TIDMCGS
RNS Number : 7076S
Castings PLC
08 November 2019
CASTINGS PLC
INTERIM MANAGEMENT REPORT
Six months ended 30 September 2019
Sales for the six months ended 30 September 2019 were GBP73.1
million (2018 - GBP68.3 million) with profit before tax of GBP7.34
million (2018 - GBP5.77 million).
Foundry operations
As previously reported, customer demand was strong during the
first three months of the period followed by some softening in the
second quarter. Overall the output during the period was up 5.4% at
25,200 tonnes (2018 - 23,900 tonnes) and external sales revenue
increased by 7.9% to GBP70.1 million. The revenue figure is
enhanced by the continued shift to more machined parts which
results in higher average selling prices.
The profit from the foundry segment of GBP7.1 million represents
an increase of 9.5% from the equivalent period last year ("previous
period"). Whilst there has been some margin improvement compared to
the previous period, further productivity gains are set to be
realised during the second half of the financial year and into
2020/21.
Investment of GBP3.1 million has been made during the period to
support automation and other productivity initiatives within the
foundry businesses.
Machining operation
CNC Speedwell generated external revenue of GBP3.0 million
during the period, a decrease of 8.1% compared to the previous
period, with a reported profit of GBP0.1 million compared to a loss
of GBP0.8 million in the previous period. The reduction in external
revenue is to be expected as the emphasis continues to be on the
group's core customer base.
The focus on engineering and productivity improvements in the
machining business are now starting to be realised and have
resulted in a return to profit in the period. It will continue to
take time before all of the necessary processes have been reviewed
and production efficiencies fully reflected in the operating
performance. Where gains have been made this has increased the
capacity available for future production without the need for
further investment.
The capital investment during the period has again reduced from
GBP1.3 million in the previous period to GBP0.6 million. The
investment made has been to support automation and other
productivity initiatives.
Outlook
The commercial vehicle sector has reported a decline in order
intake in Europe. Accordingly, we have seen a reduction in
schedules from this element of our customer base, which represents
70% of group revenue.
The focus in the foundry businesses continues to be on
productivity improvements within the production processes and the
completion of the automation of finishing processes. We expect to
see the benefit of this during the remainder of the current
financial year and into 2020/21.
The programme of automation investment commenced in the
machining business following the successful development of a pilot
cell during the period. This will enable the business to achieve
additional productivity gains over a number of years.
Dividend
An interim dividend of 3.48 pence per share has been declared
and will be paid on 2 January 2020 to shareholders who are on the
register at 22 November 2019.
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
2019.
The general election and uncertainty surrounding our future
relationship with Europe continues to cause concern over 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.
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
8 November 2019
Castings p.l.c.
Lichfield Road
Brownhills
West Midlands
WS8 6JZ
Consolidated Statement of Comprehensive Income
For six months ended 30 September 2019
Unaudited Unaudited
Half year Half year Audited
to to Year to
30 September 30 September 31 March
2019 2018 2019
GBP'000 GBP'000 GBP'000
------------------------------------------------------- ------------- ------------- ---------
Revenue 73,135 68,284 150,236
Cost of sales (57,349) (54,710) (118,129)
------------------------------------------------------- ------------- ------------- ---------
Gross profit 15,786 13,574 32,107
Distribution costs (1,444) (1,429) (2,794)
------------------------------------------------------- ------------- ------------- ---------
Excluding exceptional items (7,109) (6,444) (14,116)
Exceptional items - - (1,275)
------------------------------------------------------- ------------- ------------- ---------
Total administrative expenses (7,109) (6,444) (15,391)
------------------------------------------------------- ------------- ------------- ---------
Profit from operations 7,233 5,701 13,922
Finance income 111 70 128
------------------------------------------------------- ------------- ------------- ---------
Profit before income tax 7,344 5,771 14,050
Income tax expense (1,393) (1,094) (3,040)
------------------------------------------------------- ------------- ------------- ---------
Profit for the period attributable to the equity
holders of the parent company 5,951 4,677 11,010
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 - - 237
Defined benefit pension schemes GMP equalisation
charge - - 1,290
------------------------------------------------------- ------------- ------------- ---------
- - 1,527
Items that may be reclassified subsequently to profit
and loss:
Change in fair value of available for sale financial
assets 30 32 44
Tax effect of items that may be reclassified (5) (5) (7)
------------------------------------------------------- ------------- ------------- ---------
25 27 37
------------------------------------------------------- ------------- ------------- ---------
Total other comprehensive income/(losses) for the
period (net of tax) 25 27 1,564
------------------------------------------------------- ------------- ------------- ---------
Total comprehensive income for the period attributable
to the equity holders of the parent company 5,976 4,704 12,574
------------------------------------------------------- ------------- ------------- ---------
Earnings per share attributable to the equity holders
of the parent company
Basic and diluted 13.64p 10.72p 25.23p
------------------------------------------------------- ------------- ------------- ---------
Consolidated Balance Sheet
30 September 2019
Unaudited Unaudited Audited
30 September 30 September 31 March
2019 2018 2019
GBP'000 GBP'000 GBP'000
---------------------------------------------------- ------------- ------------- ---------
ASSETS
Non-current assets
Property, plant and equipment 70,999 75,253 71,438
Financial assets 410 369 380
Other receivables - 1,135 -
---------------------------------------------------- ------------- ------------- ---------
71,409 76,757 71,818
---------------------------------------------------- ------------- ------------- ---------
Current assets
Inventories 19,077 18,503 19,164
Trade and other receivables 36,954 40,670 41,121
Current tax asset 524 - -
Other current interest-bearing deposits - 4,900 5,000
Cash and cash equivalents 25,835 14,692 25,771
---------------------------------------------------- ------------- ------------- ---------
82,390 78,765 91,056
---------------------------------------------------- ------------- ------------- ---------
Assets classed as held for resale 1,060 - 1,060
---------------------------------------------------- ------------- ------------- ---------
83,450 78,765 92,116
---------------------------------------------------- ------------- ------------- ---------
Total assets 154,859 155,522 163,934
---------------------------------------------------- ------------- ------------- ---------
LIABILITIES
Current liabilities
Trade and other payables 22,453 22,787 24,222
Current tax liabilities - 1,075 1,842
---------------------------------------------------- ------------- ------------- ---------
22,453 23,862 26,064
---------------------------------------------------- ------------- ------------- ---------
Non-current liabilities
Deferred tax liabilities 3,560 3,666 3,481
---------------------------------------------------- ------------- ------------- ---------
Total liabilities 26,013 27,528 29,545
---------------------------------------------------- ------------- ------------- ---------
Net assets 128,846 127,994 134,389
---------------------------------------------------- ------------- ------------- ---------
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 123,596 122,744 129,139
---------------------------------------------------- ------------- ------------- ---------
Total equity 128,846 127,994 134,389
---------------------------------------------------- ------------- ------------- ---------
Consolidated Cash Flow Statement
For six months ended 30 September 2019
Unaudited Unaudited
Half year Half year Audited
to to Year to
30 September 30 September 31 March
2019 2018 2019
GBP'000 GBP'000 GBP'000
-------------------------------------------------------- ------------- ------------- ---------
Cash flows from operating activities
Profit before income tax 7,344 5,771 14,050
Adjustments for:
Depreciation 4,163 3,870 8,296
Profit on disposal of property, plant and equipment - - (160)
Finance income (111) (70) (128)
Pension administrative costs - - 237
Pension GMP equalisation charge - - 1,290
Decrease/(increase) in inventories 87 (2,219) (2,880)
Decrease/(increase) in receivables 5,185 (1,841) (4,449)
(Decrease)/increase in payables (1,769) 545 1,980
-------------------------------------------------------- ------------- ------------- ---------
Cash generated from operating activities 14,899 6,056 18,236
Tax paid (3,685) (1,341) (2,707)
Interest received 101 57 108
-------------------------------------------------------- ------------- ------------- ---------
Net cash generated from operating activities 11,315 4,772 15,637
Cash flows from investing activities
Dividends received from listed investments 10 13 20
Purchase of property, plant and equipment (3,724) (3,187) (4,858)
Proceeds from disposal of property, plant and equipment - - 160
Transfer from/(to) other current interest-bearing
deposits 5,000 - (100)
Repayments from pension schemes - - 4,455
Advances to pension schemes (1,018) (1,228) (2,390)
-------------------------------------------------------- ------------- ------------- ---------
Net cash used in investing activities 268 (4,402) (2,713)
Cash flow from financing activities
Dividends paid to shareholders (11,519) (4,852) (6,327)
-------------------------------------------------------- ------------- ------------- ---------
Net cash used in financing activities (11,519) (4,852) (6,327)
Net increase/(decrease) in cash and cash equivalents 64 (4,482) 6,597
Cash and cash equivalents at beginning of period 25,771 19,174 19,174
-------------------------------------------------------- ------------- ------------- ---------
Cash and cash equivalents at end of period 25,835 14,692 25,771
-------------------------------------------------------- ------------- ------------- ---------
Cash and cash equivalents:
Short-term deposits 23,362 11,931 19,828
Cash available on demand 2,473 2,761 5,943
-------------------------------------------------------- ------------- ------------- ---------
25,835 14,692 25,771
-------------------------------------------------------- ------------- ------------- ---------
Consolidated Statement of Changes in Equity
Equity attributable to equity holders
of the parent
Share Share Retained Total
capital premium Other reserve earnings equity
Unaudited GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------- -------- -------- ------------- --------- --------
At 1 April 2019 4,363 874 13 129,139 134,389
------------------------------------- -------- -------- ------------- --------- --------
Profit for the period - - - 5,951 5,951
Other comprehensive income/(losses):
Change in fair value of available
for sale assets - - - 30 30
Tax effect of items taken directly
to reserves - - - (5) (5)
------------------------------------- -------- -------- ------------- --------- --------
Total comprehensive income for the
period ended 30 September 2019 - - - 5,976 5,976
Dividends - - - (11,519) (11,519)
------------------------------------- -------- -------- ------------- --------- --------
At 30 September 2019 4,363 874 13 123,596 128,846
------------------------------------- -------- -------- ------------- --------- --------
Unaudited GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------- ------- ------- ------- ------- -------
At 1 April 2018 4,363 874 13 122,892 128,142
------------------------------------- ------- ------- ------- ------- -------
Profit for the period - - - 4,677 4,677
Other comprehensive income/(losses):
Change in fair value of available
for sale assets - - - 32 32
Tax effect of items taken directly
to reserves - - - (5) (5)
------------------------------------- ------- ------- ------- ------- -------
Total comprehensive income for the
period ended 30 September 2018 - - - 4,704 4,704
Dividends - - - (4,852) (4,852)
------------------------------------- ------- ------- ------- ------- -------
At 30 September 2018 4,363 874 13 122,744 127,994
------------------------------------- ------- ------- ------- ------- -------
Audited GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------- ------- ------- ------- ------- -------
At 1 April 2018 4,363 874 13 122,892 128,142
------------------------------------- ------- ------- ------- ------- -------
Profit for the year - - - 11,010 11,010
Other comprehensive income/(losses):
Movement in unrecognised surplus
on defined benefit pension schemes
net of actuarial loss - - - 237 237
Defined benefit pension schemes GMP
equalisation charge - - - 1,290 1,290
Change in fair value of available
for sale assets - - - 44 44
Tax effect of items taken directly
to reserves - - - (7) (7)
------------------------------------- ------- ------- ------- ------- -------
Total comprehensive income for the
year ended 31 March 2019 - - - 12,574 12,574
Dividends - - - (6,327) (6,327)
------------------------------------- ------- ------- ------- ------- -------
At 31 March 2019 4,363 874 13 129,139 134,389
------------------------------------- ------- ------- ------- ------- -------
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 2019 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 2019 does
not constitute the full statutory accounts for that period. The
Annual Report and Financial Statements for the year ended 31 March
2019 have been filed with the Registrar of Companies. The
Independent Auditors' Report on the Annual Report and Financial
Statements for 2019 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.
New standards effective and adopted by the group in the
period
The following new standards and IFRIC interpretations have been
issued and are effective for the first time for the group's
financial year beginning on 1 April 2019 and therefore have been
applied by the group in these condensed consolidated interim
financial statements:
-- IFRS 16 Leases
-- IFRIC 23 Uncertainty over Income Tax Treatments
The adoption of these new or amended standards did not have a
material impact on the group's financial position or results from
operations in the half-year ended 30 September 2019.
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.
Inter-segment transactions are entered into under the normal
commercial terms and conditions that would be available to third
parties.
The following shows the revenues, results and total assets by
reportable segment for the half year to 30 September 2019.
Foundry
operations Machining Elimination Total
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------- ----------- --------- ----------- --------
Revenue from external customers 70,106 3,029 - 73,135
Inter-segmental revenue 9,609 10,325 - 19,934
-------------------------------- ----------- --------- ----------- --------
Segmental result 7,094 139 - 7,233
-------------------------------- ----------- --------- ----------- --------
Unallocated income:
Finance income 111
-------------------------------- ----------- --------- ----------- --------
Profit before income tax 7,344
-------------------------------- ----------- --------- ----------- --------
Total assets 137,691 31,430 (14,262) 154,859
-------------------------------- ----------- --------- ----------- --------
Non-current asset additions 3,077 647 - 3,724
-------------------------------- ----------- --------- ----------- --------
Depreciation 2,048 2,115 - 4,163
-------------------------------- ----------- --------- ----------- --------
Total liabilities (25,890) (7,776) 7,653 (26,013)
-------------------------------- ----------- --------- ----------- --------
The following shows the revenues, results and total assets by
reportable segment for the half year to 30 September 2018.
Foundry
operations Machining Elimination Total
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------- ----------- ----------- ------------- ---------
Revenue from external customers 64,988 3,296 - 68,284
Inter-segmental revenue 9,433 9,646 - 19,079
-------------------------------- ----------- ----------- ------------- ---------
Segmental result 6,476 (775) - 5,701
-------------------------------- ----------- ----------- ------------- ---------
Unallocated income:
Finance income 70
-------------------------------- ----------- ----------- ------------- ---------
Profit before income tax 5,771
-------------------------------- ----------- ----------- ------------- ---------
Total assets 138,487 35,261 (18,226) 155,522
-------------------------------- ----------- ----------- ------------- ---------
Non-current asset additions 2,336 1,339 - 3,675
-------------------------------- ----------- ----------- ------------- ---------
Depreciation 1,972 1,898 - 3,870
-------------------------------- ----------- ----------- ------------- ---------
Total liabilities (28,132) (11,359) 11,963 (27,528)
-------------------------------- ----------- ----------- ------------- ---------
The following shows the revenues, results and total assets by
reportable segment for the year ended 31 March 2019.
Foundry
operations Machining Elimination Total
GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------------------- ----------- --------- ----------- --------
Revenue from external customers 143,060 7,176 - 150,236
Inter-segmental revenue 21,499 20,605 - 42,104
--------------------------------------------- ----------- --------- ----------- --------
Segmental result 16,832 (1,342) (56) 15,434
--------------------------------------------- ----------- --------- ----------- --------
Unallocated income/(costs):
Exceptional credit for recovery of Icelandic
bank deposits previously written off 15
Defined benefit pension costs (237)
Defined benefit pension GMP equalisation
charge (1,290)
Finance income 128
--------------------------------------------- ----------- --------- ----------- --------
Profit before income tax 14,050
--------------------------------------------- ----------- --------- ----------- --------
Total assets 145,747 33,393 (15,206) 163,934
--------------------------------------------- ----------- --------- ----------- --------
Non-current asset additions 3,496 1,850 - 5,346
--------------------------------------------- ----------- --------- ----------- --------
Depreciation 4,183 4,113 - 8,296
--------------------------------------------- ----------- --------- ----------- --------
Total liabilities (29,632) (9,879) 9,966 (29,545)
--------------------------------------------- ----------- --------- ----------- --------
5. Dividends
Amounts recognised as distributions to shareholders in the
period:
Half year Half year
to to
30 September 30 September
2019 2018
GBP'000 GBP'000
--------------------------------------------------------- ------------- -------------
Final dividend of 11.40p per share for the year ended 31
March 2019
(2018 - 11.12p per share) 4,974 4,852
Supplementary dividend of 15.00p per share for the year
ended 31 March 2019 (2018 - nil) 6,545 -
--------------------------------------------------------- ------------- -------------
11,519 4,852
--------------------------------------------------------- ------------- -------------
The directors have declared an interim dividend in respect of
the financial year ending 31 March 2020 of 3.48p per share (2019 -
3.38p), which will be paid on 2 January 2020.
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 Unaudited
Half year Half year Audited
to to Year to
30 September 30 September 31 March
2019 2018 2019
--------------------------------------- ------------- ------------- ----------
Profit after tax (GBP'000) 5,951 4,677 11,010
--------------------------------------- ------------- ------------- ----------
Weighted average number of shares 43,632,068 43,632,068 43,632,068
--------------------------------------- ------------- ------------- ----------
Earnings per share - basic and diluted 13.64p 10.72p 25.23p
--------------------------------------- ------------- ------------- ----------
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 GBP1,018,000 (2018 - GBP1,228,000) was paid by the group
on behalf of the schemes in respect of pension payments and
administration costs. At 30 September 2019, the outstanding balance
of GBP4,543,000 (2018 - GBP6,818,000) is repayable within one year.
In the prior year, GBP1,135,000 of the balance was classified as a
non-current other receivable being repayable on 30 November
2019.
Payments made by the company on behalf of the schemes in the
current period are repayable on 30 November 2020.
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
8 November 2019
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END
IR UGGAPGUPBGQM
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