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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 | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 374.00 | 370.00 | 382.00 | 7,029 | 08:15:43 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Malleable Iron Foundries | 200.99M | 13.79M | 0.3161 | 11.83 | 163.18M |
From Apr 2019 to Apr 2024
TIDMCGS
RNS Number : 0021I
Castings PLC
14 June 2017
Castings P.L.C.
Annual Financial Report
DTR 6.3.5 Disclosure
Year ended 31 March 2017
Chairman's Statement
The turnover of the group decreased to GBP119 million (GBP132 million last year) with a decrease in profits to GBP15.9 million compared to GBP19.7 million last year.
Foundry businesses
Despite a reduction in output during the year the foundries maintained a good profit level. This has been achieved by continued investment in productivity.
In this respect, both at Brownhills and William Lee, investment in robotic handling is taking place which will improve quality standards and reduce costs associated with the processing of raw castings.
The improvements reported last year in relation to William Lee are continuing and the result from this company is expected to improve in the current year.
CNC Speedwell
A significant reduction in sales occurred due to the ending of a major contract at the end of the previous financial year. Replacement work has been secured and it is hoped that turnover and profitability will increase back to previous levels during the next two years. Investment in new machines has taken place during the year to support the new orders; the utilisation of this investment will increase as the replacement work goes into full production.
Dividend
I am pleased to report that the directors recommend an increase in the final dividend to 10.59 pence per share to be paid on 18 August 2017. This, together with the interim dividend, gives a total for the year of 13.97 pence per share. Subject to approval of the final dividend by shareholders at the AGM on 15 August 2017, the dividend will be paid on 18 August 2017 to shareholders on the register on 14 July 2017.
Outlook
It appears that the customer demands at the present time remain steady.
The situation concerning Brexit is creating a certain amount of concern in the manufacturing sector and the sooner the Government negotiates a deal to remove this uncertainty the better it will be for planning the future.
The company is putting every effort into developing new work with both existing and new customers. Our focus is on core business that can be produced and machined within the group. At the same time we are continuing to invest in technology to improve productivity and profitability.
Directors
David Gawthorpe retired as Chief Executive on the 31 March 2017 after 33 years' service with the company. I would like to thank him for his contribution to the company and wish him and Linda a happy retirement.
Adam Vicary took over as Chief Executive on 1 April; he has been with the company since 2010 and was Managing Director of the Brownhills foundry. He was appointed to the Board in April 2012. He has wide experience of the industry and I am confident he will continue to develop Castings P.L.C.
In conclusion, the strong cash generation of the group has enabled us to invest in the business at the same time as returning GBP13 million to shareholders during the year as a special dividend. My thanks to all our employees for their continued support and contribution during the year.
B. J. Cooke
Chairman
14 June 2017
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.
Key Performance Indicators
The key performance indicators considered by the group are:
-- Segmental revenue -- Segmental profit -- EPS -- Net cash -- Dividends per share
Foundry operations
The foundry businesses have experienced a reduction in output of 9.2% to 47,200 tonnes and a decrease in external sales revenue of 2.5% to GBP111.8 million.
This year has seen a continuation of the sales mix change of last year with an increase in more complex, machined parts.
The segmental profit has reduced slightly to GBP14.5 million, from GBP14.7 million in the previous year, which represents a return of 11.3% on total segmental sales (2016 - 10.9%).
The improvement at William Lee has continued during the year with an even greater focus on aligning production methods across the foundry operations.
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. One particular focus has been the role of automation, an area where we have made investment during the year and will continue to do so during 2017/18. The extension to one of the premises at the Brownhills site to provide additional warehousing and machining capacity for the group was completed in December 2016.
Machining
The machining business generated total sales of GBP23.3 million in the year compared to GBP33.2 million in the previous year. Of the total revenue, 29.9% was generated from external customers compared to 53.3% in 2016.
The segmental profit has decreased to GBP1.5 million (2016 - GBP4.7 million) and the profit on total sales reduced to 6.5% (2016 - 14.2%).
The end of a contract, where there was no direct replacement work, towards the end of 2015/16 has had a significant impact on the revenue and result for the year. New orders have been secured to fill a large proportion of the resulting available capacity. However, these parts go into full production over the next two years; in the meantime, there are additional development costs being incurred.
We have invested GBP5.1 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 decreased by 10.3% to GBP118.8 million compared to GBP132.4 million reported in 2016, of which 72% was exported (2016 - 67%).
The revenue from the foundry operations to external customers decreased 2.5% to GBP111.8 million (2016 - GBP114.7 million) with the dispatch weight of castings to third-party customers decreasing 9.2% to 47,200 tonnes (2016 - 52,000 tonnes).
Revenue from the machining operation to external customers decreased by 60.6% during the year to GBP7.0 million (2016 - GBP17.7 million).
Operating profit and segmental result
The group operating profit for the year was GBP15.7 million compared to GBP19.5 million reported in 2016, which represents a return on sales of 13.2% (2016 - 14.7%).
The foundry operations returned a segmental profit of GBP14.5 million compared to GBP14.7 million in 2016. This represents an increase in segmental profit as a percentage of total segment sales to 11.3% from 10.9% in 2016.
The segmental profit of the machining operation was GBP1.5 million in the year compared to GBP4.7 million in 2016, being 6.5% (2016 - 14.2%) of total segment sales.
Icelandic bank receipts
During the year we have received GBP0.13 million (2016 - GBP0.32 million) in respect of the failed Icelandic banks. Of the original balance of GBP5.7 million, the total received to date is GBP3.73 million which is GBP1.87 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 GBP0.19 million in 2016 to GBP0.24 million in the current year reflects the slightly higher average interest rates of 0.67% compared to 0.5% in 2016.
Profit before income tax
Profit before taxation has decreased to GBP15.9 million from GBP19.7 million.
Taxation
The current year tax charge of GBP2.91 million (2016 - GBP3.49 million) is made up of a current tax charge of GBP3.25 million (2016 - GBP3.89 million) and a deferred tax credit of GBP0.33 million (2016 - GBP0.40 million).
The effective rate of tax of 18.3% (2016 - 17.7%) is lower than the main rate of corporation tax, reflecting the falling future UK corporation tax rate and therefore the measurement of deferred tax liabilities at the lower substantively enacted future rates of 19% and 17%.
Earnings per share
Basic earnings per share decreased 19.7% to 29.80 pence (2016 - 37.10 pence), reflecting a 19.1% decrease in profits and a higher 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 10.59 pence per share (2016 - 10.33 pence per share) to be paid on 18 August 2017. This would give a total normal distribution for the year of 13.97 pence per share (2016 - 13.71 pence per share).
Cash flow
The group generated cash from operating activities of GBP21.5 million compared to GBP27.8 million in 2016. In addition to the lower operating profit, the increase in payables of GBP3.1 million was offset by increases in inventory and receivables of GBP2.1 million and GBP2.7 million respectively.
Corporation tax payments during the year totalled GBP3.4 million compared to GBP3.2 million in 2016, reflecting the timing of quarterly payments.
Capital expenditure during the year amounted to GBP14.2 million (2016 - GBP7.2 million) with investment in production processes and warehousing in the foundry businesses and production facilities and machining centres within the machining operation. Included within this figure is GBP1.1 million relating to deposit payments on equipment not received at the year end, therefore, not included within property, plant and equipment additions in the year. The charge for depreciation was GBP7.3 million compared to GBP6.9 million in 2016.
The current interest-bearing deposit of GBP10 million taken out in the previous year matured in November 2016. Of this, GBP5 million was rolled over to mature during the next financial year and the remaining GBP5 million was placed on short-term deposits, therefore, a net inflow of cash and cash equivalents of GBP5 million.
Repayments of GBP3.8 million (2016 - GBP1.1 million) were received from the final salary pension schemes during the year and advances were made to the schemes of GBP2.0 million (2016 - GBP2.6 million).
Dividends paid to shareholders were GBP19.1 million in the year compared to GBP5.9 million in 2016, the increase mainly being due to the supplementary dividend of GBP13.1 million paid during the year. The resulting net cash and cash equivalents represented a decrease of GBP8.2 million (2016 - increase of GBP10.4 million).
At 31 March 2017, the total cash and deposits position at the balance sheet date is GBP27.2 million (2016 - GBP40.4 million).
Pensions
The pension valuation showed an increase in the surplus, on an IAS 19 (Revised) basis, to GBP16.8 million compared to GBP14.7 million in 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 2017 were GBP124.1 million (2016 - GBP129.9 million). Other than the total comprehensive income for the year of GBP13.3 million, the only movement relates to the dividend charge of GBP19.1 million.
Non-current assets have increased to GBP75.4 million (2016 - GBP70.7 million) primarily as a result of the investment in property, plant and equipment during the year along with the change in the debtor due from the pension scheme of GBP2.3 million (2016 - GBP3.4 million).
Current assets have decreased to GBP74.5 million (2016 - GBP82.4 million) mainly as a result of a reduction in net cash generated during the year and working capital movements. Total liabilities have increased to GBP25.8 million (2016 - GBP23.2 million), largely as a result of an increase in trade payables.
Consolidated Statement of Comprehensive Income
for the year ended 31 March 2017
Hot Features
Premium
2017 2016
GBP000 GBP000
------------------------------------------------------------- -------- --------
Revenue 118,822 132,448
Cost of sales (88,634) (98,431)
-------------------------------------------------------------- -------- --------
Gross profit 30,188 34,017
Distribution costs (1,939) (2,251)
Administrative expenses
------------------------------------------------------------- -------- --------
Excluding exceptional items (12,701) (12,591)
Exceptional items 130 315
-------------------------------------------------------------- -------- --------
Total administrative expenses (12,571) (12,276)
-------------------------------------------------------------- -------- --------
Profit from operations 15,678 19,490
Finance income 237 186
-------------------------------------------------------------- -------- --------
Profit before income tax 15,915 19,676
Income tax expense (2,911) (3,489)
-------------------------------------------------------------- -------- --------
Profit for the year attributable to equity holders of the
parent company 13,004 16,187
Other comprehensive income/(losses) 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 235 228
-------------------------------------------------------------- -------- --------
235 228
Items that may be reclassified subsequently to profit and
loss:
Change in fair value of available-for-sale financial assets 54 (28)
Reclassification adjustments for gains/(losses) on available
for sale assets included in profit - 85
Tax effect of items that may be reclassified (10) 5
-------------------------------------------------------------- -------- --------
44 62
------------------------------------------------------------- -------- --------
Other comprehensive income for the year (net of tax) 279 290
-------------------------------------------------------------- -------- --------
Total comprehensive income for the year attributable to the
equity holders of the parent company 13,283 16,477
-------------------------------------------------------------- -------- --------
Earnings per share attributable to the equity holders of the
parent company
------------------------------------------------------------- -------- --------
Basic and diluted 29.80p 37.10p
-------------------------------------------------------------- -------- --------
Consolidated Balance Sheet
as at 31 March 2017
2017 2016
GBP000 GBP000
------------------------------------------------------------ ------- -------
ASSETS
Non-current assets
Property, plant and equipment 72,762 66,948
Financial assets 408 354
Other receivables 2,269 3,383
------------------------------------------------------------- ------- -------
75,439 70,685
------------------------------------------------------------ ------- -------
Current assets
Inventories 14,063 11,992
Trade and other receivables 33,189 30,047
Other current interest-bearing deposits 5,000 10,000
Cash and cash equivalents 22,228 30,385
------------------------------------------------------------- ------- -------
74,480 82,424
------------------------------------------------------------ ------- -------
Total assets 149,919 153,109
------------------------------------------------------------- ------- -------
LIABILITIES
Current liabilities
Trade and other payables 19,866 16,769
Current tax liabilities 1,855 2,029
------------------------------------------------------------- ------- -------
21,721 18,798
------------------------------------------------------------ ------- -------
Non-current liabilities
Deferred tax liabilities 4,054 4,378
------------------------------------------------------------- ------- -------
Total liabilities 25,775 23,176
------------------------------------------------------------- ------- -------
Net assets 124,144 129,933
------------------------------------------------------------- ------- -------
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 118,894 124,683
------------------------------------------------------------- ------- -------
Total equity 124,144 129,933
------------------------------------------------------------- ------- -------
Consolidated Cash Flow Statement
for the year ended 31 March 2017
2017 2016
GBP000 GBP000
-------------------------------------------------------- -------- -------
Cash flows from operating activities
Profit before income tax 15,915 19,676
Adjustments for:
Depreciation 7,276 6,853
Profit on disposal of property, plant and equipment (24) (62)
Loss on disposal of financial assets - 48
Finance income (237) (186)
Pension administrative costs 235 228
(Increase)/decrease in inventories (2,071) 123
(Increase)/decrease in receivables (2,661) 2,925
Increase/(decrease) in payables 3,098 (1,832)
--------------------------------------------------------- -------- -------
Cash generated from operating activities 21,531 27,773
Tax paid (3,419) (3,202)
Interest received 213 165
--------------------------------------------------------- -------- -------
Net cash generated from operating activities 18,325 24,736
Cash flows from investing activities
Dividends received from listed investments 24 21
Purchase of property, plant and equipment (14,214) (7,236)
Proceeds from disposal of property, plant and equipment 23 69
Transfer from other current interest-bearing deposits 5,000 -
Proceeds from disposal of financial assets - 122
Repayments from pension schemes 3,761 1,135
Advances to the pension schemes (2,004) (2,610)
--------------------------------------------------------- -------- -------
Net cash used in investing activities (7,410) (8,499)
Cash flow from financing activities
Dividends paid to shareholders (19,072) (5,873)
--------------------------------------------------------- -------- -------
Net cash used in financing activities (19,072) (5,873)
Net (decrease)/increase in cash and cash equivalents (8,157) 10,364
Cash and cash equivalents at beginning of year 30,385 20,021
--------------------------------------------------------- -------- -------
Cash and cash equivalents at end of year 22,228 30,385
--------------------------------------------------------- -------- -------
Cash and cash equivalents:
Short-term deposits 21,362 27,786
Cash available on demand 866 2,599
--------------------------------------------------------- -------- -------
22,228 30,385
-------------------------------------------------------- -------- -------
Consolidated Statement of Changes in Equity
for the year ended 31 March 2017
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 2016 4,363 874 13 124,683 129,933
Profit for the year - - - 13,004 13,004
Other comprehensive income/(losses):
Movement in unrecognised surplus on defined
benefit pension schemes net of actuarial
gains and losses - - - 235 235
Change in fair value of available for sale
assets - - - 54 54
Tax effect of items taken directly to reserves - - - (10) (10)
----------------------------------------------- ----------- ----------- ----------- ------------ --------
Total comprehensive income for the year
ended 31 March 2017 - - - 13,283 13,283
Dividends (see note 5) - - - (19,072) (19,072)
----------------------------------------------- ----------- ----------- ----------- ------------ --------
At 31 March 2017 4,363 874 13 118,894 124,144
----------------------------------------------- ----------- ----------- ----------- ------------ --------
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
gains and losses - - - 228 228
Change in fair value of available for sale
assets - - - (28) (28)
Reclassification adjustment for gains 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 year
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
----------------------------------------------- ----------- ----------- ----------- ------------ -------
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 2017 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 financial statements 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 2016 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.
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 in the year to 31 March 2017:
Foundry Machining
operations operation Elimination Total
GBP000 GBP000 GBP000 GBP000
-------------------------------------------------- ----------- ---------- ----------- -------
Revenue from external customers 111,838 6,984 - 118,822
Inter-segmental revenue 16,826 16,347 - 33,173
-------------------------------------------------- ----------- ---------- ----------- -------
Segmental result 14,506 1,519 (242) 15,783
-------------------------------------------------- ----------- ---------- ----------- -------
Unallocated costs:
Exceptional credit for recovery of Icelandic bank
deposits previously written off 130 Defined benefit pension cost (235) Finance income 237 -------------------------------------------------- ----------- ---------- ----------- ------- Profit before income tax 15,915 Total assets 126,095 33,464 (9,640) 149,919 -------------------------------------------------- ----------- ---------- ----------- ------- Non-current asset additions 7,945 5,145 - 13,090 -------------------------------------------------- ----------- ---------- ----------- ------- Depreciation 3,543 3,733 - 7,276 -------------------------------------------------- ----------- ---------- ----------- ------- Total liabilities (24,620) (5,529) 4,374 25,775 -------------------------------------------------- ----------- ---------- ----------- -------
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 2016:
Foundry Machining
operations operation 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
-------------------------------------------------- ----------- ---------- ----------- -------
Total liabilities (23,456) (4,337) 4,617 23,176
-------------------------------------------------- ----------- ---------- ----------- -------
All non-current assets are based in the United Kingdom.
3 Exceptional items
2017 2016
GBP000 GBP000
----------------------------------------------------------------------- ------- -------
Recovery of past provision for losses on deposits with Icelandic banks (130) (315)
----------------------------------------------------------------------- ------- -------
(130) (315)
----------------------------------------------------------------------- ------- -------
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 GBP3.7 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 expense
2017 2016
GBP000 GBP000
------------------------------------------------------------------- ------- -------
Corporation tax based on a rate of 20% (2016 - 20%)
UK corporation tax
Current tax on profits for the year 3,389 4,015
Adjustments to tax charge in respect of prior periods (144) (121)
------------------------------------------------------------------- ------- -------
3,245 3,894
Deferred tax
Current year origination and reversal of temporary differences (20) 20
Adjustment to deferred tax charge in respect of prior periods (314) 63
Change in rate of corporation tax - (488)
------------------------------------------------------------------- ------- -------
(334) (405)
------------------------------------------------------------------- ------- -------
Taxation on profit 2,911 3,489
------------------------------------------------------------------- ------- -------
Profit before income tax 15,915 19,676
------------------------------------------------------------------- ------- -------
Tax on profit at the standard rate of corporation tax in the UK of
20% (2016 - 20%) 3,183 3,935
Effect of:
Expenses not deductible for tax purposes 139 54
Adjustment to tax charge in respect of prior periods (144) (121)
Adjustment to deferred tax charge in respect of prior periods (314) 63
Change in rate of future tax - (488)
Pension adjustments 47 46
------------------------------------------------------------------- ------- -------
Total tax charge for the year 2,911 3,489
------------------------------------------------------------------- ------- -------
Effective rate of tax (%) 18.3 17.7
------------------------------------------------------------------- ------- -------
Changes to the UK corporation tax rates were substantively enacted as part of the Finance Bill (No. 2) Act 2015 on 18 November 2015 and the Finance Act 2016 on 7 September 2016. These include reductions in the main tax rate to 19% from 1 April 2017 and 17% from 1 April 2020.
5 Dividends
2017 2016
GBP000 GBP000
----------------------------------------------------------------------- ------- -------
Final paid of 10.33p per share for the year ended 31 March 2016 (2015
- 10.08p) 4,507 4,398
Interim paid of 3.38p per share (2016 - 3.38p) 1,475 1,475
Supplementary dividend of 30.00p per share for the year ended 31 March
2016 13,090 -
----------------------------------------------------------------------- ------- -------
19,072 5,873
----------------------------------------------------------------------- ------- -------
The directors are proposing a final dividend of 10.59 pence (2016 - 10.33 pence) per share totalling GBP4,620,636 (2016 - GBP4,507,193). This dividend has 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 GBP13,004,000 (2016 - GBP16,187,000) and on the weighted average number of shares in issue at the end of the year of 43,632,068 (2016 - 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
Freehold
and leasehold
land and Plant and
buildings equipment Total
GBP000 GBP000 GBP000
------------------------------ -------------- ---------- -------
Cost
At 1 April 2016 34,579 120,978 155,557
Adjustment to opening balance (5) 84 79
Additions during year 5,661 7,429 13,090
Disposals - (2,628) (2,628)
------------------------------ -------------- ---------- -------
At 31 March 2017 40,235 125,863 166,098
------------------------------ -------------- ---------- -------
Accumulated depreciation
At 1 April 2016 6,986 81,623 88,609
Adjustment to opening balance - 79 79
Charge for year 1,028 6,248 7,276
Disposals - (2,628) (2,628)
------------------------------ -------------- ---------- -------
At 31 March 2017 8,014 85,322 93,336
------------------------------ -------------- ---------- -------
Net book values
At 31 March 2017 32,221 40,541 72,762
------------------------------ -------------- ---------- -------
At 31 March 2016 27,593 39,355 66,948
------------------------------ -------------- ---------- -------
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
------------------------------ -------------- ---------- -------
Accumulated depreciation
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
------------------------------ -------------- ---------- -------
The net book value of land and buildings includes GBP2,527,000 (2016 - GBP2,527,000) for land which is not depreciated and assets in the course of construction with a net book value of GBP1,004,000 (2016 - GBP1,971,000 and 2015 - GBP1,015,000) which are not depreciated.
The cost of land and buildings includes GBP359,000 for property held on long leases (2016 - GBP359,000).
Included within plant and equipment are assets in the course of construction with a net book value of GBP995,000 (2016 and 2015 - GBPnil) and assets not fully in production with a net book value of GBP4,492,000 (2016 - GBP3,004,000 and 2015 - GBP5,600,000) which are not being depreciated.
8 Commitments and contingencies
2017 2016
GBP000 GBP000
--------------------------------------------------------------------- ------- -------
Capital commitments contracted for by the group but not provided for
in the financial statements 4,406 6,087
--------------------------------------------------------------------- ------- -------
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 2017, the directors do not consider any significant liability will arise in respect of any such claims (2016 - 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 2017 was a surplus of GBP16,844,000 (2016 - GBP14,694,000). 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 financial statements for the years ended 31 March 2017 or 2016, but is derived from those financial statements. Statutory financial statements for 2016 have been delivered to the Registrar of Companies and those for 2017 will be delivered following the company's Annual General Meeting. The auditors have reported on those financial statements; 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 financial statements will be posted to shareholders on 23 June 2017 and will be available on the company's website, www.castings.plc.uk, from 30 June 2017.
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 either to completely record or to quantify every material risk that the group faces, below is a summary of those risks 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. Information is also provided as to how the risks are, where possible, being managed or mitigated.
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. We build strong relationships with our customers to develop products to meet their specific needs.
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. Such contracts are short-term in nature, matched to contractual cash flows and non-speculative.
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 2017, 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.
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 2017 the schemes were in surplus on an IAS 19 (Revised) basis. 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 2017. 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
14 June 2017
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR DXLFFDQFZBBD
(END) Dow Jones Newswires
June 14, 2017 02:00 ET (06:00 GMT)
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