Carclo to shutter diagnostics solutions division

16th May 2016 14:17

(ShareCast News) - Technical plastics firm Carclo announced its intention to shutter the Carclo Diagnostics Solutions division on Monday, after a brief review of the business's future prospects.As part of its year-end trading update on 12 April, the company's board revealed it had started discussions with potential commercial partners and appointed advisors to explore ways to develop opportunities within Carclo Diagnostics Solutions."The broad review process undertaken has explored a wide range of potential strategic options, including commercial partnerships, co-investments or divestment, with a diverse range of potential parties," the board said on Monday."In addition the board has investigated all other appropriate funding options for an independent CDS business outside of the Carclo Group," it added.The review process was now complete, the board confirmed, with key feedback pointing to "the need to develop a wider range of assays," which would require an increasing level of future investment.It said the review did not identify a credible strategic option to take CDS forward or new investors, and viewed the key drivers of group future performance as coming from the technical plastics and LED technologies divisions."Accordingly, the board has concluded that it should discontinue its investment in CDS, currently £1.5m per annum."As a result of the decision, the board has determined that the carrying value of the intangible assets related to CDS held on the group's balance sheet, being £4.9m at 31 March, should be fully impaired in the financial statements for the year ended 31 March 2016."The board said the non-cash impairment cost will be disclosed as an exceptional write-down in the financial statements.It also expects to incur an eventual closure expense of £1m, being a combination of non-cash and cash costs during the year to 31 March 2017.Carclo plans to absorb the division's intellectual property rights into the technical plastics division while it explores options to sell or license them."The group's core focus and growth opportunities sit within our two main divisions, technical plastics and LED technologies, both of which are performing well and have excellent and exciting prospects," said Carclo CEO Chris Malley, echoing the board's wider statement."While CDS' technical progress has been consistent with our published roadmap, the board considers that now is the appropriate time to withdraw funding from this business, given the uncertainty over its future commercial success and the financial commitment required to take it forward."