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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Castings Plc | LSE:CGS | London | Ordinary Share | GB0001795680 | ORD 10P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 7.00 | 1.90% | 376.00 | 370.00 | 382.00 | 380.00 | 380.00 | 380.00 | 67,794 | 16:35:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Malleable Iron Foundries | 200.99M | 13.79M | 0.3161 | 12.02 | 165.8M |
From Apr 2019 to Apr 2024
TIDMCGS
RNS Number : 2012B
Castings PLC
15 June 2016
Castings P.L.C.
Annual Financial Report
DTR 6.3.5 Disclosure
Year ended 31 March 2016
Chairman's Statement
The turnover of the group increased to GBP132 million (GBP131 million last year) with an increase in profits to GBP19.7 million compared to GBP17.5 million last year.
Foundry businesses
The foundries have enjoyed stable trading conditions throughout the year and increased profits compared with the previous year.
I am pleased to report that we are making good progress at William Lee; a full reorganisation has taken place during the year to ensure standards are raised in line with the Brownhills foundry. We continue to review foundry production techniques and technologies across the group and invest in areas that will enhance the returns in this segment.
The Brownhills warehouse is being extended so that part of the existing building can be used for expansion of our machining business; this will be complete by the end of the calendar year.
CNC Speedwell
CNC enjoyed a good year with improved profits, however a major contract ended in the last quarter of the year. Replacement work will not come on stream immediately so it is expected profits will reduce during the current financial year. It is anticipated an improvement will be seen in financial year 17/18 and onwards. Our investment in additional machining facilities reflects our commitment to this area and the potential opportunities for growth in the short to medium term.
Dividend
I am pleased to report that the directors recommend an increase in the final dividend to 10.33 pence per share to be paid on 19 August 2016. This, together with an increased interim dividend, gives a total for the year of 13.71 pence per share.
Supplementary dividend
In addition to the final dividend set out above, the board has reviewed the cash position of the group and considered the balance between increasing returns to shareholders whilst retaining flexibility for capital and other investment opportunities. As a result, the directors are declaring a supplementary dividend of 30 pence per share to be paid on 22 July 2016 to shareholders on the register on 24 June 2016. This dividend, being discretionary and non-recurring, in no way compromises our commitment to invest in market leading technologies to maintain our competitive advantage.
Outlook
It appears that customer demands remain steady at the present time and unless there is a substantial change we will only see a temporary reduction in profits due to the changing situation at CNC Speedwell.
It is also important that, whatever the result of the EU referendum, the Government return to the priority of focussing on the economy and recognising the important role of manufacturing in achieving higher levels of employment to the benefit of the country as a whole.
Directors
Paul King retired as non-executive director on 18 August 2015. I wish to thank him for his contribution over many years to Castings P.L.C.
In conclusion I wish to thank all our employees for their contribution during the year and hope we will now enjoy a period of stability.
B. J. Cooke
Chairman
15 June 2016
Business and Financial Review
Overview of business segment performance
The segmental revenue and results for the current and previous years are set out in note 2. An overview of the performance, position and future prospects of each segment, and the relevant KPIs, are set out below.
Foundry operations
The foundry businesses have experienced a slight reduction in output of 1.3% to 52,000 tonnes but an increase in external sales revenue of 1.3% to GBP114.7 million.
Sales revenue has been affected by the general reduction in raw material prices during the year. The increase in revenue on a lower tonnage output is a result of a slight change in mix of parts being sold; this year seeing an increase in more complex, machined parts compared to last year.
The segmental profit has increased to GBP14.7 million, from GBP13.1 million in the previous year, which represents a return of 10.9% on total segmental sales (2015 - 9.8%).
The management team at William Lee continue to make good progress following the increase in complexity in the work mix which impacted profitability in the previous year and progress will continue during the current year.
With customer requirements forecast to remain steady at the current levels, particularly in the commercial vehicles sector, our focus will be on our continuous efforts to improve productivity through careful investment and further developing production methods. Just before the year end, work commenced on an extension to one of the premises at the Brownhills site which will provide additional warehousing and machining capacity for the group. It is anticipated that this project will be completed by the end of the calendar year.
Machining
The machining business generated total sales of GBP33.2 million in the year compared to GBP31.4 million in the previous year. Of the total revenue, 53.3% was generated from external customers compared to 57.3% in 2015.
The segmental profit has increased to GBP4.7 million (2015 - GBP4.5 million) and the profit on total sales reduced to 14.2% (2015 - 14.4%).
The end of a contract in the last quarter of the financial year, where there was no direct replacement work, impacted the result for the year. Whilst new orders have been secured to fill some of the available capacity created, it is expected to take up to three years to be in full production on parts to fully utilise this capacity.
We have invested GBP4.7 million during the year to accommodate new orders, many of which have not come into full production. This investment also includes expenditure on converting previous warehousing into a machining facility in Brownhills.
Business review and performance
Revenue
Group revenues increased by 0.9% to GBP132.4 million compared to GBP131.3 million reported in 2015, of which 67% was exported (2015 - 67%).
The revenue from the foundry operations to external customers increased 1.3% to GBP114.7 million (2015 - GBP113.3 million) with the dispatch weight of castings to third-party customers decreasing 1.3% to 52,000 tonnes (2015 - 52,700 tonnes).
Revenue from the machining operation to external customers decreased by 1.7% during the year to GBP17.7 million (2015 - GBP18.0 million).
Operating profit and segmental result
The group operating profit for the year was GBP19.5 million compared to GBP17.4 million reported in 2015, which represents a return on sales of 14.7% (2015 - 13.3%).
The foundry operations returned a segmental profit of GBP14.7 million compared to GBP13.1 million in 2015. This represents a rise in segmental profit as a percentage of total segment sales to 10.9% from 9.8% in 2015.
The segmental profit of the machining operation was GBP4.7 million in the year compared to GBP4.5 million in 2015, being 14.2% (2015 - 14.4%) of total segment sales.
Icelandic bank receipts
During the year we have received GBP0.32 million (2015 - GBP0.02 million) in respect of the failed Icelandic banks. Of the original balance of GBP5.7 million, the total received to date is GBP3.60 million which is GBP1.74 million in excess of the original estimate of recoverable amounts. Given the uncertainty over the quantum and timing of any possible further receipts, no allowance has been made for future recoverable amounts.
Finance income
The increase in the level of finance income from GBP0.14 million in 2015 to GBP0.19 million in the current year reflects the higher average deposit balances compared to the previous year; the average interest rates being consistent at 0.5%.
Profit before income tax
Profit before taxation has increased to GBP19.7 million from GBP17.5 million.
Taxation
The current year tax charge of GBP3.49 million (2015 - GBP3.67 million) is made up of a current tax charge of GBP3.89 million (2015 - GBP3.14 million) and a deferred tax credit of GBP0.40 million (2015 - charge of GBP0.53 million).
The effective rate of tax of 17.7% (2015 - 20.9%) reflects the falling UK corporation tax rate and therefore the remeasurement of deferred tax liabilities at the lower substantively enacted future rates of 19% and 18%.
Earnings per share
Underlying basic earnings per share increased 16.7% to 37.10 pence (2015 - 31.80 pence) reflecting a 12.1% increase in profits and a lower effective tax rate compared to the previous year. There has been no change in the weighted average number of shares in issue of 43,632,068.
Dividends
The directors are recommending an increase in the final dividend to 10.33 pence per share (2015 - 10.08 pence per share) to be paid on 19 August 2016. This would give a total normal distribution for the year of 13.71 pence per share (2015 - 13.30 pence per share).
In addition, recognising the strong cash position at the balance sheet date and the cash generative nature of the group, the directors are declaring a supplementary dividend of 30 pence per share to be paid on 24 July 2016. This discretionary, non-recurring distribution is considered appropriate to provide a balance between increasing returns to shareholders whilst maintaining the flexibility for capital and other investment opportunities.
Cash flow
The group generated cash from operating activities of GBP27.8 million compared to GBP20.4 million in 2015 with working capital levels remaining broadly consistent with the previous year.
Corporation tax payments during the year totalled GBP3.2 million compared to GBP4.4 million in 2015, reflecting the timing of quarterly payments and a lower tax rate compared to 2015.
Capital expenditure during the year amounted to GBP7.2 million (2015 - GBP8.2 million) with investment in production processes and warehousing in the foundry businesses and production facilities and machining centres within the machining operation. The charge for depreciation was consistent at GBP6.9 million.
The current interest-bearing deposit of GBP10 million taken out in the previous year was rolled-over and matures during the next financial year.
Repayments of GBP1.1 million were received from the final salary pension schemes during the year and advances were made to the schemes of GBP2.6 million.
Dividends paid to shareholders were GBP5.9 million in the year compared to GBP5.7 million in 2015. The resulting net cash and cash equivalents represented an increase of GBP10.4 million (2015 - decrease of GBP7.8 million) including the impact of the current interest-bearing deposit of GBP10 million in the previous year.
At 31 March 2016, the total cash and deposits position at the balance sheet date is GBP40.4 million (2015 - GBP30.0 million).
Pensions
The pension valuation showed a broadly consistent surplus, on an IAS 19 (Revised) basis, of GBP14.7 million compared to the previous year. The surplus continues not to be shown on the balance sheet due to the IAS 19 (Revised) restriction of recognition of assets where the company does not have an unconditional right to receive returns of contributions or refunds.
Balance sheet
Net assets at 31 March 2016 were GBP129.9 million (2015- GBP119.3 million). Other than the total comprehensive income for the year of GBP16.5 million, the only movement relates to the dividend charge of GBP5.9 million. Non-current assets have decreased to GBP70.7 million (2015 - GBP71.6 million) primarily as a result of the change in the debtor due from the pension scheme of GBP3.4 million (2015 - GBP4.5 million).
Current assets have increased to GBP82.4 million (2015 - GBP72.5 million) mainly as a result of net cash generated during the year and working capital movements. Total liabilities have reduced to GBP23.2 million (2015 - GBP24.7 million), largely as a result of a reduction in trade payables, off-set slightly by an increase in the corporation tax creditor.
Consolidated Statement of Comprehensive Income
for the year ended 31 March 2016
Hot Features
Premium
2016 2015
GBP000 GBP000
------------------------------------------------ -------- --------
Revenue 132,448 131,268
Cost of sales (98,431) (99,150)
------------------------------------------------- -------- --------
Gross profit 34,017 32,118
Distribution costs (2,251) (2,162)
Administrative expenses
------------------------------------------------ -------- --------
Excluding exceptional (12,591) (12,570)
Exceptional 315 24
------------------------------------------------- -------- --------
Total administrative expenses (12,276) (12,546)
------------------------------------------------- -------- --------
Profit from operations 19,490 17,410
Finance income 186 137
------------------------------------------------- -------- --------
Profit before income tax 19,676 17,547
Income tax expense (3,489) (3,672)
------------------------------------------------- -------- --------
Profit for the year attributable to
equity holders of the parent company 16,187 13,875
Other comprehensive income for the year:
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 228 283
Tax effect of items that will not be - -
reclassified
------------------------------------------------ -------- --------
228 283
Items that may be reclassified subsequently
to profit and loss:
Change in fair value of available-for-sale
financial assets (28) (55)
Reclassification adjustments for gains/(losses)
on available for sale assets included
in profit 85 -
Tax effect of items that may be reclassified 5 11
------------------------------------------------- -------- --------
62 (44)
------------------------------------------------ -------- --------
Total other comprehensive income/(losses)
for the year (net of tax) 290 239
------------------------------------------------- -------- --------
Total comprehensive income for the year
attributable to the equity holders of
the parent company 16,477 14,114
------------------------------------------------- -------- --------
Earnings per share attributable to the
equity holders of the parent company
Basic and diluted 37.10p 31.80p
------------------------------------------------- -------- --------
Consolidated Balance Sheet
31 March 2016
2016 2015
GBP000 GBP000
---------------------------------------- ------- -------
ASSETS
Non-current assets
Property, plant and equipment 66,948 66,572
Financial assets 354 467
Other receivables 3,383 4,538
----------------------------------------- ------- -------
70,685 71,577
---------------------------------------- ------- -------
Current assets
Inventories 11,992 12,115
Trade and other receivables 30,047 30,342
Other current interest-bearing deposits 10,000 10,000
Cash and cash equivalents 30,385 20,021
----------------------------------------- ------- -------
82,424 72,478
---------------------------------------- ------- -------
Total assets 153,109 144,055
----------------------------------------- ------- -------
LIABILITIES
Current liabilities
Trade and other payables 16,769 18,602
Current tax liabilities 2,029 1,336
----------------------------------------- ------- -------
18,798 19,938
---------------------------------------- ------- -------
Non-current liabilities
Deferred tax liabilities 4,378 4,788
----------------------------------------- ------- -------
Total liabilities 23,176 24,726
----------------------------------------- ------- -------
Net assets 129,933 119,329
----------------------------------------- ------- -------
Equity attributable to equity holders
of the parent company
Share capital 4,363 4,363
Share premium account 874 874
Other reserve 13 13
Retained earnings 124,683 114,079
----------------------------------------- ------- -------
Total equity 129,933 119,329
----------------------------------------- ------- -------
Consolidated Cash Flow Statement
for the year ended 31 March 2016
2016 2015
GBP000 GBP000
--------------------------------------------- ------- --------
Cash flows from operating activities
Profit before income tax 19,676 17,547
Adjustments for:
Depreciation 6,853 6,760
(Profit)/loss on disposal of property,
plant and equipment (62) 1
Loss on disposal of financial assets 48 -
Finance income (186) (137)
Excess of employer pension contributions
over income statement charge 228 283
Decrease in inventories 123 506
Decrease/(increase) in receivables 2,925 (2,127)
Decrease in payables (1,832) (2,474)
---------------------------------------------- ------- --------
Cash generated from operating activities 27,773 20,359
Tax paid (3,202) (4,423)
Interest received 165 115
---------------------------------------------- ------- --------
Net cash generated from operating activities 24,736 16,051
Cash flows from investing activities
Dividends received from listed investments 21 22
Purchase of property, plant and equipment (7,236) (8,210)
Proceeds from disposal of property,
plant and equipment 69 72
Transfer other current interest-bearing
deposits - (10,000)
Proceeds from disposal of financial
assets 122 -
Repayments from pension schemes 1,135 -
Advances to the pension schemes (2,610) -
---------------------------------------------- ------- --------
Net cash used in investing activities (8,499) (18,116)
Cash flow from financing activities
Dividends paid to shareholders (5,873) (5,694)
---------------------------------------------- ------- --------
Net cash used in financing activities (5,873) (5,694)
Net increase/(decrease) in cash and
cash equivalents 10,364 (7,759)
Cash and cash equivalents at beginning
of year 20,021 27,780
---------------------------------------------- ------- --------
Cash and cash equivalents at end of
year 30,385 20,021
---------------------------------------------- ------- --------
Cash and cash equivalents:
Short-term deposits 27,786 19,253
Cash available on demand 2,599 768
---------------------------------------------- ------- --------
30,385 20,021
--------------------------------------------- ------- --------
Consolidated Statement of Changes in Equity
for the year ended 31 March 2016
Equity attributable to equity holders of the
parent
Share Share Other Retained Total
capital(a) premium(b) reserve(c) earnings(d) equity
GBP000 GBP000 GBP000 GBP000 GBP000
----------------------------------------------- ----------- ----------- ----------- ------------ -------
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 included in
profit - - - 85 85
Tax effect of items taken directly to reserves - - - 5 5
----------------------------------------------- ----------- ----------- ----------- ------------ -------
Total comprehensive income for the period
ended
31 March 2016 - - - 16,477 16,477
Dividends (see note 5) - - - (5,873) (5,873)
----------------------------------------------- ----------- ----------- ----------- ------------ -------
At 31 March 2016 4,363 874 13 124,683 129,933
----------------------------------------------- ----------- ----------- ----------- ------------ -------
Equity attributable to equity holders of the
parent
Share Share Other Retained Total
capital(a) premium(b) reserve(c) earnings(d) equity
GBP000 GBP000 GBP000 GBP000 GBP000
----------------------------------------------- ----------- ----------- ----------- ------------ -------
At 1 April 2014 4,363 874 13 105,659 110,909
----------------------------------------------- ----------- ----------- ----------- ------------ -------
Profit for the year - - - 13,875 13,875
Other comprehensive income/(losses):
Movement in unrecognised surplus on defined
benefit pension schemes net of actuarial
loss - - - 283 283
Change in fair value of available for sale
assets - - - (55) (55)
Tax effect of items taken directly to reserves - - - 11 11
----------------------------------------------- ----------- ----------- ----------- ------------ -------
Total comprehensive income for the period
ended 31 March 2015 - - - 14,114 14,114
Dividends (see note 5) - - - (5,694) (5,694)
----------------------------------------------- ----------- ----------- ----------- ------------ -------
At 31 March 2015 4,363 874 13 114,079 119,329
----------------------------------------------- ----------- ----------- ----------- ------------ -------
a) Share capital - The nominal value of allotted and fully paid up ordinary share capital in issue.
b) Share premium - Amount subscribed for share capital in excess of nominal value.
c) Other reserve - Amounts transferred from share capital on redemption of issued shares.
d) Retained earnings - Cumulative net gains and losses recognised in the statement of comprehensive income.
Notes to the financial report
1 Basis of preparation
The group financial statements have been prepared in accordance with International Financial Reporting Standards, International Accounting Standards ('IAS') and Interpretations (collectively 'IFRS'), as endorsed for use in the EU.
The IFRSs applied in the group financial statements are subject to ongoing amendment by the IASB and subsequent endorsement by the European Commission and therefore subject to possible change in the future. Further standards and interpretations may be issued that will be applicable for financial years beginning on or after 1 April 2016 or later accounting periods but may be adopted early.
The preparation of financial statements in accordance with IFRS requires the use of certain accounting estimates. It also requires management to exercise its judgement in the process of applying the group's accounting policies.
The primary statements within the financial information contained in this document have been presented in accordance with IAS 1 Presentation of Financial Statements.
The accounts are prepared under the historical cost convention, except where adjusted for revaluations of certain assets, and in accordance with applicable Accounting Standards and those parts of the Companies Act 2006 applicable to companies reporting under IFRS. The accounting policies used are consistent with those disclosed in the 31 March 2015 financial statements. The presentation currency used is sterling and the amounts have been presented in round thousands ("GBP000").
2 Operating segments
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 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 in the year to 31 March 2016:
Foundry
operations Machining Elimination Total
GBP000 GBP000 GBP000 GBP000
-------------------------------------------------- ----------- --------- ----------- -------
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 costs:
Exceptional credit for recovery of Icelandic bank
deposits previously written off 315
Defined benefit pension cost (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
-------------------------------------------------- ----------- --------- ----------- -------
All non-current assets are based in the United Kingdom.
The following shows the revenues, results and total assets by reportable segment in the year to 31 March 2015:
Foundry
operations Machining Elimination Total
GBP000 GBP000 GBP000 GBP000
-------------------------------------------------- ----------- --------- ----------- -------
Revenue from external customers 113,300 17,968 - 131,268
Inter-segmental revenue 20,532 13,398 - 33,930
-------------------------------------------------- ----------- --------- ----------- -------
Segmental result 13,064 4,521 84 17,669
-------------------------------------------------- ----------- --------- ----------- -------
Unallocated costs:
Exceptional credit for recovery of Icelandic bank
deposits previously written off 24
Defined benefit pension cost (283)
Finance income 137
-------------------------------------------------- ----------- --------- ----------- -------
Profit before income tax 17,547
Total assets 122,650 31,919 (10,514) 144,055
-------------------------------------------------- ----------- --------- ----------- -------
Non-current asset additions 4,303 3,907 - 8,210
-------------------------------------------------- ----------- --------- ----------- -------
Depreciation 3,507 3,253 - 6,760
-------------------------------------------------- ----------- --------- ----------- -------
All non-current assets are based in the United Kingdom.
3 Exceptional items
2016 2015
GBP000 GBP000
----------------------------------------------------------------------- ------- -------
Recovery of past provision for losses on deposits with Icelandic banks (315) (24)
----------------------------------------------------------------------- ------- -------
(315) (24)
----------------------------------------------------------------------- ------- -------
The company reported in the year ended 31 March 2009 that GBP1.86 million was included in other receivables as the net recoverable after provision from various Icelandic banks. So far GBP3.6 million has been received of the original balance of GBP5.7 million with the excess over the GBP1.86 million being shown as an exceptional credit.
4 Income tax
2016 2015
GBP000 GBP000
------------------------------------------------------------------------- ------- -------
Corporation tax based on a rate of 20% (2015 - 21%)
UK corporation tax
Current tax on profits for the year 4,015 3,730
Adjustments to tax charge in respect of prior periods (121) (586)
------------------------------------------------------------------------- ------- -------
3,894 3,144
Deferred tax
Current year origination and reversal of temporary differences 20 80
Prior year deferred tax movement 63 448
Change in rate of corporation tax (488) -
------------------------------------------------------------------------- ------- -------
(405) 528
------------------------------------------------------------------------- ------- -------
Taxation on profit on ordinary activities 3,489 3,672
------------------------------------------------------------------------- ------- -------
Profit on ordinary activities before tax 19,676 17,547
------------------------------------------------------------------------- ------- -------
Tax on profit on ordinary activities at the standard rate of corporation
tax
in the UK of 20% (2015 - 21%) 3,935 3,685
Effect of:
Expenses not deductible for tax purposes 54 66
Adjustment to tax charge in respect of prior periods (121) (586)
Adjustment to deferred tax charge in respect of prior periods 63 448
Change in rate of future tax (488) -
Pension adjustments 46 59
------------------------------------------------------------------------- ------- -------
Total tax charge for period 3,489 3,672
------------------------------------------------------------------------- ------- -------
Effective rate of tax (%) 17.7 20.9
------------------------------------------------------------------------- ------- -------
The reduction in the UK corporation tax rate to 19% from 1 April 2017 and 18% from 1 April 2020 were substantively enacted in October 2015. Accordingly, these rates have been applied in the measurement of the group's deferred tax assets and liabilities at 31 March 2016.
5 Dividends
2016 2015
GBP000 GBP000
---------------------------------------------------------------------- ------- -------
Final paid of 10.08p per share for the year ended 31 March 2015 (2014
- 9.83p) 4,398 4,289
Interim paid of 3.38p per share (2015 - 3.22p) 1,475 1,405
---------------------------------------------------------------------- ------- -------
5,873 5,694
---------------------------------------------------------------------- ------- -------
The directors are proposing a final dividend of 10.33 pence (2015 - 10.08 pence) per share totalling GBP4,507,193 (2015 - GBP4,398,112). In addition, the directors have declared a supplementary dividend of 30 pence per share, totalling GBP13,089,620. These dividends have not been accrued at the balance sheet date.
6 Earnings per share
Earnings per share is calculated on the profit on ordinary activities after taxation of GBP16,187,000 (2015 - GBP13,875,000) and on the weighted average number of shares in issue at the end of the year of 43,632,068 (2015 - 43,632,068). There are no potentially dilutive shares, hence the diluted earnings per share is the same as above.
7 Property, plant and equipment
Plant
Land and and other
buildings equipment Total
GBP000 GBP000 GBP000
------------------------------------- ---------- ---------- -------
Cost
At 1 April 2015 32,256 116,781 149,037
Additions during year 2,323 4,913 7,236
Disposals - (716) (716)
------------------------------------- ---------- ---------- -------
At 31 March 2016 34,579 120,978 155,557
------------------------------------- ---------- ---------- -------
Depreciation and amounts written off
At 1 April 2015 6,175 76,290 82,465
Charge for year 811 6,042 6,853
Disposals - (709) (709)
------------------------------------- ---------- ---------- -------
At 31 March 2016 6,986 81,623 88,609
------------------------------------- ---------- ---------- -------
Net book values
At 31 March 2016 27,593 39,355 66,948
------------------------------------- ---------- ---------- -------
At 31 March 2015 26,081 40,491 66,572
------------------------------------- ---------- ---------- -------
Cost
At 1 April 2014 30,950 110,370 141,320
Adjustment to opening position 24 (24) -
Additions during year 1,282 6,928 8,210
Disposals - (493) (493)
------------------------------------- ---------- ---------- -------
At 31 March 2015 32,256 116,781 149,037
------------------------------------- ---------- ---------- -------
Depreciation and amounts written off
At 1 April 2014 5,400 70,725 76,125
Charge for year 775 5,985 6,760
Disposals - (420) (420)
------------------------------------- ---------- ---------- ------- At 31 March 2015 6,175 76,290 82,465 ------------------------------------- ---------- ---------- ------- Net book values At 31 March 2015 26,081 40,491 66,572 ------------------------------------- ---------- ---------- ------- At 31 March 2014 25,550 39,645 65,195 ------------------------------------- ---------- ---------- -------
The net book value of group land and buildings includes GBP2,527,000 (2015 - GBP2,527,000) for land which is not depreciated. Included within the land and buildings are assets in the course of construction with a net book value of GBP1,971,000 (2015 - GBP1,015,000 and 2014 - GBPnil) which are not depreciated. The cost of land and buildings includes GBP359,000 for property held on long leases (2015 - GBP359,000).
8 Commitments and contingencies
2016 2015
GBP000 GBP000
-------------------------------------------- ------- -------
Capital commitments contracted for by the
group but not provided for in the accounts 6,087 1,174
-------------------------------------------- ------- -------
The group does not insure against the potential cost of product warranty or recall. Accordingly, there is always the possibility of claims against the group for quality related issues on parts supplied to customers. As at 31 March 2016, the directors do not consider any significant liability will arise in respect of any such claims (2015 - GBPnil).
9 Pensions
The company operates two defined benefit pension schemes which were closed to future accruals at 6 April 2009. The funded status of these schemes at 31 March 2016 was a surplus of GBP14,694,000 (2015 - GBP14,564,000). The pension surplus has not been recognised as the group does not have an unconditional right to receive returns of contributions or refunds under the scheme rules.
10 Preliminary statement
The financial information set out above does not constitute the company's statutory accounts for the years ended 31 March 2016 or 2015, but is derived from those accounts. Statutory accounts for 2015 have been delivered to the Registrar of Companies and those for 2016 will be delivered following the company's Annual General Meeting. The auditors have reported on those accounts; their reports were unqualified, did not include references to any matters to which the auditors drew attention by way of emphasis without qualifying their reports and did not contain statements under Section 498 of the Companies Act 2006.
The annual report and accounts will be posted to shareholders on 24 June 2016 and will be available on the company's website, www.castings.plc.uk, from 1 July 2016.
Appendix A - Principal Risks and Uncertainties
Risk
In common with all trading businesses, the group is exposed to a variety of risks in the conduct of its normal business operations.
The group maintains a range of insurance policies against major identified insurable risks, including (but not limited to) those related to business interruption, damage to property and equipment, damage to stocks, public and product liability and employers liability.
The directors have carried out a robust assessment of the principal risks facing the entity. Whilst it is difficult to either completely record or to quantify every material risk that the group faces, below is a summary of those risks and, where possible, how they are being managed or mitigated, that the directors believe are most significant to the group's business and could have a material impact on future performance, causing it to differ materially from expected or historic achieved results.
Operational and commercial
The group's revenues are principally derived from commercial vehicle and automotive markets. Both markets, and therefore group revenues, can be subject to variations in patterns of demand. Commercial vehicle sales are linked to technological factors (e.g. emission legislations) and economic growth. Passenger vehicle sales are influenced, inter alia, by consumer preferences, incentives and the availability of consumer credit.
Market competition
Automotive and commercial vehicle markets are, by their nature, highly competitive, which has historically led to deflationary pressure on selling prices. This pressure is most pronounced in cycles of lower demand. A number of the group's customers are also adopting global sourcing models with the aim to reduce bought out costs. Whilst there can be no guarantee that business will not be lost on price, we are confident that we can remain competitive.
Customer concentration, programme dependencies and relationships
The loss of, or deterioration in, any major customer relationship could have a material impact on the group's results.
Product quality and liability
The group's businesses expose it to certain product liability risks which, in the event of failure, could give rise to material financial liabilities. Whilst it is a policy of the group to limit its financial liability by contract in all long-term agreements ('LTAs'), it is not always possible to secure such limitations in the absence of LTAs. The group's customers do require the maintenance of demanding quality systems to safeguard against quality-related risks and the group maintains appropriate external quality accreditations. The group maintains insurance for public liability-related claims but does not insure against the risk of product warranty or recall.
Foreign exchange
The group is exposed to foreign exchange risk on both sales and purchases that are denominated in currencies other than sterling, being primarily euro and US dollar. Foreign exchange rate risk is sometimes partially mitigated by using forward foreign exchange contracts.
Equipment
The group operates a number of specialist pieces of equipment, including foundry furnaces, moulding lines and CNC milling machines which, due to manufacturing lead times, would be difficult to replace sufficiently quickly to prevent major interruption and possible loss of business in the event of unforeseen failure. Whilst this risk cannot be entirely mitigated without uneconomic duplication of all key equipment, all key equipment is maintained to the highest possible standards and inventories of strategic equipment spares maintained. The facilities at Brownhills and Dronfield have similar equipment and work can be transferred from one location to another very quickly. The machining business also operates from two separate locations enabling the transfer of some production if required.
Suppliers and trade credit
Although the group takes care to ensure alternative sources of supply remain available for materials or services on which the group's businesses are critically dependent, this is not always possible to guarantee without risk of short-term business disruption, additional costs and potential damage to relationships with key customers. The ability of our suppliers to maintain credit insurance on the group and its principal operating businesses is an important issue. We have excellent relationships with our suppliers and we continue to work closely with them on a normal commercial basis. A reduction in the level of cover available to suppliers may impact on our trading relationship with them and may have a significant effect on cash flows.
Commodity and energy pricing
The principal metal raw materials used by the group's businesses are steel scrap and various alloys. The most important alloy raw material inputs are premium graphite, magnesium ferro-silicon, copper, nickel and molybdenum. Wherever possible, prices and quantities (except steel) are secured through long-term agreements with suppliers. In general, the risk of price inflation of these materials resides with the group's customers through price adjustment clauses.
Energy contracts are locked in for at least twelve months, although renegotiation risks remain at contract maturity dates but again this is mitigated through the application of price adjustment clauses. At 31 March 2016, the group has electricity contracts in place until 30 September 2018. Consumption levels at the balance sheet date are well within the agreed tolerance levels and this situation is not expected to change.
Information technology and systems reliability
The group is dependent on its information technology ('IT') systems to operate its business efficiently, without failure or interruption. Whilst data within key systems is regularly backed up and systems subject to virus protection, any failure of back-up systems or other major IT interruption could have a disruptive effect on the group's business.
Short-term deposits
A review of credit ratings is undertaken prior to making new deposits and the maximum exposure to any one counterparty is restricted. However, institutions can be downgraded before maturity thereby possibly placing these deposits at risk.
Environmental
The group's businesses are subject to compliance with many different laws and requirements in the UK, Europe, North America and elsewhere. Great care is made to act responsibly towards the environment to achieve compliance with all relevant laws and to establish a standard above the minimum level required. Whilst the group's manufacturing processes are not generally considered to provide a high risk of harm to the environment, a major control failure leading to environmental harm could give rise to a material financial liability as well as significant harm to the reputation of our business. Further information is set out on page 9.
Pension scheme funding
The fair value of the assets and liabilities of the group's defined benefit pension schemes is substantial. As at 31 March 2016 the schemes were in surplus on an IAS 19 (Revised) basis. Further details are set out in note 6 to the accounts. The potential risks and uncertainties resulting from factors such as investment return, interest rates and mortality rates are mitigated by careful management and continual monitoring of the schemes and by appropriate and timely action to ensure as far as possible that the defined benefit pension liabilities do not increase disproportionately. The company works closely with the scheme trustees and specialist advisers in managing the inherent risks of such schemes.
The schemes were closed to future accruals from 6 April 2009, which only leaves past service liabilities to be funded.
Appendix B
The statements below have been prepared in connection with the group's full annual report for the year ended 31 March 2016. Certain parts thereof are not included within this announcement.
Each of the persons who is a director at the date of approval of this report confirms that to the best of his knowledge:
(a) each of the Group and Parent financial statements, prepared in accordance with International Financial Reporting Standards as adopted by the EU and UK Accounting Standards respectively, gives a true and fair view of the assets, liabilities, financial position and profit or loss of the issuer and the undertakings included in the consolidation taken as a whole; and
(b) the Chairman's Statement, Strategic Report and Directors' Report includes a fair review of the development and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.
By order of the Board
B. J. Cooke
Chairman
15 June 2016
This information is provided by RNS
The company news service from the London Stock Exchange
END
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(END) Dow Jones Newswires
June 15, 2016 02:00 ET (06:00 GMT)
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