Interim Results

RNS Number : 9613I

Castings PLC

27 November 2008

 



Chairman's Statement

Profit before tax and exceptional items for the six months ended 30th September 2008 was £6.22m compared with £6.27m in the period ended 30th September 2007.

Trading profit in the six months to 30th September 2008 was generally in line with expectations despite a shortfall in the recovery of rapid raw material increases during April through to July. This resulted in a reduction of operating margins.

It was disappointing to report that our deposits in three Icelandic banks are under threat; we as yet have little news on the eventual outcome. The deposits were made earlier in the year when our advisors rated them satisfactorily.  However, as a matter of prudence, we have made full provision against these deposits of £5,701,000.  Notwithstanding these at risk deposits, we have further substantial funds available. The Board is therefore satisfied that any loss which may be incurred on these deposits will not have any impact on the ability of the group to finance its trading operations or its ongoing capital expenditure programme at William Lee.

In my statement in our 2008 Annual Report written in June, I referred to the 'crazy situation'.  The world financial problems are now very well documented and the resultant effects on all manufacturing companies, particularly those related to the car and truck industries, are becoming clear.

Up to the end of September all companies were operating well, but since the beginning of October we have seen a substantial reduction in customers' schedules, now up to 40%, in the commercial vehicle manufacturers and at a higher level in the car industry. As a result of these reductions and the uncertainty in the immediate future we have had to reduce the number of shifts worked and regrettably we have had no option but to reduce the numbers employed.

Customer demands are changing on a daily basis; hence it is impossible to forecast profits but the Board consider that the results for the full year to 31st March 2009 will be below market expectations. The company will make every attempt to balance cost with customer requirements, but at the same time preparing ourselves for the recovery when it comes.

In conclusion, at the present time it is impossible to know when a recovery will take place. The new foundry at William Lee will be ready for production in the new year, but the opening will be delayed until we see an improvement.

The group has set out the principal risks which could impact the performance of the group in its Annual Report and Accounts 2008. In the view of the Board there has been no material change in the risks.

An interim dividend of 2.71 pence per share has been declared and will be paid on 9th January 2009 to shareholders who are on the register at 12th December 2008.

                            BRIAN J. COOKE

                                    Chairman

27th November 2008

Castings p.l.c.
Lichfield Road
Brownhills
West Midlands
WS8 6JZ

Consolidated Income Statement

For six months ended 30th September 2008

(Unaudited)

	Half year to		Half year to		Year to
	30th September		30th September		31st March
	2008		2007		2008
	£'000		£'000		£'000
Revenue	51,129		45,760		97,372
Cost of sales	(38,896)		(33,572)		(71,653)
Gross profit	12,233		12,188		25,719
Distribution costs	(727)		(628)		(1,369)
Administrative expenses
Normal	(6,280)		(5,985)		(9,100)
Exceptional (see note 6)	(5,701)		-		-
Total administrative expenses	(11,981)		(5,985)		(9,100)
Profit/(loss) from operations	(475)		5,575		15,250
Finance income	996		691		1,414
Profit before income tax	521		6,266		16,664
Income tax expense	(146)		(1,880)		(4,668)
Profit for the period attributable to the equity holders of the parent company	375		4,386		11,996
Earnings per share
Basic and diluted	0.86p		10.05p		27.49p

  Consolidated Balance Sheet

30th September 2008
(Unaudited)

	30thSeptember		30thSeptember		31stMarch
	2008		2007		2008
	£'000		£'000		£'000
Assets
Non-current assets
Property, plant and equipment	45,817		34,999		38,772
Financial assets	56		824		736
	45,873		35,823		39,508
Current assets
Inventories	7,983		5,080		7,054
Trade and other receivables	22,614		20,699		22,588
Cash and cash equivalents	18,946		28,314		31,494
	49,543		54,093		61,136
Total assets	95,416		89,916		100,644
Liabilities
Current liabilities
Trade and other payables	18,332		14,007		18,589
Current tax liabilities	116		1,710		1,816
	18,448		15,717		20,405
Non-current liabilities
Deferred tax liabilities	2,296		2,204		2,382
	2,296		2,204		2,382
Total liabilities	20,744		17,921		22,787
Net Assets	74,672		71,995		77,857
Equity attributable to equity of the parent company
Share capital	4,363		4,363		4,363
Share premium account	874		874		874
Other reserves	13		13		13
Retained earnings	69,422		66,745		72,607
Total equity	74,672		71,995		77,857

Consolidated Cash Flow Statement

For six months ended 30th September 2008
(Unaudited)

	Half year		Half year		Year to
	to 30thSeptember		to 30thSeptember		31stMarch
	2008		2007		2008
	£'000		£'000		£'000
Cash flows from operating activities
Cash generated from operations	789		8,464		21,440
Interest received	996		691		1,414
Tax paid	(1,784)		(990)		(3,462)
Net cash generated from operating activities	1		8,165		19,392
Cash flows from investing activities
Purchase of property, plant and equipment	(9,521)		(2,275)		(9,354)
Proceeds from disposal of property, plant and equipment	-		-		214
Proceeds from disposal of financial assets	153		-		-
Net cash used in investing activities	(9,368)		(2,275)		(9,140)
Cash flow from financing activities
Dividends paid to shareholders	(3,181)		(3,028)		(4,210)
Net cash used in financing activities	(3,181)		(3,028)		(4,210)
Net increase/(decrease) in cash and cash equivalents	(12,548)		2,862		6,042
Cash and cash equivalents at beginning of period	31,494		25,452		25,452
Cash and cash equivalents at end of period	18,946		28,314		31,494

Consolidated Statement of Recognised Income and Expense

For six months ended 30th September 2008

(Unaudited)

	Half year		Half year		Year to
	to 30thSeptember		to 30thSeptember		31stMarch
	2008		2007		2008
	£'000		£'000		£'000
Profit for period	375		4,386		11,996
Change in fair value of available for sale financial assets	(527)		1		(87)
Actuarial losses on defined pension schemes	-		-		(510)
Tax effect of gains and losses recognised directly in equity	148		-		32
Total recognised income/(expense) for period	(4)		4,387		11,431

Supplementary Statement 

Reconciliation of profit before income tax to net cash inflow from operating activities

For six months ended 30th September 2008

(Unaudited)

	Half year		Half year		Year to
	to 30thSeptember		to 30thSeptember		31stMarch
	2008		2007		2008
	£'000		£'000		£'000
Profit before income tax	521		6,266		16,664
Depreciation (net of profit on sale of property, plant & equipment)	2,476		2,771		5,863
Interest received	(996)		(691)		(1,414)
Excess of employer pension contributions over income statement charge	-		-		(510)
(Increase)/decrease in inventories	(929)		1,238		(736)
(Increase)/decrease in receivables	(26)		1,085		(804)
Increase/(decrease) in payables	(257)		(2,205)		2,377
Net cash inflow from operating activities	789		8,464		21,440

  Notes 

• BASIS OF PREPARATION

Financial information presented here is unaudited and has not been reviewed. Comparatives for the full year ended 31st March 2008 are not the Group's full statutory accounts for that year. A copy of those accounts has been delivered to the Registrar of Companies. The auditors' report on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain a statement under Section 237 (2)-(3) of the Companies Act 1985.

The condensed consolidated half-yearly financial information for the half-year ended 30th September 2008 has been prepared in accordance with IAS 34, 'Interim financial reporting' as adopted by the European Union. The half-yearly condensed consolidated financial report does not include all the information and disclosures required in the annual financial statements and should be read in conjunction with the Group's annual financial statements as at 31st March 2008.

2.       ACCOUNTING POLICIES

The interim financial statements have been prepared using the same accounting policies as used in the preparation of the Group's annual financial statements for the year ended 31st March 2008.

3.       SEGMENT INFORMATION

The geographical analysis of revenues by destination for the period is as follows:

	Half year to 30th September 2008 £'000		Half year to 30th  September 2007 £'000		Year  to 31st  March 2008 £'000
United Kingdom	18,589		16,559		33,164
Sweden	10,453		8,691		19,730
Rest of Europe	21,193		19,683		42,710
North and South America	770		827		1,768
Other	124		-		-
	51,129		45,760		97,372

All turnover and profit arises in the United Kingdom for the Group's continuing principal activity, which the directors believe to be the only class of business carried out by the Group.  As a result, it is not practical to provide segmental information.

The directors do not consider there to be any significant seasonality or cyclicality to the results of the Group.

4.       DIVIDENDS

	Half year	Half year
	to 30th September	to 30th September
Amounts recognised as distributions to shareholders in the period:	2008 £'000	2007 £'000
Final dividend of 7.29p for the year ended 31st March 2008 (2007: 6.94p) per share	3,181	3,028

The directors have declared an interim dividend in respect of the financial year ending 31st March 2009 of 2.71 pence per share (2008: 2.71p), which will be paid on 9th January 2009.

5.       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. There are no share options or other potentially issuable shares; hence the diluted earnings per share is the same calculation.

	Half year		Half year		Year to
	to 30thSeptember		to 30thSeptember		31stMarch
	2008		2007		2008
	£'000		£'000		£'000
Profit after tax	375		4,386		11,996
Weighted average number of shares	43,632,068		43,632,068		43,632,068
Earnings per share - basic and diluted	0.86p		10.05p		27.49p

6.       ICELANDIC BANKS

The company reported in October that it had £5.7 million on deposit with Icelandic banks; Kaupthing Singer and Friedlander, Heritable Bank (Landsbanki) and Glitnir Bank. All of these amounts are due for repayment by 31 December 2008.  These deposits are at risk and as a matter of prudence, the Board has considered it appropriate to make full provision against them.

Notwithstanding these at risk deposits, we have further substantial funds available. The Board is therefore satisfied that any loss which may be incurred on these deposits will not have any impact on the ability of the group to finance its trading operations or its ongoing capital expenditure programme at William Lee.

Statement of Directors' Responsibilities

The directors' confirm that the condensed set of financial statements has been prepared in accordance with IAS 34 as adopted by the European Union and that the Chairman's Statement herein includes a true and fair view of the information required by DTR 4.2.7 and DTR 4.2.8.

By order of the Board

J.C.Roby FCA

Finance Director
27th November 2008 

 

END

 

 

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