Interim Results
Castings PLC
24 November 2005
Castings p.l.c.
INTERIM FINANCIAL REPORT 2005
Chairman's Statement
Profit before tax for the six months ended 30th September 2005 was £5,422,000
compared with £3,805,000 in the period to 30th September 2004.
We have enjoyed a six month period of increased sales, partly from the recovery
of raw material costs, and also due to increased volumes and additional added
value.
All three companies have increased sales over the period and with fixed priced
contracts out of the way, William Lee in particular has returned much improved
profits for the half year.
Raw material prices have marginally reduced from a peak in November 2004 and it
is hoped they now reduce further in the next few months to more reasonable
levels. It does appear that China has a reduced demand for steel, which should
reflect in lower European prices.
We are pleased to report that building work has now started for an extension to
the machine shop in Brownhills and should be completed by May 2006.
A satisfactory year should materialise despite early signs that demand is easing
in certain areas, perhaps due to the effects of high energy prices coupled with
high raw material prices.
An interim dividend of 2.53 pence per share has been declared and will be paid
on the 6th January 2006 to shareholders who are on the register at 9th December
2005.
Brian J Cooke, Chairman
Consolidated Income Statement
Half year to Half year to Year to
Unaudited 30thSeptember 30thSeptember 31stMarch
2005 2004 2005
£'000 £'000 £'000
Total revenue 36,379 31,508 69,037
-------- -------- --------
Operating profit 4,877 3,327 8,566
Finance income 545 478 1,066
-------- -------- --------
Profit before income tax 5,422 3,805 9,632
Income tax expense 1,604 1,143 2,840
-------- -------- --------
Profit for the period 3,818 2,662 6,792
-------- -------- --------
Earnings per share
Basic and diluted 8.75p 6.11p 15.57p
------- ------- --------
All operations are continuing
Consolidated Balance Sheet
Half year to Half year to Year to
Unaudited 30thSeptember 30thSeptember 31stMarch
2005 2004 2005
£'000 £'000 £'000
Assets
Non-current assests
Property, plant and equipment 33,419 32,303 33,163
Investments 1,027 954 984
Deferred tax asset 1,949 1,975 1,949
------- ------- -------
36,395 35,232 36,096
-------- -------- --------
Current assets
Inventories 4,900 4,953 5,459
Trade and other receivables 17,227 13,149 16,781
Cash and cash equivalents 25,040 23,777 25,074
-------- -------- --------
47,167 41,879 47,314
-------- -------- --------
Total assets 83,562 77,111 83,410
-------- -------- --------
Liabilities
Current liabilities
Trade and other payables 11,838 10,371 12,993
Current tax liabilities 1,191 596 1,332
-------- -------- --------
13,029 10,967 14,325
-------- -------- --------
Non-current liabilities
Retirement Benefit
Obligations 6,498 6,586 6,498
Deferred tax liabilities 2,396 2,125 2,025
-------- -------- --------
8,894 8,711 8,523
-------- -------- --------
Total liabilities 21,923 19,678 22,848
-------- -------- --------
Net Assets 61,639 57,433 60,562
-------- -------- --------
Shareholders' equity
Share Capital 4,363 4,363 4,363
Share premium account 874 874 874
Other reserves 13 13 13
Retained earnings 56,389 52,183 55,312
-------- -------- --------
Total equity 61,639 57,433 60,562
-------- -------- --------
Consolidated Cash Flow
Half year to Half year to Year to
30thSeptember 30thSeptember 31stMarch
Unaudited 2005 2004 2005
£'000 £'000 £'000
Cash flows from operating activities
Cash generated from operations 6,138 4,929 11,100
Interest received 545 478 1,066
Tax paid (1,387) (1,058) (2,120)
--------- --------- ---------
Net cash generated from
operating activities 5,296 4,349 10,046
Cash flows from investing activities
Purchase of property, plant
and equipment (2,559) (4,176) (7,496)
Proceeds from disposal of
property, plant and equipment - 750 761
Proceeds from disposal of investments - 101 74
______ ______ ______
Net Cash used in investing activities (2,559) (3,325) (6,661)
Cash flow from financing activities
Dividends paid to shareholders (2,771) (2,640) (3,704)
-------- --------- ---------
Net cash used in financing activities (2,771) (2,640) (3,704)
Net decrease in cash and
cash equivalents (34) (1,616) (319)
Cash and cash equivalents at
beginning of period 25,074 25,393 25,393
-------- -------- --------
Cash and cash equivalents at
end of period 25,040 23,777 25,074
-------- -------- --------
Consolidated Statement of Recognised Income and Expense
Half year to Half year to Year to
30thSeptember 30thSeptember 31stMarch
Unaudited 2005 2004 2005
£'000 £'000 £'000
Profit for period 3,818 2,662 6,792
Revaluation of investments 43 99 101
Actuarial (losses)/ gains on
defined pension schemes - - 88
Tax on items taken directly
to reserves (13) (29) (56)
------ ------ ------
Total recognised income for
period 3,848 2,732 6,925
------- ------- -------
Supplementary Statement
Reconciliation of operating profit to net cash inflow from operating activities
Half year to Half year to Year to
Unaudited 30thSeptember 30thSeptember 31stMarch
2005 2004 2005
£'000 £'000 £'000
Operating profit 4,877 3,327 8,566
Depreciation 2,303 2,166 4,617
(Increase)/decrease in
inventories 559 (434) (932)
(Increase)/decrease in
receivables (446) 555 (3,084)
Increase/(decrease) in
payables (1,155) (685) 1,933
--------- ------- -------
Net cash inflow from
operating activities 6,138 4,929 11,100
------- ------- --------
Notes to the interim financial report
1. GENERAL INFORMATION
These unaudited results are the first to be reported under International
Financial Reporting Standards.
The information for the year ended 31st March 2005 does not constitute statutory
accounts as defined by section 240 of the Companies Act 1985. A copy of the
Group's UK GAAP statutory accounts for the year has been delivered to the
Registrar of Companies. The auditors' report on those accounts was unqualified.
ACCOUNTING POLICIES
The interim financial report has been prepared in accordance with anticipated
International Financial Reporting Standards (IFRS). The accounting policies and
basis of preparation followed in the interim report where they differ from the
2005 Annual Report and Accounts are shown in the Restatement of Financial
Information under IFRS.
The reconciliations of equity at 1st April 2004 (date of transition to IFRS),
30th September 2004 and at 31st March 2005 ( date of last UK GAAP financial
statements) and the reconciliation of profit for the period to 30th September
2004 and to 31st March 2005 as required by IFRS 1, are shown in the 'Restatement
of Financial Information under IFRS' below. The figures for the year ended 31st
March 2005 and half year ended 30th September 2004 are shown as restated.
The financial information presented in this document has been prepared on the
basis of all IFRSs, including International Accounting Standards (IAS) and
interpretations issued by the International Accounting Standards Board (IASB)
and its committees, and as interpreted by any regulatory bodies applicable to
the Group published by 30th September 2005. These are subject to ongoing
amendment by the IASB and subsequent endorsement by the European Commission and
are therefore subject to possible change. Further standards and interpretations
may also be issued that will be applicable for financial years beginning on or
after 1st April 2005 or that are applicable to later accounting periods but may
be adopted early. The Group's first IFRS financial statements may, therefore, be
prepared in accordance with some different accounting policies from the
financial information presented here. In preparing this financial information,
the Group has assumed that the European Commission will endorse the amendment to
IAS 19, 'Employee Benefits - Actuarial Gains and Losses, Group Plans and
Disclosures', which allows actuarial gains and losses to be recognised in full
through equity.
2. DIVIDENDS
Half year to Half year To Year to
30th September 30th September 31st March
Amounts recognised as
distributions to share
holders in the period: 2005 2004 2005
£'000 £'000 £'000
------------------------ --------- -------- --------
Final dividend of 6.35p
for the year ended 31st
March 2005 (2004: 6.05p)
per share 2,771 2,640 2,640
------------------------ --------- -------- --------
Proposed interim dividend
of 2.53p for the year
ended 31st March 2006
(2005: 2.44p) per share 1,104 1,064 1,064
------------------------ --------- -------- --------
The proposed interim dividend was approved by the Board on 1st November 2005 but
was not included as a liability as at 30th September 2005, in accordance with
IAS 10 'Events after the balance sheet date'.
3. EARNINGS PER SHARE AND DILUTED EARNINGS PER SHARE
Earnings per share is calculated by dividing the profit attribute to ordinary
shareholders by the weighted average number of ordinary shares outstanding
during the period. Diluted 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, adjusted for the effects of
dilutive options.
Half year to Half year to Year to
30thSeptember 30thSeptember 31stMarch
2005 2004 2005
£'000 £'000 £'000
Profit after tax 3,818 2,662 6,792
------- ------- -------
Weighted average number of
shares 43,632,068 43,632,068 43,632,068
---------- ---------- ----------
Earnings per share - basic
and diluted 8.75p 6.11p 15.57p
------- ------- --------
Restatement of financial Information under IFRS
The reconciliations of equity at 1st April 2004 (date of transition to IFRS) and
at 31st March 2005 (date of last UK GAAP financial statements) and the
reconciliation of profit for 2005, as required by IFRS 1, are shown below:
Reconciliation of Equity at 1st April 2004
UK GAAP Unaudited effect of transition to IFRS Unaudited IFRS
£'000 £'000 £'000
Property,
plant and
equipment 31,043 31,043
Investments
(c) 704 253 957
Deferred tax
asset - 1,975 1,975
_____ _____ ______
Non-current
assets 31,747 2,228 33,975
------ ----- ------
Inventories 4,527 4,527
Trade and
other
receivables 13,697 13,697
Cash and cash
equivalents 25,393 25,393
------ ------
Current 43,617 43,617
assets ------ ------
Current
liabilities
Trade and
other
payables (13,697) 2,640 (11,057)
(b)
Current tax
liabilities (1,158) - (1,158)
Retirement
benefit
obligation - (6,586) (6,586)
(a)
Deferred (1,374) (76) (1,450)
tax ------- ------ -------
Total
liabilities (16,229) (4,022) (20,251)
-------- ------- -------
Total assets
less Total
liabilities 59,135 (1,794) 57,341
------ ------- -------
Shareholders'
equity
Share 4,363 4,363
capital
Share premium
account 874 874
Other 13 13
reserves
Retained
earnings 53,885 (1,794) 52,091
------ ------- ------
Total 59,135 (1,794) 57,341
equity ------ ------- ------
Reconciliation of Equity at 31st March 2005
UK GAAP Unaudited effect of transition to IFRS Unaudited IFRS
£'000 £'000 £'000
Property,
plant and
equipment 33,163 33,163
Investments
(c) 630 354 984
Deferred tax
asset - 1,949 1,949
---
_____ _____ ______
Non-current
assets 33,793 2,303 36,096
------ ----- ------
Current
assets
Inventories 5,459 5,459
Trade and
other
receivables 16,781 16,781
Cash and cash
equivalents 25,074 25,074
------ ------
Current 47,314 47,314
assets ------ ------
Current
liabilities
Trade and
other
payables (15,764) 2,771 (12,993)
(b)
Current tax
liabilities (1,332) - (1,332)
Retirement
benefit
obligation - (6,498) (6,498)
(a)
Deferred (1,919) (106) (2,025)
tax ------- ------- -------
Total
liabilities (19,015) (3,833) 22,848
-------- ------- ------
Total assets
less Total
liabilities 62,092 (1,530) 60,562
------ ------- ------
Shareholders'
equity
Share 4,363 4,363
capital
Share premium
account 874 874
Other 13 13
reserves
Retained
earnings 56,842 (1,530) 55,312
------ ------- ------
Total 62,092 (1,530) 60,562
equity ------ ------- ------
Reconciliation of profit for.the.period.ended 31st March 2005
Reconciliation for the year ended 31st March 2005
UK GAAP Unaudited effect of transition to IFRS Unaudited IFRS
£'000 £'000 £'000
Revenue 69,037 69,037
-------- --------
Group
Operating
Profit 8,566 8,566
Finance 1,066 1,066
Income ------- -------
Profit
Before 9,632 9,632
Tax
Income Tax (2,840) - (2,840)
------- --- -------
Net Profit 6,792 - 6,792
------- --- -------
Explanation of reconciling items between UK GAAP and IFRS
a) Retirement benefit schemes - Accounting for pensions in accordance
with IAS 19 requires the pension asset/liability to be brought onto the balance
sheet. At 31st March 2004 the Group's defined benefit pension schemes were in
deficit under IAS 19 requiring a pension liability of £6,586,000 to be shown on
the balance sheet. We have chosen to apply the amendment to IAS19 which allows
actuarial gains and losses to be recognised immediately in the Statement of
Recognised Income and Expense i.e. actuarial gains and losses will be taken
directly to reserves.
b) Dividends - Under UK company law, companies were required to
provide for their final dividend in the closing balance sheet and in advance of
the dividend being declared and approved by the Annual General Meeting. Under
IAS 10, 'Events after the balance sheet date', the dividend cannot be provided
in the year end balance sheet as, at that date, the dividend did not represent a
liability. At 31st March 2005 accrued dividends of £2,771,000 (2004 £2,640,000)
were removed from other payables.
c) Investments - Under UK company law, companies accounted for
investments at cost and showed the market value by way of a note. Under IAS the
fair value (based on market prices) is shown on the balance sheet requiring an
uplift of £354,000 at 31st March 2005 (2004 : £253,000)
Reconciliation of Equity at 30th September 2004
The reconciliation of equity at 30th September 2004 and the reconciliation of
profit for the six months ended 30th September 2004 have been included below to
enable a comparison of the 2005 published interim figures with those published
in the corresponding period of the previous financial year.
UK GAAP Unaudited effect of transition to IFRS Unaudited IFRS
£'000 £'000 £'000
Property,
plant and
equipment 32,303 32,303
Investments
(f) 602 352 954
Deferred tax
asset - 1,975 1,975
_____ ____ _____
Non-current
assets 32,905 2,327 35,232
------ ----- ------
Current
assets
Inventories 4,953 4,953
Trade and
other
receivables 13,149 13,149
Cash and cash
equivalents 23,777 23,777
------ ------
Current 41,879 41,879
assets ------ ------
Current
liabilities
Trade and
other
payables (11,436) 1,065 (10,371)
(e)
Current tax
liabilities (596) - (596)
Retirement
benefit
obligation - (6,586) (6,586)
(d)
Deferred (2,020) (105) (2,125)
tax ------ ------- ---------
Total
liabilities 14,052 (5,626) (19,678)
------ ------- --------
Total assets
less Total
liabilities 60,732 (3,299) 57,433
------ ------- --------
Shareholders'
equity
Share 4,363 4,363
capital
Share premium
account 874 874
Other 13 13
reserves
Retained
earnings 55,482 (3,299) 52,183
------ ------- ------
Total 60,732 (3,299) 57,433
equity ------ ------- ------
Reconciliation of profit for the period ended 30th September 2004
UK GAAP Unaudited effect of transition to IFRS Unaudited IFRS
£'000 £'000 £'000
Revenue 31,508 31,508
-------- --- --------
Group
Operating
Profit 3,327 3,327
Finance Income 478 478
----- --- -----
Profit Before
Tax 3,805 3,805
Income Tax (1,143) - (1,143)
------- --- -------
Net Profit 2,662 - 2,662
------- --- -------
Explanation of reconciling items between UK GAAP and IFRS:
d) Retirement benefit schemes - Accounting for pensions in accordance
with IAS 19 requires the pension asset/liability to be brought onto the balance
sheet. At 30th September 2004 the Group's defined benefit pension schemes were
in deficit under IAS 19 requiring a pension liability of £6,586,000 to be shown
on the balance sheet.
e) Dividends - Under UK company law, companies were required to
provide for their interim dividend in the closing balance sheet and in advance
of the dividend being declared. Under IAS 10, 'Events after the balance sheet
date', the dividend cannot be provided in the half year balance sheet as, at
that date, the dividend did not represent a liability. At 30th September 2004
accrued dividends of £1,065,000 were removed from other payables.
f) Investments - Under UK company law, companies accounted for
investments at cost and showed the market value by way of a note. Under IAS the
fair value (based on market prices) is shown on the balance sheet requiring an
uplift of £352,000 at 30th September 2004.
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