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Chamberlin PLC Half-year Results

28/11/2017 7:01am

UK Regulatory (RNS & others)


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TIDMCMH

RNS Number : 6562X

Chamberlin PLC

28 November 2017

28 November 2017

AIM: CMH

CHAMBERLIN PLC

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

Half Year Results

For the six months to 30 September 2017

Key Points

-- Total H1 revenues increased to GBP17.9m (2016: GBP14.7m), in line with management expectations

-- Gross margin decreased to 15.9% (2016: 20.5%) - impacted by production issues within the foundry business:

- technical difficulties at the new machining facility created cost inefficiencies and extended cycle times

-- Underlying loss before tax of GBP574,000 (2016: GBP38,000). Statutory loss before tax of GBP810,000 (2016: GBP370,000)

   --      Underlying loss per share 6.7p (2016: 1.0p). Statutory loss per share 13.8p (2016: 4.9p) 
   --      Foundries revenues up 30.4% to GBP12.4m 
   -    driven mainly by increased demand for turbo charger bearing housings 
   --      Engineering revenues up 6.7% to GBP5.5m 
   -    satisfactory performances at both Petrel and Exidor 

-- Management continues to work with the machine and tooling suppliers to rectify issues at machining operation and, while progress is being made, it is now clear that resolution of the technical problems is likely to take longer than expected and therefore the Group's performance will be materially impacted

- a claim against the machine supplier has been initiated and a constructive dialogue is underway.

- the Company expects to reach a satisfactory settlement and further information will be provided in due course.

-- Turbo charger bearing housings remains a key growth driver for the Group, with demand growing

Chairman, Keith Butler-Wheelhouse, commented:

"While the first half of the year has delivered on our revenue expectations, margins have suffered due to the difficulties we have encountered with the start-up of our new machining facility. We are working closely with the machine and tooling suppliers to resolve the technical problems that have had a significant impact on our foundry margins, however it is now clear that resolution of the technical problems is likely to take longer than expected.

"As a result, cost inefficiencies, including the use of subcontractors and extended cycle times, will adversely affect the Group's performance. Raw material prices in the foundry operation have also increased. These costs will be recovered through a customer surcharge mechanism, however there is a short-term negative impact, given the time lag between price increases and their recovery.

"The Company is now actively pursuing a claim against the supplier of the new machining cells in view of the persistent technical failures and, expects to reach a satisfactory settlement. Further information regarding this will be provided in due course.

"Our two engineering operations, Exidor and Petrel, continued to trade in line with expectations, and together these businesses delivered operating margin of 6.0% in the first half of the year, in line with the same period in 2016.

"Looking ahead to the full year, management still expects Group revenues to be substantially ahead of the prior year, but its profitability will be materially impacted. Demand for turbo charger bearing housings, a key growth driver for the Group, continues to grow."

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) No 596/2014

Enquiries

 
 Chamberlin plc                    T: 020 3178 6378 (today) 
  Kevin Nolan, Chief Executive      / 01922 707100 
  David Roberts, Finance 
  Director 
 
 Smith & Williamson Corporate      T: 020 7131 4000 
  Finance Limited 
  (Nominated Adviser and 
  Broker) 
  Russell Cook, Katy Birkin 
 
 KTZ Communications                T: 020 3178 6378 
  (Financial PR) 
  Katie Tzouliadis, Irene 
  Bermont-Penn, Emma Pearson 
 

CHAIRMAN'S STATEMENT

Introduction

The Group's first half revenues are in line with management expectations, reflecting overall good levels of demand across the foundry and engineering businesses. However, margins within the Group's foundry businesses have been adversely affected by production issues. At the new machining facility technical difficulties have created cost inefficiencies and extended cycle times. The Company is addressing these issues and is working very closely with the machine and tooling suppliers to rectify the situation.

Results

The Group generated revenues of GBP17.9m in the six months to September 2017 (2016: GBP14.7m).

The Group's gross profit was down to GBP2.8m (2016: GBP3.0m), resulting in gross margin of 15.9% (2016: 20.5%). This reflected the cost inefficiencies within our foundry businesses, principally associated with the start-up of our new machining facility.

Underlying loss before tax was GBP574,000 (2016: loss of GBP38,000) and the underlying loss per share was 6.7p (2016: loss of 1.0p).

On a statutory basis the Group generated a loss of GBP1,099,000 (2016: loss of GBP391,000). This is after impairment of deferred tax assets of GBP374,000 (2016: GBPnil). The statutory loss per share was 13.8p (2016: loss of 4.9p).

The net debt position at 30 September 2017 was GBP8.2m (30 September 2016: GBP5.3m; 31 March 2017: GBP6.8m). The Group has debt facilities of GBP9.1m.

Pension

The Group's net pension liability has fallen to GBP4.9m (31 March 2017: GBP5.2m). This was due to a decrease in the value of liabilities as a consequence of an increase in bond yields and therefore the discount rate. The triennial valuation as at 1 April 2016 was concluded in the period and has resulted in the current level of monthly cash payments paid into the scheme being maintained.

Operations

The two foundries at Walsall and Scunthorpe generated total revenues of GBP12.4m (2016: GBP9.5m). The new Walsall machining facility generated incremental revenues of GBP0.8m, with the balance of the sales increase being driven by higher demand for turbo charger bearing housings. Despite this strong growth, our foundry activities generated an operating loss of GBP0.2m (2016: profit of GBP0.3m) which mainly reflected technical difficulties at the new machining facility.

The engineering division, which comprises Exidor, the UK market leader in panic and emergency exit door hardware, and Petrel, which manufactures lighting and control equipment for use in hazardous areas, saw revenues increase by 6.7% to GBP5.5m (2016: GBP5.1m). The division achieved an operating profit of GBP0.3m (H1 2016: GBP0.3m), a rise of 5.8%.

Outlook

Management expects full year revenues to be substantially ahead of the prior year, in particular as demand for turbo charger bearing housings continues to grow. While this is encouraging, the technical problems that have had a significant impact on foundry margins remain. The team is currently working closely with the machine and tooling suppliers, however it is now clear that the resolution of the technical problems is likely to take longer than expected. As a result, cost inefficiencies, including the use of subcontractors and extended cycle times, will materially impact the Group's performance. Raw material prices in the foundry operation have also increased. These costs will be recovered through a customer surcharge mechanism, however there is a short-term negative impact, given the time lag between price increases and their recovery.

The Company is now actively pursuing a claim against the supplier of the new machining cells in view of the persistent technical failures, and a constructive negotiation has started. We expect to reach a satisfactory settlement, and further information regarding this will be provided in due course.

Keith Butler-Wheelhouse

Chairman

27 November 2017

Consolidated Income Statement

for the six months ended 30 September 2017

 
                                    Unaudited                               Unaudited 
                                 six months ended                        six months ended 
                                   30 September                            30 September                      Year ended 
               Note                    2017                                    2016                         31 March 2017 
                     ---------------------------------------                                         --------------------------  ------------ 
                                              #                                        #                                      # 
                     Underlying  Non-underlying        Total  Underlying  Non-underlying      Total  Underlying  Non-underlying         Total 
                         GBP000          GBP000       GBP000      GBP000          GBP000     GBP000      GBP000          GBP000        GBP000 
 Revenue          2      17,906               -       17,906      14,661               -     14,661      32,119               -        32,119 
 Cost of sales         (15,058)               -     (15,058)    (11,660)               -   (11,660)    (25,173)               -      (25,173) 
 Gross profit             2,848               -        2,848       3,001               -      3,001       6,946               -         6,946 
 Other 
  operating 
  expenses        7     (3,280)           (172)      (3,452)     (2,960)           (252)    (3,212)     (6,203)           (365)       (6,568) 
                     ----------  --------------  -----------  ----------  --------------  ---------  ----------  --------------  ------------ 
 Operating 
  (loss)/ 
  profit                  (432)           (172)        (604)          41           (252)      (211)         743           (365)           378 
 Finance costs    3       (142)            (64)        (206)        (79)            (80)      (159)       (164)           (160)         (324) 
                     ----------  --------------  -----------  ----------  --------------  ---------  ----------  --------------  ------------ 
 (Loss)/ profit 
  before tax              (574)           (236)        (810)        (38)           (332)      (370)         579           (525)            54 
 Tax credit/ 
  (expense)       4          40           (329)        (289)        (83)              66       (17)       (205)             105         (100) 
                     ----------  --------------  -----------  ----------  --------------  ---------  ----------  --------------  ------------ 
 (Loss)/ profit 
  for the 
  period 
  from 
  continuing 
  operations              (534)           (565)      (1,099)       (121)           (266)      (387)         374           (420)          (46) 
                     ----------  --------------  -----------  ----------  --------------  ---------  ----------  --------------  ------------ 
 Discontinued 
  operations 
 Profit/ (loss) 
  for the 
  period 
  from 
  discontinued 
  operations                  -               -            -          47            (51)        (4)         219         (1,146)         (927) 
                     ----------  --------------  -----------  ----------  --------------  ---------  ----------  --------------  ------------ 
 (Loss)/ profit 
  for the 
  period 
  from 
  continuing 
  operations 
  attributable 
  to equity 
  holders 
  of the Parent 
  Company                 (534)           (565)      (1,099)        (74)           (317)      (391)         593         (1,566)         (973) 
                     ==========  ==============  ===========  ==========  ==============  =========  ==========  ==============  ============ 
 
 (Loss)/ 
 earnings 
 per share from 
 continuing 
 operations: 
 Basic            5                                  (13.8)p                                 (4.9)p                                    (0.6)p 
 Underlying       5      (6.7)p                                   (1.0)p                                   4.7p 
 Diluted          5                                  (13.8)p                                 (4.9)p                                    (0.6)p 
 Diluted 
  underlying      5      (6.7)p                                   (1.0)p                                   4.5p 
 
 
  Earnings/ 
  (loss) 
  per share 
  from 
  discontinued 
  operations: 
                                                                                                Nil 
 Basic            5                                        -                                      p                                   (11.6)p 
 Underlying       5           -                                     0.1p                                   2.8p 
                                                                                                Nil 
 Diluted          5                                        -                                      p                                   (11.6)p 
 Diluted 
  underlying      5           -                                     0.1p                                   2.6p 
 
 
  Total (loss)/ 
  earnings per 
  share: 
 Basic            5                                  (13.8)p                                 (4.9)p                                   (12.2)p 
 Underlying       5      (6.7)p                                   (0.9)p                                   7.5p 
 Diluted          5                                  (13.8)p                                 (4.9)p                                   (12.2)p 
 Diluted 
  underlying      5      (6.7)p                                   (0.9)p                                   7.1p 
 
 

(#) Non- underlying items represent exceptional costs as disclosed in note 7, administration costs of the pension scheme and net financing costs on pension obligations, share based payment costs and associated tax impact of these items.

Consolidated Statement of Comprehensive Income

for the six months ended 30 September 2017

 
                                 Unaudited       Unaudited 
                                six months      six months 
                                     ended           ended    Year ended 
                              30 September    30 September      31 March 
                                      2017            2016          2017 
                                    GBP000          GBP000        GBP000 
 
 Loss for the period               (1,099)           (391)         (973) 
 Other comprehensive 
  income 
 Reclassification 
  for cash flow 
  hedges included 
  in sales                           (152)           (593)          (87) 
 Movements in fair 
  value on cash 
  flow hedges taken 
  to other comprehensive 
  income                               165             253           419 
 Deferred tax on 
  movements in cash 
  flow hedges                          (2)              61          (60) 
 Movement on deferred 
  tax relating to 
  rate change                            -               -             1 
                            --------------  --------------  ------------ 
 Net other comprehensive 
  expense that may 
  be recycled to 
  profit and loss                       11           (279)           271 
 
   Re-measurement 
   gains/ (losses)on 
   pension assets 
   and liabilities                     291         (2,538)         (612) 
 Deferred/ current 
  tax on re-measurement 
  (losses)/ gains 
  on pension assets 
  and liabilities                     (55)             507           122 
 Movement on deferred 
  tax on measurement 
  losses relating 
  to rate change                         -               -          (52) 
                            --------------  --------------  ------------ 
 Net other comprehensive 
  income/(expense) 
  that will not 
  be reclassified 
  to profit and 
  loss                                 236         (2,031)         (542) 
                            --------------  --------------  ------------ 
 
   Other comprehensive 
   expense for the 
   period net of 
   tax                                 247         (2,310)         (271) 
 Total comprehensive 
  expense for the 
  period attributable 
  to equity holders 
  of the Parent 
  Company                            (852)         (2,701)       (1,244) 
                            ==============  ==============  ============ 
 

Consolidated Balance Sheet

At 30 September 2017

 
                                 Unaudited       Unaudited 
                              30 September    30 September   31 March 
                                      2017            2016       2017 
                                    GBP000          GBP000     GBP000 
 Non-current assets 
  Property, plant 
   and equipment                    10,380           8,878     10,179 
  Intangible assets                    424             402        461 
  Deferred tax 
   assets                            1,141           1,936      1,498 
                            --------------  --------------  --------- 
                                    11,945          11,216     12,138 
 Current assets 
  Inventories                        3,367           3,165      3,347 
  Trade and other 
   receivables                       7,617           7,047      7,556 
                                    10,984          10,212     10,903 
                            --------------  --------------  --------- 
 Total assets                       22,929          21,428     23,041 
                            ==============  ==============  ========= 
 
 Current liabilities 
  Financial liabilities              6,246           4,484      5,520 
  Trade and other 
   payables                          6,579           6,262      6,899 
                                    12,825          10,746     12,419 
                            --------------  --------------  --------- 
 Non-current liabilities 
  Financial liabilities              1,972             823      1,308 
  Deferred tax 
   liabilities                          17              59         27 
  Provisions                           200             200        200 
  Defined benefit 
   pension scheme 
   deficit                           4,850           7,182      5,209 
                                     7,039           8,264      6,744 
 
 Total liabilities                  19,864          19,010     19,163 
                            --------------  --------------  --------- 
 
 Capital and reserves 
  Share capital                      1,990           1,990      1,990 
  Share premium                      1,269           1,269      1,269 
  Capital redemption 
   reserve                             109             109        109 
  Hedging reserve                     (61)           (622)       (72) 
  Retained earnings                  (242)           (328)        582 
                            --------------  --------------  --------- 
 Total equity                        3,065           2,418      3,878 
                            --------------  --------------  --------- 
 
 Total equity and 
  liabilities                       22,929          21,428     23,041 
                            ==============  ==============  ========= 
 

Consolidated Cash Flow Statement

for the six months ended 30 September 2017

 
                                     Unaudited       Unaudited 
                                    six months      six months 
                                         ended           ended   Year ended 
                                  30 September    30 September     31 March 
                                          2017            2016         2017 
                                        GBP000          GBP000       GBP000 
 Operating activities 
 (Loss)/ profit for 
  the period before 
  tax                                    (810)           (370)           54 
 Adjustments for: 
 Net finance costs 
  excluding pensions                       142              79          164 
 Depreciation of property, 
  plant and equipment                      686             561        1,125 
 Amortisation of software                   50              34           90 
 Amortisation of development 
  costs                                      1               4            7 
 Profit on disposal 
  of property plant 
  and equipment                           (21)               -          (1) 
 Share based payments                       39              26           28 
 Difference between 
  pension contributions 
  paid and amounts 
  recognised in the 
  Income Statement                        (67)            (48)         (95) 
 Increase in inventories                  (20)           (298)        (676) 
 Increase in receivables                 (388)           (903)      (1,664) 
 Increase in payables                      229             264        1,220 
 Cash (outflow)/ inflow 
  from continuing operations             (159)           (651)          252 
 Cash (outflow)/ inflow 
  from discontinued 
  operations                             (142)              13        (358) 
 Net cash outflow 
  from operating activities              (301)           (638)        (106) 
 
 Investing activities 
  Purchase of property, 
   plant and equipment                   (887)         (1,385)      (3,732) 
  Purchase of software                    (14)             (2)         (41) 
  Development costs                          -            (52)        (133) 
  Disposal of property, 
   plant and equipment                      21              10            9 
                                --------------  --------------  ----------- 
 Net cash outflow 
  from investing activities              (880)         (1,429)      (3,897) 
 
 Financing activities 
  Interest paid                          (142)            (79)        (164) 
  Repayment of asset 
   loans                                  (81)            (81)        (162) 
  Net invoice finance 
   drawdown                              1,194           1,472        1,421 
  Import loan facility 
   (repayment)/ drawdown                 (879)               -        1,235 
  Finance leases taken 
   out                                     891             672        1,583 
 
   Net cash inflow from 
   financing activities                    983           1,984        3,913 
                                --------------  --------------  ----------- 
 
 
 
   Net decrease in cash 
   and cash equivalents                  (198)            (83)         (90) 
 
 
   Cash and cash equivalents 
   at the start of the 
   period                                (216)           (126)        (126) 
                                --------------  --------------  ----------- 
 
   Cash and cash equivalents 
   at the end of the 
   period                                (414)           (209)        (216) 
                                ==============  ==============  =========== 
 
 Cash and cash equivalents 
  included in discontinued 
  operations                             (474)           (466)        (332) 
 
 Cash and cash equivalents 
  for continuing operations                 60             675          116 
 
 Cash and cash equivalents 
  compromise: 
 
   Overdraft                             (414)           (209)        (216) 
                                ==============  ==============  =========== 
 

Consolidated Statement of Changes in Equity

for the six months ended 30 September 2017

 
                                                                                             Attributable 
                                                                                                to equity 
                                                          Capital                                 holders 
                                   Share      Share    redemption    Hedging     Retained          of the 
                                 capital    premium       reserve    reserve     earnings          parent 
 
                                  GBP000     GBP000        GBP000     GBP000       GBP000          GBP000 
 
 At 1 April 2016                   1,990      1,269           109      (343)        2,068           5,093 
 Loss for the 
  period                               -          -             -          -        (391)           (391) 
 Other comprehensive(expense 
  for the period 
  net of tax                           -          -             -      (279)      (2,031)         (2,310) 
                               ---------  ---------  ------------  ---------  -----------  -------------- 
 Total comprehensive 
  expense                              -          -             -      (279)      (2,422)         (2,701) 
 Share based payments                  -          -             -          -           26              26 
 Total of transactions 
  with shareholders                    -          -             -          -           26              26 
 
 At 30 September 
  2016                             1,990      1,269           109      (622)        (328)           2,418 
 
 Loss for the 
  period                               -          -             -          -        (582)           (582) 
 Other comprehensive 
  income for the 
  period net of 
  tax                                  -          -             -        550        1,489           2,039 
                               ---------  ---------  ------------  ---------  -----------  -------------- 
 Total comprehensive 
  income                               -          -             -        550          907           1,457 
 Share based payments                  -          -             -          -            2               2 
 Deferred tax 
  on employee share 
  options                              -          -             -          -            1               1 
                               ---------  ---------  ------------  ---------  -----------  -------------- 
 Total of transactions 
  with shareholders                    -          -             -          -            3               3 
 
 At 1 April 2017                   1,990      1,269           109       (72)          582           3,878 
 
 Loss for the 
  period                               -          -             -          -      (1,099)         (1,099) 
 Other comprehensive 
  income for the 
  period net of 
  tax                                  -          -             -         11          236             247 
 Total comprehensive 
  income/ (expense)                    -          -             -         11        (863)           (852) 
 Share based payments                  -          -             -          -           39              39 
 Total of transactions 
  with shareholders                    -          -             -          -           39              39 
 
 At 30 September 
  2017                             1,990      1,269           109       (61)        (242)           3,065 
                               =========  =========  ============  =========  ===========  ============== 
 

Independent review report to Chamberlin plc

Introduction

We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report of Chamberlin Plc for the six months ended 30 September 2017 which comprises of the Consolidated Income Statement, Consolidated Statement of Comprehensive Income, Consolidated Balance Sheet, Consolidated Statement of Cash Flows, Consolidated Statement of Changes in Equity and the related notes. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the company, in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board. Our review work has been undertaken so that we might state to the company those matters we are required to state to it in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company for our review work, for this report, or for the conclusion we have formed.

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors.

As disclosed in note 1, the annual financial statements of the Group are prepared in accordance with International Financial Reporting Standards as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union.

Our responsibility

Our responsibility is to express a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 September 2017 is not prepared, in all material respects, in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union.

Grant Thornton UK LLP

Statutory Auditor, Chartered Accountants

Birmingham

27 November 2017

Notes to the Interim Financial statements

   1              General information and accounting policies 

This Interim Financial Report is unaudited, but has been reviewed by the Company's auditor having regard to the International Standard on Review Engagements (UK & Ireland) 2410 "Review of Financial Information Performed by the Independent Auditor of the Entity", issued by the Auditing Practices Board for use in the UK. A copy of their unmodified review report is attached.

The interim condensed consolidated financial statements do not comprise the Group's statutory accounts as defined by section 434 of the Companies Act 2006. Statutory accounts for the year ended 31 March 2017 were approved by the board of directors on 22 May 2017 and were filed at Companies House. The auditor's report on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under section 498(2) or (3) of the Companies Act 2006.

Basis of preparation

The annual financial statements of the Group are prepared in accordance with IFRS as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with the AIM Rules issued by the London Stock Exchange.

Accounting policies

The principal accounting policies applied in preparing the interim Financial Statements comply with IFRS as adopted by the European Union and are consistent with the policies set out in the Annual Report and Accounts for the year ended 31 March 2017.

No new standards or interpretations issued since 31 March 2017 have had a material impact on the accounting of the Group.

Hedge activities

At 30 September 2017 the Group held 18 months' worth of foreign currency forward contracts designated as hedges of expected future sales to customers in Europe for which the Group has highly probable forecasted transactions

Going concern

After making appropriate enquiries, the directors consider that the Group has adequate resources to continue in operation for the foreseeable future. In forming this view the directors have reviewed internal cashflow and profit forecasts in conjunction with the available headroom on the invoice finance and overdraft facility. For this reason, they continue to adopt the going concern basis in preparing the accounts.

   2              Segmental analysis 

For management purposes, the Group is organised into two operating divisions: Foundries and Engineering. The operating segments reporting format reflects the Group's management and internal reporting structures for the Chief Operating Decision Maker.

 
                                     Segmental revenue                         Segmental operating 
                                                                                      profit 
                                Unaudited                                            Unaudited 
                                      six     Unaudited                  Unaudited         six 
                                   months    six months         Year    six months      months         Year 
                                    ended         ended        ended         ended       ended        ended 
                                   30 Sep        30 Sep     31 March        30 Sep      30 Sep     31 March 
                                     2017          2016         2017          2017        2016         2017 
 
                                   GBP000        GBP000       GBP000        GBP000      GBP000       GBP000 
 
 Foundries                         12,443         9,542       21,333         (166)         293        1,188 
 Engineering                        5,463         5,119       10,786           328         310          816 
                       ------------------  ------------  -----------  ------------  ----------  ----------- 
 Continuing 
  operations                       17,906        14,661       32,119           162         603        2,004 
 Discontinued 
  operations                            -         1,785        2,810             -          62          296 
                       ------------------  ------------  -----------  ------------  ----------  ----------- 
 Segmental 
  results                          17,906        16,446       34,929           162         665        2,300 
                       ------------------  ------------  -----------  ------------  ----------  ----------- 
 
 Reconciliation of reported segmental operating 
  profit to (loss)/ profit before tax 
                                                                                     Unaudited 
                                                                         Unaudited         six 
                                                                        six months      months         Year 
                                                                             ended       ended        ended 
                                                                            30 Sep      30 Sep     31 March 
                                                                              2017        2016         2017 
 
                                                                            GBP000      GBP000       GBP000 
 Segmental 
  operating 
  profit                                                                       162         665        2,300 
 Shared costs                                                                (594)       (562)      (1,261) 
 Exceptional 
  and non-underlying 
  costs                                                                      (172)       (252)        (365) 
 Net finance 
  costs                                                                      (206)       (159)        (324) 
 Loss from 
  discontinued 
  operations                                                                     -        (62)        (296) 
 (Loss)/ profit 
  before tax                                                                 (810)       (370)           54 
                                                                      ============  ==========  =========== 
 
 

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. The Engineering segment provides manufactured and imported products to distributors and end-users. The products fall into the categories of door hardware, hazardous area lighting and control gear and cable management.

Financing and income tax are managed on a Group basis and are not allocated to operating segments.

   3              Finance income and costs 
 
                                    Unaudited       Unaudited 
                                   six months      six months 
                                        ended           ended   Year ended 
                                 30 September    30 September     31 March 
                                         2017            2016         2017 
                                       GBP000          GBP000       GBP000 
 Interest on bank overdraft             (142)            (79)        (164) 
 Net interest on net defined 
  benefit pension liability              (64)            (80)        (160) 
                                        (206)           (159)        (324) 
                               ==============  ==============  =========== 
 
   4              Income tax expense 

An effective rate of tax for the six months to 30 September 2017 of 36% (30 September 2016: 1%) has been used in these interim statements.

The effective rate of tax is higher than the standard rate because of writing off tax losses and deferred tax assets brought forward at Russell Ductile Castings Limited leading to an increased tax charge. The 2016 effective rate of tax is lower than the standard rate because of utilising losses brought forward to reduce the overall tax charge in the period.

The corporation tax rate fell from 20% for the year ended 31 March 2016 and 31 March 2017 to 19% from 1 April 2017. The rate will fall to 17% from 1 April 2020. It is not anticipated that the subsequent reduction to 17% will have a material effect on the Company's future current or deferred tax charges.

   5              (Loss)/ earnings per share 

The calculation of (loss)/ earnings per share is based on the profit attributable to shareholders and the weighted average number of ordinary shares in issue. In calculating the diluted (loss)/ earnings per share, adjustment has been made for the dilutive effect of outstanding share options. Underlying (loss)/ earnings per share, which excludes exceptional costs, net financing cost of pension obligation, administration costs of the pension scheme and share based compensation, less related tax thereon, as analysed below, has been disclosed as the Directors believe this allows a better assessment of the underlying trading performance of the Group.

 
                                  Unaudited       Unaudited 
                                 six months      six months     Year ended 
                                      ended           ended       31 March 
                               30 September    30 September           2017 
                                       2017            2016 
                                     GBP000          GBP000         GBP000 
 Continuing operations 
  loss for basic earnings 
  per share                         (1,099)           (387)           (46) 
 Exceptional costs                       21             138            138 
 Net financing cost and 
  service cost on pension 
  obligation                            176             168            359 
 Share based payments 
  charge                                 39              26             28 
 Deferred tax asset write               374               -              - 
  off 
 Taxation effect of the 
  above                                (45)            (66)          (105) 
                             --------------  --------------  ------------- 
 
   (Loss)/ earnings for 
   underlying earnings per 
   share                              (534)           (121)            374 
                             --------------  --------------  ------------- 
 
 
                                  Unaudited       Unaudited 
                                 six months      six months     Year ended 
                                      ended           ended       31 March 
                               30 September    30 September           2017 
                                       2017            2016 
                                     GBP000          GBP000         GBP000 
 Discontinued operations 
  loss for basic earnings 
  per share                               -             (4)          (927) 
 Exceptional costs                        -              64          1,451 
 Taxation effect of the 
  above                                   -            (13)          (305) 
                             --------------  --------------  ------------- 
 
   Earnings for underlying 
   earnings per share                     -              47            219 
                             --------------  --------------  ------------- 
 
 
                                    Unaudited       Unaudited 
                                   six months      six months     Year ended 
                                        ended           ended       31 March 
                                 30 September    30 September           2017 
                                         2017            2016 
                                          000             000            000 
 Weighted average number 
  of ordinary shares                    7,958           7,958          7,958 
 Adjustment to reflect 
  dilutive shares under 
  option                                  350              52            350 
                               --------------  --------------  ------------- 
 
   Diluted weighted average 
   number of ordinary shares            8,308           8,010          8,308 
                               --------------  --------------  ------------- 
 

As at 30 September 2016 and 30 September 2017 there is no adjustment to the 52,353 and 350,000 shares respectively under option for the loss per share calculation as they are required to be excluded from the weighted average number of shares as they are anti-dilutive for the period then ended. As at 31 March 2017 there is no adjustment in the total diluted loss per share calculation for the 350,000 shares under option as they are required to be excluded from the weighted average number of shares for diluted loss per share as they are anti-dilutive for the period then ended.

   6              Pensions 

The Group operates a defined benefit pension scheme and a number of defined contribution pension schemes on behalf of its employees. For defined contribution schemes, contributions paid in the period are charged to the income statement. For the defined benefit scheme, actuarial calculations are performed in accordance with IAS 19 in order to arrive at the amounts to be charged in the income statement and recognised in the statement of comprehensive income. The defined benefit scheme is closed to new entrants and future accrual.

Under IAS 19, the Group recognises all movements in the actuarial funding position of the scheme in each period. This is likely to lead to volatility in shareholders' equity from period to period.

The IAS 19 figures are based on a number of actuarial assumptions as set out below, which the actuaries have confirmed they consider appropriate. The projected unit credit actuarial cost method has been used in the actuarial calculations.

 
                            30 September   30 September   31 March 
                                    2017           2016       2017 
 
 Salary increases                    n/a            n/a        n/a 
 Pension increases (post 
  1997)                             3.1%           2.9%       3.3% 
 Discount rate                      2.6%           2.2%       2.5% 
 Inflation assumption 
  - RPI                             3.2%           3.0%       3.3% 
 Inflation assumption 
  - CPI                             2.2%           2.2%       2.3% 
 

The demographic assumptions used for 30 September 2017, were the same as used in 31 March 2017, 30 September 2016 and the last full actuarial valuation performed as at 1 April 2016. The triennial valuation as at 1 April 2016 was concluded during the period and maintained the current level of monthly cash payments paid into the scheme. The contributions expected to be paid during the year to 31 March 2018 are GBP263,000. The triennial valuation as at 1 April 2016 increased the deficit reduction period from 2028 to 2038.

The defined benefit scheme funding has changed under IAS 19 as follows:

 
                                         Unaudited                   Unaudited 
                                        six months                  six months      Year to 
   Funding status                               to                          to     31 March 
                                      30 September                30 September         2017 
                                              2017                        2016       GBP000 
                                            GBP000                      GBP000 
 Scheme assets at end 
  of period                                 13,421                      13,220       13,548 
 Benefit obligations at 
  end of period                           (18,272)                    (20,402)     (18,757) 
                          ------------------------  --------------------------  ----------- 
 
 Deficit in scheme                         (4,850)                     (7,182)      (5,209) 
 Related deferred tax 
  asset                                        825                       1,293          886 
                          ------------------------  --------------------------  ----------- 
 Net pension liability                     (4,025)                     (5,889)      (4,323) 
                          ========================  ==========================  =========== 
 
 

The decrease in the net pension liability since March 2017 is mainly due to a decrease in the value of liabilities as a consequence of an increase in bond yields increasing the discount rate.

   7              Exceptional costs and non-underlying items 
 
                                   Unaudited       Unaudited 
                                  six months      six months     Year ended 
                                       ended           ended       31 March 
                                30 September    30 September           2017 
                                        2017            2016 
                                      GBP000          GBP000         GBP000 
 Group reorganisation                     21             138            138 
 Exceptional costs                        21             138            138 
                              ==============  ==============  ============= 
 
 Share based payment charge               39              26             28 
 Defined benefit pension 
  scheme administration 
  costs                                  112              88            199 
 
 Non-underlying other 
  operating expenses                     172             252            365 
                              --------------  --------------  ------------- 
 
 
 Non-underlying exceptional 
  costs of discontinued 
  operations                          -     64   1,451 
                                  -----  -----  ------ 
 
 Taxation 
 Write off of deferred              374      -       - 
  tax assets 
 - tax effect of non-underlying 
  other operating expenses         (33)   (63)   (363) 
 
                                    341   (63)   (363) 
                                  =====  =====  ====== 
 

During the year ended March 2017, the Group continued to rationalise operations given the reduced levels of turnover seen in the Leicester and Scunthorpe foundries. 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.

Further reorganisation and redundancy costs were incurred during the current period.

   8              Net debt 
 
                                    Unaudited       Unaudited 
                                   six months      six months     Year ended 
                                        ended           ended       31 March 
                                 30 September    30 September           2017 
                                         2017            2016 
                                       GBP000          GBP000         GBP000 
 
 Financial liabilities 
 Bank overdraft                           414             209            216 
 Current instalments due 
  on finance leases                       586              33            359 
 Current instalments due 
  on asset finance loans                  100             200            200 
 Import loan facility                     356               -          1,235 
 Invoice finance liability              4,790           4,042          3,510 
                               --------------  --------------  ------------- 
 Financial liabilities 
  due in less than one 
  year                                  6,246           4,484          5,520 
                               --------------  --------------  ------------- 
 
 Instalments due on finance 
  leases in greater than 
  one year                              1,972             723          1,308 
 Instalments due on asset                   -             100              - 
  finance loans in greater 
  than one year 
                               --------------  --------------  ------------- 
 Total financial liabilities            1,972             823          1,308 
                               --------------  --------------  ------------- 
 
 Net debt                               8,218           5,307          6,828 
                               ==============  ==============  ============= 
 
 Available facility                     9,090           6,960          9,601 
 Maximum available headroom               872           1,653          2,773 
 
   9              Interim report 

Copies of this interim results statement will be available on the Group's website, www.chamberlin.co.uk, and from the Group's headquarters at Chuckery Road, Walsall, West Midlands, WS1 2DU.

This information is provided by RNS

The company news service from the London Stock Exchange

END

IR UBVKRBKAAUAA

(END) Dow Jones Newswires

November 28, 2017 02:01 ET (07:01 GMT)

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