REG - Castings PLC - Half-year Report <Origin Href="QuoteRef">CGS.L</Origin>
RNS Number : 9001OCastings PLC11 November 2016Castings 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 6JZConsolidated 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 off315
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 RNSThe company news service from the London Stock ExchangeENDIR GGGBAGUPQGWU
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