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Castings PLC (CGS)

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Friday 11 November, 2016

Castings PLC

Half-year Report

RNS Number : 9001O
Castings PLC
11 November 2016
 

Castings P.L.C.

INTERIM MANAGEMENT REPORT

Six months ended 30 September 2016

Sales for the six months ended 30 September 2016 were £57.9 million (2015 - £65.0 million) with profit before tax of £7.08 million (2015 - £9.51 million).

At the Annual General Meeting in August we reported that we had seen a softening in demand from our main customers. This continued during the remainder of the period resulting in lower foundry sales volumes than the previous six months, although revenue continues to benefit from a greater mix of more complex machined parts.

In addition, the machining business has seen a significant reduction in revenue following the end of a major contract, as previously reported. The introduction of replacement work remains on course for 2017/18 onwards, but the pre-production costs associated with this work is impacting the current financial year.

Whilst we do not anticipate any significant further reductions in output, we do not expect to see any improvement for the remainder of the financial year.

An interim dividend of 3.38 pence per share has been declared and will be paid on 3 January 2017 to shareholders who are on the register at 25 November 2016.

Principal risks and uncertainties

There are a number of potential risks and uncertainties which could have a material impact on the group's performance over the remaining six months of the financial year and could cause actual results to differ materially from expected and historical results.

The directors consider that the principal risks and uncertainties remain substantially the same as those stated on pages 7 and 8 of the Annual Report for the year ended 31 March 2016. Since publication of the 2016 annual report, the UK vote to leave the European Union has created significant uncertainty about the near-term outlook and prospects for the UK economy. It is still too early to quantify or determine with certainty the impact on the group. The Board will continue to monitor developments, consider the impact on the group's businesses and take appropriate action to help mitigate any risks associated with the UK leaving the EU.

Director changes

Our Chief Executive, David Gawthorpe, has indicated that he wishes to retire at the end of this financial year ending 31 March 2017. In accordance with the group's succession planning, Adam Vicary, Managing Director of Castings Brownhills, will assume the role of Chief Executive thereafter.

Cautionary statement

This Interim Management Report ('IMR') has been prepared solely to provide additional information to shareholders to enable them to assess the group's strategies and the potential for those strategies to succeed. The IMR should not be relied on by any other party or for any other purpose. This IMR contains certain forward-looking statements. These are made by the directors in good faith based on the information available to them up to the time of their approval of this report but such statements should be treated with caution due to the inherent uncertainties, including both economic and business risk factors, underlying any such forward-looking information.

The group undertakes no obligation to update any forward-looking statements whether as a result of new information, future events or otherwise.

The IMR has been prepared for the group as a whole and therefore gives greater emphasis to those matters which are significant to Castings P.L.C. and its subsidiary undertakings when viewed as a whole.

By order of the board

BRIAN J. COOKE

Chairman

11 November 2016

 

Castings P.L.C.  
Lichfield Road     
Brownhills            
West Midlands
WS8 6JZ

 

 

 

Consolidated Statement of Comprehensive Income
For six months ended 30 September 2016

 

Unaudited

Half year to

30 September

2016

£'000

Unaudited

Half year to

30 September

2015

£'000

Audited

Year to

31 March

2016

£'000

Revenue

57,863

64,962

132,448

Cost of sales

(43,567)

(48,091)

(98,431)

Gross profit

14,296

16,871

34,017

Distribution costs

(901)

(1,103)

(2,251)

Administrative expenses

 

 

 

Excluding exceptional

(6,385)

(6,300)

(12,591)

Exceptional

-

-

315

Total administrative expenses

(6,385)

(6,300)

(12,276)

Profit from operations

7,010

9,468

19,490

Finance income

67

45

186

Profit before income tax

7,077

9,513

19,676

Income tax expense

(1,415)

(1,903)

(3,489)

Profit for the period attributable to the equity holders of the parent company

5,662

7,610

16,187

Other comprehensive income/(expense) for the period:

 

 

 

Items that will not be reclassified to profit and loss:

 

 

 

Movement in unrecognised surplus on defined benefit pension schemes net of actuarial gains and losses

-

-

228

Tax effect of items that will not be reclassified

-

-

-

 

-

-

228

Items that may be reclassified subsequently to profit and loss:

 

 

 

Change in fair value of available for sale financial assets

53

(32)

(28)

Reclassification adjustments for gains/(losses) on available

for sale assets included in profit

-

-

85

Tax effect of items that may be reclassified

(10)

6

5

 

43

(26)

62

Total other comprehensive (losses)/income for the period (net of tax)

43

(26)

290

Total comprehensive income for the period attributable to the equity holders of the parent company

5,705

7,584

16,477

Earnings per share attributable to the equity holders of the parent company

 

 

 

Basic and diluted

12.98p

17.44p

37.10p

 

 

Consolidated Balance Sheet
30 September 2016

 

Unaudited

30 September

2016

£'000

Unaudited

30 September

2015

£'000

Audited

31 March

2016

£'000

ASSETS

 

 

 

Non-current assets

 

 

 

Property, plant and equipment

71,023

66,622

66,948

Financial assets

407

435

354

Other receivables

3,383

5,677

3,383

 

74,813

72,734

70,685

Current assets

 

 

 

Inventories

12,706

12,933

11,992

Trade and other receivables

30,632

30,843

30,047

Other current interest-bearing deposits

10,000

10,000

10,000

Cash and cash equivalents

13,343

21,884

30,385

 

66,681

75,660

82,424

Total assets

141,494

148,394

153,109

LIABILITIES

 

 

 

Current liabilities

 

 

 

Trade and other payables

17,537

19,624

16,769

Current tax liabilities

1,457

1,379

2,029

 

18,994

21,003

18,798

Non-current liabilities

 

 

 

Deferred tax liabilities

4,459

4,876

4,378

Total liabilities

23,453

25,879

23,176

Net assets

118,041

122,515

129,933

Equity attributable to equity holders of the parent company

 

 

 

Share capital

4,363

4,363

4,363

Share premium account

874

874

874

Other reserve

13

13

13

Retained earnings

112,791

117,265

124,683

Total equity

118,041

122,515

129,933

 

 

Consolidated Cash Flow Statement
For six months ended 30 September 2016

 

Unaudited

Half year to

30 September

2016

£'000

Unaudited

Half year to

30 September

2015

£'000

Audited

Year to

31 March

2016

£'000

Cash flows from operating activities

 

 

 

Profit before income tax

7,077

9,513

19,676

Adjustments for:

 

 

 

Depreciation

3,299

3,174

6,853

Profit on disposal of property, plant and equipment

-

-

(62)

Loss on disposal of financial assets

-

-

48

Finance income

(67)

(45)

(186)

Excess of employer pension contributions over income

statement charge

-

-

228

(Increase)/decrease in inventories

(714)

(818)

123

Decrease/(increase) in receivables

334

(501)

2,925

Increase/(decrease) in payables

768

1,022

(1,832)

Cash generated from operating activities

10,697

12,345

27,773

Tax paid

(1,916)

(1,766)

(3,202)

Interest received

52

33

165

Net cash generated from operating activities

8,833

10,612

24,736

Cash flows from investing activities

 

 

 

Dividends received from listed investments

15

12

21

Purchase of property, plant and equipment

(7,374)

(3,224)

(7,236)

Proceeds from disposal of property, plant and equipment

-

-

69

Proceeds from disposal of financial assets

-

-

122

Repayments from pension schemes

-

-

1,135

Advances to pension schemes

(919)

(1,139)

(2,610)

Net cash used in investing activities

(8,278)

(4,351)

(8,499)

Cash flow from financing activities

 

 

 

Dividends paid to shareholders

(17,597)

(4,398)

(5,873)

Net cash used in financing activities

(17,597)

(4,398)

(5,873)

Net (decrease)/increase in cash and cash equivalents

(17,042)

1,863

10,364

Cash and cash equivalents at beginning of period

30,385

20,021

20,021

Cash and cash equivalents at end of period

13,343

21,884

30,385

Cash and cash equivalents:

 

 

 

Short-term deposits

11,364

20,380

27,786

Cash available on demand

1,979

1,504

2,599

 

13,343

21,884

30,385

 

Consolidated Statement of Changes in Equity

 

Equity attributable to equity holders of the parent

Unaudited

Share

capital

£'000

Share

premium

£'000

Other

reserve

£'000

Retained

earnings

£'000

Total

equity

£'000

At 1 April 2016

4,363

874

13

124,683

129,933

Profit for the period

-

-

-

5,662

5,662

Other comprehensive income/(losses):

 

 

 

 

 

Change in fair value of available for sale assets

-

-

-

53

53

Tax effect of items taken directly to reserves

-

-

-

(10)

(10)

Total comprehensive income for the period

ended 30 September 2016

 -

-

-

5,705

5,705

Dividends

-

-

-

(17,597)

(17,597)

At 30 September 2016

4,363

874

13

112,791

118,041

 

Unaudited

£'000

£'000

£'000

£'000

£'000

At 1 April 2015

4,363

874

13

114,079

119,329

Profit for the period

-

-

-

7,610

7,610

Other comprehensive income/(losses):

 

 

 

 

 

Change in fair value of available for sale assets

-

-

-

(32)

(32)

Tax effect of items taken directly to reserves

-

-

-

6

6

Total comprehensive income for the period

ended 30 September 2015

-

-

-

7,584

7,584

Dividends

-

-

-

(4,398)

(4,398)

At 30 September 2015

4,363

874

13

117,265

122,515

 

Audited

£'000

£'000

£'000

£'000

£'000

At 1 April 2015

4,363

874

13

114,079

119,329

Profit for the year

-

-

-

16,187

16,187

Other comprehensive income/(losses):

 

 

 

 

 

Movement in unrecognised surplus on defined benefit pension schemes net of actuarial loss

-

-

-

228

228

Change in fair value of available for sale assets

-

-

-

(28)

(28)

Reclassification adjustment for gains/(losses) on available for sale assets in profit

-

-

-

85

85

Tax effect of items taken directly to reserves

-

-

-

5

5

Total comprehensive income for the year

ended 31 March 2016

-

-

-

16,477

16,477

Dividends

-

-

-

(5,873)

(5,873)

At 31 March 2016

4,363

874

13

124,683

129,933

 

 

Notes

1. General information

Castings P.L.C. (the 'company') is a company domiciled in England. The condensed consolidated interim financial statements of the company for the six months ended 30 September 2016 comprise the company and its subsidiaries (together referred to as the 'group').

The principal activities of the group are the manufacture of iron castings and machining operations.

The financial information for the year ended 31 March 2016 does not constitute the full statutory accounts for that period. The Annual Report and Financial Statements for the year ended 31 March 2016 have been filed with the Registrar of Companies. The Independent Auditors' Report on the Annual Report and Financial Statements for 2016 was unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under 498 (2) or (3) of the Companies Act 2006.

This report has not been audited and has not been reviewed by independent auditors pursuant to the Auditing Practices Board guidance on Review of Interim Financial Information.

2. Accounting policies

The annual financial statements of Castings P.L.C. are prepared using the recognition and measurement principles of IFRSs as endorsed by the European Union. The condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the European Union.

Basis of preparation

After making enquiries, the directors have a reasonable expectation that the company and the group have adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the half-yearly condensed consolidated interim financial statements.

The same accounting policies, presentation and methods of computation are followed in the condensed consolidated interim financial statements as applied in the group's latest annual audited financial statements.

3. Seasonality of operations

The directors do not consider there to be any significant seasonality or cyclicality to the results of the group.

4. Segment information

For internal decision making purposes, the group is organised into three operating companies which are considered to represent two operating segments of the group. Castings P.L.C. and William Lee Limited are aggregated into Foundry Operations and CNC Speedwell Limited is the Machining Operation.

The following shows the revenues, results and total assets by reportable segment for the half year to 30 September 2016.

 

Foundry operations

£'000

 

Machining

£'000

 

Elimination

£'000

 

Total

£'000

Revenue from external customers

54,187

3,676

-

57,863

Inter-segmental revenue

8,436

8,049

-

16,485

Segmental result

6,212

798

-

7,010

Unallocated income:

Finance income

 

 

 

 

 

 

 

67

Profit before income tax

 

 

 

7,077

Total assets

120,303

33,596

(12,405)

141,494

Non-current asset additions

4,947

2,427

-

7,374

Depreciation

1,525

1,774

-

3,299

 

The following shows the revenues, results and total assets by reportable segment for the half year to 30 September 2015.

 

Foundry operations

£'000

 

Machining

£'000

 

Elimination

£'000

 

Total

£'000

Revenue from external customers

55,102

9,860

-

64,962

Inter-segmental revenue

10,342

7,038

-

17,380

Segmental result

6,915

2,553

-

9,468

Unallocated income:

Finance income

 

 

 

 

 

 

 

45

Profit before income tax

 

 

 

9,513

Total assets

121,295

33,761

(6,662)

148,394

Non-current asset additions

1,574

1,650

-

3,224

Depreciation

1,520

1,654

-

3,174

 

The following shows the revenues, results and total assets by reportable segment for the year ended 31 March 2016.

 

Foundry operations

£'000

 

Machining

£'000

 

Elimination

£'000

 

Total

£'000

Revenue from external customers

114,738

17,710

-

132,448

Inter-segmental revenue

20,393

15,496

-

35,889

Segmental result

14,682

4,699

22

19,403

Unallocated income/(costs):

 

 

 

 

Exceptional credit for recovery of Icelandic bank
deposits previously written off

 

 

 

315

Defined benefit pension costs

 

 

 

(228)

Finance income

 

 

 

186

Profit before income tax

 

 

 

19,676

Total assets

129,704

33,089

(9,684)

153,109

Non-current asset additions

2,511

4,725

-

7,236

Depreciation

3,331

3,522

-

6,853

 

5. Dividends

Amounts recognised as distributions to shareholders in the period:

 

Half year to

30 September

2016

£'000

Half year to

30 September

2015

£'000

Final dividend of 10.33p per share for the year ended 31 March 2016

(2015 - 10.08p per share)

4,507

4,398

Supplementary dividend of 30.00p per share for the year ended

31 March 2016 (2015 - nil)

13,090

-

 

17,597

4,398

The directors have declared an interim dividend in respect of the financial year ending 31 March 2017 of 3.38p per share (2016 - 3.38p), which will be paid on 3 January 2017.

6. Earnings per share and diluted earnings per share

Earnings per share is calculated by dividing the profit attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period. There are no share options or other potentially issuable shares; hence the diluted earnings per share is the same calculation.

 

Unaudited

Half year to

30 September

2016

Unaudited

Half year to

30 September

2015

Audited

 Year to

 31 March

2016

Profit after tax (£'000)

5,662

7,610

16,187

Weighted average number of shares

43,632,068

43,632,068

43,632,068

Earnings per share - basic and diluted

12.98p

17.44p

37.10p

 

7. Pension schemes

The group operates two defined benefit pension schemes which are closed to new entrants and closed to future accruals on 6 April 2009. The assets of the schemes are independent of the finances of the group and are administered by trustees.

The pension schemes are related parties of the group and during the period £919,000 (2015 - £1,139,000) was paid by the group on behalf of the schemes in respect of pension payments and administration costs. At 30 September 2016 of the outstanding balance of £8,067,000 (2015 - £6,811,000), £3,383,000 (2015 - £5,677,000) is classified as a non-current other receivable and is repayable in three equal annual instalments commencing on 30 November 2017. Payments made by the company on behalf of the schemes in the current period are repayable on 30 November 2017.

8. Interim report
Copies of this interim management report will be available on the company's website, www.castings.plc.uk, and from the registered office.

 

Statement of Directors' Responsibilities

The directors confirm that the condensed consolidated interim financial statements have been prepared in accordance with IAS 34 as adopted by the European Union and that the interim management report includes a fair review of the information required by
DTR 4.2.7R and DTR 4.2.8R.

By order of the board

S. J. MANT FCA
Group Finance Director
11 November 2016


This information is provided by RNS
The company news service from the London Stock Exchange
 
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