Full Year Trading Update
27 April 2021
("Carclo" or the "Group")
Full Year Trading Update
Carclo, a global manufacturer, principally of fine tolerance injection moulded plastic parts, today provide an update on trading for the financial year ended 31 March 2021 ("FY 2021").
The Board is pleased to report that, despite experiencing one of the most challenging years in its history, the Group has performed solidly in FY 2021 and exits the year with stable foundations and building momentum, in which we expect to have maintained CTP division total revenue to broadly similar levels to last year, reduced Group net debt excluding lease liabilities, and delivered an overall Group post-tax profit.
The response from our workforce has been outstanding throughout the pandemic and the Board wishes to record its thanks for the support, resilience, commitment and resourcefulness shown by our employees at a time of such unprecedented challenge.
As for many businesses the COVID-19 pandemic has presented significant challenges and we are mindful of the risks posed by further outbreaks as well as ongoing disruption to global supply chains. Against this backdrop, the CTP division has delivered a very resilient performance, with slightly lower annualised product sales partially offset by strong tooling revenue year on year (tooling revenues are generally a precursor to new product sales). Alongside this, the Group took swift and decisive action to reduce its cost base and utilise regional government support schemes, where appropriate, to mitigate a substantial amount of the margin pressure on the Group arising from the pandemic.
The first half of the year was significantly affected by the impact of the pandemic as well as the Board's focus on stabilising the Group following the exit from the LED Lighting division. The signing of the Tripartite Agreement with our principal bank and trustees of the Group pension fund in August 2020 was a pivotal step for the Group, providing a solid foundation for the business to move forward extending and enhancing Group bank facilities further for three years to July 2023, alongside a newly agreed schedule of enhanced pension contributions. This has also provided renewed focus on communications between bank, pension trustees and Company management, with quarterly tripartite reviews of progress and performance of both the Company and the pension fund. This has resulted in proactive cooperation between the parties and the initiation of actions aimed at reducing the pension deficit.
Momentum built steadily in the second half of the year with a successful focus on winning new business, operational execution and cash generation. As a result, and with demand in a number of key markets strengthening faster than was previously anticipated, the Group expects to report, subject to audit, total revenues for the CTP division broadly in line with last year, and Aerospace division revenues (which comprise less than 5% of Group total revenues) materially below last year, following the COVID-19 pandemic impact on the Aerospace sector.
The overall Group performance has enabled significant capital investment to be made to facilitate future business growth whilst retaining a strong financial position with net debt excluding IFRS16 lease liabilities at 31 March 2021 reducing to £20m (31 March 2020 £22.1m).
FY 2021 trading in the CTP division was stronger than the Board had previously anticipated, with total revenue including tooling broadly in line with levels last year. As previously announced, the division has secured significant new business in the second half of the year mainly related to the medical sector and consisting of both COVID and non-COVID related products. It is particularly pleasing to note that alongside increasing demand from existing customers, the division was also able to secure new customers. As a consequence, tooling orders were particularly strong as the division prepares for volume increases of existing products and the introduction of new ones. A strong focus on cash generation has enabled the division to make significant investments in capital expenditure to support its ability to deliver on anticipated future production contracts without increasing net debt.
In common with many businesses in the sector, the Aerospace division was significantly impacted by the downturn in air travel caused by the pandemic. Order intake was dramatically reduced in the first half but stabilised year on year in the second half, albeit at a lower level.
Timely and decisive management action resulted in a reduction in the division's cost base and this along with government support resulted in the business trading at a reduced profit and remaining cash generative; a significant achievement given the impact of the pandemic on the aerospace sector as a whole. Recovery in the aerospace sector is expected to take several years but focused action on winning new business has been initiated and there are early signs of opportunities to grow with new as well as existing customers.
The Company announces that Frank Doorenbosch, who was appointed a Non-Executive Director on 1 February 2021, will take over as Chairman of the Remuneration Committee from David Toohey, the current Remuneration Committee Chairman, with effect from 30 April 2021. David will step down from the Board on 30 April 2021. Phil White was appointed Chief Financial Officer on a permanent basis from 1 March 2021, having initially taken over from Matt Durkin-Jones when he stepped down on 17 December 2020.
The Group now has a refreshed Board bringing strong and relevant experience to the streamlined and re-focused Group, divested of its loss-making Wipac division from the prior year. This complements the new Tripartite Agreement established with the Group's bank and pension trustees to form a stable basis on which to drive renewed growth for the business.
The CTP division has exited FY 2021 with good momentum and the potential to target further growth opportunities as markets continue to recover. Having enhanced operational execution and focus during FY 2021, we believe the division is well set for further progress in the current year. We expect that recovery in aviation markets will take longer and consequently that performance in the Aerospace division in the current year will be similar to that achieved in FY 2021.
The Board continues to monitor market conditions closely and expects to provide further guidance for the current year at the time of the announcement of the Group's FY 2021 results.
About Carclo plc
Carclo plc is a public company whose shares are quoted on the Main Market of the London Stock Exchange. The Group is a global provider of value-adding engineered solutions for the medical, optical and aerospace industries.
Carclo plc 01924 268040
Nick Sanders - Executive Chairman
FTI Consulting 020 3727 1340
Nick Hasell / Susanne Yule