Last checked at 27 Nov 2008 09:00
Chairman's Statement
Profit before tax and exceptional items for the six months ended 30th September 2008 was £6.22m compared with £6.27m in the period ended 30th September 2007.
Trading profit in the six months to 30th September 2008 was generally in line with expectations despite a shortfall in the recovery of rapid raw material increases during April through to July. This resulted in a reduction of operating margins.
It was disappointing to report that our deposits in three Icelandic banks are under threat; we as yet have little news on the eventual outcome. The deposits were made earlier in the year when our advisors rated them satisfactorily. However, as a matter of prudence, we have made full provision against these deposits of £5,701,000. Notwithstanding these at risk deposits, we have further substantial funds available. The Board is therefore satisfied that any loss which may be incurred on these deposits will not have any impact on the ability of the group to finance its trading operations or its ongoing capital expenditure programme at William Lee.
In my statement in our 2008 Annual Report written in June, I referred to the 'crazy situation'. The world financial problems are now very well documented and the resultant effects on all manufacturing companies, particularly those related to the car and truck industries, are becoming clear.
Up to the end of September all companies were operating well, but since the beginning of October we have seen a substantial reduction in customers' schedules, now up to 40%, in the commercial vehicle manufacturers and at a higher level in the car industry. As a result of these reductions and the uncertainty in the immediate future we have had to reduce the number of shifts worked and regrettably we have had no option but to reduce the numbers employed.
Customer demands are changing on a daily basis; hence it is impossible to forecast profits but the Board consider that the results for the full year to 31st March 2009 will be below market expectations. The company will make every attempt to balance cost with customer requirements, but at the same time preparing ourselves for the recovery when it comes.
In conclusion, at the present time it is impossible to know when a recovery will take place. The new foundry at William Lee will be ready for production in the new year, but the opening will be delayed until we see an improvement.
The group has set out the principal risks which could impact the performance of the group in its Annual Report and Accounts 2008. In the view of the Board there has been no material change in the risks.
An interim dividend of 2.71 pence per share has been declared and will be paid on 9th January 2009 to shareholders who are on the register at 12th December 2008.
BRIAN J. COOKE
Chairman
27th November 2008
Castings p.l.c. Lichfield Road Brownhills West MidlandsWS8 6JZ
Consolidated Income Statement
For six months ended 30th September 2008
(Unaudited)
| Half year to | Half year to | Year to | |||
| 30th September | 30th September | 31st March | |||
| 2008 | 2007 | 2008 | |||
| £'000 | £'000 | £'000 | |||
| Revenue | 51,129 | 45,760 | 97,372 | ||
| Cost of sales | (38,896) | (33,572) | (71,653) | ||
| Gross profit | 12,233 | 12,188 | 25,719 | ||
| Distribution costs | (727) | (628) | (1,369) | ||
| Administrative expenses | |||||
| Normal | (6,280) | (5,985) | (9,100) | ||
| Exceptional (see note 6) | (5,701) | - | - | ||
| Total administrative expenses | (11,981) | (5,985) | (9,100) | ||
| Profit/(loss) from operations | (475) | 5,575 | 15,250 | ||
| Finance income | 996 | 691 | 1,414 | ||
| Profit before income tax | 521 | 6,266 | 16,664 | ||
| Income tax expense | (146) | (1,880) | (4,668) | ||
| Profit for the period attributable to the equity holders of the parent company | 375 | 4,386 | 11,996 | ||
| Earnings per share | |||||
| Basic and diluted | 0.86p | 10.05p | 27.49p | ||
Consolidated Balance Sheet
30th September 2008(Unaudited)
| 30thSeptember | 30thSeptember | 31stMarch | |||
| 2008 | 2007 | 2008 | |||
| £'000 | £'000 | £'000 | |||
| Assets | |||||
| Non-current assets | |||||
| Property, plant and equipment | 45,817 | 34,999 | 38,772 | ||
| Financial assets | 56 | 824 | 736 | ||
| 45,873 | 35,823 | 39,508 | |||
| Current assets | |||||
| Inventories | 7,983 | 5,080 | 7,054 | ||
| Trade and other receivables | 22,614 | 20,699 | 22,588 | ||
| Cash and cash equivalents | 18,946 | 28,314 | 31,494 | ||
| 49,543 | 54,093 | 61,136 | |||
| Total assets | 95,416 | 89,916 | 100,644 | ||
| Liabilities | |||||
| Current liabilities | |||||
| Trade and other payables | 18,332 | 14,007 | 18,589 | ||
| Current tax liabilities | 116 | 1,710 | 1,816 | ||
| 18,448 | 15,717 | 20,405 | |||
| Non-current liabilities | |||||
| Deferred tax liabilities | 2,296 | 2,204 | 2,382 | ||
| 2,296 | 2,204 | 2,382 | |||
| Total liabilities | 20,744 | 17,921 | 22,787 | ||
| Net Assets | 74,672 | 71,995 | 77,857 | ||
| Equity attributable to equity of the parent company | |||||
| Share capital | 4,363 | 4,363 | 4,363 | ||
| Share premium account | 874 | 874 | 874 | ||
| Other reserves | 13 | 13 | 13 | ||
| Retained earnings | 69,422 | 66,745 | 72,607 | ||
| Total equity | 74,672 | 71,995 | 77,857 |
Consolidated Cash Flow Statement
For six months ended 30th September 2008(Unaudited)
| Half year | Half year | Year to | |||
| to 30thSeptember | to 30thSeptember | 31stMarch | |||
| 2008 | 2007 | 2008 | |||
| £'000 | £'000 | £'000 | |||
| Cash flows from operating activities | |||||
| Cash generated from operations | 789 | 8,464 | 21,440 | ||
| Interest received | 996 | 691 | 1,414 | ||
| Tax paid | (1,784) | (990) | (3,462) | ||
| Net cash generated from operating activities | 1 | 8,165 | 19,392 | ||
| Cash flows from investing activities | |||||
| Purchase of property, plant and equipment | (9,521) | (2,275) | (9,354) | ||
| Proceeds from disposal of property, plant and equipment | - | - | 214 | ||
| Proceeds from disposal of financial assets | 153 | - | - | ||
| Net cash used in investing activities | (9,368) | (2,275) | (9,140) | ||
| Cash flow from financing activities | |||||
| Dividends paid to shareholders | (3,181) | (3,028) | (4,210) | ||
| Net cash used in financing activities | (3,181) | (3,028) | (4,210) | ||
| Net increase/(decrease) in cash and cash equivalents | (12,548) | 2,862 | 6,042 | ||
| Cash and cash equivalents at beginning of period | 31,494 | 25,452 | 25,452 | ||
| Cash and cash equivalents at end of period | 18,946 | 28,314 | 31,494 |
Consolidated Statement of Recognised Income and Expense
For six months ended 30th September 2008
(Unaudited)
| Half year | Half year | Year to | |||
| to 30thSeptember | to 30thSeptember | 31stMarch | |||
| 2008 | 2007 | 2008 | |||
| £'000 | £'000 | £'000 | |||
| Profit for period | 375 | 4,386 | 11,996 | ||
| Change in fair value of available for sale financial assets | (527) | 1 | (87) | ||
| Actuarial losses on defined pension schemes | - | - | (510) | ||
| Tax effect of gains and losses recognised directly in equity | 148 | - | 32 | ||
| Total recognised income/(expense) for period | (4) | 4,387 | 11,431 | ||
Supplementary Statement
Reconciliation of profit before income tax to net cash inflow from operating activities
For six months ended 30th September 2008
(Unaudited)
| Half year | Half year | Year to | |||
| to 30thSeptember | to 30thSeptember | 31stMarch | |||
| 2008 | 2007 | 2008 | |||
| £'000 | £'000 | £'000 | |||
| Profit before income tax | 521 | 6,266 | 16,664 | ||
| Depreciation (net of profit on sale of property, plant & equipment) | 2,476 | 2,771 | 5,863 | ||
| Interest received | (996) | (691) | (1,414) | ||
| Excess of employer pension contributions over income statement charge | - | - | (510) | ||
| (Increase)/decrease in inventories | (929) | 1,238 | (736) | ||
| (Increase)/decrease in receivables | (26) | 1,085 | (804) | ||
| Increase/(decrease) in payables | (257) | (2,205) | 2,377 | ||
| Net cash inflow from operating activities | 789 | 8,464 | 21,440 | ||
Notes
BASIS OF PREPARATION
Financial information presented here is unaudited and has not been reviewed. Comparatives for the full year ended 31st March 2008 are not the Group's full statutory accounts for that year. A copy of those accounts has been delivered to the Registrar of Companies. The auditors' report on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain a statement under Section 237 (2)-(3) of the Companies Act 1985.
The condensed consolidated half-yearly financial information for the half-year ended 30th September 2008 has been prepared in accordance with IAS 34, 'Interim financial reporting' as adopted by the European Union. The half-yearly condensed consolidated financial report does not include all the information and disclosures required in the annual financial statements and should be read in conjunction with the Group's annual financial statements as at 31st March 2008.
The interim financial statements have been prepared using the same accounting policies as used in the preparation of the Group's annual financial statements for the year ended 31st March 2008.
The geographical analysis of revenues by destination for the period is as follows:
| Half year to 30th September 2008 £'000 | Half year to 30th September 2007 £'000 | Year to 31st March 2008 £'000 | |||
| United Kingdom | 18,589 | 16,559 | 33,164 | ||
| Sweden | 10,453 | 8,691 | 19,730 | ||
| Rest of Europe | 21,193 | 19,683 | 42,710 | ||
| North and South America | 770 | 827 | 1,768 | ||
| Other | 124 | - | - | ||
| 51,129 | 45,760 | 97,372 |
All turnover and profit arises in the United Kingdom for the Group's continuing principal activity, which the directors believe to be the only class of business carried out by the Group. As a result, it is not practical to provide segmental information.
The directors do not consider there to be any significant seasonality or cyclicality to the results of the Group.
| Half year | Half year | |
| to 30th September | to 30th September | |
| Amounts recognised as distributions to shareholders in the period: | 2008 £'000 | 2007 £'000 |
| Final dividend of 7.29p for the year ended 31st March 2008 (2007: 6.94p) per share | 3,181 | 3,028 |
The directors have declared an interim dividend in respect of the financial year ending 31st March 2009 of 2.71 pence per share (2008: 2.71p), which will be paid on 9th January 2009.
| 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 | Half year | Year to | |||
| to 30thSeptember | to 30thSeptember | 31stMarch | |||
| 2008 | 2007 | 2008 | |||
| £'000 | £'000 | £'000 | |||
| Profit after tax | 375 | 4,386 | 11,996 | ||
| Weighted average number of shares | 43,632,068 | 43,632,068 | 43,632,068 | ||
| Earnings per share - basic and diluted | 0.86p | 10.05p | 27.49p | ||
6. ICELANDIC BANKS
The company reported in October that it had £5.7 million on deposit with Icelandic banks; Kaupthing Singer and Friedlander, Heritable Bank (Landsbanki) and Glitnir Bank. All of these amounts are due for repayment by 31 December 2008. These deposits are at risk and as a matter of prudence, the Board has considered it appropriate to make full provision against them.
Notwithstanding these at risk deposits, we have further substantial funds available. The Board is therefore satisfied that any loss which may be incurred on these deposits will not have any impact on the ability of the group to finance its trading operations or its ongoing capital expenditure programme at William Lee.
Statement of Directors' Responsibilities
The directors' confirm that the condensed set of financial statements has been prepared in accordance with IAS 34 as adopted by the European Union and that the Chairman's Statement herein includes a true and fair view of the information required by DTR 4.2.7 and DTR 4.2.8.
By order of the Board
J.C.Roby FCA
Finance Director 27th November 2008