Last checked at 15 Nov 2013 09:00
Interim Management Report
Sales for the six months ended 30 September 2013 were £65.9m (2012 - £60.4m) with profit before tax of £9.57m (2012 - £9.11m).
The company experienced exceptional levels of demand mainly from our commercial vehicle customers, with short term delivery requirements. Regrettably this caused certain inefficiencies in our operations and also logistics problems resulting in excessive cost. We also had to recruit new employees at short notice; this is costly due to training requirements.
The increase in demand we understand was caused by pre buy of commercial vehicles before the end of 2013. In the new year only Euro 6 exhaust systems can be sold in Europe, so we anticipate a short term reduction in demand during the early part of 2014.
In view of this it is impossible to forecast the outcome for the remainder of this financial year.
However we are encouraged that we have obtained orders for new projects and with the reported improvement in the world economic situation, the medium and long term future remains promising.
An interim dividend of 3.13 pence per share has been declared and will be paid on 3 January 2014 to shareholders who are on the register at 29 November 2013.
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 do not consider that the principal risks and uncertainties have changed since publication of the annual report for the year ended 31 March 2013. A detailed explanation of the risks relevant to the group is on pages 8 and 9 of the annual report.
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 plc and its subsidiary undertakings when viewed as a whole.
By order of the board:
BRIAN J. COOKE
Chairman
15 November 2013
Castings p.l.c.
Lichfield Road
Brownhills
West Midlands
WS8 6JZ
Consolidated Statement of Comprehensive Income
For six months ended 30 September 2013
(Unaudited)
Half year to | Half year to | Year to | |||
30 September | 30 September | 31 March | |||
2013 | 2012 | 2013 | |||
£'000 | £'000 | £'000 | |||
Revenue | 65,902 | 60,401 | 122,215 | ||
Cost of sales | (48,224) | (43,881) | (90,479) | ||
Gross profit | 17,678 | 16,520 | 31,736 | ||
Distribution costs | (999) | (791) | (1,553) | ||
Administrative expenses | |||||
Excluding exceptional | (7,208) | (6,683) | (11,481) | ||
Exceptional | - | - | 149 | ||
Total administrative expenses | (7,208) | (6,683) | (11,332) | ||
Profit from operations | 9,471 | 9,046 | 18,851 | ||
Finance income | 102 | 65 | 306 | ||
Profit before income tax |
9,573 |
9,111 |
19,157 | ||
Income tax expense | (2,202) | (2,187) | (4,371) | ||
Profit for the period attributable to the equity holders of the parent company | 7,371 | 6,924 | 14,786 | ||
Other comprehensive income/(expense) for the period: | |||||
Change in fair value of available for sale financial assets | 17 | (13) | 4 | ||
Net actuarial loss and movement in unrecognised surplus on defined benefit pension schemes | - | - | (138) | ||
Tax effect of gains and losses recognised directly in equity | (4) | 3 | (1) | ||
Total other comprehensive income/(loss) for the period (net of tax) | 13 | (10) | (135) | ||
Total comprehensive income for the period attributable to the equity holders of the parent company | 7,384 | 6,914 | 14,651 | ||
Earnings per share attributable to the equity holders of the parent company | |||||
Basic and diluted | 16.89p | 15.87p | 33.89p |
Consolidated Balance Sheet
30 September 2013
(Unaudited)
30 September | 30 September | 31 March | |||
2013 | 2012 | 2013 | |||
£'000 | £'000 | £'000 | |||
ASSETS | |||||
Non-current assets | |||||
Property, plant and equipment | 63,507 | 61,306 | 61,676 | ||
Financial assets | 511 | 482 | 494 | ||
64,018 | 61,788 | 62,170 | |||
Current assets | |||||
Inventories | 9,932 | 10,330 | 10,642 | ||
Trade and other receivables | 35,090 | 30,269 | 33,326 | ||
Other current interest-bearing deposits | - | 5,000 | 5,000 | ||
Cash and cash equivalents | 25,750 | 14,593 | 18,654 | ||
70,772 | 60,192 | 67,622 | |||
Total assets | 134,790 | 121,980 | 129,792 | ||
LIABILITIES | |||||
Current liabilities | |||||
Trade and other payables | 22,008 | 18,462 | 19,686 | ||
Current tax liabilities | 2,226 | 2,192 | 2,950 | ||
24,234 | 20,654 | 22,636 | |||
|
| ||||
Non-current liabilities | |||||
Deferred tax liabilities | 5,158 | 5,665 | 5,058 | ||
Total liabilities | 29,392 | 26,319 | 27,694 | ||
Net assets | 105,398 | 95,661 | 102,098 | ||
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 | 100,148 | 90,411 | 96,848 | ||
Total equity | 105,398 | 95,661 | 102,098 | ||
Consolidated Cash Flow Statement
For six months ended 30 September 2013
(Unaudited)
Half year to | Half year to | Year to | |||
30 September | 30 September | 31 March | |||
2013 | 2012 | 2013 | |||
£'000 | £'000 | £'000 | |||
Cash flows from operating activities | |||||
Profit before income tax | 9,573 | 9,111 | 19,157 | ||
Adjustments for: | |||||
Depreciation | 2,914 | 2,880 | 7,416 | ||
Profit on sale of property, plant and equipment | - | - | (19) | ||
Finance income | (102) | (65) | (306) | ||
Excess of employer pension contributions over income statement charge | - | - | (138) | ||
Decrease/(increase) in inventories | 710 | (1,020) | (1,332) | ||
(Increase) in receivables | (1,764) | (78) | (3,135) | ||
Increase/(decrease) in payables | 2,322 | (401) | 823 | ||
Cash generated from operating activities | 13,653 | 10,427 | 22,466 | ||
Tax paid | (2,830) | (2,887) | (4,925) | ||
Interest received | 90 | 53 | 285 | ||
Net cash generated from operating activities | 10,913 | 7,593 | 17,826 | ||
Cash flows from investing activities | |||||
Dividends received from listed investments | 12 | 12 | 21 | ||
Purchase of property, plant and equipment | (4,745) | (1,960) | (6,865) | ||
Proceeds from disposal of property, plant and equipment | - | - | 19 | ||
Transfer from/(to)to other current interest-bearing deposits | 5,000 | (5,000) | (5,000) | ||
Proceeds from disposal of financial assets | - | - | 5 | ||
Net cash inflow from/(used in) investing activities | 267 | (6,948) | (11,820) | ||
Cash flow from financing activities | |||||
Dividends paid to shareholders | (4,084) | (3,857) | (5,157) | ||
Net cash used in financing activities | (4,084) | (3,857) | (5,157) | ||
Net increase/(decrease) in cash and cash equivalents | 7,096 | (3,212) | 849 | ||
Cash and cash equivalents at beginning of period | 18,654 | 17,805 | 17,805 | ||
Cash and cash equivalents at end of period | 25,750 | 14,593 | 18,654 |
Consolidated Statement of Changes in Equity
(Unaudited)
Equity attributable to equity holders of the parent | |||||||||
Share capital | Share premium | Other reserve | Retained earnings | Total equity | |||||
£'000 | £'000 | £'000 | £'000 | £'000 | |||||
At 1 April 2013 | 4,363 | 874 | 13 | 96,848 | 102,098 | ||||
Total comprehensive income for the period ended 30 September 2013 | - | - | - | 7,384 | 7,384 | ||||
Dividends | - | - | - | (4,084) | (4,084) | ||||
At 30 September 2013 | 4,363 | 874 | 13 | 100,148 | 105,398 | ||||
|
Equity attributable to equity holders of the parent | ||||||||
Share capital | Share premium | Other reserve | Retained earnings | Total equity | |||||
£'000 | £'000 | £'000 | £'000 | £'000 | |||||
At 1 April 2012 | 4,363 | 874 | 13 | 87,354 | 92,604 | ||||
Total comprehensive income for the period ended 30 September 2012 | - | - | - | 6,914 | 6,914 | ||||
Dividends | - | - | - | (3,857) | (3,857) | ||||
At 30 September 2012 | 4,363 | 874 | 13 | 90,411 | 95,661 | ||||
|
Equity attributable to equity holders of the parent | ||||||||
Share capital | Share premium | Other reserve | Retained earnings | Total equity | |||||
£'000 | £'000 | £'000 | £'000 | £'000 | |||||
At 1 April 2012 | 4,363 | 874 | 13 | 87,354 | 92,604 | ||||
Total comprehensive income for the year ended 31 March 2013 | - | - | - | 14,651 | 14,651 | ||||
Dividends | - | - | - | (5,157) | (5,157) | ||||
At 31 March 2013 | 4,363 | 874 | 13 | 96,848 | 102,098 | ||||
Notes
1. GENERAL INFORMATION
Castings plc (the "Company") is a company domiciled in England. The condensed consolidated interim financial statements of the Company for the six months ended 30 September 2013 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 2013 does not constitute the full statutory accounts for that period. The Annual Report and Financial Statements for 2013 have been filed with the Registrar of Companies. The Independent Auditors' Report on the Annual Report and Financial Statement for 2013 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 plc 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 be the operating segments of the group. Castings plc 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 2013
Foundry operations £'000 |
Machining £'000 |
Elimination £'000 |
Total £'000 | |
Revenue from external customers | 57,411 | 8,491 | - | 65,902 |
Inter-segmental revenue | 11,304 | 6,449 | - | 17,753 |
Segmental result | 7,181 | 2,290 | - | 9,471 |
Unallocated income: | ||||
Finance income | 102 | |||
Profit before income tax |
9,573 | |||
| ||||
Total assets | 122,459 | 30,323 | (17,993) | 134,790 |
Non-current asset additions | 1,583 | 3,162 | - | 4,745 |
Depreciation | 1,422 | 1,492 | - | 2,914 |
The following shows the revenues, results and total assets by reportable segment for the half year to 30 September 2012.
Foundry operations £'000 |
Machining £'000 |
Elimination £'000 |
Total £'000 | |
Revenue from external customers | 53,459 | 6,942 | - | 60,401 |
Inter-segmental revenue | 9,878 | 5,795 | - | 15,673 |
Segmental result | 6,712 | 2,334 | - | 9,046 |
Unallocated income: | ||||
Finance income | 65 | |||
Profit before income tax | 9,111 | |||
Total assets | 113,332 | 25,827 | (17,179) | 121,980 |
Non-current asset additions | 924 | 1,036 | - | 1,960 |
Depreciation | 1,448 | 1,432 | - | 2,880 |
The following shows the revenues, results and total assets by reportable segment for the year ended 31 March 2013.
Foundry operations £'000 |
Machining £'000 |
Elimination £'000 |
Total £'000 | |
Revenue from external customers | 106,674 | 15,541 | - | 122,215 |
Inter-segmental revenue | 19,166 | 11,615 | - | 30,781 |
Segmental result | 14,656 | 3,803 | 105 | 18,564 |
Unallocated income: | ||||
Exceptional credit for the recovery of Icelandic deposits previously written off |
149 | |||
Excess of employer pension contributions over statement of comprehensive income charge |
138 | |||
Finance income | 306 | |||
Profit before income tax |
19,157 | |||
Total assets | 114,690 | 27,575 | (12,473) | 129,792 |
Non-current asset additions | 1,141 | 5,724 | - | 6,865 |
Depreciation | 4,169 | 3,247 | - | 7,416 |
5. DIVIDENDS
Amounts recognised as distributions to shareholders in the period:
Half year | Half year | ||
to 30 September | to 30 September | ||
2013 £'000 | 2012 £'000 | ||
Final dividend of 9.36p for the year ended 31 March 2013 (2012 - 8.84p) per share | 4,084 | 3,857 |
The directors have declared an interim dividend in respect of the financial year ending 31 March 2014 of 3.13p per share (2013 - 2.98p), which will be paid on 3 January 2014.
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.
Half year to | Half year to | Year to | |||
30 September | 30 September | 3 1 March | |||
2013 | 2012 | 2013 | |||
£'000 | £'000 | £'000 | |||
Profit after tax | 7,371 | 6,924 | 14,786 | ||
Weighted average number of shares | 43,632,068 | 43,632,068 | 43,632,068 | ||
Earnings per share - basic and diluted |
16.89p |
15.87p |
33.89p |
7. CASH, CASH EQUIVALENTS AND OTHER CURRENT INTEREST-BEARING DEPOSITS
Half year to | Half year to | Year to | |||
30 September | 30 September | 3 1 March | |||
2013 | 2012 | 2013 | |||
£'000 | £'000 | £'000 | |||
Cash and cash equivalents | 25,750 | 14,593 | 18,654 | ||
Other current interest-bearing deposits | - | 5,000 | 5,000 | ||
25,750 | 19,593 | 23,654 |
In accordance with IAS7, cash held on long term deposits, with an original maturity greater than three months, is classified as other current interest-bearing deposits.
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.
The directors of Castings plc are listed on the following page.
By order of the Board
S J Mant FCA
Group Finance Director
15 November 2013
Directors and Officers
Directors | B. J. Cooke, AdvDipNFC, FICME Chairman |
D. J. Gawthorpe, BSc (Hons), MICME Chief Executive | |
S. J. Mant, BSocSc (Hons), FCA Group Finance Director | |
M. A. Lewis, Managing Director, CNC Speedwell Ltd | |
G. Cooper, BSc (Hons) C.Eng, MICME Managing Director, William Lee Ltd | |
A. Vicary, B.Eng MSc, FICME Managing Director, Brownhills | |
G. B. Wainwright, MCMI, MIEx, FRSA Senior Independent Non-executive C. P. King, FCA Non-executive | |
A. N. Jones, BA (Hons), FCA Non executive | |
Secretary and Registered Office | S. J. Mant, FCA Lichfield Road, Brownhills West Midlands, WS8 6JZ Tel: 01543 374341 Fax: 01543 377483 Web: www.castings.plc.uk |
Registrars | Capita Registrars The Registry, 34 Beckenham Road, Beckenham, Kent, BR3 4TU Tel: 0871 664 0300 (calls cost 10p per minute plus network extras, lines are open 8.30am to 5.30pm Mon to Fri) Fax: 020 8658 3430 |
Auditors | BDO LLP Chartered Accountants 125 Colmore Row, Birmingham, B3 3SD |
Solicitors | Enoch Evans LLP St Paul's Chambers, 6/9 Hatherton Road, Walsall, West Midlands, WS1 1XS |
Pinsent Masons LLP 3 Colmore Circus, Birmingham, B4 6BH | |
Bankers | HSBC Bank plc High Street, Brownhills, West Midlands, WS8 6HJ |
Stockbrokers | Arden Partners plc Arden House, Highfield Road, Edgbaston, Birmingham, B15 3DU |
Registered No. | 91580 |