The information contained within this announcement is deemed by the Company to constitute inside information stipulated under the Market Abuse Regulation (EU) No. 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018.  Upon the publication of this announcement via the Regulatory Information Service, this inside information is now considered to be in the public domain.

Castings P.L.C.

Final Results

Year ended 31 March 2025

DTR 6.3.5 Disclosure

Chairman's Statement

Overview

Demand from our heavy truck customers, which make up over 75% of group revenue, was at a reduced level compared to the very strong levels of the previous year. These OEMs have been reporting a normalisation of demand throughout the year and this has naturally fed through to reduced schedules being placed on us. The reduction in schedules worsened during the first three quarters but recovered somewhat during the final quarter

The European market, which comprises nearly three-quarters of our revenue, was reduced generally but particularly in Germany and truck manufacturers with a greater exposure to this market were impacted more heavily. Demand from the US was strong in the first half of the year but this also declined as the year progressed and especially so in the last quarter with greater political and economic uncertainty in the region.

Turnover decreased by 21% compared with the previous year and operating profit reduced by 76%. The despatch weight fell by 19% compared to the prior year.

The year saw a significant increase in electricity costs as a direct result of lower customer demand. As a consequence of consuming less electricity, penalties were enforced on forward purchased electricity volumes that were not required. The total of these penalties was £1.5 million, which includes a provision for the period up to the end of the contract in September 2025. The forward volumes purchased from October 2025 onwards have been restricted and no further financial loss is anticipated for these periods.

In June 2024 the group purchased the fixed assets and stock from the administrators of a business making large iron castings (up to 7 tonnes) in Scunthorpe. The purchase represented an opportunity to supply products and customers that were new to the group. It also enables us to offer our existing customers a broader product range.

The Scunthorpe business, which traditionally supplies the capital goods market, is more exposed to spot-orders which creates greater short-term demand variability compared to the other foundries in the group. Whilst the initial level of demand following the purchase was high, this subsequently reduced during the second half of the financial year.

The overall loss during the nine months of operation was £1.3 million, although this does include £0.4 million of set-up costs to re-establish the business following a period of underinvestment. The business is now established and generating orders for new products from new customers as well as having re-established existing customer relationships.

Foundry businesses

Demand was down by nearly 20% on a sales weight basis (like-for-like) compared to the high levels of the previous year.  This reduction has negatively impacted production efficiencies in these businesses during the year. The impact of the electricity penalties also affects the foundries to a much greater extent than the machining business due to the greater levels of consumption.

Last year the board approved the installation of an additional foundry production line at our William Lee site. We are nearing the end of the installation phase of the project and commissioning is expected to be complete later in the summer. The project is in line with budget. The new production line will add up to 12,000 tonnes of additional gross foundry capacity which represents a 15% increase on the group's current capacity. The additional facility will enable us to take advantage of new and growing market areas such as wind energy, agriculture and further opportunities in the US as well as satisfying additional demand from our existing customer base.

CNC Speedwell

It is pleasing to report a solid performance in the machining business against the backdrop of lower demand levels.

Investment has been focussed on replacing older equipment with more efficient machines in line with our on-going replacement programme.

Outlook

The schedules from our heavy truck customers suggest that the current lower levels of demand will continue in the short-term with improvements in the autumn. 

The new foundry line can produce parts with slightly larger dimensions, thus providing the opportunity to quote for work that would have previously been outside of our scope. This will result in incremental business. The facility in Scunthorpe then allows for significantly larger castings to be supplied to existing and new customers.

At the time of writing, with the nature of the parts we supply, we do not consider the changes to tariffs to be a significant issue to our existing business in the US.

As is well reported, the UK has the highest energy prices relative to our overseas competition, on top of which the Government's decision to increase national insurance is a considerable burden for UK manufacturers. These issues impact on our competitive position. The group continues to invest in productivity and efficiency measures to try to mitigate these challenges.

We will continue to develop opportunities with existing customers in areas such as the electrification of lighter trucks and build relationships in other markets such as wind energy, agriculture and in the US.

Dividend

The directors have considered carefully the outlook described above and the strong balance sheet, even after significant capital investment during the year, and have decided to recommend the payment of a final dividend at the same level as last year. Accordingly the directors are recommending the payment of a final dividend of 14.19 pence per share to be paid on 26 August 2025 to shareholders on the register on 18 July 2025. This, together with the interim dividend, gives a total dividend for the year of 18.40 pence per share.

Directors

As part of our succession planning, Stephen Harrison was appointed to the board as a non-executive director on 26 September 2024. Having been CEO of Forterra plc and currently non-executive chairman of Epwin Group plc and Tungsten West plc, Stephen brings significant relevant experience to the group.

I would like to thank Andrew Eastgate, who is not seeking re-election at the AGM, for his outstanding contribution to the board over the last seven years. Andrew will retire as a non-executive director on 26 August 2025.

I also wish to thank the directors, senior management and all of our employees for their hard work and commitment during the year.

A. N. Jones

Chairman

11 June 2025

Business and Financial Review

General overview

The underlying demand from our commercial vehicle customers (approximately 75% of group revenue) was down 20% when compared to the elevated levels of the previous year.

Our OEM customers have reported demand normalisation throughout the year which, as expected, has flowed through to the schedule reductions we have seen from them.

Whilst the European truck market has been lower in general, the reductions have been particularly severe with customers who have more exposure to the German market.

The US market was a notable exception, in the first half of the year particularly, and we saw increased penetration with existing customers. However, we did see a slight slowing in Q4 as uncertainty levels increased in that market.

In addition to the reduced demand, the result has been impacted by two items in the second half of the financial year. The first is, as a direct impact of lower volumes, an increase in power costs resulting from enforced penalties payable on forward purchased electricity volumes that were not required. The second relates to the start-up costs and trading losses associated with the new business in Scunthorpe, Castings Ductile, certain assets of which were purchased from administration on 14 June 2024.

The increased electricity costs, including provision for expected losses on the contract through to September 2025, have negatively impacted the year by £1.5 million. The elevated costs are not expected to impact profitability during the year ending 31 March 2026.

The Castings Ductile business in Scunthorpe, which produces castings up to 7 tonnes, made a loss in the year of £1.3 million. This includes £0.4 million of non-recurring costs to re-establish the business which had been underinvested in during the period leading up to administration.

The demand for larger castings (typically the capital goods market) is inherently variable and a slowdown was seen in the second half of the year. The business is now established and the sales team are generating orders with new customers in new markets, including leveraging off the customer base of the traditional foundry businesses.

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

•     Cash

•     Dividends per share

Foundry operations

As set out previously, customer demand has been at lower levels throughout the year. The foundry businesses experienced a decrease in sales output of 18.7% to 41,000 tonnes. After taking into account the reduction in weight from machining, this equates to approximately 45,500 tonnes of production.

On a like-for-like basis, excluding Castings Ductile, the reduction in sales volume was 20.8%, down to 39,950 tonnes.

External sales revenue reduced by 21.1% to £175.5 million. Of the total output weight for the year, excluding Castings Ductile, 67.3% related to machined castings compared to 63.3% in the previous year. The change reflects the trend of an increasing proportion of more complex, machined parts.

The segmental profit of £2.9 million was down £13.3 million on the prior year. This includes £2.8 million of additional electricity costs and the Castings Ductile loss as set out previously.

The result represents a profit margin of 1.5% on total segmental sales (2024 - 6.4%) reflecting the impact of the significant fall in the demand schedules.

Investment of £15.1 million has been made in the foundry businesses during the year. The most significant element of this was
£10.6 million of payments for the new production line at our William Lee site. Of that, £6.7 million relates to down payments for undelivered plant; this has been classified within prepayments. The expected cost of the new production facility remains in line with budget and is on target to be completed later this summer.

The additional £4.5 million capitalised includes three additional automation cells and the replacement of older production equipment. These investments will enable further production efficiencies to be realised.

Machining

The machining business generated total sales of £32.1 million in the year compared to £37.6 million in the previous year, a reduction of 14.6%. Of the total revenue, 4.6% was generated from external customers compared to 5.0% in 2024.

The segmental result for the year was a profit of £2.0 million (2024 - £3.7 million).

There was a time-lag between the lower levels of customer demand for the group and the reduction in the output from the machining business. This resulted in a lower revenue and profitability reduction compared to the foundries, but also meant that finished stock levels increased during the year.

We have invested £3.0 million during the year, which included £1.6 million on more efficient machining capacity in line with our machine replacement programme.

Business review and performance

Revenue

Group revenues decreased by 21.1% to £177.0 million compared to £224.4 million reported in 2024, of which 84% was exported (2024 - 85%).

The revenue from the foundry operations to external customers decreased by 21.1% to £175.5 million (2024 - £222.5 million) with the dispatch weight of castings to third-party customers decreasing by 18.7% to 41,000 tonnes (2024 - 50,450 tonnes).

Revenue from the machining operation to external customers decreased by 21.1% during the year to £1.5 million (2024 - £1.9 million).

Operating profit and segmental result

The group operating profit for the year was £4.8 million compared to £19.8 million reported in 2024, which represents a return on sales of 2.7% (2024 - 8.8%).

Finance income

The level of finance income decreased to £0.96 million compared to £1.53 million in 2024, reflecting the lower interest rates available on deposits during the financial year and the reduced sums on deposit.

Profit before tax

Profit before tax has decreased to £5.6 million from £21.3 million in the prior year.

Taxation

The tax charge of £1.45 million (2024 - £4.57 million) is made up of a current tax charge of £0.47 million (2024 - £4.25 million) and a deferred tax charge of £0.98 million (2024 - £0.31 million).

The effective rate of tax of 25.8% (2024 - 21.4%) is marginally higher than the main rate of corporation tax of 25% (2024 - 25%). The effective rate in the previous year was lower due to a credit to the deferred tax estimate relating to the prior year.

Earnings per share

Basic earnings per share decreased 75.0% to 9.60 pence (2024 - 38.45 pence), reflecting the 75.0% decrease in profit before tax.

Options over 66,787 shares were granted during the year (2024 - options over 37,620 shares). The company did not purchase any shares during the year (2024 - 100,000). The diluted weighted average number of shares has decreased to 43,672,384 resulting in a diluted earnings per share of 9.56 pence per share (2024 - 38.32 pence per share).

Dividends

The directors are recommending a final dividend of 14.19 pence per share (2024 - 14.19 pence per share) to be paid on
26 August 2025 to shareholders on the register on 18 July 2025. This would give a total ordinary distribution for the year of 18.40 pence per share (2024 - 18.32 pence per share).

Cash flow

The cash position at 31 March 2025 was £15.6 million compared to £32.5 million in the previous year.

The group generated cash from operating activities of £12.3 million compared to £21.6 million in 2024. When compared to 2024, the variance is mainly due to the significant reduction in operating profit of £15.6 million and a lower working capital outflow.

In the year to 31 March 2025, the most significant increase to working capital relates to an increase in receivables of £6.8 million compared to the start of the year. This includes £6.7 million of payments made on the new foundry line project which have been classified as prepayments on the basis they are stage payments on assets not yet delivered.

Corporation tax payments, net of overpayments received relating to prior years, during the year totalled £1.0  million compared to £2.6 million in 2024.

Capital expenditure during the year amounted to £19.8 million (2024 - £9.6 million), including £6.7 million of advanced deposit payments. As set out previously, and the charge for depreciation was £8.9 million (2024 - £8.9 million).

The company pays pensions on behalf of the two final salary pension schemes and then reclaims these advances from the schemes. During the year repayments of £4.0 million (2024 - £2.1 million) were received from the schemes and advances were paid on behalf of the schemes of £2.3 million (2024 - £2.1 million). The outstanding amount of these advances of £0.5 million will be repaid to the company during the current financial year.

Dividends paid to shareholders were £11.0 million in the year (2024 - £14.2 million) which includes £3.0 million in relation to a supplementary dividend in respect of the year ended 31 March 2024.

The company did not purchase any shares to be held in treasury (2024 - 100,000 shares at a total cost of £0.40 million).

The net cash and cash equivalents movement for the year was a decrease of £17.0 million (2024 - decrease of £3.0 million).

At 31 March 2025, the total cash and deposits position was £15.7 million (2024 - £32.5 million).

Pensions

The pension valuation showed an increase in the surplus, on an IAS 19 (Revised) basis, to £12.2 million compared to £10.9 million in the previous year.

The majority of the liabilities of the schemes are covered by an insurance asset that fully matches, subject to final adjustment of the bulk annuity pricing, the remaining pension liabilities of the schemes. However, there remains the uninsured element relating to the GMP equalisation liability.

The pension 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 2025 were £127.4 million (2024 - £134.0 million). Other than the total comprehensive income for the year of £4.3 million (2024 - £16.8 million), the only movements relate to the dividend payment of £11.0 million (2024 - £14.2 million) and share-based payment charge of £0.14 million (2024 - £0.10 million).

Non-current assets have increased to £68.2 million (2024 - £61.8 million). Property, plant and equipment has increased by £4.3 million with investment during the year being at a higher level than the depreciation charge. The group has recognised a right-of-use asset in the year in respect of the operating lease negotiated at the time of the Castings Ductile asset purchase; the year end balance being £2.1 million.

Current assets have decreased to £100.1 million (2024 - £112.3 million) with the receivables increase being offset by a reduction in cash levels.

Total liabilities have increased to £40.8 million (2024 - £40.1 million), reduction in trade payables being offset by the recognition of lease liabilities in respect of the property lease.

Consolidated Statement of Comprehensive Income

for the year ended 31 March 2025

Consolidated Balance Sheet

as at 31 March 2025

Consolidated Cash Flow Statement

for the year ended 31 March 2025

Consolidated Statement of Changes in Equity

for the year ended 31 March 2025

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)   Treasury shares - Value of shares acquired by the company.

d)   Other reserve - Amounts transferred from share capital on redemption of issued shares.

e)   Retained earnings - Cumulative net gains and losses recognised in the statement of comprehensive income.

Financial Information

1 Basis of preparation

The group financial statements have been prepared in accordance with UK-adopted international accounting standard in conformity with the requirements of the Companies Act 2006.

The IFRSs applied in the group financial statements are subject to ongoing amendment by the IASB 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 2025 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 on a going concern basis and 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. A summary of the principal group IFRS accounting policies is set out below. The presentation currency used is sterling and the amounts have been presented in round thousands ("£000").

2 Operating segments

For internal decision-making purposes, the group is organised into four operating companies which are considered to be the operating segments of the group: Castings P.L.C., William Lee Limited and Castings Ductile Limited are aggregated into Foundry operations, due to the similar nature of the businesses, and CNC Speedwell Limited is the Machining operation. All non-current assets are based in the United Kingdom. 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 2025:

The following shows the revenues, results and total assets by reportable segment in the year to 31 March 2024:

All revenue arises in the United Kingdom from the group's continuing activities.

3 Income tax expense

4 Dividends

The directors are proposing a final dividend of 14.19 pence (2024 - 14.19 pence) per share totalling £6,166,700 (2024 - £6,166,700). This dividend has not been accrued at the balance sheet date.

5 Earnings per share and diluted earnings per share

The calculation of the basic and diluted earnings per share is based on the following data:

6 Property, plant and equipment

The net book value of land and buildings includes £2,168,000 (2024 - £2,168,000) for land which is not depreciated.

Included within plant and equipment are assets in the course of construction with a net book value of £5,630,000 (2024 - £890,000) which are not depreciated.

7 Commitments and contingencies

Capital commitments primarily relate to the investment in the new foundry line.

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 2025, the directors do not consider any significant liability will arise in respect of any such claims (2024 - £nil).

8 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 2024 was a surplus of £12,233,000 (2024 - £10,863,000). On 24 March 2020, the Trustees of the schemes completed a bulk annuity insurance buy-in with Aviva Life & Pensions UK Limited thus providing certainty and security for all members of the schemes. The buy-in secures an insurance asset from Aviva that fully matches, subject to final price adjustment of the bulk annuity pricing, the remaining pension liabilities of the schemes. The buy-in covers the investment, longevity, interest rate and inflation risks in respect of the schemes and therefore substantially reduces the pension risk to the company.

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.

9 Preliminary statement

The financial information set out above does not constitute the company's statutory financial statements for the years ended 31 March 2025 or 2024 but is derived from those financial statements. Statutory financial statements for 2024 have been delivered to the Registrar of Companies and those for 2025 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 20 June 2025 and will be available on the company's website, www.castings.plc.uk, from 23 June 2025.

Appendix 1 - Principal Risks and Uncertainties

In common with all trading businesses, the group is exposed to a variety of risks in the conduct of its normal business operations.

The directors regularly assess the principal risks facing the entity. Whilst it is difficult to completely 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.

The group does not operate a formal internal audit function; however, risk management is overseen by senior management and group risk registers are maintained and regularly reviewed, alongside factors which may result in changes to risk assessments or require additional mitigation measures to be implemented.

External consultants are used to assess the design and effectiveness of controls relating to IT security to provide specialist support to management in this area.

Key risks arising or increasing in impact are reviewed at both group and subsidiary board meetings.

The impact of each risk set out below has been described as increased, stable or decreased dependent upon whether the business environment and group activity has resulted in a change to the potential impact of that risk.