TIDMCMH
RNS Number : 9997A
Chamberlin PLC
04 June 2019
AIM: CMH
4 June 2019
CHAMBERLIN plc
("Chamberlin", the "Company" or the "Group")
FINAL RESULTS
for the year ended 31 March 2019
KEY POINTS
Financial
-- Sale of engineering subsidiary, Exidor Ltd ("Exidor"),
was completed in December 2018
-- Revenues on continuing operations up 9.3% to GBP33.0m
(2018: GBP30.2m)
-- Gross margin of 11.4% (2018: 15.5%)
-- Underlying operating loss before tax* of GBP0.9m (2018:
GBP0.3m). This result is not directly comparable to 2018's
due to the adoption of IFRS 16, which has resulted in
increased finance expense of GBP0.1m and reduced operating
expenses of GBP0.1m in the year
-- Reported profit of GBP2.9m, which was mainly generated
from the sale of Exidor (GBP6.2m net profit) offset by
an impairment of GBP3.0m on the fixed assets of the foundry
operations as the value of the asset could not be supported
by the current level of business
-- IFRS diluted loss per share for continuing operations
increased to 16.8p (2018: loss per share of 12.4p)
-- Capital expenditure of GBP1.2m (2018: GBP3.0m), excluding
GBP0.8m of leased assets due to early adoption of IFRS
16
-- Net debt reduced to GBP5.4m as at the year-end (2018:
GBP9.6m). This includes machining facility investment
and IFRS 16 liabilities of GBP1.0m
Operational
-- Foundry revenues grew by 11.2% to GBP29.3m, mainly reflecting
a strong first half
-- Continuing engineering revenues decreased by 3.8% to GBP3.6m
primarily due to a weaker quarter 4 because of Brexit
uncertainties although profitability increased
-- Sale of Exidor to ASSA ABLOY Limited for a headline consideration
of GBP10.0m:
o generated cash proceeds of GBP8.5m after deductions
for net debt transferred, working capital, retentions
and transaction costs;
o strengthened the Group's balance sheet
o facilitated a one-off contribution of GBP2.5m towards
the defined benefit pension liability
*Underlying figures are stated before exceptional items (GMP
Equalisation, impairment of fixed assets and onerous leases) and
non-underlying costs (administration costs of the pension scheme,
net financing costs on pension obligations and share based payment
costs) together with the associated tax impact.
Chairman, Keith Butler-Wheelhouse, commented:
"Although revenues are expected to reduce, we are positioning
Chamberlin to deliver an improved operating financial performance
in the 2019/20 financial year".
Enquiries
Chamberlin plc T: 01922 707100
Kevin Nolan, Chief Executive
Neil Davies, Finance Director
Cenkos Securities plc T: 020 7397 8900
(Nominated Adviser and Broker)
Russell Cook, Katy Birkin
KTZ Communications T: 020 3178 6378
(Financial PR)
Katie Tzouliadis, Dan Mahoney
Chairman's Statement
For the last several years we have been seeking to grow both our
foundry business and our two smaller engineering businesses. During
the year we concluded that we did not have the financial resources
to continue this growth on all fronts policy and accordingly set
about finding a new owner for Exidor, better placed to develop this
business, and who could reflect the potential of the business in
the price. Exidor was accordingly sold to ASSA ABLOY for a headline
consideration of GBP10m during the year.
The proceeds were used to reduce both the level of debt and the
pension deficit. The pension deficit as at the year end was GBP2.6m
compared to GBP5.1m last year.
On a like-for-like basis, net debt reduced from GBP8.9m in 2018
to GBP4.4m in 2019. Chamberlin chose to adopt the new IFRS 16
accounting standard to capitalise finance leases early, and this
has increased the reported net debt by GBP1.0m to GBP5.4m.
Although each of our businesses grew during the year, the
performance of our principal foundry operations deteriorated in the
second half, with our automotive turbocharger customers reducing
their schedules. This partly reflected upheavals in their
activities as the car manufacturers adjusted their offerings in
response to the new emissions testing regime and took account of
wider trading conditions.
Our profit after tax of GBP1.5m incorporated the gain on the
sale of Exidor, which amounted to GBP6.2m, offset by an impairment
of GBP3.0m on the fixed assets of the foundry division. The
underlying operating loss on continuing operations was GBP0.9m
(2018: GBP0.3m). We are now engaged in right-sizing our structure
to better match trading conditions.
The Board and Staff
David Roberts resigned as Finance Director and Company Secretary
and was replaced by Neil Davies in December 2018. Neil, formerly
Finance Director of European Operations for International
Automotive Components, has over 20 years' experience in senior
finance roles within high volume automotive manufacturing. I would
like to record my thanks to David for his strong contribution to
the Company and to extend a warm welcome to Neil.
Chamberlin has a hard-working and dedicated team and, on behalf
of the Board, I would like to thank everyone for their high level
of commitment during the year.
Outlook
Although revenues are expected to reduce, we are positioning
Chamberlin to deliver an improved operating financial performance
in the 2019/20 financial year.
Keith Butler-Wheelhouse
Chairman
3 June 2019
Chief Executive's Review
The Group is pleased to report a profit after tax of GBP1.5m
based on revenue of GBP33.0m. This was driven by a one-off profit
of GBP6.2m from the disposal of Exidor, part of our engineering
operations, partly offset by an impairment charge of GBP3.0m
against some of our foundry fixed assets.
Operationally, the technical issues faced during 2017-18 were
mainly resolved by mid-2018 but the lower revenues in the second
half resulted in the Group posting an underlying operational loss
on continuing operations before finance cost and tax of GBP0.9m
(2018: GBP0.3m loss).
Foundries
Foundry revenues increased by 11.2% year-on-year from GBP26.4m
to GBP29.3m benefiting from a full year contribution from our
machining facility. Sales slowed in the second half due to the
tightening demand in the European turbocharger market, partly
arising from the disruption to vehicle manufacturers schedules by
the new Worldwide Harmonised Light Vehicle Test Procedure "WLTP"
emissions testing regime.
Operating profits were held back in the first half by
operational issues in our new machining facility, which are now
resolved. In the second half the reducing volumes constrained the
profit opportunity. Second half volumes in the turbo-charger
focussed Walsall business unit were 16% below the first half
levels, and it was not possible to immediately reduce overheads in
step with sales. Additionally a foundry customer entered into
administration, impacting our profit by approximately GBP0.1m.
Underlying operating loss for the year for the continuing
businesses was below break-even with a negative margin of -0.7%
(2018: +2.0%). Overhead reduction and cost control are a main focus
as we adjust to the lower demand.
The Group operates two foundries, at Walsall and Scunthorpe,
each with a different specialisation. Our foundry at Walsall is our
main operation and drives the majority of the foundry division's
sales. Walsall's expertise is in producing small castings,
typically below 3kg in weight that have complex internal geometry.
The complex geometry is achieved through the use of innovative core
design and assembly techniques and, importantly, the foundry is
capable of producing these castings in high volumes.
The automotive turbocharger segment is a major market for
Walsall, with modern designs requiring precise alignment of cooling
and lubrication passages to meet the increased performance demanded
by modern engines. Legislation is a major driver of this market,
with the requirement to reduce nitrogen dioxide emissions promoting
the introduction of smaller, turbocharged petrol engines.
Approximately 74% of Walsall's casting production is for petrol
engines.
Walsall is one of only four specialist foundries in Europe with
the technical capability of supplying castings for turbochargers
and, with our new machining capability, the foundry is now the only
fully integrated supplier of grey iron bearing housings in
Europe.
The Scunthorpe foundry specialises in heavy castings weighing up
to 6,000kg that have complex geometry and challenging metallurgy.
These castings are used in applications where there is a
requirement for high strength or high temperature performance, for
instance in large process compressors, industrial gas turbines and
mining, quarrying and construction equipment, and the majority of
customers are Original Equipment Manufacturers ("OEMs"). Demand at
the foundry increased as we continued to work to deepen and broaden
customer relationships, and to achieve competitive pricing by means
of operational efficiency.
Engineering
The sale of our Exidor business was a key event for the year.
The headline consideration of GBP10m gave rise to a profit of
GBP6.2m, allowing the Group to strengthen its balance sheet and
make a one-off cash contribution into our closed final salary
pension fund of GBP2.5m.
Petrel, our remaining engineering business, has a
well-established reputation for designing and manufacturing high
quality lighting and control equipment for use in hazardous or
demanding environments. It supplies customers across the UK and
Europe as well as internationally. Revenues decreased by 3.8%
year-on-year mainly due to concerns over Brexit by our customers
but the business managed to grow profits by 9.6% mainly due to
excellent cost control. The transition to LED lighting provides
growth opportunities and continues to be a main focus as well as
developing the business's portable light fittings range.
Financial Matters and Outlook
Chamberlin has adopted IFRS 16 "Accounting for Right of Use
Assets" early, and the effect has been an increase in the reported
net debt of GBP751k. Including this reclassification, net debt at
the year-end was GBP5.4m compared to GBP9.6m in the prior year.
Following the cash injection into the pension fund it is now 86%
funded on the IAS19 accounting basis.
During the year the carrying value of our fixed assets was
reviewed, and a non-cash impairment charge was made where the value
of the asset could not be supported by the current level of
business.
Cash is, and will remain, a key performance measure for the
Group.
Looking to the new financial year, near-term lower volumes from
the automotive market will result in lower revenues. Petrel faces a
prospective business move during the year, involving some one-off
cash outflows. We are continuing to work with our customers on new
projects that will increase the sales opportunity in future years.
The major focus in the next financial year will be on reducing
costs to match the lower level of output and on improving margins,
in addition to developing opportunities for revenue growth.
Kevin Nolan
Chief Executive
3 June 2019
Finance Review
Overview
Sales from continuing operations increased by 9.3% during the
year to GBP33.0m (2018: GBP30.2m). Gross profit margin decreased to
11.4% from 15.5% in 2018.
Underlying operating loss before tax increased to GBP1.3m (2018:
GBP0.7m).
The IFRS results show a profit for the year of GBP1.5m (2018:
loss of GBP0.8m), which includes an asset impairment of GBP3.0m
(2018: nil) and a statutory profit per share of 19.2p (2018: loss
per share 12.2p).
Non-underlying exceptional items
Exceptional items in the year included GBP0.1m (2018: GBP0.1m)
relating to the realignment of the cost base of the Group, GBP3.0m
for the impairment of assets and GBP0.3m for Guaranteed Minimum
Pension ("GMP") equalisation.
Tax
The effective rate of taxation at Group level was 1% primarily
due to the impairment loss and profit from the sale of Exidor both
being exempt from tax. The tax position will be aided in the coming
years through the reduced rate of tax to 17% and as we utilise
elements of losses carried forward.
Cash generation and financing
Operating cash outflow from continuing operations was GBP1.0m
(2018: inflow of GBP0.8m).
Capital expenditure for the year decreased to GBP1.2m (2018:
GBP2.7m) excluding GBP0.8m on leased assets included under IFRS 16.
Depreciation and amortisation was GBP1.7m (2018: GBP1.3m) for the
year.
Our net proceeds from the sale of Exidor was GBP8.5m with
GBP2.5m paid towards the pension deficit. Net borrowings as at 31
March 2019 decreased by GBP3.3m (2018: increase GBP3.6m).
Foreign exchange
It is the Group's policy to minimise risk to exchange rate
movements affecting sales and purchases by economically hedging or
netting currency exposures at the time of commitment, or when there
is a high probability of future commitment, using currency
instruments (primarily forward exchange contracts). A proportion of
forecast exposures are hedged depending on the level of confidence
and hedging is topped up following regular reviews. On this basis
up to 50% of the Group's annual exposures are likely to be hedged
at any point in time and the Group's net transactional exposure to
different currencies varies from time to time.
Approximately 60% of the Group's revenues are denominated in
Euros. During the year to 31 March 2019 the average exchange rate
used to translate into GBP sterling was EUR1.13 (2018:
EUR1.26).
Pension
The Group's defined benefit pension scheme was closed to future
accrual in 2007. Following the last triennial valuation, as at 1
April 2016, contributions were set at GBP0.3m per year for the
period under review increasing by 3% per year thereafter based on a
deficit recovery period of 22 years.
The pension expense for the defined benefit scheme was GBP0.2m
in 2019 (2018: GBP0.3m) and is shown in non-underlying results. The
Group cash contribution during the year was GBP0.2m (2018: GBP0.3m)
in addition to a special payment of GBP2.5m following the sale of
Exidor.
The Group operates a defined contribution pension scheme for its
current employees. The cost of GBP0.2m (2018: GBP0.2m) is included
within underlying operating performance.
A Guaranteed Minimum Pension (GMP) equalisation review was
undertaken resulting in an increase in the pension liability of
GBP295,000. The IAS 19 deficit at 31 March 2019 was GBP2.6m (2018:
GBP5.1m).
Neil Davies
Group Finance Director
3 June 2019
Consolidated Income Statement
for the year ended 31 March 2019
Year ended 31 March 2019 Year ended 31 March 2018
------------------------------------------- -------------------------------------------
(+) Exceptional (+) Exceptional
/ Non- / Non-
Note Underlying underlying Total Underlying underlying Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Revenue 3 32,958 - 32,958 30,153 - 30,153
Cost of sales (29,192) - (29,192) (25,474) - (25,474)
Gross profit 3,766 - 3,766 4,679 - 4,679
Other operating
expenses 6 (4,652) (3,572) (8,224) (4,995) (324) (5,319)
----------- ------------------ ---------- ------------ ------------------ ---------
Operating loss (886) (3,572) (4,458) (316) (324) (640)
Finance costs 4 (387) (112) (499) (346) (126) (472)
----------- ------------------ ---------- ------------ ------------------ ---------
Loss before
tax (1,273) (3,684) (4,957) (662) (450) (1,112)
Tax (expense)/
credit (63) 111 48 (324) 85 (239)
----------- ------------------ ---------- ------------ ------------------ ---------
Loss for the
year from
continuing
operations (1,336) (3,573) (4,909) (986) (365) (1,351)
Discontinued
operations 7
Profit for the year
from discontinued
operations - 6,435 6,435 539 539
----------- ------------------ ---------- ------------ ------------------ ---------
(Loss)/ profit for
the year
attributable to
equity holders of
the parent company (1,336) 2,862 1,526 (986) 174 (813)
=========== ================== ========== ============ ================== =========
(Loss) per share
from continuing
operations:
Basic 5 (16.8)p (12.4)p
Diluted 5 (16.8)p (12.4)p
Earnings per share
from discontinued
operations:
Basic 5 80.9p 6.8p
Diluted 5 80.9p 6.8p
Total earnings
/ (loss) per
share:
Basic 5 19.2p (12.2)p
Diluted 5 19.2p (12.2)p
*Underlying figures are stated before exceptional items (GMP
Equalisation, impairment of fixed assets and onerous leases)
and non-underlying costs (administration costs of the pension
scheme, net financing costs on pension obligations and share
based payment costs) together with the associated tax impact.
Consolidated Statement of Comprehensive Income
for the year ended 31 March 2019
2019 2018
Note GBP000 GBP000
Profit/(loss) for the year 1,526 (813)
Other comprehensive income
Reclassification for cash flow hedge
included in sales - (18)
Movements in fair value on cash flow
hedges taken to other comprehensive
income 134 87
Deferred tax on movement in cash
flow hedges (23) (12)
Net other comprehensive income that
may be recycled to profit and loss 111 57
Re-measurement losses on pension
assets and liabilities 9 76 (8)
Deferred/ current tax (expense)/
credit on re-measurement losses on
pension scheme (15) 2
Net other comprehensive income/ (loss)
that will not be recycled to profit
and loss 61 (6)
Other comprehensive income for the
year net of tax 172 51
Total comprehensive income / (expense)
for the period attributable to equity
holders of the parent Company 1,698 (762)
======= =======
Consolidated Balance Sheet
at 31 March 2019
Note 31 March 31 March
2019 2018
GBP000 GBP000
Non-current assets
Property, plant and equipment 7,769 12,454
Intangible assets 290 427
Deferred tax assets 906 1,136
--------- ---------
8,965 14,017
Current assets
Inventories 2,702 3,551
Trade and other receivables 6,052 7,985
Cash at Bank 291 -
9,045 11,536
Total assets 18,010 25,553
========= =========
Current liabilities
Financial liabilities 8 2,683 7,091
Trade and other payables 4,600 7,465
7,283 14,556
Non-current liabilities
Financial liabilities 8 2,966 2,538
Deferred tax 53 23
Provisions 200 200
Defined benefit pension scheme
deficit 9 2,640 5,080
--------- ---------
5,859 7,841
Total liabilities 13,142 22,397
Capital and reserves
Share capital 1,990 1,990
Share premium 1,269 1,269
Capital redemption reserve 109 109
Hedging reserve 96 (15)
Retained earnings 1,404 (197)
--------- ---------
Total equity 4,868 3,156
Total equity and liabilities 18,010 25,553
========= =========
Consolidated Cash Flow Statement
for the year ended 31 March 2019
Year ended Year ended
31 March 31 March
2019 2018
GBP000 GBP000
Operating activities
(Loss) for the year before tax (4,957) (1,112)
Adjustments to reconcile (loss)
for the year to net cash (outflow)/
inflow from operating activities:
Net finance costs excluding pensions 387 347
Impairment charge on property,
plant and equipment 3,043 -
Depreciation of property, plant
and equipment 1,688 1,280
Amortisation of software 59 50
Amortisation and impairment of
development costs 25 10
Profit on disposal of property,
plant and equipment - 5
Share based payments 40 46
One-off contribution made to the
pension scheme (2,500) -
Remaining difference between pension
contributions paid and amounts
recognised in the Consolidated
Income Statement 137 (137)
(Increase)/ Decrease in inventories (388) 74
Decrease/ (Increase) in receivables 419 (315)
(Decrease)/ Increase in payables (1,332) 543
------------ -------------------------
Cash (outflow)/ inflow from continuing
operations (3,379) 791
Cash inflow from discontinued operations 491 509
------------ -------------------------
Net cash (outflow)/ inflow from
operating activities (2,888) 1,300
------------ -------------------------
Investing activities
Purchase of property, plant and
equipment (1,188) (2,726)
Purchase of software - (16)
Development costs (22) (24)
Proceeds from sale of subsidiary 8,520 -
Cash and cash equivalents disposed (1,146) -
Investing activities from discontinued
operations (125) (207)
Net cash inflow/ (outflow) from
investing activities 6,039 (2,973)
------------ -------------------------
Financing activities
Interest paid (387) (347)
Repayment of asset loan - (175)
Net invoice finance (outflow)/
inflow (1,832) 918
Import loan (outflow)/ inflow (873) 1,137
Import loan facility repayment - (1,235)
Finance lease payment (781) -
Finance lease additions 1,291 849
Financing activities from discontinued
operations 207 257
Net cash (outflow)/ inflow from
financing activities (2,375) 1,404
------------ -------------------------
Net increase/ (decrease) in cash
and cash equivalents 776 (269)
Cash and cash equivalents at the
start of the year (485) (216)
Cash and cash equivalents at the
end of the year 291 (485)
============ -------------------------
Cash and cash equivalents included
in discontinued operations - 572
Cash and cash equivalents for continuing
operations 291 (1,057)
============ =========================
Cash and cash equivalents comprise:
Cash at bank/ (overdraft) 291 (485)
------------ -------------------------
291 (485)
============ =========================
Consolidated statement of changes in equity
Attributable
to equity
Share Capital holders
Share premium redemption Hedging Retained of the
capital account reserve reserve earnings parent
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Balance at 1 April
2017 1,990 1,269 109 (72) 582 3,878
Loss for the year - - - - (813) (813)
Other comprehensive
income for the year
net of tax - - - 57 (6) 51
--------- --------- ------------ --------- ---------- -------------
Total comprehensive
income/ (expense) - - - 57 (819) (762)
Share based payment - - - - 46 46
Deferred tax on
employee share options - - - - (6) (6)
--------- --------- ------------ --------- ---------- -------------
Total of transactions
with shareholders - - - - 40 40
Balance as at 1
April 2018 1,990 1,269 109 (15) (197) 3,156
Cumulative impact - - - - - -
of IFRS 16
--------- --------- ------------ --------- ---------- -------------
Revised Balance
at 1 April 2018 1,990 1,269 109 (15) (197) 3,156
Profit for the year - - - - 1,526 1,526
Other comprehensive
income for the year
net of tax - - - 111 61 172
--------- --------- ------------ --------- ---------- -------------
Total comprehensive
income - - - 111 1,588 1,699
Share based payments - - - - 40 40
Deferred tax on
employee share options - - - - (27) (27)
--------- --------- ------------ --------- ---------- -------------
Total of transactions
with shareholders - - - - 13 13
Balance at 31 March
2019 1,990 1,269 109 96 1,404 4,868
========= ========= ============ ========= ========== =============
Share premium account
The share premium account balance includes the proceeds that
were above the nominal value from issuance of the Company's equity
share capital comprising 25p shares.
Capital redemption reserve
The capital redemption reserve has arisen on the cancellation of
previously issued shares and represents the nominal value of those
shares cancelled.
Hedging reserve
The hedging reserve records the effective portion of the net
change in the fair value of the cash flow hedging instruments
related to hedged transactions that have not yet occurred.
Retained earnings
Retained earnings include the accumulated profits and losses
arising from the Consolidated Income Statement and certain items
from the Statement of Comprehensive Income attributable to equity
shareholders, less distributions to shareholders.
NOTES TO THE PRELIMINARY ANNOUNCEMENT
1. AUTHORISATION OF FINANCIAL STATEMENTS AND STATEMENT OF COMPLIANCE WITH IFRS
The Group's and Company's financial statements of Chamberlin for
the year ended 31 March 2019 were authorised for issue by the board
of directors on 3 June 2019 and the balance sheets were signed on
the Board's behalf by Kevin Nolan and Neil Davies. The Company is a
public limited company incorporated and domiciled in England &
Wales. The Company's ordinary shares are traded on the AIM market
of the London Stock Exchange.
The Group's financial statements have been prepared in
accordance with International Financial Reporting Standards (IFRS)
as adopted by the European Union.
The financial information set out in this announcement does not
constitute the statutory accounts of the Group for the years to 31
March 2019 or 31 March 2018 but is derived from the 2019 Annual
Report and Accounts. The Annual Report and Accounts for 2018 have
been delivered to the Registrar of Companies and the Group Annual
Report and Accounts for 2019 will be delivered to the Registrar of
Companies in due course. The auditors, Grant Thornton UK LLP, have
reported on the accounts for the year ended 31 March 2019 and have
given an unqualified report which does not contain a statement
under Sections 498(2) or 498(3) of the Companies Act 2006 or an
emphasis of matter paragraph.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of preparation
The consolidated financial statements are presented in sterling
and all values are rounded to the nearest thousand pounds (GBP000)
except when otherwise indicated.
Basis of consolidation
The consolidated financial statements comprise the financial
statements of Chamberlin plc and its subsidiaries as at 31 March
each year. The financial statements of subsidiaries are prepared
for the same reporting year as the parent Company, using consistent
accounting policies. All inter-Company balances and transactions,
including unrealised profits arising from intra-group transactions,
have been eliminated in full. Subsidiaries are consolidated from
the date on which control is transferred to the Group and cease to
be consolidated from the date on which control is transferred out
of the Group.
Accounting policies
The preliminary announcement has been prepared on the same basis
as the financial statements for the year ended 31 March 2018
including IFRS 9 Financial Instruments and IFRS 15 Revenue from
Contracts with Customers noting that there is no impact for the
Group however we elected to adopt the new IFRS 16 accounting
standard to capitalise finance leases early (effective from 1(st)
April 2018), increasing the overall reported debt by GBP751k.
Financial impact of initial application of IFRS 16
The table below shows the amount of adjustment for each
financial statement line item affected by the application of IFRS
16 for the current year. The weighted average incremental borrowing
rate applied to lease liabilities recognised in the consolidated
balance sheet at the date of initial application is 4.8%
Impact on assets, Liabilities As previously IFRS 16 adjustment As restated
and equity as at 1 April reported
2018
GBP'000 GBP'000 GBP'000
Property, plant and equipment
Land and Buildings - NBV 3,546 704 4,250
Plant and machinery- NBV 8,157 - 8,157
Motor vehicles- NBV - 47 47
-------------- ------------------- ------------
Total 11,703 751 12,454
============== =================== ============
Financial liabilities <
1 year 6,989 102 7,091
Financial liabilities >1
year 1,889 649 2,538
-------------- ------------------- ------------
Total 8,878 751 9,629
============== =================== ============
Going concern
The Group's forecasts and projections, taking account of
reasonably possible changes in trading conditions, show that the
Group is able to operate within the level of its current bank
facilities, comprising a GBP7.75m ongoing invoice discounting and
finance leases of GBP4.0m repayable over 5 years. As a consequence,
the Directors believe that the Group is well placed to manage its
business and financial risks successfully.
After making enquiries, the Directors have a reasonable
expectation that the Group has adequate resources to continue in
operational existence for the foreseeable future. For this reason,
they continue to adopt the going concern basis in preparing the
Financial Statements.
3. SEGMENTAL ANALYSIS
For management purposes, the Group is organised into two
operating divisions according to the nature of the products and
services. Operating segments within those divisions are combined on
the basis of their similar long term characteristics and similar
nature of their products, services and end users as follows:
The Foundries segment is a supplier of iron castings, in raw or
machined form, to a variety of industrial customers who incorporate
the castings into their own products or carry out further machining
or assembly operations on the castings before selling them on to
their customers.
The engineering segment provides manufactured and imported
products to distributors and end-users operating in the safety and
security markets. The products fall into the categories of
hazardous area lighting and control gear.
Management monitors the operating results of its divisions
separately for the purposes of making decisions about resource
allocation and performance assessment. The Chief Operating Decision
Maker is the Chief Executive.
(i) By operating segment
Segmental operating
Segmental revenue profit
Year ended 2019 2018 2019 2018
GBP000 GBP000 GBP000 GBP000
Foundries 29,343 26,396 (211) 528
Engineering 3,615 3,757 251 229
---------- ---------- ---------- ------------
Segmental results 32,958 30,153 40 757
========== ========== ========== ============
Reconciliation of reported segmental
operating profit
Segment operating profit 40 757
Shared costs (excluding share
based payment charge) (927) (1,073)
Exceptional and non-underlying
costs (3,684) (324)
Net finance costs (387) (472)
Loss before tax from continuing
operations (4,957) (1,112)
Segmental assets
Foundries 15,244 18,320
Engineering 1,402 1,563
---------- ------------
16,646 19,883
---------- ------------
Segmental liabilities
Foundries (3,840) (5,522)
Engineering (794) (949)
---------- ------------
(4,634) (6,471)
---------- ------------
Segmental net assets 12,012 13,412
Unallocated net liabilities (7,144) (12,564)
Unallocated discontinued - 2,308
------------------------ ---------
Total net assets 4,868 3,156
======================== =========
Unallocated net liabilities include the pension liability of
GBP2,640,000 (2018: GBP5,080,000), financial liabilities of
GBP5,359,000 (2018: GBP8,134,000) and deferred tax asset of
GBP853,000 (2018: GBP650,000).
Capital expenditure,
depreciation and amortisation
and impairment
Capital additions Foundries Engineering Total
2019 2018 2019 2018 2019 2018
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Property, plant and
equipment 972 2,720 8 238 980 2,958
Software - 9 - 7 - 16
Development costs - - 22 24 22 24
Depreciation, amortisation Foundries Engineering Total
and impairment
2019 2018 2019 2018 2019 2018
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Property, plant and
equipment (1,458) (1,208) (49) (217) (1,507) (1,425)
Software (49) (54) (7) (10) (56) (64)
Development costs - - (18) (10) (18) (10)
(ii) By geographical segment
2019 2018
Revenue by location of customer: GBP000 GBP000
United Kingdom 12,203 10,292
Italy 3,743 5,835
Germany 3,124 4,100
Rest of Europe 13,024 9,291
Other countries 864 635
---------- -------
32,958 30,153
========== =======
4. FINANCE COSTS
2019 2018
GBP000 GBP000
Bank overdraft interest payable (335) (164)
Interest expense on lease liabilities (52) -
Finance cost of pensions (112) (126)
------- -------
(499) (472)
======= =======
5. (LOSS)/ EARNINGS PER SHARE
The calculation of (loss)/ earnings per share is based on the
profit attributable to shareholders and the weighted average number
of ordinary shares in issue. In calculating the diluted (loss)/
earnings per share, adjustment has been made for the dilutive
effect of outstanding share options. Underlying (loss)/ earnings
per share, which excludes exceptional costs and non-underlying
items, as analysed below, has also been disclosed as the Directors
believe this allows a better assessment of the underlying trading
performance of the Group. Exceptional costs and non-underlying
items are detailed in note 6.
2019 2018
GBP000 GBP000
Loss for basic earnings per share (4,909) (1,351)
Exceptional/ non-underlying costs- continuing
operations 3,113 60
Net financing costs and service cost on
pension obligations 531 344
Share based payment charge 40 46
Taxation effect of the above (111) (85)
Loss for underlying loss per share (1,336) (986)
========== ==========
(Loss) per share (pence) from continuing
operations:
Underlying (16.8) (12.4)
Diluted underlying (16.8) (12.4)
2019 2018
GBP000 GBP000
Discontinued loss for basic earnings per
share 6,435 539
Exceptional/ non-underlying costs (3,684) (450)
Taxation effect of the above 111 85
---------- ----------
Earnings for underlying earnings per share 2,862 173
========== ==========
Earnings per share (pence) from discontinued
operations:
Underlying 80.9 6.8
Diluted underlying 80.9 6.8
Total earnings/ (loss) per share (pence):
Underlying 19.2 (12.2)
Diluted underlying 19.2 (12.2)
2019 2018
Number Number
'000 '000
Weighted average number of ordinary shares 7,958 7,958
Adjustment to reflect shares under options 424 350
---------- ----------
Weighted average number of ordinary shares
- fully diluted 8,382 8,308
========== ==========
As at 31 March 2019 and 31 March 2018 there is no adjustment in
the total diluted loss per share calculation for the 424,000 (2018:
350,000) shares under option as they are required to be excluded
from the weighted average number of shares for diluted loss per
share as they are anti-dilutive for the period then ended.
6. EXCEPTIONAL AND NON-UNDERLYING COSTS
2019 2018
GBP000 GBP000
Group reorganisation 52 60
Asset impairment 3,043 -
Onerous leases 17 -
GMP Equalisation 295 -
------- -------
Exceptional items 3,408 60
Defined benefit pension scheme administration
costs 124 218
Share based payment charge 40 46
Non-underlying other operating expenses 164 264
Finance cost of pensions 112 126
Taxation
- tax effect of exceptional and non-underlying
costs (111) (85)
------- -------
3,572 365
------- -------
During 2019 the Group continued to rationalise its operations.
Group reorganisation costs, including redundancy and recruitment,
relate to this rationalisation.
The Group undertook an impairment review of two of its sites
within the foundry division which identified the assets were
identified that the prior carrying value could not be supported by
the future value to the business.
Guaranteed Minimum Pension (GMP) equalisation review was
undertaken resulting in an increase in the pension liability of
GBP295,000.
7. DISCONTINUED OPERATIONS
On 19 December 2018 Exidor was sold. As a result the results of
Exidor are classified as a discontinued operation and presented as
such in these financial statements.
The operating profit of Exidor is summarised
as follows:
GBP000
Property, plant and equipment 1,135
Intangible assets 74
Deferred tax 70
Inventories 1,491
Trade and other receivables 1,882
Cash and cash equivalents 1,146
Trade and other payables (3,508)
------------------
Net assets disposed 2,291
Consideration 10,000
Working capital adjustment (98)
Debt adjustment (639)
Claim retention (350)
8,913
Disposal costs (393)
------------------
Net cash received relating to disposal 8,520
==================
Cash proceeds 8,520
Net assets disposed (2,291)
------------------
Profit on disposal 6,229
==================
Included in the consideration is a retention of GBP350,000
relating to a customer claim.
The results prior to 19 December 2018 for the discontinued
operations included in the consolidated income statement were:
2019 2018
'000 '000
Revenue 5,924 7,517
Operating profit 305 672
Finance costs (23) (30)
------- -------
Profit before tax 282 642
Tax (76) (103)
Profit on disposal 6,229 -
Profit of discontinued operations 6,435 539
======= =======
Exidor contributed the following to the Group's cashflow:
2019 2018
'000 '000
Operating activities 491 509
Investing activities (125) (207)
Financing activities 207 257
------- -------
573 559
======= =======
8. FINANCIAL LIABILITIES
2019 2018
GBP000 GBP000
Current liabilities
Bank overdraft - 485
Invoice finance facility 1,628 4,740
Import loan facility - 1,137
Finance lease liability (right of use) 184 102
Current instalments due on finance leases 871 627
2,683 7,091
Non-current liabilities
Instalments due on finance leases 2,175 1,889
Finance lease liability (right of use) 791 649
------- -------
Total financial liabilities 5,649 9,629
------- -------
The overdraft which was held with HSBC Bank plc as part of the
Group net facility was reviewed in December 2018 as part of the
Exidor disposal and was fully settled.
The net overdraft position as at 31 March 2019 was GBPnil (2018:
GBP485,000), this comprises cash balances of GBP314,000 (2018:
GBP1,735,000) and bank overdrafts of GBP23,000 (2018:
GBP2,220,000). Interest is payable at 2.0% (2018: 2.0%) over base
rate.
Asset finance loans were fully repaid in the year. Previously
they were secured against various items of plant and machinery
across the Group.
The import loan facility is used to facilitate the purchase of
equipment for the new machining centre. Once each asset is
commissioned the import loan facility is repaid in full,
facilitated by a sale and lease back on finance lease. Interest is
payable at 3.25% over base rate.
Other finance leases are secured against the specific item to
which they relate. These leases are repayable by monthly
instalments for a period of five years to March 2022. Interest is
payable at fixed amounts that range between 3.1% and 6.2%.
Invoice finance balances are secured against the trade
receivables of the Group and are repayable on demand. Interest is
payable at 2.3% over base rate. The maximum facility as at 31 March
2019 was GBP7,750,000 (2018: GBP7,000,000). Management have
assessed the treatment of the financing arrangements and have
determined it is appropriate to recognise trade receivables and
invoice finance liabilities separately.
9. PENSIONS ARRANGEMENTS
During the year, the Group operated funded defined benefit and
defined contribution pension schemes for the majority of its
employees, these being established under trusts with the assets
held separately from those of the Group. The pension operating cost
for the Group defined benefit scheme for 2019 was GBP124,000 (2018:
GBP218,000) plus GBP112,000 of financing cost (2018:
GBP126,000).
The other schemes within the Group are defined contribution
schemes and the pension cost represents contributions payable. The
total cost of defined contribution schemes was GBP191,000 (2018:
GBP190,000). The notes below relate to the defined benefit
scheme.
The actuarial liabilities have been calculated using the
Projected Unit method. The major assumptions used by the actuary
were (in nominal terms):-
31 March 31 March 31 March
2019 2018 2017
Salary increases n/a n/a n/a
Pension increases (post 1997) 3.2% 3.1% 3.3%
Discount rate 2.3% 2.5% 2.5%
Inflation assumption - RPI 3.3% 3.2% 3.3%
Inflation assumption - CPI 2.3% 2.2% 2.3%
Demographic assumptions are all based on the S2PA (2018: S2PA)
mortality tables with a 1% annual increase. The post retirement
mortality assumptions allow for expected increases in longevity.
The current disclosures relate to assumptions based on longevity in
years following retirement as of the balance sheet date, with
future pensions relating to an employee retiring in 2032.
2019 2018
Years Years
Current pensioner at 65 - male 20.9 21.1
* female 23.1 23.0
Future pensioner at 65 - male 21.8 22.1
* female 24.2 24.1
The scheme was closed to future accrual with effect from 30
November 2007, after which the Company's regular contribution rate
reduced to zero (previously the rate had been 9.1% of members'
pensionable salaries).
The triennial valuation as at 1 April 2017 was completed in the
year and concluded that in return for maintaining the previous
contribution arrangements and extending the deficit reduction
period to 2038, the Company has given security over the Group's
land and buildings to the pension scheme. There will be a further
triennial review with effect from 1 April 2020, which will
establish future deficit payments. This will reflect, amongst other
matters, the special payment of GBP2.5m into the scheme during
2018/19.
The contributions expected to be paid during the year to 31
March 2020 are GBP279,000.
The scheme assets are stated at the market values at the
respective balance sheet dates. The assets and liabilities of the
scheme were:
2019 2018
GBP000 GBP000
Equities/ diversified growth
fund 14,286 11,802
Bonds 1,580 1,280
Insured pensioner assets 26 28
Cash 173 97
---------- ---------
Market value of assets 16,065 13,207
Actuarial value of liability (18,705) (18,287)
---------- ---------
Scheme deficit (2,640) (5,080)
Related deferred tax asset 448 864
---------- ---------
Net pension liability (2,192) (4,216)
---------- ---------
2019 2018
Net benefit expense recognised GBP000 GBP000
in profit and loss
Operating costs (112) (126)
(112) (126)
-------- --------
Re-measurement losses/ (gains) in other 2019 2018
comprehensive income GBP000 GBP000
Actuarial losses/ (gains) arising from
changes in financial assumptions 622 (151)
Actuarial gains arising from changes
in demographic assumptions (151) (129)
Experience adjustments 91 291
Return on assets (excluding interest
income) (638) (3)
---------- --------
(76) 8
---------- --------
2019 2018
GBP000 GBP000
Actual return on plan assets 976 334
---------- --------
Movement in deficit during the 2019 2018
year GBP000 GBP000
Deficit in scheme at beginning
of year (5,080) (5,209)
Employer contributions 2,771 263
Net interest expense (112) (126)
Actuarial loss 76 (8)
-------- --------
Deficit in scheme at end of
year (2,345) (5,080)
-------- --------
Movement in scheme assets 2019 2018
GBP000 GBP000
Fair value at beginning of year 13,207 13,548
Interest income on scheme assets 338 331
Return on assets (excluding
interest income) 638 3
Employer contributions 2,771 263
Benefits paid (889) (938)
---------- --------
Fair value at end of year 16,065 13,207
---------- --------
Movement in scheme liabilities 2019 2018
GBP000 GBP000
Benefit obligation at start of year 18,287 18,757
Interest cost 450 457
Actuarial losses/ (gains) arising from
changes in financial assumptions 622 (151)
Actuarial gains arising from changes
in demographic assumptions (151) (129)
Experience adjustments 91 291
Benefits paid (889) (938)
---------- --------
Benefit obligation at end of year 18,705 18,287
---------- --------
The weighted average duration of the pension scheme liabilities
are 13.5 years (2018: 13.5 years).
A quantitative sensitivity analysis for significant assumptions
as at 31 March 2019 is as shown below:
2019
Present value of scheme liabilities when changing GBP000
the following assumptions:
Discount rate increased by 1% p.a. 16,497
RPI and CPI increased by 1% p.a. 19,734
Mortality- members assumed to be their actual
age as opposed to 1 year older 19,594
The sensitivity analysis above has been determined based on a
method that extrapolates the impact on defined benefit obligations
as a result of reasonable changes in key assumptions occurring at
the end of the year.
10. REPORT AND ACCOUNTS
Copies of the Annual Report will be available on the Group's
website, www.chamberlin.co.uk from 28 June 2019 and from the
Group's head office at Chuckery Road, Walsall, West Midlands, WS1
2DU. The AGM will be held on 23 July 2019 at Chuckery Road,
Walsall, West Midlands, WS1 2DU.
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
FR DMGGVVFNGLZM
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