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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 | |
|---|---|---|---|---|---|---|---|---|---|---|
| 6.00 | 1.60% | 380.00 | 370.00 | 380.00 | 380.00 | 374.00 | 380.00 | 25,201 | 15:47:02 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Malleable Iron Foundries | 200.99M | 13.79M | 0.3161 | 11.96 | 164.93M |
From Apr 2019 to Apr 2024
TIDMCGS
RNS Number : 1184R
Castings PLC
13 June 2018
Castings P.L.C.
Annual Financial Report
DTR 6.3.5 Disclosure
Year ended 31 March 2018
Chairman's Statement
Foundry businesses
The foundries have seen an increase in output and improved profitability compared to the previous year. Our recent investments, particularly in robotic handling, have enabled the rise in productivity. Further investments will continue to be made where cost savings can be identified. It is pleasing to report that William Lee has improved production and productivity. We have also strengthened the management team at William Lee.
CNC Speedwell
We reported at the half year that Mark Lewis had resigned from the Board and as Managing Director of CNC. In the second half year we recruited a new General Manager, Steve Barwell, and a new Technical Director, Quality Director and Financial Controller. We are confident that this team is much stronger and has brought the business under operational control.
It is very disappointing to report a substantial loss at CNC for the year. One of the major issues for much of the year has been an inability to meet customer orders in a timely way, which has resulted in extra transport costs in excess of GBP1.2m. These costs have been necessary to prevent disruption to our customers' production lines. I am pleased to be able to report that transport costs are now back down to historic levels.
We have also carried out a review of the operations of the company and, as a result, identified certain projects that were not suitable for the group. This has cost us a further GBP1m in write-downs of capital and tooling equipment. The total financial impact in 2017/18 of the reorganisation of the machining business was a non-recurring cost of GBP3.3 million.
It will take time before we see the turnaround from the changes being implemented by the new team, including the training of operatives that we have taken on, but we expect the trading results of CNC to improve during the second half of this financial year.
Dividend
I am pleased to report that the directors recommend an increase in the final dividend to 11.12 pence per share to be paid on 17 August 2018. This, together with the interim dividend, gives a total dividend for the year of 14.50 pence per share.
Outlook
It appears at the present time our order book is sound and schedules are increasing. In particular demand for commercial vehicles is currently strong and it is hoped this trend will continue.
Directors
As part of our on-going succession planning, it is our intention to recruit further directors to strengthen the board.
I wish to thank all our employees for their continued hard work and in particular their support during a difficult supply situation.
B. J. Cooke
Chairman
13 June 2018
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 an increase in output of 4.2% to 49,200 tonnes and an increase in external sales revenue of 13.6% to GBP127.0 million.
This year has seen a continuation of the sales mix change of last year with an increase in more complex, machined parts. Of the total output weight for the year, just under 53% related to machined castings compared to 49.5% in the previous year.
In addition to product mix, the average price of steel scrap and other alloys has increased in the year which has increased sales revenue compared to the previous year. Furthermore, the weakened value of sterling has increased the value of reported revenue for invoices denominated in foreign currencies.
The segmental profit has increased to GBP16.1 million, from GBP14.5 million in the previous year, which represents a return of 11.0% on total segmental sales (2017 - 11.3%). The reduction in percentage can largely be attributed to the impact of higher raw material prices.
The aligning of production methods across the foundries and productivity improvements have continued with William Lee increasingly contributing to the overall segment profitability. The roll-out of automation within the foundry processing areas has continued with GBP1.8 million having been invested during the year. This is an area that will continue to be in focus during 2018/19.
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.
Machining
The machining business generated total sales of GBP24.8 million in the year compared to GBP23.3 million in the previous year. Of the total revenue, 25.2% was generated from external customers compared to 29.9% in 2017.
The segmental result for the year was a loss of GBP3.95 million (2017 - profit of GBP1.52 million).
Following the change of management and a full review of the machining operation, certain projects were identified that were not considered suitable for the group. The total cost of exiting these projects was just over GBP1 million which comprised write-downs of specific capital and tooling equipment and exiting contract commitments to purchase equipment.
In addition to these project specific items, the disruption in manufacturing has resulted in higher than previously anticipated costs, particularly in relation to excessive transport, to ensure customer schedules are met. The direct additional logistics costs were GBP1.2 million during the year.
The total financial impact in 2017/18 of the reorganisation of the machining business was a non-recurring cost of GBP3.3 million. Therefore, excluding these costs, the underlying machining business generated a trading loss of GBP0.65 million during the year.
We have invested GBP7.1 million during the year which was primarily focused on work for the group's traditional customer base. Whilst there will continue to be a replacement need, it is expected that the investment will be significantly reduced in 2018/19. Management are focused on ensuring an enhanced return on the capital already invested in the machining business.
Business review and performance
Revenue
Group revenues increased by 12.2% to GBP133.3 million compared to GBP118.8 million reported in 2017, of which 73% was exported (2017 - 72%).
The revenue from the foundry operations to external customers increased 13.6% to GBP127.0 million (2017 - GBP111.8 million) with the dispatch weight of castings to third-party customers increasing 4.2% to 49,200 tonnes (2017 - 47,200 tonnes).
Revenue from the machining operation to external customers decreased by 10.2% during the year to GBP6.3 million (2017 - GBP7.0 million).
Operating profit and segmental result
The group operating profit for the year was GBP11.9 million compared to GBP15.7 million reported in 2017, which represents a return on sales of 9.0% (2017 - 13.2%). However, this result includes GBP3.3 million of non-recurring costs associated with the reorganisation of the machining segment; an adjusted return on sales figure would be 11.4%.
The foundry operations returned a segmental profit of GBP16.1 million compared to GBP14.5 million in 2017. This represents a slight decrease in segmental profit as a percentage of total segment sales to 11.0% from 11.3% in 2017.
The segmental result of the machining operation was a loss of GBP3.95 million in the year compared to a profit of GBP1.52 million in 2017.
Icelandic bank receipts
During the year we have received GBP0.11 million (2017 - GBP0.13 million) in respect of the failed Icelandic banks. Of the original balance of GBP5.7 million, the total received to date is GBP3.84 million which is GBP1.97 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 reduction in the level of finance income from GBP0.24 million in 2017 to GBP0.13 million in the current year reflects the lower levels of cash held and a lower average interest rates on deposits.
Profit before income tax
Profit before taxation has decreased to GBP12.1 million from GBP15.9 million.
Taxation
The current year tax charge of GBP2.28 million (2017 - GBP2.91 million) is made up of a current tax charge of GBP2.72 million (2017 - GBP3.25 million) and a deferred tax credit of GBP0.44 million (2017 - GBP0.33 million).
The effective rate of tax of 18.9% (2017 - 18.3%) is marginally lower than the main rate of corporation tax, reflecting the falling future UK corporation tax rate and therefore the remeasurement of deferred tax liabilities at the lower substantively enacted future rate of 17%.
Earnings per share
Basic earnings per share decreased 24.6% to 22.46 pence (2017 - 29.80 pence), reflecting the 24.1% decrease in profits and a slightly 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 11.12 pence per share (2017 - 10.59 pence per share) to be paid on 17 August 2018. This would give a total normal distribution for the year of 14.50 pence per share (2017 - 13.97 pence per share).
Cash flow
The group generated cash from operating activities of GBP17.4 million compared to GBP21.5 million in 2017. In addition to the lower operating profit, the increase in payables of GBP2.4 million was offset by increases in inventory and receivables of GBP2.2 million and GBP3.6 million respectively.
Corporation tax payments during the year totalled GBP3.2 million compared to GBP3.4 million in 2017, reflecting the timing of quarterly payments.
Capital expenditure during the year amounted to GBP11.2 million (2017 - GBP14.2 million). This included investment in production processes and automation in the foundry businesses and production facilities and machining centres within the machining operation. The charge for depreciation was GBP8.5 million compared to GBP7.3 million in 2017.
The current interest-bearing deposit of GBP5 million taken out in the previous year matured in November 2017. With the exception of GBP0.1 million which was transferred to short-term deposits, the remainder was rolled over to mature during the next financial year.
Repayments of GBP3.1 million (2017 - GBP3.8 million) were received from the final salary pension schemes during the year and advances were made to the schemes of GBP3.3 million (2017 - GBP2.0 million). The higher level of advances reflects the payments in respect of new pensioners and deferred members transferring out of the schemes. Dividends paid to shareholders were GBP6.1 million in the year compared to GBP19.1 million in 2017, the reduction being due to the supplementary dividend of GBP13.1 million paid during the previous year. The resulting net cash and cash equivalents represented a decrease of GBP3.1 million (2017 - GBP8.2 million).
At 31 March 2018, the total cash and deposits position at the balance sheet date is GBP24.1 million (2017 - GBP27.2 million).
Pensions
The pension valuation showed an increase in the surplus, on an IAS 19 (Revised) basis, to GBP22.6 million compared to GBP16.8 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 2018 were GBP128.1 million (2017 - GBP124.1 million). Other than the total comprehensive income for the year of GBP10.1 million, the only movement relates to the dividend charge of GBP6.1 million.
Non-current assets have increased to GBP76.9 million (2017 - GBP75.4 million) primarily as a result of the investment in property, plant and equipment during the year offset by the change in the debtor due from the pension scheme of GBP1.1 million (2017 - GBP2.3 million).
Current assets have increased to GBP78.4 million (2017 - GBP74.5 million) mainly as a result of increases in material prices. Total liabilities have increased to GBP27.2 million (2017 - GBP25.8 million), largely as a result of an increase in trade payables.
Consolidated Statement of Comprehensive Income
for the year ended 31 March 2018
Hot Features
Premium
2018 2017
GBP000 GBP000
------------------------------------------------------ --------- --------
Revenue 133,276 118,822
Cost of sales (103,674) (88,634)
------------------------------------------------------- --------- --------
Gross profit 29,602 30,188
Distribution costs (3,818) (1,939)
Administrative expenses
------------------------------------------------------ --------- --------
Excluding exceptional items (13,949) (12,701)
Exceptional items 109 130
------------------------------------------------------- --------- --------
Total administrative expenses (13,840) (12,571)
------------------------------------------------------- --------- --------
Profit from operations 11,944 15,678
Finance income 133 237
------------------------------------------------------- --------- --------
Profit before income tax 12,077 15,915
Income tax expense (2,279) (2,911)
------------------------------------------------------- --------- --------
Profit for the year attributable to equity holders
of the parent company 9,798 13,004
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 352 235
352 235
Items that may be reclassified subsequently to profit
and loss:
Change in fair value of available-for-sale financial
assets (72) 54
Tax effect of items that may be reclassified 15 (10)
------------------------------------------------------- --------- --------
(57) 44
------------------------------------------------------ --------- --------
Other comprehensive income for the year (net of tax) 295 279
------------------------------------------------------- --------- --------
Total comprehensive income for the year attributable
to the equity holders of the parent company 10,093 13,283
------------------------------------------------------- --------- --------
Earnings per share attributable to the equity holders
of the parent company
Basic and diluted 22.46p 29.80p
------------------------------------------------------- --------- --------
Consolidated Balance Sheet
as at 31 March 2018
2018 2017
GBP000 GBP000
---------------------------------------------------- ------- -------
ASSETS
Non-current assets
Property, plant and equipment 75,448 72,762
Financial assets 336 408
Other receivables 1,135 2,269
----------------------------------------------------- ------- -------
76,919 75,439
---------------------------------------------------- ------- -------
Current assets
Inventories 16,284 14,063
Trade and other receivables 38,090 33,189
Other current interest-bearing deposits 4,900 5,000
Cash and cash equivalents 19,174 22,228
----------------------------------------------------- ------- -------
78,448 74,480
---------------------------------------------------- ------- -------
Total assets 155,367 149,919
----------------------------------------------------- ------- -------
LIABILITIES
Current liabilities
Trade and other payables 22,242 19,866
Current tax liabilities 1,380 1,855
----------------------------------------------------- ------- -------
23,622 21,721
---------------------------------------------------- ------- -------
Non-current liabilities
Deferred tax liabilities 3,603 4,054
----------------------------------------------------- ------- -------
Total liabilities 27,225 25,775
----------------------------------------------------- ------- -------
Net assets 128,142 124,144
----------------------------------------------------- ------- -------
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 122,892 118,894
----------------------------------------------------- ------- -------
Total equity 128,142 124,144
----------------------------------------------------- ------- -------
Consolidated Cash Flow Statement
for the year ended 31 March 2018
2018 2017
GBP000 GBP000
-------------------------------------------------------- -------- --------
Cash flows from operating activities
Profit before income tax 12,077 15,915
Adjustments for:
Depreciation 8,525 7,276
Loss/(profit) on disposal of property, plant and
equipment 9 (24)
Finance income (133) (237)
Pension administrative costs 352 235
Increase in inventories (2,221) (2,071)
Increase in receivables (3,568) (2,661)
Increase in payables 2,376 3,098
--------------------------------------------------------- -------- --------
Cash generated from operating activities 17,417 21,531
Tax paid (3,190) (3,419)
Interest received 111 213
--------------------------------------------------------- -------- --------
Net cash generated from operating activities 14,338 18,325
Cash flows from investing activities
Dividends received from listed investments 22 24
Purchase of property, plant and equipment (11,223) (14,214)
Proceeds from disposal of property, plant and equipment 3 23
Transfer from other current interest-bearing deposits 100 5,000
Repayments from pension schemes 3,122 3,761
Advances to the pension schemes (3,321) (2,004)
--------------------------------------------------------- -------- --------
Net cash used in investing activities (11,297) (7,410)
Cash flow from financing activities
Dividends paid to shareholders (6,095) (19,072)
Net cash used in financing activities (6,095) (19,072)
Net decrease in cash and cash equivalents (3,054) (8,157)
Cash and cash equivalents at beginning of year 22,228 30,385
--------------------------------------------------------- -------- --------
Cash and cash equivalents at end of year 19,174 22,228
--------------------------------------------------------- -------- --------
Cash and cash equivalents:
Short-term deposits 16,846 21,362
Cash available on demand 2,328 866
--------------------------------------------------------- -------- --------
19,174 22,228
-------------------------------------------------------- -------- --------
Consolidated Statement of Changes in Equity
for the year ended 31 March 2018
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 2017 4,363 874 13 118,894 124,144
------------------------------------- ----------- ----------- ----------- ------------ -------
Profit for the year - - - 9,798 9,798
Other comprehensive income/(losses):
Movement in unrecognised surplus on
defined benefit pension schemes net
of actuarial gains and losses - - - 352 352
Change in fair value of available
for sale assets - - - (72) (72)
Tax effect of items taken directly
to reserves - - - 15 15
------------------------------------- ----------- ----------- ----------- ------------ -------
Total comprehensive income for the
year ended 31 March 2018 - - - 10,093 10,093
Dividends (see note 5) - - - (6,095) (6,095)
------------------------------------- ----------- ----------- ----------- ------------ -------
At 31 March 2018 4,363 874 13 122,892 128,142
------------------------------------- ----------- ----------- ----------- ------------ -------
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
------------------------------------- ----------- ----------- ----------- ------------ --------
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 Statements
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 2018 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 2017 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 2018:
Foundry Machining
operations operations Elimination Total
GBP000 GBP000 GBP000 GBP000
--------------------------------------------- ----------- ----------- ----------- --------
Revenue from external customers 127,007 6,269 - 133,276
Inter-segmental revenue 19,024 18,571 - 37,595
--------------------------------------------- ----------- ----------- ----------- --------
Segmental result 16,051 (3,950) 86 12,187
--------------------------------------------- ----------- ----------- ----------- --------
Unallocated costs:
Exceptional credit for recovery of Icelandic
bank deposits previously written off 109
Defined benefit pension cost (352)
Finance income 133
--------------------------------------------- ----------- ----------- ----------- --------
Profit before income tax 12,077 Total assets 135,669 36,258 (16,560) 155,367 --------------------------------------------- ----------- ----------- ----------- -------- Non-current asset additions 4,134 7,089 - 11,223 --------------------------------------------- ----------- ----------- ----------- -------- Depreciation 3,921 4,604 - 8,525 --------------------------------------------- ----------- ----------- ----------- -------- Total liabilities (27,008) (11,581) 11,364 (27,225) --------------------------------------------- ----------- ----------- ----------- --------
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 2017:
Foundry Machining
operations operations 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.
2018 2017
GBP000 GBP000
--------------------------------------------------------- ------- -------
The geographical analysis of revenues by destination for
the year is as follows:
United Kingdom 36,542 32,889
Sweden 36,787 32,985
Netherlands 22,070 17,801
Rest of Europe 33,452 31,813
North and South America 3,735 2,879
Other 690 455
--------------------------------------------------------- ------- -------
133,276 118,822
--------------------------------------------------------- ------- -------
All revenue arises in the United Kingdom from the group's continuing activities.
3 Exceptional items
2018 2017
GBP000 GBP000
----------------------------------------------------------------- ------- -------
Recovery of past provision for losses on deposits with Icelandic
banks (109) (130)
----------------------------------------------------------------- ------- -------
(109) (130)
----------------------------------------------------------------- ------- -------
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 GBP3.8 million has been received of the original balance of GBP5.7 million with the excess over the GBP1.97 million being shown as an exceptional credit.
4 Income tax expense
2018 2017
GBP000 GBP000
--------------------------------------------------------------- ------- -------
Corporation tax based on a rate of 19% (2017 - 20%)
UK corporation tax
Current tax on profits for the year 2,759 3,389
Adjustments to tax charge in respect of prior periods (44) (144)
--------------------------------------------------------------- ------- -------
2,715 3,245
Deferred tax
Current year origination and reversal of temporary differences (95) (20)
Adjustment to deferred tax charge in respect of prior periods (341) (314)
--------------------------------------------------------------- ------- -------
(436) (334)
--------------------------------------------------------------- ------- -------
Taxation on profit 2,279 2,911
--------------------------------------------------------------- ------- -------
Profit before income tax 12,077 15,915
--------------------------------------------------------------- ------- -------
Tax on profit at the standard rate of corporation tax
in the UK of 19% (2017 - 20%) 2,295 3,183
Effect of:
Expenses not deductible for tax purposes 302 139
Adjustment to tax charge in respect of prior periods (44) (144)
Adjustment to deferred tax charge in respect of prior periods (341) (314)
Pension adjustments 67 47
--------------------------------------------------------------- ------- -------
Total tax charge for the year 2,279 2,911
--------------------------------------------------------------- ------- -------
Effective rate of tax (%) 18.9 18.3
--------------------------------------------------------------- ------- -------
The main rate of corporation tax was reduced from 20% to 19% with effect from 1 April 2017. The Finance Act 2016, substantively enacted on 7 September 2016, reduced the main tax rate to 17% from 1 April 2020.
5 Dividends
2018 2017
GBP000 GBP000
----------------------------------------------------------- ------- -------
Final paid of 10.59p per share for the year ended 31 March
2017 (2016 - 10.33p) 4,620 4,507
Interim paid of 3.38p per share (2017 - 3.38p) 1,475 1,475
Supplementary dividend of 30.00p per share for the year
ended 31 March 2016 - 13,090
----------------------------------------------------------- ------- -------
6,095 19,072
----------------------------------------------------------- ------- -------
The directors are proposing a final dividend of 11.12 pence (2017 - 10.59 pence) per share totalling GBP4,851,886 (2017 - GBP4,620,636). 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 GBP9,798,000 (2017 - GBP13,004,000) and on the weighted average number of shares in issue at the end of the year of 43,632,068 (2017 - 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 2017 40,235 125,863 166,098
Additions during the year 846 10,377 11,223
Disposals - (691) (691)
At 31 March 2018 41,081 135,549 176,630
Accumulated depreciation
At 1 April 2017 8,014 85,322 93,336
Charge for year 1,164 7,361 8,525
Disposals - (679) (679)
------------------------------ -------------- ---------- -------
At 31 March 2018 9,178 92,004 101,182
------------------------------ -------------- ---------- -------
Net book values
At 31 March 2018 31,903 43,545 75,448
------------------------------ -------------- ---------- -------
At 31 March 2017 32,221 40,541 72,762
------------------------------ -------------- ---------- -------
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
------------------------------ -------------- ---------- -------
The net book value of land and buildings includes GBP2,527,000 (2017 - GBP2,527,000) for land which is not depreciated and assets in the course of construction with a net book value of GBPnil (2017 - GBP1,004,000 and 2016 - GBP1,971,000) which are not depreciated.
The cost of land and buildings includes GBP359,000 for property held on long leases (2017 - GBP359,000).
Included within plant and equipment are assets in the course of construction with a net book value of GBP158,000 (2017 - GBP995,000) and assets not fully in production with a net book value of GBP1,618,000 (2017 - GBP4,492,000 and 2016 - GBP3,004,000) which are not being depreciated.
8 Commitments and contingencies
2018 2017
GBP000 GBP000
-------------------------------------------------------- ------- -------
Capital commitments contracted for by the group but not
provided for in the financial statements 752 4,406
-------------------------------------------------------- ------- -------
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 2018, the directors do not consider any significant liability will arise in respect of any such claims (2017 - 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 2018 was a surplus of GBP22,631,000 (2017 - GBP16,844,000). 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 2018 or 2017, but is derived from those financial statements. Statutory financial statements for 2017 have been delivered to the Registrar of Companies and those for 2018 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 22 June 2018 and will be available on the company's website, www.castings.plc.uk, from 29 June 2018.
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 12 months, although renegotiation risks remain at contract maturity dates but again this is mitigated through the application of price adjustment clauses. At 31 March 2018, the group has electricity contracts in place until 30 September 2020. 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 backup 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 2018 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 2018. 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
13 June 2018
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
END
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(END) Dow Jones Newswires
June 13, 2018 02:00 ET (06:00 GMT)
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