TIDMCGS
RNS Number : 5040G
Castings PLC
16 November 2022
CASTINGS P.L.C.
INTERIM MANAGEMENT REPORT
Six months ended 30 September 2022
Interim Management Report
Overview
Sales for the six months ended 30 September 2022 were GBP85.6
million (2021 - GBP69.7 million) with profit before tax of GBP7.5
million
(2021 - GBP5.4 million).
During the period, the underlying demand for heavy trucks has
been strong and the conversion of forward schedules to actual sales
has improved when compared with the same period in the previous
year. Two of our largest commercial vehicle customers have
introduced new engine platforms during the period on which the
group has an increased share of parts. The simultaneous
introduction has led to production challenges in the transition
phase which are now largely behind us.
Input price changes continue to be passed onto our customers
through both established escalators and additional price increases.
The most significant increase came into effect on 1 October 2022,
following the end of our fixed price electricity contract. The
higher unit cost for power is being surcharged to our customers
immediately and will therefore increase revenue in the second half
of the year. This should not adversely affect group profit as it is
a pass-through of a direct cost increase.
Foundry operations
Output during the period was up 3.3% at 25,100 tonnes (2021 -
24,300 tonnes) and external sales revenue was up by 24.3% to
GBP84.7million. Of the output weight for the period, 57.4% related
to machined castings compared to 52.4% in the previous period. This
reflects a return to the sales mix for the year ended 31 March
2021, following a reduction last year due to the disrupted customer
demand patterns.
The profit from the foundry segment of GBP7.8 million compares
to GBP5.3 million in the equivalent period last year.
The strong group cash position has enabled the continued
investment in foundry facilities during the period. The most
significant investments include GBP0.8 million on the completion of
an automated pouring process on one of our largest production lines
and GBP0.6 million on automation of the foundry finishing
processes.
Machining operation
CNC Speedwell generated external revenue of GBP0.9 million
during the period, a reduction of 42.7% compared to the previous
period, with a reported loss of GBP0.47 million compared to a
profit of GBP0.05 million in the previous period.
The previously mentioned introduction of new engine platforms in
the period has a particularly significant impact on the operational
efficiency of the machining business. With the end of the
transitional ramp down and ramp up period, it is pleasing to see
that CNC Speedwell returned to profitability in the final month of
the period.
Outlook
The long-term demand schedules continue to reflect the high
build rates that the heavy truck OEMs require to satisfy their
order books.
The group will see the benefit of the greater content won on the
new customer platforms as these are now in production. Production
efficiencies will also improve as the focus will be on the new
parts that have been introduced.
The group maintains a strong balance sheet with cash levels of
GBP25.6 million; a decrease of GBP10.2 million during the period
after paying dividends totalling GBP12.0 million (including a
supplementary dividend of GBP6.5 million).
Dividend
An interim dividend of 3.84 pence per share has been declared
and will be paid on 5 January 2023 to shareholders who are on the
register at 25 November 2022.
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 8 to 11 of the Annual Report for the year ended 31 March
2022.
Director changes
I have decided to step down as Chairman of the company with
effect from 1 January 2023 and will not be seeking re-election as a
director at the next Annual General meeting of the company to be
held in August 2023. I am pleased to announce that Alec Jones, who
is currently senior independent director, will succeed me as
chairman of the company.
Mark Smith has been appointed as a non-executive director with
effect from 16 November 2022. He is also appointed Chairman of the
Audit and Risk Committee and a member of the Nomination and
Remuneration Committees. Mark was a partner at
PricewaterhouseCoopers LLP for 24 years until his retirement from
the firm in September 2021. He was the Midlands Regional Chairman
and a senior partner in the UK Audit and Risk business and has
extensive experience of auditing public limited companies.
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
16 November 2022
Castings P.L.C.
Lichfield Road
Brownhills
West Midlands
WS8 6JZ
Consolidated Statement of Comprehensive Income
For six months ended 30 September 2022
Unaudited
Unaudited Half Audited
Half year Year
year to to to
30 September 30 September 31 March
2022 2021 2022
GBP'000 GBP'000 GBP'000
--------------------------------------------- ------------- ------------- ---------
Revenue 85,600 69,747 148,583
Cost of sales (68,265) (55,798) (118,105)
--------------------------------------------- ------------- ------------- ---------
Gross profit 17,335 13,949 30,478
Distribution costs (2,471) (1,490) (3,411)
Administrative expenses (7,515) (7,071) (15,040)
--------------------------------------------- ------------- ------------- ---------
Profit from operations 7,349 5,388 12,027
Finance income 104 19 47
--------------------------------------------- ------------- ------------- ---------
Profit before income tax 7,453 5,407 12,074
Income tax expense (1,414) (1,025) (3,522)
--------------------------------------------- ------------- ------------- ---------
Profit for the period attributable
to the equity holders
of the parent company 6,039 4,382 8,552
Other comprehensive (losses)/income
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 - - 119
--------------------------------------------- ------------- ------------- ---------
- - 119
Items that may be reclassified subsequently
to profit and loss:
Change in fair value of financial
assets (77) 26 88
Tax effect of items that may be reclassified 15 (4) (22)
--------------------------------------------- ------------- ------------- ---------
(62) 22 66
--------------------------------------------- ------------- ------------- ---------
Total other comprehensive (losses)/income
for the period
(net of tax) (62) 22 185
--------------------------------------------- ------------- ------------- ---------
Total comprehensive income for the
period attributable
to the equity holders of the parent
company 5,977 4,404 8,737
--------------------------------------------- ------------- ------------- ---------
Earnings per share attributable
to the equity holders
of the parent company
Basic 13.86p 10.04p 19.60p
Diluted 13.83p 10.03p 19.57p
--------------------------------------------- ------------- ------------- ---------
Consolidated Balance Sheet
30 September 2022
Unaudited Unaudited Audited
30 September 30 September 31 March
2022 2021 2022
GBP'000 GBP'000 GBP'000
-------------------------------------- ------------- ------------- ---------
ASSETS
Non-current assets
Property, plant and equipment 62,236 65,441 62,801
Financial assets 318 334 396
-------------------------------------- ------------- ------------- ---------
62,554 65,775 63,197
-------------------------------------- ------------- ------------- ---------
Current assets
Inventories 24,699 20,275 25,889
Trade and other receivables 41,861 36,048 39,874
Current tax asset 556 251 489
Cash and cash equivalents 25,592 34,648 35,745
-------------------------------------- ------------- ------------- ---------
92,708 91,222 101,997
-------------------------------------- ------------- ------------- ---------
Total assets 155,262 156,997 165,194
-------------------------------------- ------------- ------------- ---------
LIABILITIES
Current liabilities
Trade and other payables 24,611 24,528 28,477
-------------------------------------- ------------- ------------- ---------
24,611 24,528 28,477
-------------------------------------- ------------- ------------- ---------
Non-current liabilities
Deferred tax liabilities 5,278 3,628 5,219
-------------------------------------- ------------- ------------- ---------
Total liabilities 29,889 28,156 33,696
-------------------------------------- ------------- ------------- ---------
Net assets 125,373 128,841 131,498
-------------------------------------- ------------- ------------- ---------
Equity attributable to equity holders
of the parent company
Share capital 4,363 4,363 4,363
Share premium account 874 874 874
Treasury shares (231) - (79)
Other reserve 13 13 13
Retained earnings 120,354 123,591 126,327
-------------------------------------- ------------- ------------- ---------
Total equity 125,373 128,841 131,498
-------------------------------------- ------------- ------------- ---------
Consolidated Cash Flow Statement
For six months ended 30 September 2022
Unaudited Unaudited
Half Half Audited
year year Year
to to to
30 September 30 September 31 March
2022 2021 2022
GBP'000 GBP'000 GBP'000
------------------------------------------- ------------- ------------- ---------
Cash flows from operating activities
Profit before income tax 7,453 5,407 12,074
Adjustments for:
Depreciation 3,996 4,050 8,601
Profit on disposal of property, plant
and equipment - - 62
Finance income (104) (19) (47)
Equity settled share-based payment
expense 59 74 74
Pension administrative costs - - 119
Decrease/(increase) in inventories 1,190 (1,556) (7,170)
(Increase)/decrease in receivables (919) 383 (4,898)
(Decrease)/increase in payables (3,866) 157 4,106
------------------------------------------- ------------- ------------- ---------
Cash generated from operating activities 7,809 8,496 12,921
Tax paid (1,407) (1,406) (2,568)
Interest received 95 9 28
------------------------------------------- ------------- ------------- ---------
Net cash generated from operating
activities 6,497 7,099 10,381
Cash flows from investing activities
Dividends received from listed investments 9 10 19
Purchase of property, plant and equipment (3,430) (2,379) (4,379)
Proceeds from disposal of property,
plant and equipment - - 27
Repayments from pension schemes - - 2,496
Advances to pension schemes (1,068) (1,073) (2,114)
------------------------------------------- ------------- ------------- ---------
Net cash used in investing activities (4,489) (3,442) (3,951)
Cash flow from financing activities
Dividends paid to shareholders (12,009) (5,101) (6,698)
Purchase of own shares (152) - (79)
------------------------------------------- ------------- ------------- ---------
Net cash used in financing activities (12,161) (5,101) (6,777)
------------------------------------------- ------------- ------------- ---------
Net decrease in cash and cash equivalents (10,153) (1,444) (347)
Cash and cash equivalents at beginning
of period 35,745 36,092 36,092
------------------------------------------- ------------- ------------- ---------
Cash and cash equivalents at end
of period 25,592 34,648 35,745
------------------------------------------- ------------- ------------- ---------
Cash and cash equivalents:
Short-term deposits 11,627 19,080 17,065
Cash available on demand 13,965 15,568 18,680
------------------------------------------- ------------- ------------- ---------
25,592 34,648 35,745
------------------------------------------- ------------- ------------- ---------
Consolidated Statement of Changes in Equity
Equity attributable to equity holders of the parent
Share Share Other Retained Total
capital premium Treasury shares reserve earnings equity
Unaudited GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------------------- -------- -------- --------------- -------- --------- --------
At 1 April 2022 4,363 874 (79) 13 126,327 131,498
----------------------------------------------- -------- -------- --------------- -------- --------- --------
Profit for the period - - - - 6,039 6,039
Other comprehensive income/(losses):
Change in fair value of financial assets - - - - (77) (77)
Tax effect of items taken directly to reserves - - - - 15 15
----------------------------------------------- -------- -------- --------------- -------- --------- --------
Total comprehensive income for the period
ended 30 September 2022 - - - - 5,977 5,977
Shares acquired during the period - - (152) - - (152)
Equity settled share-based payments - - - - 59 59
Dividends - - - - (12,009) (12,009)
----------------------------------------------- -------- -------- --------------- -------- --------- --------
At 30 September 2022 4,363 874 (231) 13 120,354 125,373
----------------------------------------------- -------- -------- --------------- -------- --------- --------
Unaudited GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- ------- ------- ------- ------- ------- -------
At 1 April 2021 4,363 874 - 13 124,214 129,464
---------------------------- ------- ------- ------- ------- ------- -------
Profit for the period - - - - 4,382 4,382
Other comprehensive
income/(losses):
Change in fair value
of financial assets - - - - 26 26
Tax effect of items
taken directly to reserves - - - - (4) (4)
---------------------------- ------- ------- ------- ------- ------- -------
Total comprehensive
income for the period
ended 30 September 2021 - - - - 4,404 4,404
Equity settled share-based
payments - - - - 74 74
Dividends - - - - (5,101) (5,101)
---------------------------- ------- ------- ------- ------- ------- -------
At 30 September 2021 4,363 874 - 13 123,591 128,841
---------------------------- ------- ------- ------- ------- ------- -------
Audited GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- ------- ------- ------- ------- ------- -------
At 1 April 2021 4,363 874 - 13 124,214 129,464
---------------------------- ------- ------- ------- ------- ------- -------
Profit for the year - - - - 8,552 8,552
Other comprehensive
income/(losses):
Movement in unrecognised
surplus on defined benefit
pension schemes net
of actuarial gains and
losses - - - - 119 119
Change in fair value
of financial assets - - - - 88 88
Tax effect of items
taken directly to reserves - - - - (22) (22)
---------------------------- ------- ------- ------- ------- ------- -------
Total comprehensive
income for the year - - - - 8,737 8,737
Shares acquired in the
year - - (79) - - (79)
Equity settled share-based
payments - - - - 74 74
Dividends - - - - (6,698) (6,698)
---------------------------- ------- ------- ------- ------- ------- -------
At 31 March 2022 4,363 874 (79) 13 126,327 131,498
---------------------------- ------- ------- ------- ------- ------- -------
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 2022 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 2022 does
not constitute the full statutory accounts for that period. The
Annual Report and Financial Statements for the year ended 31 March
2022 have been filed with the Registrar of Companies. The
Independent Auditors' Report on the Annual Report and Financial
Statements for 2022 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 adopted
pursuant to Regulation (EC) No 1606/2002 as it applies in the
European Union. The condensed set of financial statements has been
prepared in accordance with IAS 34 Interim Financial Reporting as
adopted by the UK.
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.
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 2022.
Foundry
operations Machining Elimination Total
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------- ----------- --------- ----------- --------
Revenue from external customers 84,676 924 - 85,600
Inter-segmental revenue 10,309 9,773 - 20,082
-------------------------------- ----------- --------- ----------- --------
Segmental result 7,818 (469) - 7,349
-------------------------------- ----------- --------- ----------- --------
Unallocated income:
Finance income 104
-------------------------------- ----------- --------- ----------- --------
Profit before income tax 7,453
-------------------------------- ----------- --------- ----------- --------
Total assets 141,547 25,594 (11,879) 155,262
-------------------------------- ----------- --------- ----------- --------
Non-current asset additions 2,820 610 - 3,430
-------------------------------- ----------- --------- ----------- --------
Depreciation 2,381 1,615 - 3,996
-------------------------------- ----------- --------- ----------- --------
Total liabilities (28,733) (6,299) 5,143 (29,889)
-------------------------------- ----------- --------- ----------- --------
The following shows the revenues, results and total assets by
reportable segment for the half year to 30 September 2021.
Foundry
operations Machining Elimination Total
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------- ----------- --------- ----------- --------
Revenue from external customers 68,132 1,615 - 69,747
Inter-segmental revenue 7,538 9,381 - 16,919
-------------------------------- ----------- --------- ----------- --------
Segmental result 5,336 52 - 5,388
-------------------------------- ----------- --------- ----------- --------
Unallocated income:
Finance income 19
-------------------------------- ----------- --------- ----------- --------
Profit before income tax 5,407
-------------------------------- ----------- --------- ----------- --------
Total assets 141,272 28,119 (12,394) 156,997
-------------------------------- ----------- --------- ----------- --------
Non-current asset additions 2,081 298 - 2,379
-------------------------------- ----------- --------- ----------- --------
Depreciation 2,263 1,787 - 4,050
-------------------------------- ----------- --------- ----------- --------
Total liabilities (27,328) (6,997) 6,169 (28,156)
-------------------------------- ----------- --------- ----------- --------
The following shows the revenues, results and total assets by
reportable segment for the year ended 31 March 2022.
Foundry
operations Machining Elimination Total
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------- ----------- --------- ----------- --------
Revenue from external customers 145,601 2,982 - 148,583
Inter-segmental revenue 17,037 19,488 - 36,525
-------------------------------- ----------- --------- ----------- --------
Segmental result 13,084 (894) (50) 12,140
-------------------------------- ----------- --------- ----------- --------
Unallocated costs:
Exceptional credit for recovery
of Icelandic bank deposits
previously written off 6
Defined benefit pension cost (119)
Finance income 47
-------------------------------- ----------- --------- ----------- --------
Profit before income tax 12,074
Total assets 148,554 26,741 (10,101) 165,194
-------------------------------- ----------- --------- ----------- --------
Non-current asset additions 3,388 991 - 4,379
Depreciation 4,790 3,811 - 8,601
Total liabilities (31,561) (6,977) 4,842 (33,696)
-------------------------------- ----------- --------- ----------- --------
5. Dividends
Amounts recognised as distributions to shareholders in the
period:
Half Half
year year
to to
30 September 30 September
2022 2021
GBP'000 GBP'000
------------------------------------------- ------------- -------------
Final dividend of 12.57p per share for
the year ended 31 March 2022
(2021 - 11.69p per share) 5,475 5,101
Supplementary dividend of 15.00p per share
for the year ended 31 March 2022 6,534 -
------------------------------------------- ------------- -------------
12,009 5,101
------------------------------------------- ------------- -------------
The directors have declared an interim dividend in respect of
the financial year ending 31 March 2023 of 3.84p per share (2022 -
3.66p), which will be paid on 5 January 2023.
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. The
diluted earnings per share includes the outstanding share options
within the weighted average number of shares figure.
Unaudited Unaudited Audited
Half Half year Year
year to to to
30 September 30 September 31 March
2022 2021 2022
---------------------------------- ------------- ------------- ----------
Profit after tax (GBP'000) 6,039 4,382 8,552
---------------------------------- ------------- ------------- ----------
Weighted average number of shares
- basic calculation 43,565,115 43,632,068 43,631,545
---------------------------------- ------------- ------------- ----------
Weighted average number of shares
- diluted calculation 43,675,024 43,699,509 43,698,986
---------------------------------- ------------- ------------- ----------
Earnings per share - basic 13.86p 10.04p 19.60p
---------------------------------- ------------- ------------- ----------
Earnings per share - diluted 13.83p 10.03p 19.57p
---------------------------------- ------------- ------------- ----------
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 GBP1,068,000 (2021 - GBP1,073,000) was paid by the group
on behalf of the schemes in respect of pension payments and
administration costs. At 30 September 2022, the outstanding balance
of GBP3,182,000 (2021 - GBP3,569,000) is repayable within one
year.
Payments made by the company on behalf of the schemes in the
current period are repayable by 30 November 2022.
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
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
16 November 2022
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