.7 million (2012 - £0.3 million) and broke even after amortisation charges totalling £0.2 million (2012 - £0.2 million). This amortisation charge on the intangible assets of the business is expected to increase during the current financial year as commercial ramp up occurs on the FLT project with Atmel.
CIT received the $10.0 million prepayment from Atmel at the end of the financial year and this has substantially reduced group indebtedness as at 31 March 2013. This prepayment will unwind as sales are generated by CIT during the current financial year.
CIT incurred capital expenditure of £3.5 million (2012 - £0.3 million) during the year. In addition, the total amount of development expenditure capitalised was £2.9 million (2012 - £2.0 million). The group balance sheet now includes intangible assets totalling £19.5 million in respect of CIT (2012 - £16.8 million), with £12.5 million (2012 - £9.8 million) of this amount being capitalised research and development cost funded by the group. The remaining £7.0 million represents the fair value assigned to the intellectual property that arose from the accounting treatment of the previous acquisitions of the minority holdings from our original joint venture partner. The group's policy is to conduct an annual impairment review in respect of the goodwill and to amortise the other intangible assets on a straight line basis over the estimated economic life of the intangible asset which is judged to be a period of up to 12 years from the date upon which the patent or related development expenditure becomes available for use.
CIT has incurred legal costs of £0.4 million in the year ended 31 March 2013 and this relates to its litigation against Uni-Pixel Inc.
Carclo Diagnostic Solutions ("CDS") and Platform Diagnostics ("PDL")
In the financial year, a further £0.9 million of development costs were capitalised in respect of CDS and PDL. This increases the total fair value of intangible assets relating to these investments to £4.3 million in the group balance sheet, of which £0.5 million is goodwill and £3.8 million is capitalised development costs.
Robert Brooksbank
11 June 2013
Consolidated income statement
year ended 31 March
| Notes | 2013 £000 |
2012 £000 |
|||
| # Revenue | 2 | 86,514 | 93,267 | ||
| Underlying operating profit | |||||
| Operating profit before exceptional items | 6,199 | 6,645 | |||
| - rationalisation costs | 3 | (161) | (528) | ||
| - litigation costs | 3 | (414) | - | ||
| - exit from Ford volume automotive communication business | 3 | (95) | (1,560) | ||
| - exceptional credit in respect of retirement benefits | - | 300 | |||
| After exceptional items | 5,529 | 4,857 | |||
| Operating profit | 2 | 5,529 | 4,857 | ||
| Finance revenue | 8,350 | 9,855 | |||
| Finance expense | (8,865) | (9,214) | |||
| Profit before tax | 5,014 | 5,498 | |||
| Income tax expense | (821) | (856) | |||
| Profit after tax but before loss on discontinued operations | 4,193 | 4,642 | |||
| ##### Loss on discontinued operations, net of tax | (70) | (19) | |||
| # Profit after tax | 4,123 | 4,623 | |||
| # Attributable to - | |||||
| # Equity holders of the parent | 4,151 | 4,637 | |||
| # Non-controlling interests | (28) | (14) | |||
| 4,123 | 4,623 | ||||
| Earnings per ordinary share | 4 | ||||
| Basic - continuing operations | 6.6 p | 7.5 p | |||
| Basic - discontinued operations | (0.1) p | 0.0 p | |||
| Basic - total | 6.5 p | 7.5 p | |||
| Diluted - continuing operations | 6.5 p | 7.5 p | |||
| Diluted - discontinued operations | (0.1) p | 0.0 p | |||
| Diluted - total | 6.4 p | 7.5 p | |||
| 2013 £000 |
2012 £000 |
||
| #### Profit for the period | 4,123 | 4,623 | |
| Other comprehensive income - | |||
| Foreign exchange translation differences | 607 | (546) | |
| Actuarial gains / (losses) on defined benefit scheme | 5,428 | (16,700) | |
| Taxation on items taken directly to equity - | |||
| Deferred tax | (2,011) | 3,464 | |
| Corporation tax | 2 | (5) | |
| Other comprehensive income, net of tax | 4,026 | (13,787) | |
| Total comprehensive income for the period | 8,149 | (9,164) | |
| Attributable to - | |||
| Equity holders of the parent | 8,177 | (9,150) |
Non-controlling interests (28) (14)
| Total comprehensive income for the period | 8,149 | (9,164) |
as at 31 March
| Notes | 2013 £000 |
2012 £000 |
|||
| ##### Assets | |||||
| Intangible assets | 44,516 | 40,827 | |||
| Property, plant and equipment | 33,449 | 27,983 | |||
| Investments | 6 | 6 | |||
| Deferred tax assets | 9,741 | 10,818 | |||
| Total non current assets | 87,712 | 79,634 | |||
| Inventories | 12,574 | 11,704 | |||
| Trade and other receivables | 19,444 | 16,754 | |||
| Cash and cash deposits | 16,098 | 9,485 | |||
| Non current assets classified as held for sale | - | 350 | |||
| Total current assets | 48,116 | 38,293 | |||
| Total assets | 135,828 | 117,927 | |||
| ##### Liabilities | |||||
| Interest bearing loans and borrowings | 18,308 | 19,135 | |||
| Deferred tax liabilities | 6,720 | 5,922 | |||
| Retirement benefit obligations | 6 | 15,476 | 22,597 | ||
| Total non current liabilities | 40,504 | 47,654 | |||
| ##### Trade and other payables | 20,979 | 14,335 | |||
| ##### Current tax liabilities | 2,255 | 2,208 | |||
| ##### Provisions | - | 130 | |||
| Interest bearing loans and borrowings | 6,968 | 8,326 | |||
| Total current liabilities | 30,202 | 24,999 | |||
| Total liabilities | 70,706 | 72,653 | |||
| Net assets | 65,122 | 45,274 | |||
| Equity | |||||
| Ordinary share capital issued | 7 | 3,258 | 3,090 | ||
| Share premium | 20,901 | 8,296 | |||
| Other reserves | 3,584 | 3,584 | |||
| Translation reserve | 4,795 | 4,188 | |||
| Retained earnings | 31,504 | 25,008 | |||
| Total equity attributable to equity holders of the parent | 64,042 | 44,166 | |||
| Non-controlling interests | 1,080 | 1,108 | |||
| ##### Total equity | 65,122 | 45,274 | |||
| Approved by the board of directors and signed on its behalf by - | |||||
| Michael Derbyshire | } directors | ||||
| Robert Brooksbank | |||||
| 11 June 2013 |
Attributable to equity holders of the company
| Share | Share | Translation | Other | Retained | Non-controlling | Total | ||||||||||||||
| capital | premium | reserve | reserves | earnings | Total | interests | Equity | |||||||||||||
| £000 | £000 | £000 | £000 | £000 | £000 | £000 | £000 | |||||||||||||
| Balance at 1 April 2011 | 3,078 | 8,189 | 4,734 | 3,584 | 34,746 | 54,331 | - | 54,331 | ||||||||||||
| Profit for the period | - | - | - | - | 4,637 | 4,637 | (14) | 4,623 | ||||||||||||
| Other comprehensive income - | ||||||||||||||||||||
| Foreign exchange translation differences | - | - | (546) | - | - | (546) | - | (546) | ||||||||||||
| Actuarial losses on defined benefit scheme | - | - | - | - | (16,700) | (16,700) | - | (16,700) | ||||||||||||
| Taxation on items above | - | - | - | - | 3,459 | 3,459 | - | 3,459 | ||||||||||||
| Transactions with owners recorded directly in equity - | ||||||||||||||||||||
| Share based payments | - | - | - | - | 183 | 183 | - | 183 | ||||||||||||
| Dividends to shareholders | - | - | - | - | (1,390) | (1,390) | - | (1,390) | ||||||||||||
| Exercise of share options | 3 | 41 | - | - | - | 44 | - | 44 | ||||||||||||
| Proceeds from sale of own shares | - | - | - | - | 19 | 19 | - | 19 | ||||||||||||
| Performance share plan awards | 9 | 66 | - | - | (187) | (112) | - | (112) | ||||||||||||
| Acquisition of subsidiary with non-controlling interests | - | - | - | - | - | - | 1,122 | 1,122 | ||||||||||||
| Taxation on items recorded directly in equity | - | - | - | - | 241 | 241 | - | 241 | ||||||||||||
| Balance at 31 March 2012 | 3,090 | 8,296 | 4,188 | 3,584 | 25,008 | 44,166 | 1,108 | 45,274 | ||||||||||||
| Balance at 1 April 2012 | 3,090 | 8,296 | 4,188 | 3,584 | 25,008 | 44,166 | 1,108 | 45,274 | ||||||||||||
| Profit for the period | - | - | - | - | 4,151 | 4,151 | (28) | 4,123 | ||||||||||||
| Other comprehensive income - | ||||||||||||||||||||
| Foreign exchange translation differences | - | - | 607 | - | - | 607 | - | 607 | ||||||||||||
| Actuarial gains on defined benefit scheme | - | - | - | - | 5,428 | 5,428 | - | 5,428 | ||||||||||||
| Taxation on items above | - | - | - | - | (2,009) | (2,009) | - | (2,009) | ||||||||||||
| Transactions with owners recorded directly in equity - | ||||||||||||||||||||
| Share based payments | - | - | - | - | 189 | 189 | - | 189 | ||||||||||||
| Dividends to shareholders | - | - | - | - | (1,071) | (1,071) | - | (1,071) | ||||||||||||
| Exercise of share options | 1 | 23 | - | - | - | 24 | - | 24 | ||||||||||||
| Issue of shares net of costs | 154 | 12,492 | - | - | - | 12,646 | - | 12,646 | ||||||||||||
| Proceeds from sale of own shares | - | - | - | - | 6 | 6 | - | 6 | ||||||||||||
| Performance share plan awards | 13 | 90 | - | - | (246) | (143) | - | (143) | ||||||||||||
| Taxation on items recorded directly in equity | - | - | - | - | 48 | 48 | - | - | 48 | |||||||||||
| Balance at 31 March 2013 | 3,258 | 20,901 | 4,795 | 3,584 | 31,504 | 64,042 | 1,080 | 65,122 | ||||||||||||
Consolidated statement of cash flows
year ended 31 March
| Notes | 2013 £000 |
2012 £000 |
||
| Cash generated from operations | 8 | 11,303 | 10,417 | |
| Interest paid | (624) | (620) | ||
| Tax paid | (852) | (734) | ||
| ##### Net cash from operating activities | 9,827 | 9,063 | ||
| Cash flows from investing activities | ||||
| Proceeds from sale of property, plant and equipment | 227 | 405 | ||
| ##### Interest received | 12 | 13 | ||
| ##### Cash flow on discontinued operations | (70) | (70) | ||
| ##### Acquisition of business undertaking, net of cash acquired | - | (239) | ||
| Acquisition of property, plant and equipment | (8,174) | (4,120) | ||
| Acquisition of intangible assets - computer software | (26) | (66) | ||
| Investment in Platform Diagnostics Limited, whilst an associate | - | (250) | ||
| Development expenditure | (3,765) | (2,567) | ||
| Net cash from investing activities | (11,796) | (6,894) | ||
| Cash flows from financing activities | ||||
| Proceeds from issue of share capital net of costs | 12,646 | - | ||
| Proceeds from exercise of share options | 128 | 44 | ||
| Proceeds from sale of own shares | 6 | 19 | ||
| Drawings on term loan facilities | 350 | 500 | ||
| Repayment of borrowings | (1,600) | - | ||
| Cash outflow in respect of performance share plan awards | (246) | (112) | ||
| Dividends paid | (1,534) | (1,358) | ||
| Net cash from financing activities | 9,750 | (907) | ||
| Net increase in cash and cash equivalents | 7,781 | 1,262 | ||
| Cash and cash equivalents at beginning of period | 1,159 | (100) | ||
| Effect of exchange rate fluctuations on cash held | 190 | (3) | ||
| Cash and cash equivalents at end of period | 9,130 | 1,159 | ||
| Cash and cash equivalents comprise - | ||||
| Cash and cash deposits | 16,098 | 9,485 | ||
| Bank overdrafts | (6,968) | (8,326) | ||
| 9,130 | 1,159 |
Notes on the accounts
1. Notes on the preliminary statement
Basis of preparation
Whilst the financial information included in this preliminary statement has been prepared on the basis of the requirements of IFRSs in issue, as adopted by the European Union and effective at 31 March 2013, this statement does not itself contain sufficient information to comply with IFRS. The group expects to publish full consolidated financial statements on 28 June 2013.
The financial information set out in this preliminary statement does not constitute the company's consolidated financial statements for the years ended 31 March 2013 or 2012, but is derived from those financial statements. Statutory financial statements for 2012 have been delivered to the Registrar of Companies and those for 2013 will be delivered following the company's annual general meeting. The auditor, KPMG Audit Plc, has reported on those financial statements; its report was unqualified, did not draw attention to any matters by way of emphasis without qualifying their report and did not contain statements under section 498 (2) or (3) of the Companies Act 2006 in respect of the financial statements for 2013 and 2012.
Neither the company nor the directors accept any liability to any person in relation to this report except to the extent that such liability could arise under English law. Accordingly, any liability to a person who has demonstrated reliance on any untrue or misleading statement or omission shall be determined in accordance with section 90(A) of the Financial Services and Markets Act 2000.
Responsibility statement of the directors in respect of the annual report
We confirm that to the best of our knowledge -
· the financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the company and the undertakings included in the consolidation taken as a whole; and
· the directors' report includes a fair review of the development and performance of the business and the position of the company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.
2. Segment reporting
At 31 March 2013, the group was organised into four, separately managed, business segments - Technical Plastics, LED Technologies, Precision Engineering and Conductive Inkjet Technology. These are the segments for which summarised management information is presented to the group's chief operating decision maker (comprising the main board and general executive committee).
Formerly the group reported three business segments, Technical Plastics, Precision Products and Conductive Inkjet Technology. Following the combination of the LED optics business previously contained within Technical Plastics and the Wipac supercar lighting business previously contained within Precision Products to form LED Technologies, the directors receive and report results over the four segments detailed above. Consequently the group has restated the previous segmental reporting to provide comparatives under the new segmentation.
The Technical Plastics segment supplies fine tolerance, injection moulded plastic components, which are used in medical, optical and electronics products. This business operates internationally in a fast growing and dynamic market underpinned by rapid technological development.
The LED Technologies segment develops innovative solutions in LED lighting, and is a leader in the development of high power LED lighting for supercars.
The Precision Engineering segment supplies systems to the manufacturing and aerospace industries.
The Conductive Inkjet Technology segment undertakes applied research into the digital printing of conductive metals on to plastic substrates.
The Unallocated segment also includes the group's development companies, Platform Diagnostics Limited and Carclo Diagnostic Solutions, until these companies start to achieve income streams for the group.
Discontinued operations relate to the disposal of the group's automotive control cables business in May 2006 and the card clothing business in June 2005.
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.
| Technical Plastics £000 |
LED Technologies £000 |
Precision Engineering £000 |
Conductive Inkjet Technology £000 |
Unallocated £000 |
Eliminations £000 | Group total £000 |
|
| # Consolidated income statement | |||||||
| # Total revenue | 57,103 | 23,115 | 7,505 | 661 | - | (1,870) | 86,514 |
| Less inter-segment revenue | (1,768) | (102) | - | - | - | 1,870 | - |
| # Total external revenue | 55,335 | 23,013 | 7,505 | 661 | - | - | 86,514 |
| # Expenses | (51,379) | (20,823) | (6,000) | (653) | (1,460) | - | (80,315) |
| # Underlying operating profit | 3,956 | 2,190 | 1,505 | 8 | (1,460) | - | 6,199 |
| # Rationalisation costs | (48) | (32) | - | - | (81) | - | (161) |
| # Litigation costs | - | - | - | (414) | - | - | (414) |
| # Exit from Ford volume automotive communication business | - | (95) | - | - | - | - | (95) |
| # Operating profit | 3,908 | 2,063 | 1,505 | (406) | (1,541) | - | 5,529 |
| # Net finance expense | (515) | ||||||
| # Income tax expense | (821) | ||||||
| # Loss on discontinued operations, net of tax | (70) | ||||||
| Profit after tax | 4,123 | ||||||
| Consolidated statement of financial position | |||||||
| Segment assets | 65,485 | 17,041 | 6,600 | 32,668 | 14,034 | - | 135,828 |
| Segment liabilities | (11,384) | (3,050) | (1,586) | (7,774) | (46,912) | - | (70,706) |
| Net assets | 54,101 | 13,991 | 5,014 | 24,894 | (32,878) | - | 65,122 |
| Other segmental information | |||||||
| Capital expenditure on property, plant and equipment | 4,293 | 772 | 64 | 3,494 | 69 | - | 8,692 |
| Capital expenditure on computer software | 4 | 16 | 6 | - | - | - | 26 |
| Capital expenditure on other intangibles | - | - | - | 2,941 | 824 | - | 3,765 |
| Depreciation | 2,356 | 677 | 156 | 299 | 33 | - | 3,521 |
| Amortisation of computer software | 15 | 22 | 3 | - | 16 | - | 56 |
| Amortisation of other intangibles | - | 101 | 12 | 192 | - | - | 305 |
| Technical Plastics £000 |
LED Technologies £000 |
Precision Engineering £000 |
Conductive Inkjet Technology £000 |
Unallocated £000 |
Eliminations £000 | Group total £000 |
|
| # Consolidated income statement | |||||||
| # Total revenue | 56,922 | 30,989 | 7,434 | 296 | - | (2,374) | 93,267 |
| Less inter-segment revenue | (2,374) | - | - | - | - | 2,374 | - |
| # Total external revenue | 54,548 | 30,989 | 7,434 | 296 | - | - | 93,267 |
| # Expenses | (49,949) | (28,771) | (6,035) | (493) | (1,374) | - | (86,622) |
| # Underlying operating profit | 4,599 | 2,218 | 1,399 | (197) | (1,374) | - | 6,645 |
| # Rationalisation costs | (326) | (159) | - | - | (43) | - | (528) |
| # Exit from Ford volume automotive communication business | - | (1,560) | - | - | - | - | (1,560) |
| # Exceptional credit in respect of retirement benefits | - | - | - | - | 300 | - | 300 |
| # Operating profit | 4,273 | 499 | 1,399 | (197) | (1,117) | - | 4,857 |
| # Net finance income | 641 | ||||||
| # Income tax expense | (856) | ||||||
| # Loss on discontinued operations, net of tax | (19) | ||||||
| Profit after tax | 4,623 | ||||||
| Consolidated statement of financial position | |||||||
| Segment assets | 57,992 | 17,327 | 7,177 | 19,416 | 16,015 | - | 117,927 |
| Segment liabilities | (9,448) | (4,105) | (2,175) | (742) | (56,183) | - | (72,653) |
| Net assets | 48,544 | 13,222 | 5,002 | 18,674 | (40,168) | - | 45,274 |
| Other segmental information | |||||||
| Capital expenditure on property, plant and equipment | 2,351 | 959 | 119 | 289 | 16 | - | 3,734 |
| Capital expenditure on computer software | 26 | 24 | - | - | 16 | - | 66 |
| Capital expenditure on other intangibles | - | 15 | - | 1,975 | 576 | - | 2,566 |
| Depreciation | 2,213 | 793 | 96 | 196 | 23 | - | 3,321 |
| Amortisation of computer software | 13 | 27 | 3 | - | 18 | - | 61 |
| Amortisation of other intangibles | - | 129 | 12 | 193 | - | - | 334 |
Analysis by geographical segment
The business operates in three main geographical regions - the United Kingdom, North America and in lower cost regions such as the Czech Republic, China and India.
| External revenue | Segment net assets | Expenditure on tangible fixed assets and computer software | |||||||||
| 2013 £000 |
2012 £000 |
2013 £000 |
2012 £000 |
2013 £000 |
2012 £000 |
||||||
| United Kingdom | 23,056 | 27,092 | 24,757 | 9,306 | 5,248 | 2,480 | |||||
| North America | 23,821 | 23,408 | 18,643 | 16,562 | 1,469 | 971 | |||||
| Rest of world | 39,637 | 42,767 | 21,722 | 19,406 | 2,001 | 349 | |||||
| 86,514 | 93,267 | 65,122 | 45,274 | 8,718 | 3,800 | ||||||
The analysis of segment revenue represents revenue from external customers based upon the location of the customer. The analysis of segment assets and capital expenditure is based upon the location of the assets.
The material components of unallocated segment assets and liabilities are retirement benefit obligation net liabilities of £15.476 million (2012 - £22.597 million) and net borrowings of £19.908 million (2012 - £21.366 million).
One Technical Plastics customer accounted for 20.4% of group revenues (2012 - 18.8%) and one LED Technologies customer accounted for 12.4% of group revenues (2012 - 15.5%) and similar proportions of trade receivables. No other customer accounted for more than 10.0% of revenues in the year or prior year.
The unallocated segment relates to central costs and non-trading companies and also includes the group's development companies, Platform Diagnostics Limited and Carclo Diagnostic Solutions, until these companies start to achieve income streams for the group.
Deferred tax assets by geographical location are as follows, United Kingdom £8.388 million (2012 - £9.867 million), North America £1.236 million (2012 - £0.835 million), Rest of world £0.118 million (2012 - £0.116 million).
Total non-current assets by geographical location are as follows, United Kingdom £64.141 million (2012 - £58.807 million), North America £12.129 million (2012 - £11.933 million), Rest of world £11.352 million (2012 - £8.894 million).
3. Exceptional costs
| 2013 | 2012 | |||
| £000 | £000 | |||
| United Kingdom | ||||
| Redundancy costs | (77) | (310) | ||
| Exit from Ford volume automotive business | (95) | (1,560) | ||
| Litigation costs | (414) | - | ||
| Rationalisation costs | (81) | (186) | ||
| North America | ||||
| Redundancy costs | - | (9) | ||
| Rest of world | ||||
| Redundancy costs | (3) | (23) | ||
| (670) | (2,088) |
Litigation costs relate to fees incurred as part of the group's proceedings against Uni-Pixel Inc.
We stated in December 2012 that CIT had issued proceedings in the English High Court against Uni-Pixel Inc. ("Uni-Pixel"). In these proceedings, which were issued and notified to Uni-Pixel in June 2012 and served in December 2012, CIT claims that Uni-Pixel has breached contract and duties of confidence in the development of its own metal mesh process and products (which it calls "UniBoss™"), and that CIT is entitled to ownership of certain related patents which Uni-Pixel has filed in relation to these processes. CIT know-how in that field was disclosed to Uni-Pixel in relation to a different field of use, unrelated to touch screen sensors. CIT believes that Uni-Pixel has breached the restrictions imposed in respect of its use of that know-how. Under the proceedings CIT is seeking injunctive relief against Uni-Pixel to deprive it of the unfair head-start in its development efforts which CIT believes it to have gained from unauthorised use of CIT know-how, plus damages.
Uni-Pixel's response to service of the English proceedings was to issue a court application in January 2013, under which it requested the English court to decline jurisdiction and allow all aspects of the parties' dispute to be determined exclusively in the courts of Montgomery County, Texas. Uni-Pixel also issued proceedings in Texas to seek declaration that it has not breached any duties of confidence owed to CIT.
Arguments on jurisdiction are continuing within both the UK and USA courts. An initial jurisdiction hearing took place in the UK in April, but judgment is still awaited. Final determination of appropriate jurisdiction has yet to be determined in both sets of proceedings.
4. Earnings per share
The calculation of basic earnings per share is based on the profit attributable to equity holders of the parent company divided by the weighted average number of ordinary shares outstanding during the year.
The calculation of diluted earnings per share is based on profit attributable to equity holders of the parent company divided by the weighted average number of ordinary shares outstanding during the year (adjusted for dilutive options).
The following details the profit and average number of shares used in calculating the basic and diluted earnings per share -
| 2013 | 2012 | |||
| £000 | £000 | |||
| Profit after tax from continuing operations | 4,193 | 4,642 | ||
| Loss attributable to non-controlling interests | 28 | 14 | ||
| Profit attributable to ordinary shareholders from continuing operations | 4,221 | 4,656 | ||
| Loss on discontinued operations, net of tax | (70) | (19) | ||
| Profit after tax, attributable to equity holders of the parent | 4,151 | 4,637 | ||
| 2013 | 2012 | |||
| Shares | Shares | |||
| Weighted average number of ordinary shares in the year | 64,125,734 | 61,715,997 | ||
| Effect of share options in issue | 344,080 | 336,894 | ||
| Weighted average number of ordinary shares (diluted) in the year | 64,469,814 | 62,052,891 |
In addition to the above, the company also calculates earnings per share on the underlying profits as the board believe this to be a better yardstick against which to judge the progress of the group. Underlying profit is defined as profit before rationalisation costs, one-off retirement benefit effects, exceptional bad debts, business closure costs, litigation costs and the impact of property and business disposals, net of attributable taxes.
The following table reconciles the group's profit to underlying profit used in the numerator in calculating underlying earnings
per share -
| 2013 | 2012 | |||
| £000 | £000 | |||
| Profit after tax, attributable to equity holders of the parent | 4,151 | 4,637 | ||
| Rationalisation costs, net of tax | 122 | 391 | ||
| Exceptional credit in respect of retirement benefits, net of tax | - | (222) | ||
| Litigation costs, net of tax | 315 | - | ||
| Exit from Ford volume automotive communication business net of tax | 72 | 1,154 | ||
| Loss on disposal of discontinued operations, net of tax | 70 | 19 | ||
| Underlying profit attributable to equity holders of the parent | 4,730 | 5,979 |
The following table summarises the earnings per share figures based on the above data -
| 2013 | 2012 | |||
| Pence | Pence | |||
| Basic - continuing operations | 6.6 | 7.5 | ||
| Basic - discontinued operations | (0.1) | 0.0 | ||
| Basic - total | 6.5 | 7.5 | ||
| Diluted - continuing operations | 6.5 | 7.5 | ||
| Diluted - discontinued operations | (0.1) | 0.0 | ||
| Diluted - total | 6.4 | 7.5 | ||
| Underlying earnings per share - basic | 7.4 | 9.7 | ||
| Underlying earnings per share - diluted | 7.3 | 9.6 |
5. Dividends paid and proposed
Ordinary dividends per 5 pence share paid or proposed in the period comprised -
| 2013 | 2012 | |||||||
| £000 | Pence | £000 | Pence | |||||
| Final dividend for 2010/11 | - | - | 926 | 1.50 | ||||
| Interim dividend for 2011/12 | - | - | 464 | 0.75 | ||||
| Final dividend for 2011/12 | 1,071 | 1.65 | - | - | ||||
| Interim dividend for 2012/13 | 521 | 0.80 | - | - | ||||
| 1,592 | 2.45 | 1,390 | 2.25 |
The directors are proposing a final dividend of 1.75 pence per ordinary share for the year ended 31 March 2013. If approved at the annual general meeting on 5 September 2013, the dividend payment totalling £1.143 million will be paid on 4 October 2013 to shareholders on the share register at close of business on 30 August 2013.
The interim dividend of £0.521 million was paid on 9 April 2013 and consequently has not been accrued.
6. Retirement benefit obligations
The group operates a defined benefit UK pension scheme which provides pensions based on service and final pay. The defined benefit scheme is now closed to new entrants who have the option of entering into a defined contribution scheme and the company has elected to cease future accrual for existing members of the defined benefit scheme. The assets of the defined benefit scheme are held in a separate trustee administered pension fund. Outside of the UK, retirement benefits are determined according to local practice and funded accordingly.
The amounts recognised in the balance sheet in respect of the defined benefit scheme were as follows -
| 2013 | 2012 | |||
| £000 | £000 | |||
| Present value of funded obligations | (185,948) | (172,761) | ||
| Fair value of scheme assets | 170,472 | 150,164 | ||
| Recognised liability for defined benefit obligations | (15,476) | (22,597) | ||
| Movements in the net liability for defined benefit obligations recognised in the consolidated statement of financial position - | ||||
| 2013 | 2012 | |||
| £000 | £000 | |||
| Net liability for defined benefit obligations at the start of the year | (22,597) | (9,067) | ||
| Contributions paid | 1,594 | 1,591 | ||
| Net income recognised in the consolidated income statement (see below) | 99 | 1,579 | ||
| Actuarial gains / (losses) recognised directly in equity | 5,428 | (16,700) | ||
| Net liability for defined benefit obligations | (15,476) | (22,597) | ||
| Movements in the present value of defined benefit obligations and scheme assets - | ||||
| 2013 | 2012 | |||
| £000 | £000 | |||
| Liability at the start of the year | 172,761 | 157,501 | ||
| Exceptional credit in respect of retirement benefits | ||||
| in respect of past service costs | - | (300) | ||
| Interest cost | 8,239 | 8,563 | ||
| Actuarial losses | 14,419 | 16,233 | ||
| Benefits paid | (9,471) | (9,236) | ||
| Liability at the end of the year | 185,948 | 172,761 | ||
| 2013 | 2012 | |||
| £000 | £000 | |||
| Assets at the start of the year | 150,164 | 148,434 | ||
| Expected return on scheme assets | 8,338 | 9,842 | ||
| Actuarial gains / (losses) | 19,847 | (467) | ||
| Contributions by employer | 1,594 | 1,591 | ||
| Benefits paid | (9,471) | (9,236) | ||
| Assets at the end of the year | 170,472 | 150,164 | ||
| Actual return on scheme assets | 28,185 | 9,375 | ||
| The fair value of scheme asset investments was as follows - | ||||
| 2013 | 2012 | |||
| £000 | £000 | |||
| Equities | 76,760 | 61,219 | ||
| Bonds | 68,010 | 62,687 | ||
| Other | 25,702 | 26,258 | ||
| 170,472 | 150,164 | |||
| The income recognised in the consolidated income statement - | ||||
| 2013 | 2012 | |||
| £000 | £000 | |||
| Exceptional credit in respect of retirement benefits | - | (300) | ||
| Interest on obligation | 8,239 | 8,563 | ||
| Expected return on plan assets | (8,338) | (9,842) | ||
| (99) | (1,579) | |||
| The income is recognised in the following line items in the consolidated income statement - | ||||
| 2013 | 2012 | |||
| £000 | £000 | |||
| Exceptional credit in respect of retirement benefits | - | (300) | ||
| Other finance revenue and expense - retirement benefits | (99) | (1,279) | ||
| (99) | (1,579) | |||
The group recognises actuarial gains and losses immediately on the balance sheet through the statement of comprehensive income. The cumulative actuarial net loss reported in the statement of comprehensive income since 1 April 2004 is £16.438 million.
The current best estimate of employer cash contributions to be paid in the year ending 31 March 2014 is £1.609 million. This comprises a payment of £1.009 million as part of the agreed recovery plan and £0.600 million in respect of pension administration costs.
An exceptional credit of £0.300 million consisting of a credit in respect of a pension increase exchange exercise was recognised in the prior year.
The overperformance of the scheme assets against expectations in the year was due to a stronger performance by the market.
The principal actuarial assumptions at the balance sheet date (expressed as weighted averages) were -
| 2013 | 2012 | 2011 | 2010 | 2009 | ||
| # Discount rate at 31 March | 4.4% | 4.9% | 5.6% | 5.5% | 7.0% | |
| Expected return on plan assets at 31 March | N/A | 6.8% | 7.0% | 7.7% | 7.1% | |
| # Future salary increases | N/A | N/A | N/A | 4.2% | 3.2% | |
| # Inflation | 3.5% | 3.3% | 3.6% | 3.7% | 2.7% | |
| # Future pension increases | 2.4% | 2.2% | 2.9% | 3.7% | 2.7% | |
| Life expectancy for a male (current pensioner) aged 65 | 18.1 years | 18.0 years | 17.1 years | 17.0 years | 16.7 years | |
| # Life expectancy at 65 for a male aged 40 | 19.8 years | 19.7 years | 18.8 years | 18.7 years | 18.0 years | |
It is assumed that 100% of the post A-Day maximum for actives and deferreds will be commuted for cash (2012 - 100%).
The history of the scheme's deficits and experience gains and losses is shown in the following table -
| 2013 £000 |
2012 £000 |
2011 £000 |
2010 £000 |
2009 £000 |
||
| # Present value of funded obligation | (185,948) | (172,761) | (157,501) | (161,972) | (131,657) | |
| Fair value of scheme asset investments | 170,472 | 150,164 | 148,434 | 141,885 | 113,733 | |
| Recognised liability for defined benefit obligations | (15,476) | (22,597) | (9,067) | (20,087) | (17,924) | |
| # Actual return on scheme assets | 28,185 | 9,375 | 13,783 | 34,949 | (33,167) | |
| # Actuarial (losses) / gains on scheme liabilities | (14,419) | (16,233) | 3,788 | (30,104) | 22,784 | |
7. Ordinary share capital
| Number of | ||||
| Shares | £000 | |||
| Ordinary shares 5 pence each | ||||
| Authorised at 31 March 2012 and 31 March 2013 | 80,000,000 | 4,000 | ||
| Issued and fully paid at 31 March 2012 | 61,796,702 | 3,090 | ||
| Shares issued on placing of shares for cash | 3,078,240 | 154 | ||
| Shares issued on exercise of share options | 294,700 | 14 | ||
| Issued and fully paid at 31 March 2013 | 65,169,642 | 3,258 |
During the course of the financial year 294,700 shares were issued in respect of share options at an average exercise price of 43.6 pence per ordinary share. The shares are fully paid.
On 9 July 2012, Carclo issued 3,078,240 new shares for cash at a price of 431.0 pence per share. The share placing raised £12.646 million after associated costs. The shares are fully paid.
8. Cash generated from operations
| 2013 | 2012 | ||
| £000 | £000 | ||
| Operating profit | 5,529 | 4,857 | |
| Adjustments for - | |||
| Pension fund contributions in excess of service costs | (1,594) | (1,591) | |
| Depreciation charge | 3,521 | 3,321 | |
| Amortisation of intangible assets | 361 | 395 | |
| Share of losses in associated undertaking | - | 13 | |
| Exceptional tangible fixed asset write down, arising on rationalisation of business | - | 1,701 | |
| Provision for site closure | (130) | 130 | |
| Profit on disposal of other plant and equipment | (42) | (30) | |
| Profit on business disposal | - | (2) | |
| Exceptional credit in respect of retirement benefits | - | (300) | |
| Share based payment charge | 189 | 183 | |
| Operating cash flow before changes in working capital | 7,834 | 8,677 | |
| Changes in working capital (excluding the effects of acquisition and disposal of subsidiaries) | |||
| (Increase) / decrease in inventories | (710) | 572 | |
| (Increase) / decrease in trade and other receivables | (2,527) | 1,939 | |
| Increase / (decrease) in trade and other payables | 6,706 | (771) | |
| Cash generated from operations | 11,303 | 10,417 | |
This information is provided by RNS
The company news service from the London Stock Exchange
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