Carclo PLC on Tuesday announced it has reached a settlement agreement with a customer over a cancelled order.

The engineering firm focused on the medical, optical and aerospace industries said the agreement is likely to offset the financial hit from the early termination of the order.

Shares in Carclo jumped 13% to 13.50 pence each in London late on Tuesday morning.

Back in December, West Yorkshire-based Carclo had announced that an original equipment manufacturer customer had cancelled a 10-year toolings contract, which Carclo had expected to bring in around £10 million and £15 million per year.

The cancellation was because the customer no longer intended to proceed into the production phase of its project, Carclo explained at the time.

Carclo and the customer reached a settlement deal on ‘working capital and recompense for business disruption’, Carlo said.

‘While the specifics of this agreement remain confidential, it is expected to largely offset the group’s financial exposure arising from the early termination of the contract,’ it said.

Carclo has begun putting a plan into action to repurpose the production capacity that had been assigned to the project. Its facilities and equipment have been reallocated to enhance existing projects.

‘The cancellation, though regrettable, has served to highlight Carclo’s capacity for agility and resilience,’ Chief Executive Officer Frank Doorenbosch asserted.

‘We have responded promptly, optimising our asset utilisation whilst continuing to focus on our strategy on stability and balance sheet fortification.’

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