Update on refinancing and current trading

Carclo plc

("Carclo" or "the Group" or "the Company")

Update on refinancing and current trading

Tripartite financing agreement secured

The Board announces that on 14 August 2020, the Group agreed revised funding arrangements with the Company's main secured creditors, HSBC and the Pension Scheme, which provide access to ongoing bank facilities as well as visibility over repayment schedules through to July 2023.

As part of this agreement, new facilities have been entered into with the Group's lending bank, HSBC, which comprise a Term Loan of £34.5m and a Revolving Credit Facility of £3.5m.  In parallel to this, the Group reached agreement with the Trustees of the Pension Scheme in respect of both the actuarial deficit and the resultant deficit repair contributions to be made over the next three years; £2.8m (2021), £3.9m (2022) and £3.8m (2023).

As previously announced, securing a suitable long-term funding position for the Group has been a key focus of the Board.  With a more stable base now established, the Board can turn its focus to delivering its growth strategy aimed at capturing the significant long-term opportunities it sees for the Group.

Update on current trading

Group revenue for the continuing businesses for the first quarter was 12% lower than the same period last year. In anticipation of a material reduction in activity in both businesses during the first quarter, the Group implemented a number of operating and commercial initiatives aimed at preserving operational continuity as well as matching cost to reduced demand. The Group has also been able to access Covid-19 relief schemes, particularly in relation to job retention programmes, in a number of its territories including for the UK and US operations. As a result of an effective response by the business, and more resilient demand conditions in certain segments, the overall trading performance in the first quarter of the Group's current financial year to 31 March 2021 was ahead of the Board's initial, Covid-19 adjusted, planning assumptions with both the Technical Plastics and Aerospace divisions recording encouraging performances.   Group net debt excluding IFRS16 lease liabilities as at 27 June 2020 was £24.2m (31 March 2020: £22.1m).

The Technical Plastics business benefited from robust demand for products relating to Covid-19 testing, which partially offset a reduction in demand for other products in both the medical diagnostics and industrial sectors that had been exacerbated by the impact of government-imposed lockdown of a customer's facility in India.  The business was also successful in securing a number of new tooling orders in the medical diagnostics sector which are expected to deliver significant production volumes in future years. 

The Aerospace Division performed better than anticipated in the first quarter, largely as a result of continued offtake from the existing orderbook, which partly offset the impact of a significant reduction in both newbuild and spares demand from Airbus.

Outlook

In light of the ongoing uncertainty presented by the pandemic, as well as any wider resultant economic impacts, the Board does not believe that it is possible to provide detailed guidance for the year ending 31 March 2021 at this time.  Activity levels in July were broadly in line with those seen in the first quarter and the Board remains cautious about market conditions in the near term.  The Group will continue to take action to reduce its cost base, where appropriate, to mitigate the effect of any reduction in demand, whilst seeking to preserve the capability and capacity to respond positively as conditions improve.

The Board expects to release the Group's preliminary results on 25 August 2020.

Enquiries:

FTI Consulting                         020 3727 1340

Nick Hasell / Susanne Yule