TIDMCMH
RNS Number : 4021F
Chamberlin PLC
04 November 2022
4 November 2022
CHAMBERLIN plc
("Chamberlin", the "Company" or the "Group")
FINAL RESULTS
for the year ended 31 May 2022
Chamberlin plc (AIM: CMH.L), the specialist castings and
engineering group, is pleased to announce its final results for the
year ended 31 May 2022:
Key Points
Financial
-- FY 2022 Group operational performance significantly improved
compared to the prior period, delivering a 79% increase in adjusted
EBITDA and a full year profit after tax for the first time in five
years
-- Revenue of GBP16.8m (14 months to 31 May 2021: GBP26.4m) was
26% lower than prior year on a pro rata basis reflecting the loss
of BorgWarner Turbo Systems Worldwide ("BorgWarner") contracts in
2021 and headwinds in the automotive sector. Encouragingly,
revenues at Russell Ductile Castings ("RDC") and Petrel increased
by 20% and 21% respectively on a pro rata basis
-- Significant reduction in underlying operating loss to GBP0.7m
(14 months to 31 May 2021: GBP2.9m loss) driven by improvements
across all divisions, but most significantly, by record profits at
RDC and Petrel
-- Underlying loss before taxation reduced to GBP1.0m (14 months
to 31 May 2021: GBP3.2m)
-- Statutory loss before tax of GBP0.5m (14 months to 31 May
2021: GBP10.4m) significantly reduced from 2021 which included
GBP7.2m of non-underlying costs and impairments
-- Profit after tax of GBP0.1m (14 months to 31 May 2021:
GBP9.6m loss) demonstrates the significant progress made in
2022
-- Underlying diluted loss per share of (0.5)p (14 months to 31
May 2021: (13.7)p loss per share)
-- Total diluted earnings per share of 0.1p (14 months to 31 May
2021: (55.1)p loss per share)
1. Underlying figures are stated before non-underlying costs
(restructuring costs, impairment, onerous leases and share based
payment costs) together with the associated tax impact.
2. Adjusted EBITDA defined as operating profit before interest,
taxation, depreciation, amortisation and non-underlying items
Operational
-- Foundry revenues fell by 32% on a pro rata basis to GBP13.6m
(14 months to 31 May 2021: GBP23.3m) reflecting the loss of
BorgWarner revenue at Chamberlin & Hill Castings ("CHC")
partially offset by a 20% increase at RDC
-- Foundry operating loss reduced to GBP0.5m (14 months to 31
May 2021: GBP1.9m) driven by lower losses at CHC from cost
reductions and a record level of profitability at RDC
-- Engineering revenues of GBP3.2m increased by 21% on a pro
rata basis (14 months to 31 May 2021: GBP3.1m) as the business made
substantial progress in recovering from COVID-19 impacts in 2021.
Operating performance continued to go from strength to strength,
with the business delivering a record operating profit of GBP0.5m
(14 months to 31 May 2021: GBP0.2m) by improving margins and
tightly controlling costs
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the UK version of the EU Market Abuse Regulation (2014/596) which
is part of UK law by virtue of the European Union (Withdrawal) Act
2018, as amended and supplemented from time to time.
Chamberlin plc T: 01922 707100
Kevin Price, Chief Executive
Alan Tomlinson, Finance Director
Cenkos Securities plc T: 020 7397 8900
(Nominated Adviser and Joint Broker)
Katy Birkin
Stephen Keys
George Lawson
Peterhouse Capital Limited T: 020 7469 0930
(Joint Broker)
Lucy Williams
Duncan Vasey
Chairman's Statement
The difficulties that Chamberlin faced in the previous financial
period have been well documented but I am pleased to report that
these difficulties are now largely behind us. This financial year
has seen the Group execute its restructuring plan to significantly
reduce its cost base following the loss of the BorgWarner work in
2021 and effectively manage a rapidly changing economic landscape
that has seen unprecedented cost and supply chain pressures.
The Group strengthened the balance sheet through a GBP1.6m
fundraise in February 2022 and completed a sale and leaseback of
the property owned by RDC in May 2022. These actions have
contributed to the Group returning to a positive net asset position
of GBP0.4m at the end of the financial year compared to a GBP2.6m
net liability position in 2021.
In addition, the Group launched two new e-commerce brands in
Iron Foundry Weights ("IFW") and Emba cookware and developed and
pursued a new, ambitious strategic direction to enhance shareholder
value over the medium to long term.
The journey to a full recovery in the operational performance
and financial standing of the Group has begun extremely well and
the financial results for 2022 are evidence of the progress made.
All of the operating divisions have made substantial improvements
to their performance compared to the prior financial period,
although progress at CHC has been slower than anticipated. These
operational improvements have enabled the Group to deliver a profit
after tax of GBP0.1m, a significant turnaround from the GBP9.6m
loss made in 2021.This is the first time in over five years that
Chamberlin has reported a profit after tax to shareholders and is
the first step towards our future growth ambitions.
The Board and Staff
The Board have worked tirelessly through these challenging times
to return the Group to a stable financial position and I have been
pleased with the seamless transition made by Kevin Price, Alan
Tomlinson and Trevor Brown to their new roles on the Board.
The success of Chamberlin in the future will not only be
determined by the leadership and strategic vision provided by the
Board but as importantly, will be shaped by the outstanding
professionalism, dedication and expertise provided by our loyal
workforce. Our employees have a passion for innovation and a keen
focus on delivering excellence to all our customers, which enhance
Chamberlin's reputation and contribute to making the Group a leader
in many of its markets. I would like to place on record the Board's
thanks to all our employees for their considerable efforts during
the past year.
Outlook
The Group is well positioned to continue its recovery and
expects to return to a more sustainable level of profitability,
having taken the appropriate steps to reduce its cost base and
improve performance at CHC, and to develop and invest in new growth
strategies for each business.
The overall economic outlook for global markets remains
uncertain, but the Board is pleased to report that all three
operating divisions have made a positive start to the new financial
year. At the present time, demand across all of the Group's
businesses remains buoyant driven in particular at CHC and RDC by
an increasing trend towards UK on-shore supply. This has
contributed to higher than expected levels of orders for Q1 FY 2023
and strong ongoing order books.
The Board continues to focus on opportunities to provide the
Group with adequate resources to meet the requirements of the
Group's growth strategy and insulate the Group from potential
adverse macro-economic risks.
Keith Butler-Wheelhouse
Chairman
Chief Executive's Review
I am delighted to report that Chamberlin has returned to
profitability for the first time in over five years. This
performance is even more pleasing given the challenges faced by the
Group over the last 12 months. During this period, the Board and
the senior management team have worked together to:
-- Substantially reduce the cost base at Chamberlin and Hill
Castings in the wake of the loss of the BorgWarner contracts at the
end of the last financial period
-- Mitigate the unprecedented level of raw material price
increases to maintain margins at the required level
-- Raise GBP1.6m from shareholders to strengthen the balance
sheet and to implement the new growth strategy and investment
plans
-- Generate GBP1.25m from the sale and leaseback of the property owned by RDC, providing
further funds for investment in its capacity expansion plans and
to reduce the pension deficit by GBP0.6m
-- Launch new products at Chamberlin and Hill Castings through
its IFW fitness and Emba cookware brands
-- Navigate an uneven level of demand from our automotive customers
-- Refinance historic debts relating to machine shop plant and equipment
The Group has been able to successfully navigate its way through
these issues to deliver a significant improvement in financial
performance and to place the Group on a solid financial base from
which our strategic plans for growth can be delivered.
Group revenue of GBP16.8m for the year ended 31 May 2022 (14
months to 31 May 2021: GBP26.4m) was 26% lower than the prior
period on a pro rata basis, largely reflecting the loss of revenue
at Chamberlin and Hill Castings from the cancellation of contracts
by BorgWarner in 2021. However, revenue at RDC and Petrel continued
the strong upward trajectory from 2021, leading to increases of 20%
and 21% respectively on a pro rata basis. The 20% increase in
revenue at RDC was in addition to an 18% pro rata increase in 2021
and continues to be driven by reduced competition in the UK foundry
industry and the trend to re-shoring to the UK from overseas.
Petrel's revenue growth in 2022 has been primarily driven by a
recovery in export markets following a reduction in the immediate
aftermath of Brexit, with export revenues now representing 31% of
Petrel's total revenue (2021: 10%).
The underlying operating loss reduced by 76% to GBP0.7m (2021:
GBP2.9m), with the underlying loss before interest, tax,
depreciation and amortisation reducing to GBP0.4m (2021: GBP2.1m
loss). This improvement in financial operating performance compared
to 2021 came from all three sites, although the pace of the
improvement in results at Chamberlin and Hill Castings was slower
than anticipated due to the uneven recovery in automotive volumes.
RDC improved its operating profit significantly through increased
revenues and gross margin improvement whilst Petrel's performance
benefitted from higher revenues and gross margin together with the
full year benefit of overhead cost reductions implemented in
2021.
After net interest costs of GBP0.3m (2021: GBP0.3m), the Group
made an underlying loss before tax of GBP1.0m (2021: GBP3.2m loss).
With non-underlying items amounting to a GBP0.5m credit in 2022
compared to the GBP7.2m charge taken in 2021, the statutory loss
before tax of GBP0.5m was 95% lower than the GBP10.4m loss incurred
in 2021. The tax credit in 2022 amounted to GBP0.6m (2021: GBP0.8m)
and reflected research and development tax credits receivable from
the prior period of GBP0.3m and deferred tax of GBP0.3m recognised
on trading losses in respect of RDC in the light of their continued
improved financial performance. On an after tax basis, the Group
delivered a modest but pleasing GBP0.1m profit (2021: GBP9.6m
loss), a significant turnaround compared to the prior period and
giving the Group a basis for delivering future sustainable
profitable growth.
In conjunction with returning the Group to profitability, there
has been substantial progress made in the key objective of
strengthening the balance sheet after the significant loss incurred
in 2021. With this in mind, the Group successfully raised GBP1.6m
net of expenses from shareholders in February 2022 to provide funds
for investment in new growth strategies and provide working capital
during the implementation. In addition, as part of the Group's
initiative to improve financial stability, a sale and leaseback
transaction was completed in May 2022 on the property owned by RDC
generating gross proceeds of GBP1.25m. The proceeds were used to
reduce the pension scheme deficit by GBP0.6m and to provide the
funds for further investment in the business. These actions have
contributed to the improvement in the Group's financial position,
with the balance sheet returning to a positive net asset position
of GBP0.4m compared to a GBP2.6m net liabilities position in 2021.
Although net debt increased at 31 May 2022 to GBP5.0m (31 May 2021:
GBP1.8m), this was largely due to the payment of redundancy costs
provided for in 2021 of GBP1.3m, the unwind of working capital
associated with the loss of the BorgWarner contracts in 2021 and an
increase in lease liabilities of GBP1.0m arising from the sale and
leaseback of the property at RDC.
During this financial year, the Group embarked upon its strategy
to deliver sustainable profitable growth over the medium to long
term by diversifying away from reliance on the automotive sector,
investing in plant and machinery to increase capacity and investing
in new products in markets with strong growth characteristics and
opportunities. The progress made in each of our three businesses in
the context of the above strategy is discussed below:
Chamberlin & Hill Castings Ltd - Casting Facility and
Machining Facility ("CHC")
The Board has continued to implement the strategy to reduce sole
reliance on the automotive industry, diversify the Group's customer
base and pursue more attractive markets.
In relation to the Group's automotive products, well publicised
global economic conditions such as inflation, escalating raw
material costs, supply chain shortages and a slowdown in the
automotive industry remain challenges to trading conditions. As a
result, management continue to reduce costs, improve efficiencies,
and optimise pricing at CHC in order to improve margins and restore
sustainable profitability to the Group. Unfortunately, these
actions are taking longer to implement than anticipated and the
division continues to operate at a loss and is not yet cash
generative, albeit the losses are reducing on a monthly basis.
However, longer term demand for the Group's automotive products is
expected to improve in the second half of FY 2023 and the Group has
been successful in winning new contracts in the niche supercar
market and the commercial vehicle sector.
The Group, as the sole UK based foundry manufacturer and
distributor of UK made cast iron cookware, launched its Emba range
at the end of November 2021, which continues to be very well
received by consumers. The Group has utilised targeted marketing to
businesses, subsequently entering into a number of small
distribution deals, with traditional and digital retailers, for the
Emba products, as well as focusing on more penetrative marketing
strategies for sales direct to consumers including advertising
through social media platforms, such as Instagram.
The Board was very encouraged by the rapid increase in sales,
new leads and social media followers in the final quarter of FY
2022. With the in-house capability to design, manufacture and
distribute new products into a global marketplace, the Board firmly
believe that further development and investment in Emba cookware
will position the brand to be a material contributor to growth over
the coming months and years.
The IFW brand was launched in May 2021 selling direct to the
consumer, where the Group can offer high-quality, UK made products
that have a significantly reduced carbon footprint compared to
products imported from overseas. Demand in the fitness equipment
market has reduced considerably in the final quarter of the
financial year and the Board are continuing to assess the most cost
effective options for securing market share. However, Chamberlin is
well positioned to take advantage of market opportunities as they
arise through our unique ability to design, manufacture and machine
fitness products on a high-volume or bespoke basis.
Driven by the exciting progress of the consumer products brands
and the feedback from consumers, Chamberlin has designed a number
of new premium products to support the existing Emba and IFW
offerings and plans to launch these products in 2023. Chamberlin
has recently installed a new shotblast system at CHC to support the
growth plans and ensure that it provides premium quality,
competitively priced products.
Russell Ductile Castings Ltd ("RDC")
The Company's Scunthorpe foundry continues to operate at near
full capacity in response to both a growing customer demand and
pipeline of opportunities, with the current order book at
sufficient levels to ensure already that around 70% of the
full-year FY 2023 management sales expectations are met. The
substantial opportunities for RDC arise from a combination of
reduced competition in the UK as competitor foundry numbers
continue to dwindle and the growing trend of re-shoring production
back to the UK from overseas foundries. With planning permission
now secured, the investment programme to expand both the production
capacity by up to 40% and the types of product that can be
manufactured at RDC's facilities to exploit new growth
opportunities, including in the offshore and green energy
generation markets, is expected to be completed towards the end of
November 2022.
Petrel Ltd
Petrel, Chamberlin's specialist lighting business, delivered a
record operating profit during FY 2022 and continues to exceed the
Board's expectations significantly. Petrel continues to benefit
from a strong order book, reflecting recovery from the lows brought
about by both COVID-19 and Brexit. Petrel is developing a pipeline
of new and innovative products that can be brought to market
swiftly and potentially move Petrel into a market leading position.
Management is also investigating the provision of additional
services (such as warranty, inspection and maintenance) to its
customers that have a significant installed base of Petrel
products. In addition, management continue to review and update
Petrel's existing product range through in-house design and
manufacture of new products as new technology evolves.
Outlook
The Board's strategy has already begun both to shape the future
direction of the business and to be reflected in the financial
performance of the Group, having generated a modest profit after
tax in 2022. We have made good progress on implementing the
strategy in a relatively short period of time and have improved the
financial stability of the Group to provide the platform to
accelerate our plans. There remains work to do in order to achieve
our growth ambitions and the Board are mindful of the resources
that will be required. Consequently, the Board continues to
evaluate the use of its property assets with the objective of
strengthening the balance sheet and ensuring that the Group has
adequate resources to deliver on its growth strategy. Overall, the
Board remain confident that the Group is heading in the right
direction, with a strategic plan that will deliver shareholder
value in the future.
Kevin Price
Chief Executive
Finance Review
Overview
Revenue for the year ended 31 May 2022 of GBP16.8m (14 months
ended 31 May 2021: GBP26.4m) represents a 26% reduction on a pro
rata basis compared to the prior period, largely due to the effect
of the cancellation of all contracts by BorgWarner in 2021.
Gross profit margin increased to 10.7% from 8.3% in 2021
reflecting the recovery in performance of the Foundry division,
which reduced its operating loss to GBP0.5m from a GBP1.9m loss in
the previous period, and a substantial increase in operating margin
at Petrel in the Engineering division.
Underlying operating loss before tax reduced to GBP0.7m (14
months ended 31 May 2021: GBP2.9m) due to the improved operating
results noted above together with a pro rata 22% reduction in Head
Office costs.
Financing costs were maintained at GBP0.3m (14 months ended 31
May 2021: GBP0.3m) with a reduction in the interest charge
associated with the pension scheme offset by increased interest on
higher average net debt.
As a result of the above, the underlying loss before tax
amounted to GBP1.0m (14 months ended 31 May 2021: GBP3.2m
loss).
The statutory loss before tax reduced dramatically to GBP0.5m
(14 months ended 31 May 2021: GBP10.4m) largely reflecting GBP7.2m
of non-underlying items in 2021 that were not repeated in the
current year.
Tax
The tax credit in the year of GBP0.6m (14 months ended 31 May
2021: GBP0.8m) includes the recognition of a deferred tax asset on
trading losses in RDC reflecting the confidence the Group has in
the future profitability of this business.
Diluted earnings per share
Diluted earnings per share of 0.1p (14 months ended 31 May 2021:
55.1p loss per share) reflects the return to profitability of the
Group for the first time in over five years and a significant
turnaround compared to the prior period.
Cash generation and financing
Operating cash outflow of GBP4.0m (14 months ended 31 May 2021:
inflow of GBP0.3m) includes GBP1.3m of cash payments relating to
restructuring the business in 2021, GBP0.9m paid to the Group's
defined benefit pension scheme and increased working capital.
Cash spent on property, plant and equipment and capitalised
software and development costs in the year ended 31 May 2022 was
GBP0.5m (14 months ended 31 May 2021: GBP0.2m).
New equity of GBP1.6m was raised in February 2022 following a
fundraise and was net of transaction costs of GBP0.2m.
Lease payments of GBP0.5m (14 months ended 31 May 2021: GBP0.9m)
primarily relate to assets at the Group's machining facility and
were lower than the prior period due to a payment holiday agreed
with HSBC. These asset leases were subsequently refinanced with
HSBC in April 2022 over a 42 month term ending in September
2025.
Net debt
Net debt at 31 May 2022 increased by GBP3.2m to GBP5.0m (31 May
2021: GBP1.8m) reflecting the operating cash outflow described
above and an increase in lease liabilities of GBP1.0m relating to
the sale and leaseback of the property owned by RDC partially
offset by the GBP1.6m fundraise in February 2022. The Group debt
facility has two elements: a GBP3.5m invoice discounting facility
limited to 90% of outstanding invoice value (of which GBP2.3m was
drawn at the year end) and lease liabilities of GBP2.7m.
Foreign exchange
It is the Group's policy to minimise risk arising from 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
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 90% 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.
During the year ended 31 May 2022, the average exchange rate
used to translate into GBP Sterling was EUR1.18 (14 months ended 31
May 2021: EUR1.13).
Pension
The Group has one defined benefit pension scheme. It is closed
to future accrual, with the Group operating a defined contribution
pension scheme for its current employees. The defined benefit
pension scheme moved from a liability position of GBP1.2m at 31 May
2021 to a GBP0.1m surplus at 31 May 2022, as reduced liabilities
arising from an increase in bond yields and Company contributions
of GBP0.9m more than offset a reduction in the market value of
scheme assets.
The 31 March 2019 triennial valuation established that employer
contributions are GBP0.30m for 2021, GBP0.33m for 2022 and GBP0.36m
for 2023. The next triennial valuation as at 31 March 2022 is
currently in progress.
Administration costs of the defined benefit pension scheme were
GBP0.2m in the year ended 31 May 2022 (14 months ended 31 May 2021:
GBP0.2m) and are shown in other operating expenses. The Group cash
contribution during the year ended 31 May 2022 was GBP0.9m (14
months ended 31 May 2021: GBP0.4m), which included an additional
GBP0.6m payment following completion of the sale and leaseback of a
property over which the pension scheme had a charge.
Audit Opinion
The auditors have reported on the accounts for the year ended 31
May 2022 and have given a modified audit opinion drawing attention
to a material uncertainty regarding going concern. After making
enquiries, the Directors have an expectation that, in the
circumstances of reasonably foreseeable downside scenarios, the
Group and Company have adequate resources to continue in
operational existence for the foreseeable future.
However, the rate at which revenue growth and margin improvement
can be achieved during a potentially future recessionary period and
uncertain global trading conditions is difficult to predict.
Furthermore, the ability to renew or source alternative invoice
finance facilities or to agree deferred settlement terms with HMRC
results in material uncertainty, which may cast significant doubt
over the ability of the Group and the Company to realise its assets
and discharge its liabilities in the normal course of business and
hence continue as a going concern.
The Directors continue to adopt the going concern basis, whilst
recognising there is material uncertainty relating to the above
matters.
Alan Tomlinson
Group Finance Director
Consolidated Income Statement
for the year ended 31 May 2022
Year ended 31 May 2022 14 months ended 31 May 2021
---------------------------------------- -----------------------------------------------
(+) Non- (+) Non-
Note Underlying underlying Total Underlying underlying Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Revenue 3 16,836 - 16,836 26,444 - 26,444
Cost of sales (15,038) - (15,038) (24,262) - (24,262)
Gross profit 1,798 - 1,798 2,182 - 2,182
Other operating
expenses 6 (2,501) 505 (1,996) (5,083) (7,193) (12,276)
------------ ------------- ----------- ------------ -------------- -----------------
Operating
loss (703) 505 (198) (2,901) (7,193) (10,094)
Bank interest
receivable 26 - 26 13 - 13
Finance costs 4 (337) - (337) (310) - (310)
------------ ------------- ----------- ------------ -------------- -----------------
Loss before
tax (1,014) 505 (509) (3,198) (7,193) (10,391)
Tax credit 581 - 581 817 - 817
------------ ------------- ----------- ------------ -------------- -----------------
Profit/(loss)
for the period
attributable
to equity holders
of the parent
company (433) 505 72 (2,381) (7,193) (9,574)
============ ============= =========== ============ ============== =================
Underlying loss
per share:
Basic 5 (0.5)p - - (13.7)p - -
Diluted 5 (0.5)p - - (13.7)p - -
Total
earnings/(loss)
per share:
Basic 5 - - 0.1p - - (55.1)p
Diluted 5 - - 0.1p - - (55.1)p
*Non-underlying items include restructuring costs, impairment
of assets, dilapidation costs and share-based payment
costs together with the associated tax impact.
Consolidated Statement of Comprehensive Income
for the year ended 31 May 2022
Year ended 14 months
31 May ended 31
2022 May 2021
Note GBP000 GBP000
Profit/(loss) for the period 72 (9,574)
Other comprehensive income
Gain on revaluation of property, plant 1,003 -
& equipment
Movements in fair value of cash flow
hedges taken to other comprehensive
income (158) 650
Deferred tax on movement in cash flow
hedges 40 (133)
------------ -----------
Net other comprehensive income that
may be recycled to profit and loss 885 517
------------ -----------
Remeasurement gain on pension scheme
assets and liabilities 8 332 463
Deferred tax on remeasurement gain
on pension scheme (63) 7
Net other comprehensive income that
will not be recycled to profit and
loss 269 470
Other comprehensive income for the
period net of tax 1,154 987
Total comprehensive income/(expense)
for the period attributable to equity
holders of the parent company 1,226 (8,587)
============ ===========
Consolidated Balance Sheet
at 31 May 2022
Note 2022 2021
GBP000 GBP000
Non-current assets
Property, plant and equipment 3,506 2,431
Intangible assets 283 263
Deferred tax assets 1,434 1,206
Defined benefit pension scheme
surplus 8 64 -
5,287 3,900
Current assets
Inventories 3,143 1,698
Trade and other receivables 4,303 3,932
Cash at Bank - 1,038
7,446 6,668
Total assets 12,733 10,568
========= =========
Current liabilities
Financial liabilities 7 2,877 1,715
Trade and other payables 6,475 8,031
9,352 9,746
Non-current liabilities
Financial liabilities 7 2,097 1,158
Deferred tax 70 150
Provisions 806 890
Defined benefit pension scheme
deficit 8 - 1,190
--------- ---------
2,973 3,388
Total liabilities 12,325 13,134
--------- ---------
Capital and reserves
Share capital 2,087 2,051
Share premium 6,308 4,720
Capital redemption reserve 109 109
Hedging reserve 100 218
Revaluation reserve 1,003 -
Retained earnings (9,199) (9,664)
--------- ---------
Total equity 408 (2,566)
Total equity and liabilities 12,733 10,568
========= =========
Consolidated Cash Flow Statement
for the year ended 31 May 2022
14 months
Year ended ended
31 May 31 May
2022 2021
GBP000 GBP000
Operating activities
Loss for the period before tax (509) (10,391)
Adjustments to reconcile loss for
the period to net cash outflow
from operating activities:
Interest receivable (26) (13)
Finance costs 337 310
Impairment (reversal)/charge on
property, plant and equipment,
inventory and receivables (498) 4,632
Dilapidations provision (84) 690
Depreciation of property, plant
and equipment 324 1,135
Amortisation of intangible assets 24 86
(Profit)/loss on disposal of property,
plant and equipment (66) 135
Foreign exchange rate movement (1) 37
Share-based payments 67 41
Defined benefit pension contributions
paid (935) (355)
(Increase)/decrease in inventories (945) 175
(Increase)/decrease in receivables (168) 2,036
(Decrease)/increase in payables (1,557) 1,009
Corporation tax received - 129
-------------- -----------
Net cash outflow from operating
activities (4,037) (344)
-------------- -----------
Investing activities
Purchase of property, plant and
equipment (520) (183)
Purchase of software (20) (3)
Development costs (24) (5)
Disposal of property, plant and
equipment 1,189 -
Net cash inflow/(outflow) from
investing activities 625 (191)
-------------- -----------
Financing activities
Interest received 26 13
Interest paid (324) (261)
Net invoice finance inflow/(outflow) 1,585 (1,202)
New share capital issued 1,624 3,312
Proceeds from convertible loan - 200
Principal element of lease payments (537) (946)
Net cash inflow from financing
activities 2,374 1,116
-------------- -----------
Net (decrease)/increase in cash
and cash equivalents (1,038) 581
Cash and cash equivalents at the
start of the period 1,038 457
Impact of foreign exchange rate - -
movements
Cash and cash equivalents at the
end of the period - 1,038
============== ===========
Cash and cash equivalents comprise:
Cash at bank - 1,038
-------------- -----------
- 1,038
============== ===========
Consolidated statement of changes in equity
Attributable
to equity
Share Capital Revaluation holders
Share premium redemption Hedging reserve Retained of the
capital account reserve reserve earnings parent
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Balance
at 1
April
2020 1,990 1,269 109 (299) - (524) 2,545
Loss
for the
year - - - - - (9,574) (9,574)
Other
comprehensive
income
for the
period
net of
tax - - - 517 - 470 987
---------- ------------- ------------- ---------- ------------- ----------- --------------
Total
comprehensive
income/(expense) - - - 517 - (9,104) (8,587)
New share
capital
issued 61 3,451 - - - - 3,512
Share-based
payment - - - - - 41 41
Deferred
tax on
share-based
payment - - - - - (77) (77)
---------- ------------- ------------- ---------- ------------- ----------- --------------
Total
of transactions
with
shareholders 61 3,451 - - - (36) 3,476
Balance
at 1
June
2021 2,051 4,720 109 218 - (9,664) (2,566)
Profit
for the
year - - - - - 72 72
Other
comprehensive
income
for the
year
net of
tax - - - (118) 1,003 269 1,154
---------- ------------- ------------- ---------- ------------- ----------- --------------
Total
comprehensive
income/(expense) - - - (118) 1,003 341 1,226
New share
capital
issued 36 1,588 - - - - 1,624
Share-based
payments - - - - - 67 67
Deferred
tax on
share-based
payment - - - - - 57 57
---------- ------------- ------------- ---------- ------------- ----------- --------------
Total
of transactions
with
shareholders 36 1,588 - - - 124 1,748
Balance
at 31
May 2022 2,087 6,308 109 100 1,003 (9,199) 408
========== ============= ============= ========== ============= =========== ==============
NOTES TO THE FINAL RESULTS ANNOUNCEMENT
1. AUTHORISATION OF FINANCIAL STATEMENTS AND STATEMENT OF
COMPLIANCE WITH UK ADOPTED INTERNATIONAL ACCOUNTING STANDARDS
The Group and Company financial statements of Chamberlin Plc
(the 'Company') for the year ended 31 May 2022 were authorised for
issue by the Board of Directors on 4 November 2022, and the balance
sheets were signed on the Board's behalf by Kevin Price and Alan
Tomlinson. The Company is a public limited company incorporated and
domiciled in England and Wales. The Company's ordinary shares are
admitted to trading on AIM, a market of the same name operated by
the London Stock Exchange.
The Group's financial statements have been prepared in
accordance with UK adopted International Accounting Standards in
conformity with the requirements of the Companies Act 2006. The
Company's financial statements have been prepared in accordance
with Financial Reporting Standard 101 'The Reduced Disclosure
Framework'.
The financial information set out in this announcement does not
constitute the statutory accounts of the Group for the year ended
31 May 2022 or for the 14 months ended 31 May 2021 but is derived
from the 2022 Annual Report and Accounts. The Annual Report and
Accounts for the 14 months ended 31 May 2021 have been delivered to
the Registrar of Companies and the Group Annual Report and Accounts
for the year ended 31 May 2022 will be delivered to the Registrar
of Companies by 30 November 2022. The auditors, Crowe UK LLP, have
reported on the accounts for the year ended 31 May 2022 and have
given a modified audit opinion drawing attention to a material
uncertainty regarding going concern.
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 May. 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 May 2022. There
were no new accounting standards adopted in the year that have a
material impact on the financial statements.
Going concern
The Director's assessment of going concern is based on the
Group's detailed forecast for the three years ending 31 May 2023,
31 May 2024 and 31 May 2025, which reflect the Director's view of
the most likely trading conditions. Since the balance sheet date,
HSBC have confirmed their agreement to an increase in the Group's
invoice finance facilities and the forecasts indicate that these
bank facilities are expected to remain adequate.
The forecasts include revenue growth and margin improvement
assumptions across all of the Group's businesses. At Chamberlin and
Hill Castings, these assumptions include an improvement in
automotive volumes as this sector recovers from the backlog of
passenger vehicle orders arising from the shortage of vital
electronic and other components in the last 18 months, modest
growth from fitness equipment and cookware products and
diversification into new markets. At RDC, the forecasts assume that
revenue and margin growth will be achieved from the investment
being made in the expansion of its capacity and the ability to
manufacture and sell a wider range of products using new materials.
At Petrel, revenue and margin growth assumptions are based on the
introduction of new products, including the use of new technology,
and services, including warranty, inspection and maintenance.
The Directors have applied reasonably foreseeable downside
sensitivities to the forecast, including sales growth and margin
improvement at Chamberlin and Hill Castings is 40% and 20% lower
than expectations respectively, sales growth and margin improvement
at RDC are both 20% lower than expectations and sales growth and
margin at Petrel are 20% and 10% lower than expectations
respectively. Furthermore, the Group is reliant on an invoice
finance facility to fund its working capital needs. The renewal of
the facility at the next annual review in March 2023 cannot be
guaranteed, although there are no indications at the date of the
approval of the financial statements that a renewal with the
existing provider would not be granted or that alternative
providers could not be found. In addition, the Directors have
assumed that deferred settlement terms will be agreed with HMRC in
relation to PAYE arrears of GBP1.5m for one subsidiary in the Group
that have arisen in the period since the announcement by
BorgWarner, having already agreed deferred settlement terms with
HMRC for two subsidiaries.
As a consequence, after making enquiries, the Directors have an
expectation that, in the circumstances of the reasonably
foreseeable downside scenarios described above, the Group and
Company have adequate resources to continue in operational
existence for the foreseeable future.
However, the rate at which revenue growth and margin improvement
can be achieved during a potentially future recessionary period and
uncertain global trading conditions is difficult to predict.
Furthermore, the ability to renew or source alternative invoice
finance facilities or to agree deferred settlement terms with HMRC
results in material uncertainty, which may cast significant doubt
over the ability of the Group and the Company to realise its assets
and discharge its liabilities in the normal course of business and
hence continue as a going concern.
The Directors continue to adopt the going concern basis, whilst
recognising there is material uncertainty relating to the above
matters.
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 supplies manufactured products to
distributors and end-users operating in hazardous area and
industrial lighting markets.
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 (loss)/profit
Year 14 months Year 14 months
ended ended ended ended 31
31 May 31 May 31 May May 2021
2022 2021 2022
GBP000 GBP000 GBP000 GBP000
Foundries 13,604 23,321 (463) (1,931)
Engineering 3,232 3,123 535 191
----------- ----------- ---------- -----------
Segment results 16,836 26,444 72 (1,740)
=========== =========== ========== ===========
Reconciliation of reported segmental
operating profit/(loss)
Segment operating profit/(loss) 72 (1,740)
Shared costs (775) (1,161)
Non-underlying items 505 (7,193)
Net finance costs (311) (297)
Loss before tax (509) (10,391)
Segmental assets Year 14 months
ended ended
31 May
31 May 2021
2022
GBP000 GBP000
Foundries 9,811 7,211
Engineering 1,425 1,113
---------- -----------
11,236 8,324
---------- -----------
Segmental liabilities
Foundries (5,771) (7,674)
Engineering (1,511) (1,247)
---------- -----------
(7,282) (8,921)
---------- -----------
Segmental net assets/(liabilities) 3,954 (597)
Unallocated net liabilities (3,546) (1,969)
Total net assets/(liabilities) 408 (2,566)
=========== ===========
Unallocated net liabilities include the pension asset of
GBP64,000 (2021: GBP1,190,000), net debt of (GBP4,974,000) (2021:
GBP1,835,000) and a net deferred tax asset of GBP1,364,000 (2021:
GBP1,056,000).
Capital expenditure,
depreciation, amortisation
and impairment
Capital additions Foundries Engineering Total
------------------- ------------------- -----------------------
Year 14 months Year 14 months Year 14 months
ended ended ended ended ended ended
31 31 May 31 31 May 31 May 31 May
May 2021 May 2021 2022 2021
2022 2022
------- ---------- ------- ---------- ---------- -----------
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------- ---------- ------- ---------- ---------- -----------
Property, plant and equipment 1,327 177 - 20 1,327 197
------- ---------- ------- ---------- ---------- -----------
Software 20 3 - - 20 3
------- ---------- ------- ---------- ---------- -----------
Development costs - - 24 5 24 5
------- ---------- ------- ---------- ---------- -----------
Depreciation, amortisation Foundries Engineering Total
and impairment
------------------- ------------------- -----------------------
Year 14 months Year 14 months Year 14 months
ended ended ended ended ended ended
31 31 May 31 31 May 31 May 31 May
May 2021 May 2021 2022 2021
2022 2022
------- ---------- ------- ---------- ---------- -----------
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------- ---------- ------- ---------- ---------- -----------
Property, plant and equipment (317) (1,113) (7) (22) (324) (1,135)
------- ---------- ------- ---------- ---------- -----------
Software 4 (47) (1) (6) 3 (53)
------- ---------- ------- ---------- ---------- -----------
Development costs - - (27) (33) (27) (33)
------- ---------- ------- ---------- ---------- -----------
In addition to the above, property, plant and equipment in the
Foundries division in 2021 were impaired by GBP3,809,000.
(ii) By geographical segment
Year 14 months
ended ended 31
31 May May 2021
2022
Revenue by location of customer: GBP000 GBP000
United Kingdom 13,344 13,944
Italy 1,171 1,351
Germany 1,382 2,595
Rest of Europe 211 7,425
Other countries 738 1,129
--------- ---------
16,836 26,444
========= =========
4. FINANCE COSTS
14 months
Year ended
ended 31 May
31 May 2021
2022
GBP000 GBP000
Bank overdraft and invoice finance interest payable (94) (103)
Interest expense on lease liabilities and other
interest payable (230) (158)
Finance cost of pensions (13) (49)
---------- -----------
(337) (310)
========== ===========
5. EARNINGS /( LOSS) PER SHARE
The calculation of earnings/(loss) per share is based on the
earnings/(loss) attributable to shareholders and the weighted
average number of ordinary shares in issue. In calculating the
diluted earnings/(loss) per share, adjustment has been made for the
dilutive effect of outstanding share options where applicable.
Underlying earnings/(loss) per share, which excludes non-underlying
items, as disclosed in Note 6, has also been disclosed.
14 months
Year ended
ended 31 May
31 May 2021
2022
GBP000 GBP000
Earnings/(loss) for basic earnings
per share 72 (9,574)
Non-underlying items (505) 7,193
Taxation effect of the above - -
Loss for underlying earnings
per share (433) (2,381)
========== ===========
Underlying loss per share (pence):
Basic (0.5) (13.7)
Diluted (0.5) (13.7)
Total earnings/(loss) per share
(pence):
Basic 0.1 (55.1)
Diluted 0.1 (55.1)
2022 2021
Number Number
'000 '000
Weighted average number of ordinary
shares 79,488 17,387
Adjustment to reflect shares
under options 3,581 3,798
---------- -----------
Weighted average number of ordinary
shares - fully diluted 83,069 21,185
========== ===========
There is no adjustment in the diluted loss per share calculation
for the 3,798,000 shares under option in 2021 as they are required
to be excluded from the weighted average number of shares for
diluted loss per share as they are anti-dilutive. The weighted
average number of shares used in the fully diluted calculation is
83,069,000 (2021:17,387,000).
6. NON-UNDERLYING ITEMS
14 months
Year ended
ended 31 May
31 May 2021
2022
GBP000 GBP000
Group reorganisation - 1,310
Adviser costs relating to corporate restructuring - 520
Impairment of property, plant and equipment - 3,809
Impairment of inventory and receivables (498) 823
Additional liability from customer claim 10 -
relating to disposal of Exidor Limited
Dilapidations provision (84) 690
Share-based payment charge 67 41
---------- -----------
Non-underlying operating items (505) 7,193
Taxation
- tax effect of non-underlying items - -
---------- -----------
(505) 7,193
---------- -----------
During the year, an agreement was reached on the settlement of a
customer claim relating to Exidor Limited, a subsidiary that was
sold in December 2018. Additional costs of GBP10,000 over and above
the original provision made at the time of the disposal were agreed
to settle the claim.
In 2022, GBP84,000 was released from the dilapidations provision
following negotiations with the landlord. The charge of GBP690,000
in 2021 relates to the estimated costs for land and building leases
that are nearing their end date.
In 2021, following the cancellation of all contracts by the
Group's major customer, BorgWarner, announced on 16 December 2020,
the Group embarked upon a significant restructuring programme to
realign the cost base of the Foundry division to the reduced level
of continuing revenue. Group reorganisation costs of GBP1,310,000,
which include redundancy and associated costs, relate to this
restructuring programme.
Following the cancellation of the Group's contracts by
BorgWarner, the Group undertook a review of the carrying value of
the assets in the Foundry division in 2021. This gave rise to an
asset impairment charge of GBP4,632,000, of which GBP3,809,000
related to property, plant & equipment, GBP716,000 related to
obsolete inventory and GBP107,000 related to irrecoverable
receivables. In 2022, GBP498,000 of the impairment charge relating
to inventory was reversed, as a number of new contract wins
indicates that the inventory will now be utilised.
The share-based payment charge in 2022 of GBP67,000 (2021:
GBP41,000) relates to the fair value cost of share option schemes
for the year.
7. NET DEBT
31 May 31 May
2022 2021
GBP000 GBP000
Net cash - (1,038)
Invoice finance facility 2,243 665
Lease liabilities 634 1,050
Net debt due in less than one year 2,877 677
Non-current liabilities
Lease liabilities 2,097 1,158
Total net debt 4,974 1,835
-------- ---------
Lease liabilities are secured against the specific item to which
they relate. These leases are repayable by monthly instalments for
a period of up to 10 years to May 2032. Interest is payable at
fixed amounts that range between 3.1% and 9.4%.
Invoice finance balances are secured against the trade
receivables of the Group and are repayable on demand. Interest is
payable at 2.75% over base rate. The maximum facility as at 31 May
2022 was GBP3,500,000 (2021: GBP3,500,000). Management have
assessed the treatment of the financing arrangements and have
determined it is appropriate to recognise trade receivables and
invoice finance liabilities separately.
8. PENSIONS ARRANGEMENTS
During the year, the Group operated funded defined benefit and
defined contribution pension schemes for the majority of its
employees in the UK, 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 2022 was
GBP151,000 (2021: GBP236,000), with the reduction being due to
costs associated with the triennial valuation in 2021 not repeated,
together with GBP13,000 of financing cost (2021: GBP49,000).
The other scheme within the Group is a defined contribution
scheme and the pension cost represents contributions payable. The
total cost of the defined contribution scheme was GBP200,000 (2021:
GBP377,000). 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 May 31 May 31 March
2022 2021 2020
Salary increases n/a n/a n/a
Pension increases (post 1997) 3.4% 3.1% 2.6%
Discount rate 3.4% 1.85% 2.3%
Inflation assumption - RPI 3.5% 3.2% 2.6%
Inflation assumption - CPI 2.8% 2.5% 1.7%
Demographic assumptions are all based on the S3PA (2019: S2PA)
mortality tables with a 1.25% 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 pensioners relating to an employee retiring in 2032.
2022 2021
Years Years
Current pensioner at 65 - male 20.6 20.5
* female 23.0 22.9
Future pensioner at 65 - male 21.4 21.3
* female 24.1 24.0
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 latest triennial valuation was completed as at 31 March 2019
and concluded that Company contributions would increase to
GBP300,000 for the year ended 31 March 2021, GBP330,000 for the
year ended 31 March 2022 and GBP360,000 for the year ended 31 March
2023, with the deficit reduction period reducing to 2032. The
Company has given security over the Group's land and buildings to
the pension scheme. During the year, the charge over one of the
Group's properties was released following the payment of an
additional contribution to the pension scheme of GBP600,000, paid
out of the proceeds of a sale and leaseback transaction. The
triennial review with effect from 31 March 2022, which will
establish future deficit payments, is currently in progress.
The scheme assets are stated at the market values at the
respective balance sheet dates. The assets and liabilities of the
scheme were:
2022 2021
GBP000 GBP000
Equities/ diversified growth
fund 1,937 5,273
Bonds - -
Liability Driven Investments 2,370 2,993
Buy and Maintain Credit 1,853 2,211
Multi-Sector Credit 4,273 4,962
Insured pensioner assets 13 21
Cash 3,578 141
---------- ----------
Market value of assets 14,024 15,601
Actuarial value of liabilities (13,960) (16,791)
---------- ----------
Scheme surplus/(deficit) 64 (1,190)
Related deferred tax asset (16) 297
---------- ----------
Net pension surplus/(deficit) 48 (893)
Net benefit expense recognised 2022 2021
in profit and loss GBP000 GBP000
Net interest cost (13) (49)
(13) (49)
---------- ----------
Re-measurement losses/ (gains) in other 2022 2021
comprehensive income GBP000 GBP000
Actuarial losses/(gains) arising from
changes in financial assumptions (2,466) 1,510
Actuarial gains arising from changes
in demographic assumptions 60 (429)
Experience adjustments 98 171
(Return)/loss on assets (excluding interest
income) 1,976 (1,715)
--------- ---------
Total re-measurement gain shown in other
comprehensive income (332) (463)
--------- ---------
2022 2021
GBP000 GBP000
Actual return/(loss) on plan assets (1,686) 2,092
--------- ---------
Movement in deficit during the 2022 2021
period GBP000 GBP000
Deficit in scheme at beginning
of period (1,190) (1,959)
Employer contributions 935 355
Net interest expense (13) (49)
Actuarial gain 332 463
--------- ---------
Surplus/(deficit) in scheme at
end of period 64 (1,190)
--------- ---------
Movement in scheme assets 2022 2021
GBP000 GBP000
Fair value at beginning of period 15,601 14,538
Interest income on scheme assets 290 377
Return on assets (excluding interest
income) (1,976) 1,715
Employer contributions 935 355
Benefits paid (826) (1,384)
--------- ---------
Fair value at end of period 14,024 15,601
--------- ---------
Movement in scheme liabilities 2022 2021
GBP000 GBP000
Benefit obligation at start of period 16,791 16,497
Interest cost 303 426
Actuarial (gains)/ losses arising from
changes in financial assumptions (2,466) 1,510
Actuarial gains arising from changes in
demographic assumptions 60 (429)
Experience adjustments 98 171
Benefits paid (826) (1,384)
Benefit obligation at end of period 13,960 16,791
--------- ---------
The weighted average duration of the pension scheme liabilities
are 12 years (2021: 13 years).
A quantitative sensitivity analysis for significant assumptions
as at 31 May 2022 is as shown below:
2022 2021
Present value of scheme liabilities when changing GBP000 GBP000
the following assumptions:
Discount rate increased by 1% p.a. 12,543 14,859
RPI and CPI increased by 1% p.a. 14,584 17,705
Mortality- members assumed to be their actual
age as opposed to one year older 14,627 17,653
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.
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END
FR MZMGMZDLGZZM
(END) Dow Jones Newswires
November 04, 2022 08:23 ET (12:23 GMT)
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