TIDMCGS
RNS Number : 3707T
Castings PLC
14 November 2023
CASTINGS PLC
INTERIM MANAGEMENT REPORT
Six months ended 30 September 2023
Interim Management Report
Overview
Sales for the six months ended 30 September 2023 were GBP111.3
million (2022 - GBP85.6 million) with profit before tax of GBP10.3
million (2022 - GBP7.5 million).
During the period, the underlying demand for heavy trucks
(approximately 80% of group revenue) has been strong and this
continues to be reflected in the forward schedules that our OEM
customers are providing. We have also seen continued progression in
our other growth sectors of wind energy, rail, trailer braking and
trailer coupling, as well as increasing opportunities to supply
parts into the US market.
Input prices have stabilised in the current year and in some
areas we are seeing slight reductions. The higher unit cost for
electricity, following the end of a fixed contract on 30 September
2022, continues to be surcharged to our customers. This does not
adversely affect group profit as it is a pass-through of a direct
cost increase but does increase revenue in the six month period
compared to the same period last year.
Foundry operations
Output during the period was up 1.6% at 25,500 tonnes (2022 -
25,100 tonnes) and external sales revenue was up by 30.6% to
GBP110.6 million. Of the output weight for the period, 62.1%
related to machined castings compared to 57.4% in the previous
period, reflecting the continuing demand trend for more processed
and value-add parts.
The profit from the foundry segment of GBP7.7 million compares
to GBP7.8 million in the equivalent period last year. This
represents a margin on external sales of 7.0% compared to 9.2% in
the prior period. The most significant impact on the margin
percentage has been the pass-through impact of cost rises, along
with some production inefficiencies due to high demand and
production rebalancing.
The high level of demand, both current and forecast, is in
excess of our current foundry production capacity. As a result, in
collaboration with our customers, we have outsourced some
production to other foundries for the short-term.
As a more strategic and longer-term solution, the board has
approved a new foundry production line at our William Lee site. It
is anticipated that the new line will be commissioned within two
years, at a cost of around GBP17 million, to be funded from
internal resources, and will add up to 12,000 tonnes of additional
gross foundry capacity. The additional facility will enable us to
satisfy demand for our current heavy truck parts, as well as
providing capacity to take advantage of new and growing market
areas such as truck electrification, wind energy and further
opportunities in the US.
Machining operation
CNC Speedwell continues its focus on group work and has
therefore seen a reduction in external revenue to GBP0.8 million.
The company reported a profit of GBP1.9 million compared to a loss
of GBP0.5 million in the previous period.
The business returned to profitability in the final quarter of
the last financial year and it is pleasing to report that this has
continued in each month of the current period. This demonstrates
the impact of consistently high volumes in a period and also
reflects the benefits of the new parts introduced last year and the
adjustment of prices to pass on recent inflationary cost rises.
Investment of GBP1.5 million in the period includes the second
phase of the cooling plant energy efficiency initiative and also
the start of a gradual machine replacement programme.
Outlook
The long-term demand schedules continue to reflect the high
build rates that the heavy truck OEMs require to satisfy their
order books.
We expect production and supply efficiencies to improve with the
short-term outsourcing of foundry parts and the continued focus on
the engineering of the new parts that have been introduced in the
machine shop. Management believes that the company will trade
marginally ahead of market expectations.
The group maintains a very strong balance sheet with cash levels
of GBP31.3 million. Free cash flow during the period was GBP8.5
million which was used to pay dividends totalling GBP12.4 million
(including a supplementary dividend of GBP6.5 million).
Dividend
An interim dividend of 4.13 pence per share has been declared
and will be paid on 4 January 2024 to shareholders who are on the
register at 24 November 2023.
Principal risks and uncertainties
There are a number of potential risks and uncertainties which
could have a material impact on the group's performance over the
remaining six months of the financial year and could cause actual
results to differ materially from expected and historical
results.
The directors consider that the principal risks and
uncertainties remain substantially the same as those stated on
pages 8 to 11 of the Annual Report for the year ended 31 March
2023.
The risks identified are in respect of market and customer
concentration; competition, product quality, foreign exchange and
technological change risks within the export-dominated commercial
vehicle sector; risk of disruption to supply of raw materials or
the availability of capital equipment and the price risk of input
costs; and regulatory and environmental compliance risks.
Brian Cooke
As reported in the Annual Report, after nearly sixty three years
with the company, of which forty were as Chairman, Brian Cooke
stood down as a director of the company on 15 August 2023.
Cautionary statement
This Interim Management Report ('IMR') has been prepared solely
to provide additional information to shareholders to enable them to
assess the group's strategies and the potential for those
strategies to succeed. The IMR should not be relied on by any other
party or for any other purpose. This IMR contains certain
forward-looking statements. These are made by the directors in good
faith based on the information available to them up to the time of
their approval of this report but such statements should be treated
with caution due to the inherent uncertainties, including both
economic and business risk factors, underlying any such
forward-looking information.
The group undertakes no obligation to update any forward-looking
statements whether as a result of new information, future events or
otherwise.
The IMR has been prepared for the group as a whole and therefore
gives greater emphasis to those matters which are significant to
Castings P.L.C. and its subsidiary undertakings when viewed as a
whole.
By order of the board
A. N. Jones
Chairman
14 November 2023
Castings P.L.C.
Lichfield Road
Brownhills
West Midlands
WS8 6JZ
Consolidated Statement of Comprehensive Income
For six months ended 30 September 2023
Unaudited
Unaudited Half Audited
Half year Year
year to to to
30 September 30 September 31 March
2023 2022 2023
GBP'000 GBP'000 GBP'000
--------------------------------------------- ------------- ------------- ---------
Revenue 111,333 85,600 200,990
Cost of sales (90,031) (68,265) (162,077)
--------------------------------------------- ------------- ------------- ---------
Gross profit 21,302 17,335 38,913
Distribution costs (2,434) (2,471) (5,440)
Administrative expenses (9,260) (7,515) (17,104)
--------------------------------------------- ------------- ------------- ---------
Profit from operations 9,608 7,349 16,369
Finance income 648 104 344
--------------------------------------------- ------------- ------------- ---------
Profit before income tax 10,256 7,453 16,713
Income tax expense (2,564) (1,414) (2,923)
--------------------------------------------- ------------- ------------- ---------
Profit for the period attributable
to the equity holders
of the parent company 7,692 6,039 13,790
Other comprehensive (losses)/income
for the period:
Items that will not be reclassified
to profit and loss:
Movement in unrecognised surplus
on defined benefit pension
schemes net of actuarial gains and
losses - - 117
--------------------------------------------- ------------- ------------- ---------
- - 117
Items that may be reclassified subsequently
to profit and loss:
Change in fair value of financial
assets - (77) (40)
Tax effect of items that may be reclassified - 15 10
--------------------------------------------- ------------- ------------- ---------
- (62) (30)
--------------------------------------------- ------------- ------------- ---------
Total other comprehensive (losses)/income
for the period
(net of tax) - (62) 87
--------------------------------------------- ------------- ------------- ---------
Total comprehensive income for the
period attributable
to the equity holders of the parent
company 7,692 5,977 13,877
--------------------------------------------- ------------- ------------- ---------
Earnings per share attributable
to the equity holders
of the parent company
Basic 17.68p 13.86p 31.66p
Diluted 17.62p 13.83p 31.58p
--------------------------------------------- ------------- ------------- ---------
Consolidated Balance Sheet
As at 30 September 2023
Unaudited Unaudited Audited
30 September 30 September 31 March
2023 2022 2023
GBP'000 GBP'000 GBP'000
-------------------------------------- ------------- ------------- ---------
ASSETS
Non-current assets
Property, plant and equipment 61,199 62,236 60,353
Financial assets 372 318 356
-------------------------------------- ------------- ------------- ---------
61,571 62,554 60,709
-------------------------------------- ------------- ------------- ---------
Current assets
Inventories 23,654 24,699 26,095
Trade and other receivables 49,484 41,861 51,080
Current tax asset 176 556 980
Cash and cash equivalents 31,262 25,592 35,566
-------------------------------------- ------------- ------------- ---------
104,576 92,708 113,721
-------------------------------------- ------------- ------------- ---------
Total assets 166,147 155,262 174,430
-------------------------------------- ------------- ------------- ---------
LIABILITIES
Current liabilities
Trade and other payables 33,608 24,611 37,051
-------------------------------------- ------------- ------------- ---------
33,608 24,611 37,051
-------------------------------------- ------------- ------------- ---------
Non-current liabilities
Deferred tax liabilities 5,924 5,278 5,719
-------------------------------------- ------------- ------------- ---------
Total liabilities 39,532 29,889 42,770
-------------------------------------- ------------- ------------- ---------
Net assets 126,615 125,373 131,660
-------------------------------------- ------------- ------------- ---------
Equity attributable to equity holders
of the parent company
Share capital 4,363 4,363 4,363
Share premium account 874 874 874
Treasury shares (627) (231) (231)
Other reserve 13 13 13
Retained earnings 121,992 120,354 126,641
-------------------------------------- ------------- ------------- ---------
Total equity 126,615 125,373 131,660
-------------------------------------- ------------- ------------- ---------
Consolidated Cash Flow Statement
For six months ended 30 September 2023
Unaudited Unaudited
Half year Half year Audited
to to Year to
30 September 30 September 31 March
2023 2022 2023
GBP'000 GBP'000 GBP'000
------------------------------------------------- ------------- ------------- ---------
Cash flows from operating activities
Profit before income tax 10,256 7,453 16,713
Adjustments for:
Depreciation 3,921 3,996 8,646
Finance income (648) (104) (344)
Equity settled share-based payment expense 73 59 119
Pension administrative costs - - 117
Change in fair value of financial assets (16) - -
Decrease/(increase) in inventories 2,441 1,190 (206)
Decrease/(increase) in receivables 2,659 (919) (11,200)
(Decrease)/increase in payables (3,443) (3,866) 8,574
------------------------------------------------- ------------- ------------- ---------
Cash generated from operating activities 15,243 7,809 22,419
Tax paid (1,555) (1,407) (2,904)
Interest received 642 95 327
------------------------------------------------- ------------- ------------- ---------
Net cash generated from operating activities 14,330 6,497 19,842
Cash flows from investing activities
Dividends received from listed investments 6 9 17
Purchase of property, plant and equipment (4,767) (3,430) (6,198)
Repayments from pension schemes - - 2,114
Advances to pension schemes (1,063) (1,068) (2,120)
------------------------------------------------- ------------- ------------- ---------
Net cash used in investing activities (5,824) (4,489) (6,187)
Cash flow from financing activities
Dividends paid to shareholders (12,414) (12,009) (13,682)
Purchase of own shares (396) (152) (152)
------------------------------------------------- ------------- ------------- ---------
Net cash used in financing activities (12,810) (12,161) (13,834)
------------------------------------------------- ------------- ------------- ---------
Net decrease in cash and cash equivalents (4,304) (10,153) (179)
Cash and cash equivalents at beginning of period 35,566 35,745 35,745
------------------------------------------------- ------------- ------------- ---------
Cash and cash equivalents at end of period 31,262 25,592 35,566
------------------------------------------------- ------------- ------------- ---------
Cash and cash equivalents:
Short-term deposits 13,967 11,627 19,993
Cash available on demand 17,295 13,965 15,573
------------------------------------------------- ------------- ------------- ---------
31,262 25,592 35,566
------------------------------------------------- ------------- ------------- ---------
Consolidated Statement of Changes in Equity
Equity attributable to equity holders of the
parent
Share Share Treasury Other Retained Total
capital premium shares reserve earnings equity
Unaudited GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------- -------- -------- -------- -------- --------- --------
At 1 April 2023 4,363 874 (231) 13 126,641 131,660
--------------------------- -------- -------- -------- -------- --------- --------
Profit for the period - - - - 7,692 7,692
--------------------------- -------- -------- -------- -------- --------- --------
Total comprehensive
income for the period
ended 30 September 2023 - - - - 7,692 7,692
Shares acquired during
the period - - (396) - - (396)
Equity-settled share-based
payments - - - - 73 73
Dividends - - - - (12,414) (12,414)
--------------------------- -------- -------- -------- -------- --------- --------
At 30 September 2023 4,363 874 (627) 13 121,992 126,615
--------------------------- -------- -------- -------- -------- --------- --------
Unaudited GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- ------- ------- ------- ------- -------- --------
At 1 April 2022 4,363 874 (79) 13 126,327 131,498
---------------------------- ------- ------- ------- ------- -------- --------
Profit for the period - - - - 6,039 6,039
Other comprehensive
income/(losses):
Change in fair value
of financial assets - - - - (77) (77)
Tax effect of items
taken directly to reserves - - - - 15 15
---------------------------- ------- ------- ------- ------- -------- --------
Total comprehensive
income for the period
ended 30 September 2022 - - - - 5,977 5,977
Shares acquired during
the period - - (152) - - (152)
Equity-settled share-based
payments - - - - 59 59
Dividends - - - - (12,009) (12,009)
---------------------------- ------- ------- ------- ------- -------- --------
At 30 September 2022 4,363 874 (231) 13 120,354 125,373
---------------------------- ------- ------- ------- ------- -------- --------
Audited GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- ------- ------- ------- ------- -------- --------
At 1 April 2022 4,363 874 (79) 13 126,327 131,498
---------------------------- ------- ------- ------- ------- -------- --------
Profit for the year - - - - 13,790 13,790
Other comprehensive
income/(losses):
Movement in unrecognised
surplus on defined benefit
pension schemes net
of actuarial gains and
losses - - - - 117 117
Change in fair value
of financial assets - - - - (40) (40)
Tax effect of items
taken directly to reserves - - - - 10 10
---------------------------- ------- ------- ------- ------- -------- --------
Total comprehensive
income for the year - - - - 13,877 13,877
Shares acquired in the
year - - (152) - - (152)
Equity-settled share-based
payments - - - - 119 119
Dividends - - - - (13,682) (13,682)
---------------------------- ------- ------- ------- ------- -------- --------
At 31 March 2023 4,363 874 (231) 13 126,641 131,660
---------------------------- ------- ------- ------- ------- -------- --------
Notes
1. General information
Castings P.L.C. (the 'company') is a company domiciled in
England. The condensed consolidated interim financial statements of
the company for the six months ended 30 September 2023 comprise the
company and its subsidiaries (together referred to as the
'group').
The principal activities of the group are the manufacture of
iron castings and machining operations.
The financial information for the year ended 31 March 2023 does
not constitute the full statutory accounts for that period. The
Annual Report and Financial Statements for the year ended 31 March
2023 have been filed with the Registrar of Companies. The
Independent Auditors' Report on the Annual Report and Financial
Statements for 2023 was unqualified, did not draw attention to any
matters by way of emphasis, and did not contain a statement under
498 (2) or (3) of the Companies Act 2006.
This report has not been audited and has not been reviewed by
independent auditors pursuant to the Financial Reporting Council
guidance on Review of Interim Financial Information.
2. Accounting policies
The annual financial statements of Castings P.L.C. are prepared
in accordance with UK-adopted international accounting standards in
conformity with the requirements of the Companies Act 2006. The
condensed set of financial statements has been prepared in
accordance with IAS 34 Interim Financial Reporting as adopted by
the UK.
Basis of preparation
After making enquiries, the directors have a reasonable
expectation that the company and the group have adequate resources
to continue in operational existence for the foreseeable future.
Accordingly, they continue to adopt the going concern basis in
preparing the half-yearly condensed consolidated interim financial
statements.
The same accounting policies, presentation and methods of
computation are followed in the condensed consolidated interim
financial statements as applied in the group's latest annual
audited financial statements.
3. Seasonality of operations
The directors do not consider there to be any significant
seasonality or cyclicality to the results of the group.
4. Segment information
For internal decision making purposes, the group is organised
into three operating companies which are considered to represent
two operating segments of the group. Castings P.L.C. and William
Lee Limited are aggregated into Foundry Operations and CNC
Speedwell Limited is the Machining Operation.
Inter-segment transactions are entered into under the normal
commercial terms and conditions that would be available to third
parties.
The following shows the revenues, results and total assets by
reportable segment for the half year to 30 September 2023.
Foundry
operations Machining Elimination Total
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------- ----------- --------- ----------- --------
Revenue from external customers 110,566 767 - 111,333
Inter-segmental revenue 14,339 17,441 - 31,780
-------------------------------- ----------- --------- ----------- --------
Segmental result 7,685 1,923 - 9,608
-------------------------------- ----------- --------- ----------- --------
Unallocated income:
Finance income 648
-------------------------------- ----------- --------- ----------- --------
Profit before income tax 10,256
-------------------------------- ----------- --------- ----------- --------
Total assets 155,677 29,144 (18,674) 166,147
-------------------------------- ----------- --------- ----------- --------
Non-current asset additions 3,239 1,528 - 4,767
-------------------------------- ----------- --------- ----------- --------
Depreciation 2,294 1,627 - 3,921
-------------------------------- ----------- --------- ----------- --------
Total liabilities (43,098) (7,273) 10,839 (39,532)
-------------------------------- ----------- --------- ----------- --------
The following shows the revenues, results and total assets by
reportable segment for the half year to 30 September 2022.
Foundry
operations Machining Elimination Total
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------- ----------- --------- ----------- --------
Revenue from external customers 84,676 924 - 85,600
Inter-segmental revenue 10,309 9,773 - 20,082
-------------------------------- ----------- --------- ----------- --------
Segmental result 7,818 (469) - 7,349
-------------------------------- ----------- --------- ----------- --------
Unallocated income:
Finance income 104
-------------------------------- ----------- --------- ----------- --------
Profit before income tax 7,453
-------------------------------- ----------- --------- ----------- --------
Total assets 141,547 25,594 (11,879) 155,262
-------------------------------- ----------- --------- ----------- --------
Non-current asset additions 2,820 610 - 3,430
-------------------------------- ----------- --------- ----------- --------
Depreciation 2,381 1,615 - 3,996
-------------------------------- ----------- --------- ----------- --------
Total liabilities (28,733) (6,299) 5,143 (29,889)
-------------------------------- ----------- --------- ----------- --------
The following shows the revenues, results and total assets by
reportable segment for the year ended 31 March 2023.
Foundry
operations Machining Elimination Total
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------- ----------- --------- ----------- --------
Revenue from external customers 198,972 2,018 - 200,990
Inter-segmental revenue 24,739 25,640 - 50,379
-------------------------------- ----------- --------- ----------- --------
Segmental result 16,332 169 (15) 16,486
-------------------------------- ----------- --------- ----------- --------
Unallocated costs:
Defined benefit pension cost (117)
Finance income 344
-------------------------------- ----------- --------- ----------- --------
Profit before income tax 16,713
-------------------------------- ----------- --------- ----------- --------
Total assets 162,671 26,687 (14,928) 174,430
-------------------------------- ----------- --------- ----------- --------
Non-current asset additions 4,826 1,372 - 6,198
-------------------------------- ----------- --------- ----------- --------
Depreciation 5,235 3,411 - 8,646
-------------------------------- ----------- --------- ----------- --------
Total liabilities (45,668) (6,759) 9,657 (42,770)
-------------------------------- ----------- --------- ----------- --------
5. Dividends
Amounts recognised as distributions to shareholders in the
period:
Half Half
year year
to to
30 September 30 September
2023 2022
GBP'000 GBP'000
---------------------------------------- ------------- -------------
Final dividend of 13.51p per share for
the year ended 31 March 2023
(2022 - 12.57p per share) 5,880 5,475
Supplementary dividend of 15p per share
for the year ended 31 March 2023
(2022 - 15p per share) 6,534 6,534
---------------------------------------- ------------- -------------
12,414 12,009
---------------------------------------- ------------- -------------
The directors have declared an interim dividend in respect of
the financial year ending 31 March 2024 of 4.13 pence per share
(2023 - 3.84 pence), which will be paid on 4 January 2024.
6. Earnings per share and diluted earnings per share
Earnings per share is calculated by dividing the profit
attributable to ordinary shareholders by the weighted average
number of ordinary shares outstanding during the period. The
diluted earnings per share includes the outstanding share options
within the weighted average number of shares figure.
Unaudited Unaudited Audited
Half Half year Year
year to to to
30 September 30 September 31 March
2023 2022 2023
---------------------------------- ------------- ------------- ----------
Profit after tax (GBP'000) 7,692 6,039 13,790
---------------------------------- ------------- ------------- ----------
Weighted average number of shares
- basic calculation 43,518,814 43,565,115 43,561,593
---------------------------------- ------------- ------------- ----------
Weighted average number of shares
- diluted calculation 43,666,343 43,675,024 43,671,502
---------------------------------- ------------- ------------- ----------
Earnings per share - basic 17.68p 13.86p 31.66p
---------------------------------- ------------- ------------- ----------
Earnings per share - diluted 17.62p 13.83p 31.58p
---------------------------------- ------------- ------------- ----------
7. Pension schemes
The group operates two defined benefit pension schemes which are
closed to new entrants and closed to future accruals on 6 April
2009. The assets of the schemes are independent of the finances of
the group and are administered by trustees. Both schemes are in
surplus with the combined position at 31 March 2023 being an
unrecognised surplus of GBP10,413,000.
The pension schemes are related parties of the group and during
the period GBP1,063,000 (2022 - GBP1,068,000) was paid by the group
on behalf of the schemes in respect of pension payments and
administration costs. At 30 September 2023, the outstanding balance
of GBP3,183,000 (2022 - GBP3,182,000) is repayable within one
year.
8. Interim report
Copies of this interim management report will be available on
the company's website, www.castings.plc.uk , and from the
registered office.
Statement of Directors' Responsibilities
The directors confirm that the condensed consolidated interim
financial statements have been prepared in accordance with IAS 34
and that the interim management report includes a fair review of
the information required by DTR 4.2.7R and DTR 4.2.8R.
By order of the board
S. J. Mant
Group Finance Director
14 November 2023
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END
IR GPGACGUPWUQC
(END) Dow Jones Newswires
November 14, 2023 02:00 ET (07:00 GMT)
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