Results for year ended 31 March 2015 Presentation to Analysts 9 June 2015
Carclo is a leading global manufacturer of fine tolerance parts for the Medical, Industrial, Aerospace and Luxury and Supercar Lighting markets Global contract manufacturer to medical market Leading designer and manufacturer for luxury and supercar LED Lighting Leading supplier of control cables in Europe Investing in complementary new technologies Manufacturing locations Strong revenue and profit growth across principal divisions 2
Results and Summary • Strong growth in turnover and underlying operating profit across the group • Revenue increased by 10.5% to £107.5 million, reflecting excellent sales progression across our businesses • Underlying operating profit was £7.8 million (2014 - £6.6 million), up 18.9% on the prior year • Underlying profit before tax of £7.1 million (2014 - £5.3 million), up 34.6% on the prior year • Strategic review of CIT Technology (“CIT’’) business complete • Exceptional charge of £31.7 million (2014 - £0.5 million) of which £23.5 million had been provided at the half year, primarily due to £25.4 million of impairment costs in CIT • Technical Plastics revenue and underlying profits increased compared to the prior year • Excellent performance by LED Technologies, driven by Wipac luxury and supercar lighting business • Continuing investment in Carclo Diagnostic Solutions (“CDS”) underpinned by further technological developments • Group very well placed to continue with its growth strategy 3
Key performance indicators (“KPIs”) To enable our performance to be tracked against our growth strategy we focus on the following KPIs: Revenue growth The revenue growth seen year on year is a strong indicator of success in growing the business – up 10.5% on 2014. Underlying operating profit margin Margin strengthened from 6.7% in 2014 to 7.2% in the current year. Return on Investment* Underlying operating profit as a percentage of annual investment shows improving returns *calculated on a 5-year rolling average basis with investment/performance in CIT excluded to give a more meaningful benchmark for future comparison. 4
CTP and LED divisions drive strong group performance CTP & LED Underlying Operating CTP & LED Revenue (£m) Profit (£m) 98.3 86.2 9.8 78.3 7.2 H2 54.0 6.1 46.1 H2 5.9 42.6 H2 H1 4.5 3.9 H1 44.3 40.1 3.9 35.7 2.7 2.2 12/13 13/14 14/15 12/13 13/14 14/15 Revenue Initiatives Margin Initiatives • Harthill facility closed and higher • Business development activities margin work retained successful • Strong increase in equipment • Global quality systems now fully utilisation implemented • Increase cleanroom moulding • Factory expansion has continued capabilities • Wipac transformed into world • Tight control of overheads as class facility capacity is expanded 5
HIGHLIGHTS Financial Highlights Year ended Year ended 31 March 31 March 2015 2014 £000 £000 Revenue Technical Plastics 64,296 58,080 LED Technologies 34,053 28,160 Precision Engineering 6,304 7,776 CIT Technology 2,850 3,251 Total 107,503 97,267 Operating profit before exceptional items 7,789 6,551 Exceptional items (31,668) (520) Operating (loss) / profit (23,879) 6,031 Underlying profit before tax 7,123 5,291 (Loss) / profit before tax (24,545) 4,771 Basic earnings per share (33.2)p 5.5p Underlying earnings per share 7.9p 6.1p Dividend per share 2.75p 2.65p Net debt 24,518 17,680 6
Divisional Analysis CTP** Revenue change •Strong sales growth in USA and Czech 80 6 +10.7% regions 5 60 4 •Improved press utilisation Sales Profit* Operating profit* 40 3 •New global medical customer projects in £m £m 2 20 production +15.9% 1 0 0 Mar Mar Mar Mar 14 15 14 15 LED 40 5 •New programme wins continue to Revenue change 4 underpin future growth prospects 30 3 +20.9% Sales Profit •First design & development revenue 20 2 £m £m from new luxury and supercar projects 10 Operating profit* 1 •Several commercial adoptions of 0 0 +72.9% Mar Mar Mar Mar proprietary Hyperlite™ LED module 14 15 14 15 PE*** 8 2.0 Revenue change •New project win from leading OEM 6 1.5 0% •Expanded product capability with new Sales Profit 4 1.0 £m £m Operating profit* equipment investment 2 0.5 •Strong profit and cash generation +6.7% 0 0.0 Mar Mar Mar Mar 14 15 14 15 * Underlying operating profit ** Adjusted for Harthill closure ***Adjusted for Birkett Cutmaster disposal 7
Income Statement I Comparative • Group revenue increased by 10.5% to £107.5 31-Mar-15 31-Mar-14 million Revenue 107.5 97.3 • Divisional operating profit increased 16.2% to Operating profit £9.9 million Divisional operating profit 9.9 8.6 Central costs (2.1) (2.0) • Underlying operating profit increased 19% to Underlying operating profit from continuing ops 7.8 6.6 £7.8 million • Loss before tax of £24.5 million primarily due to Exceptional items (31.7) (0.5) £25.4 million write down at CIT, £2.8 million Operating (loss) / profit (23.6) 6.0 write down in PDL and rationalisation costs of Net financing charge (0.7) (1.3) £3.1 million in Technical Plastics (Loss) / profit before tax (24.5) 4.8 • Underlying tax charge of 27% due to a greater proportion of taxable profits being generated in Income tax credit / (expense) 1.8 (1.2) Loss on discontinued operations, net of tax (0.0) 0.0 high tax countries • Underlying earnings per share increased 29.5% (Loss) / profit for the period (22.8) 3.6 to 7.9p Basic earnings per share (33.2p) 5.5p Underlying earnings per share 7.9p 6.1p • Dividend increased 3.8% to 2.75 pence per share Dividend per share 2.75p 2.65p 8
HIGHLIGHTS Exceptional Costs Year ended 31 March 2015 £m Impairment review of CIT Technology (25.4) Harthill rationalisation costs (3.1) Impairment review of Platform Diagnostics (2.8) Other (0.4) Total (31.7) Impairment review of CIT Technology As a result of the strategic review, £25.4m impairment loss recognised; allocated £0.9m to goodwill, £16.9m to patents and development costs and £5.7m to property, plant and equipment leaving carrying values of nil, £3.1m and nil respectively. Rationalisation costs The closure of CTP Harthill in the current year led to £3.1m of rationalisation costs; including £0.9m of land and buildings impairment. Impairment review of Platform Diagnostics As a result of refocusing resources on optimal applications, £2.8m of impairment loss has been recognised; allocated £0.5m to goodwill, £2.3m to patents and development costs leaving a carrying value of nil at year end. 9
FINANCIAL POSITION – Financial Position – CASH FLOW Cash Flow • Increase in working capital primarily due to Underlying cash from operations 12.6 unwind of $10 million Atmel prepayment & Exceptional cash flows (1.8) increased sub contract tooling balances Working capital (6.1) Interest and tax (1.4) Net capital expenditure (6.6) Free cash flow (3.3) • Net capital expenditure of £6.6 million included our US facility expansion (£1.9m) Additional pension contributions (1.0) Proceeds from share transactions 0.1 and the investment in the Wipac facility in Equity dividends (1.8) Buckingham (£1.5m) Cash flow from corporate activities (2.7) Development expenditure (1.3) • Exchange movement 0.5 £0.9 million of development expenditure relates to our investment in CDS Movement in net debt (6.8) Net debt at end of period (24.5) 10
Financial Position – Debt & Facilities Net Debt • £24.5 million at 31 March 2015 • Increase since 31 March 2014 due to planned capital investment programme and unwinding of the $10 million Atmel prepayment • Expected to reduce in the current financial year mainly due to increased operating cash generation Bank Facilities • Bank refinancing successfully complete in the second half • £30.0 million of committed facilities through to March 2020 and £10.8 million of overdraft facilities • The group continues to have good levels of headroom on its main banking covenants 11
Financial Position – Pensions • IAS 19 pension deficit has increased to £9.7 million net of deferred tax at 31 March 2015, after the group reported a small surplus as at 31 March 2014 • Scheme assets have increased by £5.2 million since 31 March 2014 and scheme liabilities have increased by £17.5 million due to a material decrease in the corporate bond yield assumption used to discount the liability • IAS19 financing credit of £30,000 and scheme administration costs of £0.7 million reflected in the income statement • Next triennial funding valuation in March 2015 and agreement with the trustees expected later this year 12
OUTLOOK Markets & Strategy Actions Technical Plastics LED Technologies Aerospace CDS 13
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