Exit from Wipac business

20 December 2019

Carclo plc

Exit from Wipac business

Carclo plc ("Carclo" or the "Group"), a global manufacturer of fine tolerance injection moulded plastic parts mainly for the medical, automotive lighting and optics markets, announces that it has completed its exit from the Wipac business

Rachael Wilkinson and Zelf Hussain of PricewaterhouseCoopers LLP were today appointed as Joint Administrators of Wipac Limited. Following the appointment, the business and assets of Wipac  Limited (in administration), other than those related to its Aylesbury Optics business ("Optics"), were immediately sold to Wipac Technology Limited, a newly formed wholly owned subsidiary of Wuhu Anrui Optoelectrics Co. Ltd, for a total consideration of £10.5 million. The proceeds of the sale, net of costs, will be applied by the Administrators to reduce the outstanding liabilities owed to the creditors of Wipac Limited. The Group's defined benefit pension scheme and lending bank are the principal secured creditors of Wipac Limited and it is expected that approximately £3.5 million of the net proceeds will be paid by the Administrator to the Group's pension scheme and approximately £5.0 million will be used to reduce the outstanding drawn balance of the Group's revolving credit facility.

In the year ended 31 March 2019, Wipac Limited generated a loss of £13.2 million and had gross assets at 31 March 2019 of £46.3 million. Wipac Limited will be presented as a discontinued operation in the Group's accounts for the year ending 31 March 2020.

Optics is a profitable standalone business operating within the Wipac Limited legal entity with its business closely related to the Group's Technical Plastics Division. Its principal supplier is CTP Czech.  Immediately following the appointment of the Administrator, the Group acquired the business and assets (other than trade debtors) related to Optics, for a total cash consideration of £0.25 million. The Administrators have retained the Optics trade debtors and the Group will assist in their collection. In the year ended 31 March 2019, the Optics business generated a profit before taxation of £1.07 million and had gross assets at 31 March 2019 of £3.5 million.

Separately, the Group announces that Ed Watkinson, Chief Finance Officer will step down from his role in January 2020. Mr Watkinson, who is not a member of the Board, was appointed to the role on 30 September 2019 on an interim basis. The Group is in the process of recruiting a long term Chief Financial Officer to join the management team who will be focussed on establishing the long-term strategy for Carclo once the current period of restructuring is completed.

Commenting on the exit from the Wipac business, Mark Rollins, Chairman said:

"We are pleased to have been able to conclude an exit from the Wipac business which will ensure continuity for both the customers and employees of the business. The poor performance of Wipac has put significant financial strain on the Group and the exit from this business will enable Carclo to focus on Technical Plastics and Aerospace which continue to perform well and offer encouraging long term opportunities. The Group now has a more stable financial position from which to continue the long-term funding and pension contribution negotiations which are key to the future of Carclo."