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Chamberlin PLC Final Results

23/05/2017 7:00am

UK Regulatory (RNS & others)


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TIDMCMH

RNS Number : 8949F

Chamberlin PLC

23 May 2017

CHAMBERLIN plc

("Chamberlin", the "Company" or the "Group")

FINAL RESULTS

for the year ended 31 March 2017

KEY POINTS

   --      Continued encouraging progress, both strategically and operationally 

o underpins expected significant growth in the current year and beyond

   --      Revenues up 10% to GBP32.1m (2016: GBP29.1m) 
   --      Underlying profit before tax* increased significantly to GBP0.6m (2016: GBP0.2m) 
   --      Underlying diluted profit per share* more than tripled to 4.5p (2016: 1.4p) 

IFRS diluted loss per share of 12.2p (2016: loss per share of 3.3p)

-- Capital expenditure of GBP3.9m (2016: GBP1.4m), included establishment of new machining facility:

o opens up new long term growth opportunities

o positions Chamberlin as the only fully integrated supplier of grey iron bearing housings in Europe

   --      Net debt of GBP6.8m at year end, reflected machining facility investment 
   --      Foundry operations grew revenues by 8% to GBP21.3m 

o major new automotive contract commenced in H2 as expected, with volumes rising in 2017

o new machining facility opened in Q4 to support move into fully machined components

o Walsall foundry's promotion to 'Category A' supplier in Q1 is providing additional growth opportunities

   --      Engineering operations increased revenues by 15% to GBP10.8m 

o initiatives in place to drive export sales and margins

   --    Board remains confident of delivering further progress through 2017 

* Underlying figures are stated before exceptional items, administration costs of the pension scheme and net financing costs on pension obligations, share based payment costs and the associated tax impact of these items.

Chairman, Keith Butler-Wheelhouse, commented:

"Chamberlin made important strategic and operational progress over the year, which will help to support a significant new phase of growth. Revenue increased by 10% to GBP32.1m and the underlying profit before tax increased significantly to GBP0.6m.

We have further developed Chamberlin's product offering with a significant investment in a machining facility in Walsall. Opened in the final quarter of the financial year, it improves our competitive positioning and will support further growth over the new financial year. It also underlines our ability to deliver a world class product at a globally competitive cost.

The Group remains well placed for further progress over the new financial year, supported by major new contracts."

Enquiries

 
 Chamberlin plc (www.chamberlin.co.uk)     T: 01922 707100 
  Kevin Nolan, Chief Executive 
  David Roberts, Finance Director 
 
 Smith & Williamson Corporate              T: 020 7131 
  Finance Limited                           4000 
  (Nominated Adviser and Broker) 
  Russell Cook, Katy Birkin 
 
 KTZ Communications                        T: 020 3178 
  (Financial PR)                            6378 
  Katie Tzouliadis, Emma Pearson 
 

Chairman's Statement

Introduction

The Group delivered a significantly strengthened performance in the second half of the year, as expected, and financial results for the year are encouraging, with revenue growth of 10% at GBP32.1m and underlying profit before tax significantly increased to GBP0.6m from GBP0.2m last year.

These improved results were supported by both our foundry and engineering operations. Operating profit across our foundry activities rose by 55%, driven mainly by our Walsall foundry, and our engineering operations increased operating profit by 20% year-on-year.

We took some important strategic decisions in the year. Most significantly, we invested in a new machining facility in Walsall. The investment supports Chamberlin's move into fully machined components for automotive turbochargers. It also positions the Group as the only fully integrated supplier of grey iron bearing housings in Europe and is expected to open up new long term growth opportunities, as we have previously reported. We started production at the new facility in early 2017 and held a successful Open Day at the end of March 2017 which was attended by both customers and stakeholders.

The Board took the difficult decision of closing our non-core foundry at Leicester, which was the least specialised of the Group's foundries, at the end of 2016, and production at Leicester stopped in February 2017. An orderly decommissioning process is now underway.

Exidor has delivered good growth and management are implementing further initiatives to improve profitability. Petrel is showing encouraging growth by continuing to access new markets outside of its core oil and gas customer base, helped by the successful introduction of new LED product ranges.

Prospects for the current financial year remain very encouraging. The actions we have completed over the last year help to improve Chamberlin's competitive positioning and we are continuing to focus on margin development across both areas of operations. The automotive turbocharger sector is a growth area and with our new machining capability in operation, we are well placed to expand further. Production volumes from last year's major new automotive contract win should increase over 2017 and will help to support growth in revenue and profitability.

Results

Revenues for the year to 31 March 2017 increased by 10% to GBP32.1m (2016: GBP29.1m), with growth coming from new, cast-only, work at the Walsall foundry and increased market share from our two engineering businesses. This offset the loss of an industrial vehicle contract at our Scunthorpe facility. Revenues from the new machining facility, which opened in early 2017, made only a marginal contribution, as expected.

Underlying profit before tax increased significantly to GBP0.6m (2016: GBP0.2m) and diluted underlying profit per share more than tripled to 4.5p (2016: 1.4p).

On an IFRS basis, after accounting for restructuring costs of GBP0.1m (2016: GBP0.1m), administration and costs of the closed pension scheme of GBP0.4m (2016: GBP0.4m) and impairment of Leicester of GBP1.5m (2016: GBPnil), the Group generated a loss of GBP1.0m (2016: loss of GBP0.3m). Diluted loss per share was 12.2p (2016: loss per share of 3.3p).

The net debt position at 31 March 2017 was GBP6.8m (2016: GBP3.2m), reflecting the investment in the new machining facility.

Dividend

In line with the current dividend policy, the Directors are not proposing the payment of a dividend for the period under review (2016: nil).

Staff

Our staff continue to demonstrate huge commitment and dedication as we develop the business, and on behalf of the Board, I would like to thank everyone for their hard work. The Group's improving business performance is supported by their talents and efforts.

Outlook

The Group is well positioned to deliver a further improvement in performance during the current financial year. Major new contract wins in the automotive turbocharger market support ongoing growth and our recently opened new machining plant helps to strengthen our market positioning and widen opportunities.

We look forward to reporting further progress at the Group's AGM on 20 July 2017.

Keith Butler-Wheelhouse

Chairman

22 May 2017

Chief Executive's Review

Chamberlin continues to make encouraging progress, building on our previous work to improve efficiencies and processes and to realign the cost base. The opening of our new machining operations in the fourth quarter of the financial year marked a high point for the Group and we remain excited about the additional growth opportunities the new facility brings. Our engineering operations are also progressing well and we intend to continue to focus on building export sales across both engineering businesses.

Foundries

Foundry revenues increased by 8% year-on-year to GBP21.3m (2016: GBP19.8m), with operating profit rising by 55% to GBP1.2m (2016: GBP0.8m).

Following our decision to close our non-core foundry at Leicester, the Group now operates two foundries, at Walsall and Scunthorpe, each with a different specialisation.

Our foundry at Walsall is our flagship operation and drives the majority of the foundry division's sales. Walsall's expertise is in producing small castings, typically below 3kg in weight, which 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 72% of Walsall's casting production is for petrol engines.

To support Chamberlin's growth in the automotive turbocharger market, we have invested an initial GBP2.1m in a machining facility near to our Walsall foundry which will enable us to supply turbo charger bearing housings which are fully machined in-house. This initiative is an exciting development which we expect to open up significant new long term growth opportunities. 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 which 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 was relatively subdued over the year but we have driven further operational improvement at the foundry and continue to work to deepen and broaden customer relationships.

Engineering

Revenues from the engineering operations, comprising our Exidor and Petrel businesses, increased by 15% year-on-year to GBP10.8m (2016: GBP9.4m) and operating profit rose by 20% to GBP0.8m (2016: GBP0.7m).

Our Exidor business is the UK market leader in panic and emergency exit door hardware. Its products are for life-critical applications and Exidor operates in a highly regulated market. Customers place great value on Exidor's heritage as a British designer and manufacturer, which delivers high quality, certified products. We are re-engineering the product range to support our growth drive and continue to target overseas sales while maintaining Exidor's leading position in the UK. The business delivered good growth and we are implementing lean manufacturing initiatives which will help to reduce costs and improve margins.

Petrel 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. Revenue growth over the year was very good and we are encouraged by the progress being made outside Petrel's traditional markets of oil & gas. The transition to LED lighting remains a key focus as well as developing the business's portable light fittings range. Approximately 31.3% of sales (2016: 11.8%) were generated from portable lighting and LED products over the year and this percentage should rise further. We have also expanded Petrel's commercial and technical resource to support ongoing growth.

Outlook

We expect further profitable revenue growth in the next financial year supported by major new contracts coming on stream.

Kevin Nolan

Chief Executive

22 May 2017

Finance Review

Overview

Sales increased by 10% during the year to GBP32.1m (2016: GBP29.1m). Gross profit margin increased to 21.6% from 20.3% in 2016.

Underlying profit before tax increased to GBP0.6m (2016: GBP0.2m). Diluted underlying earnings per share increased to 4.5p (2016: 1.4p).

The IFRS results show a loss of GBP1.0m (2016: GBP0.3m) and a statutory loss per share of 12.2p (2016: loss per share 3.3p).

The income statement has been presented to reflect that operations relating to the Leicester foundry are now discontinued, as required by IFRS 5.

Non-underlying exceptional items

Exceptional items in the year included GBP0.1m (2016: GBP0.5m) relating to the realignment of the cost base of the Group, and GBP1.5m (2016: nil) relating to the impairment of the Leicester assets and lease contracts.

Tax

The Group's underlying tax charge for the year was GBP0.2m (2016: GBP0.1m).

Cash generation and financing

Operating cash inflow from continuing operations was GBP0.3m (2016: GBP1.9m).

Capital expenditure for the year increased to GBP3.9m (2016: GBP1.4m). This was ahead of depreciation and amortisation of GBP1.2m (2016: GBP1.2m), reflecting the investment in the new machining facility.

Our overdraft and net borrowings at 31 March 2017 increased to GBP6.8m (2016: GBP3.2m).

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 40% of the Group's revenues are denominated in Euros. During the year to 31 March 2017 the average exchange rate used to translate into GBP sterling was EUR1.26 (31 March 2016: EUR1.34).

Pension

The Group's defined benefit pension scheme was closed to future accrual in 2007. Following the last triennial valuation, as at 1 April 2013, 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 14 years. The triennial valuation as at 1 April 2016 has not yet been finalised. However, the Group is confident that this will not result in a materially increased deficit contribution, albeit at the expense of a longer deficit recovery period due to lower gilt yields.

The pension expense for the defined benefit scheme was GBP0.4m in 2017 (2016: GBP0.4m), and is shown in non-underlying. The Group cash contribution during the year was GBP0.3m (2016: GBP0.3m).

The Group operates a defined contribution pension scheme for its current employees. The cost of GBP0.4m (2016: GBP0.3m) is included within underlying operating performance.

The IAS 19 deficit at 31 March 2017 was GBP5.2m (2016: GBP4.7m). The increase principally reflects the decrease in the discount rate used to calculate scheme liabilities, as a consequence of a fall in bond yields over the last year, partially offset by the over performance of assets against expected levels.

David Roberts

22 May 2017

Consolidated Income Statement

for the year ended 31 March 2017

 
                                       Year ended 31 March                       Year ended 31 March 
                                               2017                                      2016 
                            -----------------------------------------  -------------------------------------- 
                                                       (+)                                (+) Non- 
                      Note   Underlying     Non-underlying      Total   Underlying      underlying      Total 
                                 GBP000             GBP000     GBP000       GBP000          GBP000     GBP000 
 
Revenue                3         32,119                  -     32,119       29,120               -     29,120 
Cost of sales                  (25,173)                  -   (25,173)     (23,208)               -   (23,208) 
Gross profit                      6,946                  -      6,946        5,912               -      5,912 
 
Other operating 
 expenses              6        (6,203)              (365)    (6,568)      (5,529)           (427)    (5,956) 
                            -----------  -----------------  ---------  -----------  --------------  --------- 
 
Operating 
 profit/ (loss)                     743              (365)        378          383           (427)       (44) 
 
Finance costs          4          (164)              (160)      (324)        (150)           (142)      (292) 
                            -----------  -----------------  ---------  -----------  --------------  --------- 
 
Profit/ (loss) 
 before tax                         579              (525)         54          233           (569)      (336) 
 
Tax (expense)/ 
 credit                           (205)                105      (100)        (119)             104       (15) 
                            -----------  -----------------  ---------  -----------  --------------  --------- 
 
Profit/ (loss) 
 for the year 
 from continuing 
 operations                         374              (420)       (46)          114           (465)      (351) 
                            -----------  -----------------  ---------  -----------  --------------  --------- 
 
Discontinued 
 operations 
 
Profit/ (loss) 
 for the year 
 from discontinued 
 operations                         219            (1,146)      (927)          336           (246)         90 
                            -----------  -----------------  ---------  -----------  --------------  --------- 
 
Profit/ (loss) 
 for the year 
 attributable 
 to equity holders 
 of the parent 
 company                            593            (1,566)      (973)          450           (711)      (261) 
                            ===========  =================  =========  ===========  ==============  ========= 
 
Earnings/ (loss) 
 per share from 
 continuing operations: 
Basic                  5                                       (0.6)p                                  (4.4)p 
Underlying             5           4.7p                                       1.5p 
Diluted                5                                       (0.6)p                                  (4.4)p 
Diluted underlying     5           4.5p                                       1.4p 
                            -----------  -----------------  ---------  -----------  --------------  --------- 
 
Earnings/ (loss) 
 per share from 
 discontinued 
 operations: 
Basic                  5                                      (11.6)p                                    1.1p 
Underlying             5           2.8p                                       4.2p 
Diluted                5                                      (11.6)p                                    1.1p 
Diluted underlying     5           2.6p                                       4.1p 
                            -----------  -----------------  ---------  -----------  --------------  --------- 
 
Total earnings/ 
 (loss) per 
 share: 
Basic                  5                                      (12.2)p                                  (3.3)p 
Underlying             5           7.5p                                       5.7p 
Diluted                5                                      (12.2)p                                  (3.3)p 
Diluted underlying     5           7.1p                                       5.5p 
                            -----------  -----------------  ---------  -----------  --------------  --------- 
 
 
 (+) Non-underlying items represent exceptional 
  items as disclosed in note 6, administration 
  costs of the pension scheme and net financing 
  costs on pension obligations, share based payment 
  costs and the associated tax impact of these 
  items. 
 

Consolidated Statement of Comprehensive Income

for the year ended 31 March 2017

 
                                        2017      2016 
                                      GBP000    GBP000 
 
 Loss for the year                     (973)     (261) 
 Other comprehensive income 
 Reclassification for cash 
  flow hedge included in sales          (87)     (419) 
 Movements in fair value on 
  cash flow hedges taken to 
  other comprehensive income             419     (193) 
 Deferred tax on movement 
  in cash flow hedges                   (60)       123 
 Movement on deferred tax 
  relating to rate change                (1)       (9) 
                                    --------  -------- 
 Net other comprehensive income 
  that may be recycled to profit 
  and loss                               271     (498) 
 
 Re-measurement losses on 
  pension assets and liabilities       (612)     (254) 
 Deferred/ current tax on 
  re-measurement losses on 
  pension scheme                         122        51 
 Movement on deferred tax 
  on re-measurement losses 
  relating to rate change               (52)      (93) 
                                    --------  -------- 
 
 Net other comprehensive loss 
  that will not be recycled 
  to profit and loss                   (542)     (296) 
 
 Other comprehensive loss 
  for the year net of tax              (271)     (794) 
 
 Total comprehensive loss 
  for the period attributable 
  to equity holders of the 
  parent Company                     (1,244)   (1,055) 
                                    ========  ======== 
 
 

Consolidated Balance Sheet

at 31 March 2017

 
                                 Note   31 March   31 March 
                                            2017       2016 
                                          GBP000     GBP000 
 Non-current assets 
  Property, plant and 
   equipment                              10,179      8,112 
  Intangible assets                          461        387 
  Deferred tax assets                      1,498      1,370 
                                       ---------  --------- 
                                          12,138      9,869 
 
 Current assets 
  Inventories                              3,347      2,899 
  Trade and other receivables              7,556      6,195 
                                          10,903      9,094 
 
 Total assets                             23,041     18,963 
                                       =========  ========= 
 
 Current liabilities 
  Financial liabilities           7        5,520      2,941 
  Trade and other payables                 6,899      5,727 
                                          12,419      8,668 
 
 Non-current liabilities 
  Financial liabilities           7        1,308        251 
  Deferred tax                                27         59 
  Provisions                                 200        200 
  Defined benefit pension 
   scheme deficit                 8        5,209      4,692 
                                       ---------  --------- 
                                           6,744      5,202 
 
 Total liabilities                        19,163     13,870 
 
 Capital and reserves 
  Share capital                            1,990      1,990 
  Share premium                            1,269      1,269 
  Capital redemption reserve                 109        109 
  Hedging reserve                           (72)      (343) 
  Retained earnings                          582      2,068 
                                       ---------  --------- 
 Total equity                              3,878      5,093 
 
 
 Total equity and liabilities             23,041     18,963 
                                       =========  ========= 
 
 
 
 
 
 
 
 

Consolidated Cash Flow Statement

for the year ended 31 March 2017

 
                                             Year        Year 
                                            ended       ended 
                                         31 March    31 March 
                                             2017        2016 
                                           GBP000      GBP000 
 Operating activities 
 
 Profit/ (loss) for the 
  year before tax                              54       (336) 
 Adjustments to reconcile 
  profit/ (loss) for the 
  year to net cash (outflow)/ 
  inflow from operating activities: 
    Net finance costs excluding 
     pensions                                 164         150 
    Depreciation of property, 
     plant and equipment                    1,125       1,104 
    Amortisation of software                   90          97 
    Amortisation and impairment 
     of development costs                       7          11 
    Profit on disposal of property, 
     plant and equipment                      (1)        (12) 
    Share based payments                       28          53 
    Difference between pension 
     contributions paid and 
     amounts recognised in the 
     Consolidated Income Statement           (95)       (106) 
    (Increase)/ decrease in 
     inventories                            (676)         934 
    (Increase)/ decrease in 
     receivables                          (1,664)         880 
    Increase/ (decrease) in 
     payables                               1,220       (874) 
    Income taxes received                       -           1 
                                       ----------  ---------- 
      Cash inflow from continuing 
       operations                             252       1,902 
      Cash (outflow)/ inflow 
       from discontinued operations         (358)         378 
 
 Net cash (outflow)/ inflow 
  from operating activities                 (106)       2,280 
                                       ----------  ---------- 
 
 
 Investing activities 
      Purchase of property, 
       plant and equipment                (3,732)     (1,418) 
    Purchase of software                     (41)        (31) 
    Development costs                       (133)        (12) 
    Disposal of plant and equipment             9          33 
 
    Net cash outflow from investing 
     activities                           (3,897)     (1,428) 
                                       ----------  ---------- 
 
 Financing activities 
      Interest paid                         (164)       (150) 
    Repayment of asset loans                (162)       (162) 
    Net invoice finance draw 
     down/ (repayment)                      1,421       (459) 
    Import loan facility draw 
     down                                   1,235           - 
    Finance leases taken out                1,583          84 
 
 Net cash inflow/ (outflow) 
  from financing activities                 3,913       (687) 
                                       ----------  ---------- 
 
 Net (decrease)/ increase 
  in cash and cash equivalents               (90)         165 
 
 Cash and cash equivalents 
  at the start of the year                  (126)       (291) 
 
 Cash and cash equivalents 
  at the end of the year                    (216)       (126) 
                                       ==========  ---------- 
 
 Cash and cash equivalents 
  included in discontinued 
  operations                                (332)       (479) 
 
 Cash and cash equivalents 
  for continuing operations                   116         353 
                                       ==========  ========== 
 
 Cash and cash equivalents 
  comprise: 
 Bank overdraft                             (216)       (126) 
                                       ----------  ---------- 
                                            (216)       (126) 
                                       ==========  ========== 
 
 
 

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 2015                 1,990      1,269           109        155       2,586          6,109 
 
 Loss for the 
  year                           -          -             -          -       (261)          (261) 
 Other comprehensive 
  income for the 
  year net of tax                -          -             -      (498)       (296)          (794) 
                         ---------  ---------  ------------  ---------  ----------  ------------- 
 Total comprehensive 
  income/ (expense)              -          -             -      (498)       (557)        (1,055) 
 
 Share based payment             -          -             -          -          53             53 
 Deferred tax 
  on employee share 
  options                        -          -             -          -        (14)           (14) 
                         ---------  ---------  ------------  ---------  ----------  ------------- 
 Total of transactions 
  with shareholders              -          -             -          -          39             39 
 
 Balance as at 
  1 April 2016               1,990      1,269           109      (343)       2,068          5,093 
 
 Loss for the 
  year                           -          -             -          -       (973)          (973) 
 Other comprehensive 
  income for the 
  year net of tax                -          -             -        271       (542)          (271) 
                         ---------  ---------  ------------  ---------  ----------  ------------- 
 Total comprehensive 
  income/ (expense)              -          -             -        271     (1,515)        (1,244) 
 
 Share based payments            -          -             -          -          28             28 
 Deferred tax 
  on employee share 
  options                        -          -             -          -           1              1 
                         ---------  ---------  ------------  ---------  ----------  ------------- 
 Total of transactions 
  with shareholders              -          -             -          -          29             29 
 
 
 Balance at 31 
  March 2017                 1,990      1,269           109       (72)         582          3,878 
                         =========  =========  ============  =========  ==========  ============= 
 
 

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 2017 were authorised for issue by the board of directors on 22 May 2017 and the balance sheets were signed on the board's behalf by Kevin Nolan and David Roberts. 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 Company's financial statements have been prepared in accordance with IFRS as adopted by the European Union and as applied in accordance with the provisions of the Companies Act 2006.

The financial information set out in this announcement does not constitute the statutory accounts of the Group for the years to 31 March 2017 or 31 March 2016 but is derived from the 2017 Annual Report and Accounts. The Annual Report and Accounts for 2016 have been delivered to the Registrar of Companies and the Group Annual Report and Accounts for 2017 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 2017 and have given an unqualified report which does not contain a statement under Sections 498(2) or 498(3) of the Companies Act 2006 nor 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. The Company has taken advantage of the exemption provided under section 408 of the Companies Act 2006 not to publish its individual income statement and related notes.

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 2017.

Going concern

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 door hardware, 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                            2017       2016               2017      2016 
                                    GBP000     GBP000             GBP000    GBP000 
Foundries                           21,333     19,767              1,188       764 
Engineering                         10,786      9,353                816       679 
                                 ---------  ---------  -----------------  -------- 
Continuing operations               32,119     29,120              2,004     1,443 
Discontinued operations              2,810      5,868                296       448 
 
Segmental results                   34,929     34,988              2,300     1,891 
                                 =========  =========  =================  ======== 
 
Reconciliation of reported 
 segmental operating profit 
Segment operating profit                                           2,300     1,891 
Shared costs (excluding 
 share based payment charge)                                     (1,261)   (1,060) 
Exceptional and non-underlying 
 costs                                                             (365)     (427) 
Net finance costs                                                  (324)     (292) 
Loss from discontinued 
 operation                                                         (296)     (448) 
 
Profit/ (loss) before tax 
 from continuing operations                                           54     (336) 
 
Segmental assets 
Foundries                                                         16,861    13,560 
Engineering                                                        5,508     4,768 
                                                       -----------------  -------- 
                                                                  22,369    18,328 
                                                       -----------------  -------- 
 
Segmental liabilities 
Foundries                                                        (5,051)   (4,313) 
Engineering                                                      (2,048)   (1,614) 
                                                       -----------------  -------- 
                                                                 (7,099)   (5,927) 
                                                       -----------------  -------- 
 
Segmental net assets                                              15,270    12,401 
Unallocated net liabilities                                     (11,392)   (7,308) 
 
Total net assets                                                   3,878     5,093 
                                                       =================  ======== 
 

Unallocated net liabilities include the pension liability of GBP5,209,000 (2016: GBP4,692,000), financial liabilities of GBP6,828,000 (2016: GBP3,192,000), deferred tax asset of GBP645,000 (2016: GBP564,000) and other assets of Nil (2016: GBP12,000).

 
  Capital expenditure, 
   depreciation and amortisation 
   and impairment 
 Capital additions                      Foundries            Engineering              Total 
                                         2017     2016          2017     2016      2017      2016 
                                       GBP000   GBP000        GBP000   GBP000    GBP000    GBP000 
 Property, plant 
  and equipment                         3,611    1,381           127       87     3,738     1,468 
 Software                                  35       13             6       18        41        31 
 Development costs                          -        -           133       12       133        12 
 
 Depreciation, amortisation             Foundries            Engineering              Total 
 and impairment 
                                         2017     2016          2017     2016      2017      2016 
                                       GBP000   GBP000        GBP000   GBP000    GBP000    GBP000 
 Property, plant 
  and equipment                         (984)    (985)         (213)    (250)   (1,197)   (1,235) 
 Software                                (81)     (85)          (12)     (12)      (93)      (97) 
 Development costs                          -        -           (7)     (11)       (7)      (11) 
 
 
   (ii)           By geographical segment 
 
                                      2017     2016 
 Revenue by location of customer    GBP000   GBP000 
 United Kingdom                     15,031   15,588 
 Italy                               4,702    3,343 
 Germany                             3,736    4,192 
 Rest of Europe                      6,159    3,824 
 Other countries                     2,491    2,173 
                                   -------  ------- 
                                    32,119   29,120 
                                   =======  ======= 
 
   4.             FINANCE COSTS 
 
                                      2017     2016 
                                    GBP000   GBP000 
 Bank overdraft interest payable     (164)    (150) 
 Finance cost of pensions            (160)    (142) 
                                   -------  ------- 
                                     (324)    (292) 
                                   =======  ======= 
 
   5.             EARNINGS/ (LOSS) PER SHARE 

The calculation of earnings/ (loss) per share is based on the profit 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. Underlying earnings/ (loss) per share, which excludes 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 are detailed in note 6.

 
                                                 2017     2016 
                                               GBP000   GBP000 
 Loss for basic earnings per share              (973)    (261) 
 Exceptional costs- continuing operations         138      143 
 Exceptional costs- discontinued operations     1,451      320 
 Net financing costs and service cost 
  on pension obligations                          359      372 
 Share based payment charge                        28       54 
 Taxation effect of the above                   (410)    (178) 
 Profit for the year from discontinued 
  operations                                    (219)    (336) 
 Earnings for underlying earnings per 
  share                                           374      114 
                                              =======  ======= 
 
 
                                                 2017     2016 
                                               Number   Number 
                                                 '000     '000 
 Weighted average number of ordinary 
  shares                                        7,958    7,958 
 Adjustment to reflect shares under 
  options                                         350      160 
                                              -------  ------- 
 Weighted average number of ordinary 
  shares - fully diluted                        8,308    8,118 
                                              =======  ======= 
 
 

As at 31 March 2017 and 31 March 2016 there is no adjustment in the total diluted loss per share calculation for the 350,000 and 160,300 shares respectively 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 COSTS AND NON-UNDERLYING 
 
                                                      2017     2016 
                                                    GBP000   GBP000 
 Group reorganisation                                  138      143 
 Exceptional costs                                     138      143 
 
 Share based payment charge                             28       54 
 Defined benefit pension scheme administration 
  costs                                                199      230 
                                                   -------  ------- 
 Non-underlying other operating expenses               365      427 
 Finance cost of pensions                              160      142 
 Taxation 
  - tax effect of exceptional and non-underlying 
   costs                                             (105)    (104) 
                                                   -------  ------- 
                                                       420      465 
                                                   -------  ------- 
 
 
 Non-underlying exceptional costs of 
  discontinued operation                1,451    320 
 Tax effect of exceptional costs        (305)   (74) 
                                       ------  ----- 
                                        1,146    246 
                                       ------  ----- 
 

During 2016 and continuing into 2017 the Group continues to rationalise its cost base. Group reorganisation costs, including redundancy and recruitment, relate to this rationalisation.

During 2017 the Group took the decision to close the Leicester foundry. Non-underlying exceptional costs of discontinued operations, including asset impairment, redundancy and site clean up costs, relate to this closure.

   7.             FINANCIAL LIABILITIES 
 
                                               2017     2016 
                                             GBP000   GBP000 
 Current liabilities 
 Bank overdraft                                 216      126 
 Current instalments due on asset finance 
  loans                                         200      200 
 Invoice finance facility                     3,510    2,582 
 Import loan facility                         1,235        - 
 Current instalments due on finance 
  leases                                        359       33 
                                              5,520    2,941 
 Non-current liabilities 
 Instalments due on asset finance loans           -      200 
 Instalments due on finance leases            1,308       51 
                                            -------  ------- 
 Total financial liabilities                  6,828    3,192 
                                            -------  ------- 
 

The overdraft is held with HSBC Bank plc as part of the Group facility of GBP500,000, is secured on all assets of the business, is repayable on demand and is renewable in March 2018. Interest is payable at 2.0% (2016: 2.0%) over base rate.

Asset finance loans are secured against various items of plant and machinery across the Group. These loans are repayable by monthly instalments for a period of one year to March 2018. Interest is payable at 3.25% over base rate.

The import loan facility is used to facilitate the purchase of equipment for the new machine 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 5 years to March 2022. Interest is payable at fixed amounts that range between 3.1% and 6.1%.

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 2017 is GBP7.0m. 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, 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 2017 was GBP199,000 (2016: GBP230,000) plus GBP160,000 of financing cost (2016: GBP142,000).

The other schemes within the Group are defined contribution schemes and the pension cost represents contributions payable. The total cost of defined contributions schemes was GBP353,000 (2016: GBP331,000). 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 
                                2017       2016       2015 
 
 Salary increases                n/a        n/a        n/a 
 Pension increases (post 
  1997)                         3.3%       2.9%       2.9% 
 Discount rate                  2.5%       3.5%       3.2% 
 Inflation assumption 
  - RPI                         3.3%       2.9%       2.9% 
 Inflation assumption 
  - CPI                         2.3%       2.1%       1.8% 
 

Demographic assumptions are all based on the S2PA (2016: S1NA) 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.

 
                                                    2017     2016 
                                                   Years    Years 
 
 Current pensioner at 65 
  - male                                            21.1     21.4 
 
                                  *    female       22.9     23.7 
 Future pensioner at 65 
  - male                                            22.1     22.4 
 
                                  *    female       24.0     24.8 
 

The scheme was closed to future accrual with effect from 30th 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 2016 is currently being negotiated. The triennial valuation as at 1 April 2013 concluded that in return for maintaining the previous contribution arrangements and extending the deficit reduction period to 2028, the Company has given security over the Group's land and buildings to the pension scheme. With effect from 1 April 2017 deficit reduction contributions will increase to GBP21,890 per month (previously GBP21,252 per month), with a 3% annual increase thereafter.

The contributions expected to be paid during the year to 31 March 2018 are GBP263,000.

The scheme assets are stated at the market values at the respective balance sheet dates. The assets and liabilities of the scheme were:

 
                                      2017       2016 
                                    GBP000     GBP000 
 
 Equities/ diversified 
  growth fund                       12,325     11,719 
 Bonds                               1,143      1,123 
 Insured pensioner assets               30          9 
 Cash                                   50        123 
                                 ---------  --------- 
 Market value of assets             13,548     12,974 
 Actuarial value of liability     (18,757)   (17,666) 
                                 ---------  --------- 
 Scheme deficit                    (5,209)    (4,692) 
 Related deferred tax 
  asset                                886        845 
                                 ---------  --------- 
 Net pension liability             (4,323)    (3,847) 
                                 ---------  --------- 
 
 
 
                                         2017      2016 
   Net benefit expense recognised      GBP000    GBP000 
   in profit and loss 
 
 Operating costs                        (199)     (230) 
 Net interest expense                   (160)     (142) 
                                     --------  -------- 
                                        (359)     (372) 
                                     --------  -------- 
 
 
 
 Re-measurement losses/ (gains)                     2017      2016 
  in other comprehensive income                   GBP000    GBP000 
 
 Actuarial losses/ (gains) arising 
  from changes in financial assumptions            2,703     (575) 
 Actuarial gains arising from 
  changes in demographic assumptions               (599)         - 
 Experience adjustments                            (254)       (5) 
 Return on assets (excluding 
  interest income)                               (1,238)       834 
                                                --------  -------- 
                                                     612       254 
                                                --------  -------- 
 
                                                    2017      2016 
                                                  GBP000    GBP000 
 
 Actual return on plan 
  assets                                           1,673     (396) 
                                                --------  -------- 
 
 
 
 
 Movement in deficit during        2017      2016 
  the year                       GBP000    GBP000 
 
 Deficit in scheme at 
  beginning of year             (4,692)   (4,544) 
 Employer contributions             255       248 
 Net interest expense             (160)     (142) 
 Actuarial loss                   (612)     (254) 
                               --------  -------- 
 Deficit in scheme at 
  end of year                   (5,209)   (4,692) 
                               --------  -------- 
 
 
 
 Movement in scheme assets          2017      2016 
                                  GBP000    GBP000 
 
 Fair value at beginning 
  of year                         12,974    14,008 
 Interest income on scheme 
  assets                             435       438 
 Return on assets (excluding 
  interest income)                 1,238     (834) 
 Employer contributions              255       248 
 Benefits paid                   (1,354)     (886) 
                                --------  -------- 
 Fair value at end of 
  year                            13,548    12,974 
                                --------  -------- 
 
 
 
 
 Movement in scheme liabilities                2017      2016 
                                             GBP000    GBP000 
 
 Benefit obligation at start 
  of year                                    17,666    18,552 
 Interest cost                                  595       580 
 Actuarial losses/ (gains) arising 
  from changes in financial assumptions       2,703     (575) 
 Actuarial gains arising from 
  changes in demographic assumptions          (599)         - 
 Experience adjustments                       (254)       (5) 
 Benefits paid                              (1,354)     (886) 
                                           --------  -------- 
 Benefit obligation at end of 
  year                                       18,757    17,666 
                                           --------  -------- 
 
 

The weighted average duration of the pension scheme liabilities are 14.0 years (2016: 14.5 years).

A quantitative sensitivity analysis for significant assumptions as at 31 March 2017 is as shown below:

 
                                                    2017 
   Present value of scheme liabilities            GBP000 
   when changing the following assumptions: 
 
 Discount rate increased by 1% p.a.               16,443 
 RPI and CPI increased by 1% p.a.                 19,859 
 Mortality- members assumed to be 
  their actual age as opposed to 1 
  year older                                      19,575 
 
 

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.

   9.             REPORT AND ACCOUNTS 

Copies of the Annual Report will be available on the Group's website, www.chamberlin.co.uk from 24 June 2017 and from the Group's head office at Chuckery Road, Walsall, West Midlands, WS1 2DU. The AGM will be held on 20 July 2017 at Chuckery Road, Walsall, West Midlands, WS1 2DU.

This information is provided by RNS

The company news service from the London Stock Exchange

END

FR GMGZKNZMGNZM

(END) Dow Jones Newswires

May 23, 2017 02:00 ET (06:00 GMT)

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