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Share Name Share Symbol Market Type Share ISIN Share Description
Chamberlin Plc LSE:CMH London Ordinary Share GB0001870228 ORD 0.1P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  0.70 5.47% 13.50 13.00 14.00 13.75 12.75 12.75 1,172,161 11:10:43
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Industrial Engineering 26.1 -2.3 -18.7 - 9

Chamberlin PLC Half-year Report

16/04/2021 7:00am

UK Regulatory (RNS & others)


Chamberlin (LSE:CMH)
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From Apr 2021 to May 2021

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TIDMCMH

RNS Number : 6754V

Chamberlin PLC

16 April 2021

16 April 2021

AIM: CMH

CHAMBERLIN PLC

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

Interim Results

for the six months to 30 September 2020

Key Points

-- H1 results from operations significantly improved compared to prior year despite headwinds due to COVID-19 and Brexit uncertainty.

-- Revenues of GBP11.0m (2019: GBP12.8m) largely reflect impact of COVID-19 disruption which caused the closure of the Walsall foundry and machine shop in April 2020.

-- In spite of the lower volumes, operating loss before non-underlying costs* reduced to GBP0.2m (2019: loss GBP1.0m). Operating loss after non-underlying costs of GBP0.5m (2019: GBP1.7m).

   --      Loss before tax of GBP0.6m (2019: loss of GBP1.8m). 
   --      Net debt at 30 September 2020 of GBP4.7m (31 March 2020: GBP4.6m). 

Post Balance Sheet Events

-- The publication of the FY 2020 Accounts was delayed due, in part, to the impact of COVID 19 on the business and the audit process. In addition, the Company announced the loss of a major contract in December 2020 which has impacted on the Company's future prospects. This in turn led to the Company delaying publication of the FY 2021 Interim Results.

   --    Trading in the Company's shares on AIM has been suspended since 4 January 2021. 

-- The Company completed a GBP3.5m share placing and subscription on 26 March 2021 which has enabled the Company to proceed with finalising the FY 2020 Accounts and FY 2021 Interim Results. The Company is now well positioned to restructure and take advantage of future growth opportunities.

Chairman, Keith Butler-Wheelhouse, commented:

"Management are confident that sales at Chamberlin will stabilise in the first half of the 2021/22 financial year and will then grow from the post BorgWarner low, with the growth gathering pace in the second half. The Board expects growth from all business units and a return to profitability and cash generation post our restructuring."

*Underlying figures are stated before non-underlying costs (restructuring costs, hedge ineffectiveness, impairment, GMP equalization, onerous leases and share based payment costs) together with the associated tax impact.

Enquiries

 
 Chamberlin plc                    T: 01922 707100 
  Kevin Nolan, Chief Executive 
  Neil Davies, Finance Director 
 Cenkos Securities plc             T: 020 7397 8900 
  (Nominated Adviser and Broker) 
  Russell Cook 
  Katy Birkin 
 Peterhouse Capital Limited        T: 020 7469 0930 
  (Joint Broker) 
  Heena Karani 
  Duncan Vasey 
 

Chairman's Statement

Chamberlin plc (AIM: CMH) announces its interim results for the six months ended 30 September 2020.

Revenues in the first six months reduced to GBP11.0m from GBP12.8m in the prior year, primarily reflecting the impact of COVID-19 induced shutdowns in April 2020 of our European automotive customer's sites. As a result of these closures, we were forced to shutdown our own operations at the Walsall foundry and machine shop in April. In the following five months, revenue for the Walsall foundry and machine shop recovered to around 96% of the comparable five-month period in the prior year.

Our Russell Ductile Castings foundry in Scunthorpe and Petrel, our hazardous area lighting business, both remained operational throughout the first half. Russell Ductile Castings have been able to capitalise on a reduction in foundry market capacity and the increasing demand for its products, with revenue 10% ahead of the previous half year. Petrel remained operational in the half-year, but was impacted by the impact of COVID-19 induced customer shutdowns and delays to the procurement of some large lighting projects. As a result, Petrel's revenue reduced by 34% to GBP1.1m (2019: GBP1.7m). However, the level of new orders has increased markedly and second half revenues are much improved.

Despite the overall reduction in revenue, the loss before taxation reduced to GBP0.6m in the first half from GBP1.8m in the prior year. Of this loss, GBP0.4m occurred during the enforced shutdown at Walsall in April. The reduction in losses compared to prior year was driven by tight cost control, an improved operational performance by Russell Ductile Castings, the ability to flex the workforce to the level of demand using the Government's furlough scheme and lower non-underlying costs of GBP0.2m (2019: GBP0.7m). Non-underlying costs included GBP0.1m of restructuring costs (2019: GBP0.7m).

Improved control of working capital and capital expenditure enabled net debt to increase only marginally to GBP4.7m from GBP4.6m at 31 March 2020.

Subsequent events

In December 2020, our principal customer BorgWarner gave notice of the early termination of all existing contracts, dealing a body blow to the company. This required Chamberlin to seek additional finance to remain solvent and pursue substantial further restructuring. A share issue was successfully undertaken in March 2021 generating GBP3.5m before costs.

The publication of these accounts was delayed until 16 April 2021 first by COVID-19, then by the loss of the BorgWarner contract and finally by the share issue.

Outlook

The Walsall foundry (including its associated machine shop) have experienced lower revenues in the second half, reflecting the progressive reduction in purchases from the historical principal customer BorgWarner. The prospects for utilisation of the machine shop remain unclear and the Board is continuing to review its options in the light of the continued reduction in purchases and the prevailing market conditions.

Meanwhile the prospects for growth at the Walsall foundry are encouraging. The casting of automotive turbocharger housings remains a dominant market for Chamberlin and demand across the sector remains stable. The capacity demands of BorgWarner previously left Chamberlin unable to supply prospective new, non-automotive customers, however, the Company is now able to exploit these new higher margin market opportunities. The Company is continuing with the cost reduction programme referred to above and further measures are planned. Overall, the headcount at 28 February 2021 was 239 and the restructuring programme plans to reduce the headcount to 138. The Board estimates that the annualised reduction in employment cost arising from the restructuring should not be less than GBP3.4 million.

Sales at RDC and Petrel in the second half are tracking ahead of the prior year and the outlook for both RDC and Petrel is encouraging, with the recent revenue growth expected to continue.

Management are confident that sales at Chamberlin will stabilise in the first half of the 2021/22 financial year and will then grow from the post BorgWarner low, with the growth gathering pace in the second half. The Board expects growth from all business units and a return to profitability and cash generation post our restructuring.

Keith Butler-Wheelhouse

Chairman

Consolidated Income Statement

for the six months ended 30 September 2020

 
 
                                     Unaudited                                 Unaudited 
                                  six months ended                          six months ended                              Year ended 
              Note               30 September 2020                          30 September 2019                            31 March 2020 
                                               #                                           #                                        # 
                     Underlying   Non-underlying         Total   Underlying   Non-underlying      Total   Underlying   Non-underlying          Total 
                         GBP000           GBP000        GBP000       GBP000           GBP000     GBP000       GBP000           GBP000         GBP000 
 
 Revenue         2       11,044                -        11,044       12,828                -     12,828       26,143                -         26,143 
 Cost of sales          (9,458)                -       (9,458)     (11,921)                -   (11,921)     (23,632)                -       (23,632) 
 Gross profit             1,586                -         1,586          907                -        907        2,511                -          2,511 
 Other 
  operating 
  expenses       7      (1,798)            (247)       (2,045)      (1,917)            (686)    (2,603)      (3,635)            (909)        (4,544) 
                    -----------  ---------------  ------------  -----------  ---------------  ---------  -----------  ---------------  ------------- 
 Operating 
  loss                    (212)            (247)         (459)      (1,010)            (686)    (1,696)      (1,124)            (909)        (2,033) 
 Finance costs   3         (99)                -          (99)        (147)                -      (147)        (310)                -          (310) 
                    -----------  ---------------  ------------  -----------  ---------------  ---------  -----------  ---------------  ------------- 
 Loss before 
  tax                     (311)            (247)         (558)      (1,157)            (686)    (1,843)      (1,434)            (909)        (2,343) 
 Tax expense     4        (104)                -         (104)        (143)                -      (143)         (50)                -           (50) 
                    -----------  ---------------  ------------  -----------  ---------------  ---------  -----------  ---------------  ------------- 
 Loss for the 
  period 
  attributable 
  to equity 
  holders 
  of the 
  Parent 
  Company                 (415)            (247)         (662)      (1,300)            (686)    (1,986)      (1,484)            (909)        (2,393) 
                    -----------  ---------------  ------------  -----------  ---------------  ---------  -----------  ---------------  ------------- 
 
 
  Loss per 
  share: 
 Basic           5       (5.2)p           (3.1)p        (8.3)p      (16.3)p           (8.7)p    (25.0)p      (18.7)p          (11.4)p        (30.1)p 
 Diluted                 (5.2)p           (3.1)p        (8.3)p      (16.3)p           (8.7)p    (25.0)p      (18.7)p          (11.4)p        (30.1)p 
 
 
 
 

(#) Non-underlying items include restructuring costs, hedge ineffectiveness, impairment, GMP equalisation, onerous leases and share-based payment costs together with the associated tax impact as disclosed in note 7 .

Consolidated Statement of Comprehensive Income

for the six months ended 30 September 2020

 
                                         Unaudited 
                                        six months           Unaudited 
                                             ended    six months ended    Year ended 
                                      30 September        30 September      31 March 
                                              2020                2019          2020 
                                            GBP000              GBP000        GBP000 
 
 Loss for the period                         (662)             (1,986)       (2,393) 
                                    --------------  ------------------  ------------ 
 Other comprehensive 
  income 
 Ineffective portion 
  of movement in cash 
  flow hedges recycled 
  to income statement                          124                   -           138 
 Movements in fair value 
  of cash flow hedges 
  taken to other comprehensive 
  income                                     (102)               (165)         (614) 
 Deferred tax on movements 
  in cash flow hedges                           17                  28            81 
                                    --------------  ------------------  ------------ 
 Net other comprehensive 
  income/(expense) that 
  may be recycled to 
  profit and loss                               39               (137)         (395) 
                                    --------------  ------------------  ------------ 
 
   Re-measurement (losses)/gains 
   on pension scheme assets 
   and liabilities                           (611)               (261)           460 
 Deferred tax on re-measurement 
  (losses)/ gains on 
  pension assets and 
  liabilities                                  116                  50          (87) 
 Net other comprehensive 
  (expense)/ income that 
  will not be reclassified 
  to profit and loss                         (495)               (211)           373 
                                    --------------  ------------------  ------------ 
 
   Other comprehensive 
   expense for the period 
   net of tax                                (456)               (348)          (22) 
 Total comprehensive 
  expense for the period 
  attributable to equity 
  holders of the Parent 
  Company                                  (1,118)             (2,334)       (2,415) 
                                    ==============  ==================  ============ 
 

Consolidated Balance Sheet

at 30 September 2020

 
                                      Unaudited       Unaudited 
                                   30 September    30 September   31 March 
                                           2020            2019       2020 
                                         GBP000          GBP000     GBP000 
 Non-current assets 
  Property, plant and 
   equipment                              6,809           7,714      7,209 
  Intangible assets                         303             264        341 
  Deferred tax assets                       657             820        611 
                                 --------------  --------------  --------- 
                                          7,769           8,798      8,161 
                                 --------------  --------------  --------- 
 Current assets 
  Inventories                             2,577           2,838      2,589 
  Trade and other receivables             4,434           5,140      6,082 
  Cash at bank                              505             599        457 
                                          7,516           8,577      9,128 
                                 --------------  --------------  --------- 
 Total assets                            15,285          17,375     17,289 
                                 ==============  ==============  ========= 
 
 Current liabilities 
  Financial liabilities                   3,264           4,159      3,028 
  Trade and other payables                5,937           5,153      7,481 
                                          9,201           9,312     10,509 
                                 --------------  --------------  --------- 
 Non-current liabilities 
  Financial liabilities                   1,941           2,491      2,037 
  Deferred tax liabilities                   57              35         39 
  Provisions                                200             200        200 
  Defined benefit pension 
   scheme deficit                         2,442           2,791      1,959 
                                          4,640           5,517      4,235 
 
 Total liabilities                       13,841          14,829     14,744 
                                 --------------  --------------  --------- 
 
 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                         (260)            (41)      (299) 
  Retained earnings                     (1,664)           (781)      (524) 
                                 --------------  --------------  --------- 
 Total equity                             1,444           2,546      2,545 
                                 --------------  --------------  --------- 
 
 Total equity and liabilities            15,285          17,375     17,289 
                                 ==============  ==============  ========= 
 

Consolidated Cash Flow Statement

for the six months ended 30 September 2020

 
                                               Unaudited            Unaudited 
                                              six months           six months 
                                                   ended                ended        Year ended 
                                            30 September         30 September          31 March 
                                                    2020                 2019              2020 
                                                  GBP000               GBP000            GBP000 
 Operating activities 
 Loss for the period before 
  tax                                              (558)              (1,843)           (2,343) 
 Adjustments for: 
 Net finance costs                                    99                  147               310 
 Impairment charge on property,                        -                    -                 - 
  plant and equipment 
 Hedge ineffectiveness                               124                    -               138 
 Depreciation of property, 
  plant and equipment                                483                  476               980 
 Amortisation of software                             29                   22                52 
 Amortisation of development 
  costs                                               10                   11                25 
 (Profit)/loss on disposal 
  of property plant and equipment                      -                 (12)              (12) 
 Share based payments                                 17                    -                59 
 Foreign exchange rate movements                    (22)                 (79)              (91) 
 Difference between pension 
  contributions paid and 
  amounts recognised in the 
  Income Statement                                 (150)                (139)             (279) 
 Decrease/(increase) in 
  inventories                                         13                (136)               113 
 Decrease/(increase) in 
  receivables                                      1,711                  998              (95) 
 (Decrease)/increase in 
  payables                                       (1,652)                  400             2,265 
 Corporation tax received                              -                    -               424 
                                          --------------       --------------       ----------- 
 Net cash inflow/(outflow) 
  from operating activities                          104                (155)             1,546 
                                          --------------       --------------       ----------- 
 
 Investing activities 
  Purchase of property, 
   plant and equipment                              (73)                (400)             (316) 
  Purchase of software                                 -                  (7)              (20) 
  Development costs                                    -                    -              (30) 
  Disposal of property, 
   plant and equipment                                 -                   12                12 
                                          --------------       --------------       ----------- 
 Net cash outflow from investing 
  activities                                        (73)                (395)             (354) 
                                          --------------       --------------       ----------- 
 
 Financing activities 
  Interest paid                                     (77)                (118)             (252) 
  Net invoice finance drawdown                       301                1,495               279 
  Finance lease payments                           (208)                (530)           (1,066) 
 
   Net cash inflow/(outflow) 
   from financing activities                          16                  847           (1,039) 
                                          --------------       --------------       ----------- 
 
 Net increase in cash and 
  cash equivalents                                    47                  297               153 
 
 
  Cash and cash equivalents 
   at the start of the period                        457                  291               291 
   Impact of foreign exchange 
    rate movements                                     1                   11                13 
 
 
   Cash and cash equivalents 
   at the end of the period                          505                  599               457 
                                          ==============       ==============       =========== 
 
 
 Cash and cash equivalents 
  compromise: 
 
   Cash at bank                                      505                  599               457 
                                          ==============       ==============       =========== 
 

Consolidated Statement of Changes in Equity

for the six months ended 30 September 2020

 
                                                                 Capital 
                                                              redemption    Hedging     Retained 
                             Share capital   Share premium       reserve    reserve     earnings    Total equity 
 
                                    GBP000          GBP000        GBP000     GBP000       GBP000          GBP000 
 
 At 1 April 2019                     1,990           1,269           109         96        1,404           4,868 
 Loss for the period                     -               -             -          -      (1,986)         (1,986) 
 Other comprehensive 
  expense for the period 
  net of tax                             -               -             -      (137)        (211)           (348) 
                            --------------  --------------  ------------  ---------  -----------  -------------- 
 Total comprehensive 
  expense                                -               -             -      (137)      (2,197)         (2,334) 
 Share-based payments                    -               -             -          -           14              14 
 Deferred tax on employee 
  share options                          -               -             -          -          (2)             (2) 
 Total of transactions 
  with shareholders                      -               -             -          -           12              12 
 At 30 September 2019                1,990           1,269           109       (41)        (781)           2,546 
 
 Loss for the period                     -               -             -          -        (407)           (407) 
 Other comprehensive 
  (expense)/income for 
  the period net of 
  tax                                    -               -             -      (258)          584             326 
                            --------------  --------------  ------------  ---------  -----------  -------------- 
 Total comprehensive 
  (expenses)/income                      -               -             -      (258)          177            (81) 
 Share-based payments                    -               -             -          -           45              45 
 Deferred tax on employee 
  share options                          -               -             -          -           35              35 
                            --------------  --------------  ------------  ---------  -----------  -------------- 
 Total of transactions 
  with shareholders                      -               -             -          -           80              80 
 At 1 April 2020                     1,990           1,269           109      (299)        (524)           2,545 
 
 Loss for the period                     -               -             -          -        (662)           (662) 
 Other comprehensive 
  income/(expense) for 
  the period net of 
  tax                                    -               -             -         39        (495)           (456) 
 Total comprehensive 
  income/(expense)                       -               -             -         39      (1,157)         (1,118) 
 Share-based payments                    -               -             -          -           17              17 
 Deferred tax on employee                -               -             -          -            -               - 
  share options 
 Total of transactions 
  with shareholders                      -               -             -          -           17              17 
 At 30 September 2020                1,990           1,269           109      (260)      (1,664)           1,444 
                            ==============  ==============  ============  =========  ===========  ============== 
 

Notes to the Interim Financial statements

   1              General information and accounting policies 

The unaudited 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 2020 were approved by the Board of Directors on 15 April 2021 and will be filed at Companies House in due course. The auditor's report on those accounts was unqualified, but contained an emphasis of matter paragraph relating to a material uncertainty regarding going concern.

Basis of preparation

The Group's financial statements have been prepared in accordance with International Accounting Standards in conformity with the requirements of the Companies Act 2006.

The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with 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 2020.

No new standards or interpretations issued since 31 March 2020 have had a material impact on the financial statements of the Group.

Going concern

The Group's detailed budget for the year ending 31 March 2022 and extended forecast for the six months to 30 September 2022 take into account the net proceeds of GBP3.3m raised from the Share Placing and Subscription announced on 26 March 2021 and the Director's view of most likely trading conditions. These forecasts and projections indicate that existing bank facilities are expected to remain adequate. The budget and extended forecast provides for significant revenue growth in the second half of the year to 31 March 2022 and the 6 months to 30 September 2022, which is needed to replace the lost BorgWarner contracts. The budget includes the significant but necessary benefits and costs of the restructuring that will be required to right-size the cost-base to the lower level of revenue. As the implementation and delivery of the restructuring benefits and costs are within the control of the Directors, no downside sensitivities have been applied in relation to these. The Directors have, however, applied reasonably foreseeable downside sensitivities to the budget and forecast, which assumes that sales growth from October 2021 onwards is only 3% above the first half average and the machine shop has no sales output. In the detailed budget, extended forecast and sensitised scenario, the possible receipt of compensation from BorgWarner has been entirely discounted, as has any sales of no-longer required machinery.

As a consequence, after making enquiries, the Directors have an expectation that, in the circumstances of a reasonably foreseeable downside scenario as described above, the Group and Company have adequate resources to continue in operational existence for the foreseeable future.

However, the rate at which new work can be secured to replace the lost BorgWarner activity is difficult to predict resulting in material uncertainty, which may cast significant doubt over the ability of the Group and Company to realise its assets and discharge its liabilities in the normal course of business and hence continue as a going concern.

The Directors continue to adopt the going concern basis, whilst recognising there is material uncertainty relating to the above matter.

   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.

 
                                       Revenue                               Operating (loss)/ profit 
                          Unaudited       Unaudited                    Unaudited       Unaudited 
                         six months      six months         Year      six months      six months 
                              ended           ended        ended           ended           ended     Year ended 
                       30 September    30 September     31 March    30 September    30 September       31 March 
                               2020            2019         2020            2020            2019           2020 
 
                             GBP000          GBP000       GBP000          GBP000          GBP000         GBP000 
 
 Foundries                    9,958          11,177       23,106             201           (522)           (84) 
 Engineering                  1,086           1,651        3,037              21              18           (45) 
                     --------------  --------------  -----------  --------------  --------------  ------------- 
 Segmental results           11,044          12,828       26,143             222           (504)          (129) 
                     --------------  --------------  ----------- 
 Shared costs                                                              (434)           (506)          (995) 
 Non-underlying 
  items (Note 
  7)                                                                       (247)           (686)          (909) 
 Net finance 
  costs (Note 
  3)                                                                        (99)           (147)          (310) 
 Loss before 
  tax                                                                      (558)         (1,843)        (2,343) 
                                                                  ==============  ==============  ============= 
 
 

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 hazardous area lighting products to distributors and end-users.

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

   3               Net f inance costs 
 
                                                Unaudited       Unaudited 
                                               six months      six months 
                                                    ended           ended   Year ended 
                                             30 September    30 September     31 March 
                                                     2020            2019         2020 
                                                   GBP000          GBP000       GBP000 
 Interest on bank overdraft                          (52)            (46)        (164) 
 Interest expense on lease liabilities               (25)            (72)         (88) 
 Net interest on defined benefit pension 
  liability                                          (22)            (29)         (58) 
                                                     (99)           (147)        (310) 
                                           ==============  ==============  =========== 
 
   4               Income tax expense 

An estimated effective rate of tax for the six months to 30 September 2020 of 18.6% (30 September 2019: 7.8%) has been used in these interim statements. This rate is higher than the standard corporation tax rate of 19% due primarily to not recognising a deferred tax asset on trading losses, due to uncertainty over when the losses will recoverable. The corporation tax rate remained at 19% for the year ended 31 March 2020.

   5               Loss per share 

The calculation of loss per share is based on the loss attributable to shareholders and the weighted average number of ordinary shares in issue. In calculating the diluted loss per share, adjustment has been made for the dilutive effect of outstanding share options where applicable. Underlying loss per share, which excludes non-underlying items and the related tax thereon as disclosed in Note 7, 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 ended      six months     Year ended 
                                           30 September           ended       31 March 
                                                   2020    30 September           2020 
                                                                   2019 
                                                 GBP000          GBP000         GBP000 
 Loss after tax for basic earnings 
  per share                                       (662)         (1,986)        (2,393) 
 Non-underlying operating items                     247             686            909 
 Taxation effect of the above                         -               -              - 
                                     ------------------  --------------  ------------- 
 
   Loss for underlying earnings 
   per share                                      (415)         (1,300)        (1,484) 
                                     ------------------  --------------  ------------- 
 
 
 
 
 
                                                Unaudited       Unaudited 
                                         six months ended      six months     Year ended 
                                             30 September           ended       31 March 
                                                     2020    30 September           2020 
                                                                     2019 
                                                      000             000            000 
 Weighted average number of ordinary 
  shares                                            7,958           7,958          7,958 
 Adjustment to reflect dilutive 
  shares under option                                 217             424            217 
                                       ------------------  --------------  ------------- 
 
   Diluted weighted average number 
   of ordinary shares                               8,175           8,382          8,175 
                                       ------------------  --------------  ------------- 
 

There is no adjustment for the shares under option in the diluted loss per share calculation as they are required to be excluded from the weighted average number of shares as they are anti-dilutive.

   6               Pensions 

The Group operates a defined benefit pension scheme and a defined contribution pension scheme on behalf of its employees. For the defined contribution scheme, 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 
                                          2020           2019       2020 
 
 Salary increases                          n/a            n/a        n/a 
 Pension increases (post 1997)            2.8%           3.0%       2.6% 
 Discount rate                            1.4%           1.7%       2.3% 
 Inflation assumption - RPI              2.85%           3.1%       2.6% 
 Inflation assumption - CPI              1.95%           2.2%       1.7% 
 

The demographic assumptions used for 30 September 2020 were the same as those used at 31 March 2020, and were based on the last full actuarial valuation performed as at 31 March 2019. The contributions expected to be paid during the year to 31 March 2021 are GBP300,000. The next triennial valuation is due as at 31 March 2022.

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

 
                                                 Unaudited                   Unaudited 
                                                six months                  six months     Year ended 
   Funding status                                    ended                       ended       31 March 
                                              30 September                30 September           2020 
                                                      2020                        2019         GBP000 
                                                    GBP000                      GBP000 
 Scheme assets at end of period                     15,789                      16,861         14,538 
 Benefit obligations at end of 
  period                                          (18,231)                    (19,652)       (16,497) 
                                  ------------------------  --------------------------  ------------- 
 Deficit in scheme                                 (2,442)                     (2,791)        (1,959) 
 Related deferred tax asset                            415                         474            333 
                                  ------------------------  --------------------------  ------------- 
 Net pension liability                             (2,027)                     (2,317)        (1,626) 
                                  ========================  ==========================  ============= 
 
 

The increase in the net pension liability since 31 March 2020 is mainly due to an increase in the value of liabilities as a consequence of a reduction in bond yields reducing the discount rate.

   7               Non-underlying items 
 
                                       Unaudited       Unaudited 
                                      six months      six months     Year ended 
                                           ended           ended       31 March 
                                    30 September    30 September           2020 
                                            2020            2019 
                                          GBP000          GBP000         GBP000 
 Group reorganisation                        106             672            712 
 Hedge ineffectiveness                       124               -            138 
 Share-based payment charge                   17              14             59 
                                  --------------  --------------  ------------- 
 Non-underlying operating costs              247             686            909 
 Taxation 
 - tax effect of non-underlying                -               -                - 
  costs 
 
                                             247             686              909 
                                  ==============  ==============  =============== 
 
 

During the half year ended 30 September 2020, the Group continued to realign the cost base to the reduced levels of revenue, incurring Group reorganisation costs of GBP106,000, which include redundancy and related costs.

The hedge ineffectiveness charge of GBP124,000 in 2020 arises from a reduction in highly probable Euro denominated sales as a result of economic disruption to our customers caused by COVID-19.

   8               Net debt 
 
                                           Unaudited       Unaudited 
                                          six months      six months     Year ended 
                                               ended           ended       31 March 
                                        30 September    30 September           2020 
                                                2020            2019 
                                              GBP000          GBP000         GBP000 
 Financial liabilities 
 Net cash                                      (505)           (599)          (457) 
 Current instalments due on finance 
  leases                                       1,003           1,022          1,103 
 Invoice finance liability                     2,261           3,137          1,925 
                                      --------------  --------------  ------------- 
 Net debt due in less than one 
  year                                         2,759           3,560          2,571 
                                      --------------  --------------  ------------- 
 
 Instalments due on finance leases 
  in greater than one year                     1,941           2,491          2,037 
 
 Net debt                                      4,700           6,051          4,608 
                                      ==============  ==============  ============= 
 
 
   9           SUBSEQUENT EVENTS 

On 16 December 2020, the Company announced that it had received notice from its major customer, BorgWarner Turbo Systems Worldwide Headquarters GmbH, of its intention to cancel all contracts with effect from 22 January 2021. Following this announcement, it became evident that the Company was not in a position to publish its 2020 Accounts by the agreed extended date of 31 December 2020 in accordance with AIM Rules. Consequently, the Company's shares were suspended from trading on AIM with effect from 4 January 2021.

The Board and its advisers immediately implemented measures to reduce costs and preserve cash whilst exploring options to strengthen the balance sheet in order to safeguard the Company's future. After evaluating a number of alternative options with its advisers, the Company issued a GBP200,000 unsecured convertible loan note to Mr Trevor Brown in February 2021 to provide immediate short-term working capital, which was converted into 3,333,333 Ordinary Shares following Shareholder approval at the General Meeting held on 8 March 2021. On that same date, Mr Trevor Brown was appointed to the Board of Chamberlin as a Non-Executive Director.

The Board continued to explore further funding possibilities and on 26 March 2021 announced that the Company had raised net proceeds of GBP3.3 million by way of a Share Placing and Subscription. The primary purpose of the Share Placing and Subscription was to fund working capital and to meet the restructuring costs associated with reducing the cost base to a level appropriate to the lower ongoing revenue of the Group. Following the publication and filing of the annual audited accounts for the year end 31 March 2020 and the publication of the interim results for the six months ended 30 September 2020, the Company will immediately apply for the suspension of trading of the Company's Ordinary Shares on AIM to be lifted by the London Stock Exchange.

   10            Interim report 

This interim results statement is available on the Group's website, www.chamberlin.co.uk.

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END

IR IAMJTMTTBTFB

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April 16, 2021 02:00 ET (06:00 GMT)

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