- Carclo says it has continued to trade well in the current financial year and the trading performance remains in line with its expectations but warns it may not be able to pay a final dividend because of an increase in its pension deficit.

An update says that Technical Plastics has had a very good start to the financial year with demand from our healthcare customers as expected.

Following the award of additional production volume from a long term Group customer, we have approved the expansion of our existing Indian facility and expect this expansion to be completed by late summer of 2017. Our strategies to win new programmes to fill the expanded capacity at our new China facility are gaining traction, with some initial programme wins secured in the first half of the year.

In LED Technologies, our Wipac luxury and supercar lighting business has performed well with good product demand and all of the current design, development and tooling programmes are progressing as planned.

Wipac's new business wins and order pipeline have been consistent with our targets.

In addition, our Optics business has seen strong demand in the first half of the financial year.

The Aerospace division has seen stable demand so far this year and is expected to trade in line with expectations.

Carclo expects group debt to be a little higher at 30 September 2016 than at 31 March 2016, primarily due to the impact of weaker sterling on the re-translation of its US dollar and euro denominated medium term loans.

However, the group has made modest gains on trading and on the retranslation of overseas profits year on year due to the weakness of Sterling.

Subsequent to the EU Referendum result on 23 June 2016, corporate bond yields have decreased materially in the UK and, as this yield is used to discount the group's pension liability under IAS 19 'Employee Benefits', if the corporate bond yield remains at its current low level then this will result in a significant increase in the Group's pension deficit as at 30 September 2016.

This likely increased IAS 19 pension deficit would have the effect of extinguishing the Company's available distributable reserves, in which case the Company will not be able to pay the final dividend of 1.95 pence per share, declared on 7 June 2016, on 7 October 2016 to those members that were on the register at 26 August 2016.

Whilst the Board is disappointed that the final dividend is now unlikely to be capable of being paid due to these legal and accounting constraints, it intends to resume the company's progressive dividend policy once legal and accounting circumstances allow.

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