Final Results

RNS Number : 1552F
Chamberlin PLC
21 May 2013
 



 

 

AIM: CMH

 

CHAMBERLIN plc

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

 

FINAL RESULTS

for the year ended 31 March 2013

 

KEY POINTS

 

·      Results impacted by softening trading conditions, especially in H2

 

·      Revenues of £42.3m (2012: £45.5m)

 

·      Underlying operating profit* of £1.3m (2012: £1.7m)

Statutory operating profit of £1.1m (2012: £1.6m)

 

·      Underlying diluted earnings per share* of 13.4p (2012: 16.5p)

Statutory diluted earnings per share of 9.6p (2012: 14.5p)

 

·      Continued strong cash generation from operations, £2.3m (2012: £2.4m)

 

·      Net borrowings reduced to £0.98m (2012: £1.56m) - lowest year-end position since FY07

 

·      Proposed final dividend of 2.0p, taking total dividend for the year to 3.25p (2012: 3.0p)

 

·      Foundry Division (80% of Group sales) - revenues affected by slowdown in demand but continued investment and strong focus on new business development

 

·      Engineering Division (20% of Group sales) - sales increased and growth initiatives in place

 

·      Tim Hair, Chief Executive, to step down from his role in May 2014 after seven years - search for new chief executive commenced, date of departure to be coordinated with appointment of a successor, to ensure smooth transition. (Separate announcement issued today)

 

·      Board expects softer conditions to remain in H1 but Group is well positioned as demand returns

 

 

*    figures are stated before Non-underlying items which represent ineffective hedge costs, exceptional items as disclosed in note 7, net financing costs on pension obligations, share-based payment costs and associated tax impact of these items.

 

 

Chairman, Keith Butler-Wheelhouse, commented, 

 

"Revenues and profitability for the year to 31 March 2013 were affected by softening demand, particularly in the second half of the financial year. However, cash generation remained strong and the slowdown has been managed as effectively as possible.  We have also continued to invest in the business and make operational changes which will support Chamberlin's growth prospects over the long term.

 

Market conditions are weaker than a year ago and we expect the first half of the new financial year to be tough. Nonetheless, we believe that Chamberlin is in very good shape to make progress as the cycle improves, and we see a significant opportunity over the next few years to utilise the increased capacity that has been created in the foundries, with only modest expenditure. Our long term focus is on simultaneous achievement of top line sales growth and bottom line margin improvement."   

 

 

Enquiries

 

Chamberlin plc

Tim Hair, Chief Executive


T: 01922 707100

 




Charles Stanley Securities                                                    

(Nominated Adviser and Broker)

Russell Cook / Carl Holmes


T: 020 7149 6000




Biddicks

(Financial PR)

Katie Tzouliadis


T: 020 3178 6378

 

Chairman's Statement

 

Introduction

 

Having joined Chamberlin on 1 March 2012, this report marks my first full year as Chairman. Over the financial year, the Group has contended with softening trading conditions in a number of sectors, especially in the second half of the financial year, which have adversely affected the Group's results for the year as a whole.  Nonetheless, the slowdown in demand has been managed effectively as possible by the team and as we reported in our half year results statement, we have also continued to invest in the business and make operational changes which will support Chamberlin's growth prospects over the long term.  In particular, we have refocused the way we approach our new business development, added new skills and expertise, and continued to seek improvements to operational processes and product profitability.  

 

We are confident that Chamberlin is well placed to see out the near term challenges of the current economic cycle and notwithstanding the prevailing tough conditions, our focus remains on simultaneous achievement of top line sales growth and bottom line margin improvement.

 

Results

 

Revenues for the year ended 31 March 2013 were down 7% to £42.3m (2012: £45.5m), with a slight softening of demand in the first half followed by a further slowdown in the second half of the financial year. 

 

Underlying operating profit reduced to £1.3m (2012: £1.7m), with tight cost control limiting the impact of the revenue reduction.  Gross margins decreased slightly to 19.2% (2012: 19.5%) however our internal calculation of variable contribution, which measures the margin achieved before fixed costs, shows continuing progression at 32.9% (2012: 32.5%, 2011: 31.6%).  The underlying profit before tax was £1.3m (2012 £1.7m) and diluted underlying earnings per share was 13.4p (2012: 16.5p).

 

The statutory results show statutory operating profit at £1.1m (2012: £1.6m), statutory profit before tax at £0.9m (2012: £1.4m) and diluted statutory earnings per share at 9.6p (2012: 14.5p).

 

Chamberlin has a strong record of cash generation and working capital control and this remains evident in these results.  Cash generation was only slightly down at £2.3m (2012: £2.4m) and once again was significantly above underlying operating profit, equating to 177% of operating profit. The strong cash generation enabled us to reduce net borrowing by 37% to £0.98m (2012: £1.56m), which is the lowest year-end position since March 2007.

 

We typically hold capital expenditure in line with depreciation.  However, we are currently installing a new process in our Walsall foundry which will deliver attractive ongoing cost reductions.  This investment will result in a one-off increase in capital expenditure in the new financial to 31 March 2014 but we also expect to see immediate cost benefits.

 

Gearing reduced to 12% (2012: 17%) and Chamberlin continues to be financed by a £5.0m overdraft facility from HSBC.

 

Dividend

 

Our strong balance sheet and reliable cash generation provides a good underpinning for the dividend and I am pleased to announce that the Directors are recommending the payment of a final dividend of 2.0p per share, to be paid on 26 July 2013 to shareholders on the register at 5 July 2013.  This increases the total dividend for the year to 3.25p (2012: 3.0p).

 

The Board

 

The Company announced today, after seven years as Chief Executive, Tim Hair has given notice that he will be stepping down from the Board and the Company next May 2014, or sooner, if an appropriate replacement is found before that date. The Board has commenced the search for Tim's successor and the date of Tim's departure will be coordinated with the appointment of the new Chief Executive to ensure a smooth transition.   

 

The recruitment of a new Finance Director is in its final stages and until the appointment is formalised, Ian Poole, Group Financial Controller, has assumed responsibility for the day-to-day running of the finance function.

 

Strategy & Outlook

 

The modernisation of Chamberlin has created significant capacity in our businesses, especially in our foundry operations, which can be utilised with only modest amounts of expenditure. Our growth strategy is therefore focused on taking advantage of this opportunity, utilising our technical expertise and the changes we have made over the year to enhance new business development. Our goals are to generate top line sales growth as well as continuous operational development to improve efficiency and maintain tight cost controls, and therefore drive the Group's profitability. The transition is still in its early stages, but I have been encouraged by initial progress.

 

Market conditions are weaker than a year ago and we expect the first half of the new financial year to be tough.  Nonetheless, we believe that Chamberlin is in very good shape to make progress as the cycle improves, and we continue to invest in the business to support our long term commercial objectives. 

 

The Group's financial position is healthy and cash flows are good and we view prospects for the business over the long term very positively. 

  

 

Keith Butler-Wheelhouse

Chairman

21 May 2013

 

 

 

 

Chief Executive's Review

 

The financial year to 31 March 2013 saw mixed trading conditions, with a slight softening of demand in the first half year followed by a further slowdown in the second half, particularly in the final months of the year.  The slowdown was especially apparent in the power generation, quarrying and mineral processing sectors, and there was reduced order levels in turbocharger casings and housings.  Although underlying demand remains subdued our focus on business development is identifying new opportunities and I believe that our prospects for the medium term remain attractive.

 

Foundries

 

Chamberlin & Hill Castings ("CHC")

 

CHC comprises our foundries in Walsall and Leicester which, since 2009, we have operated as a single business under the control of a single management team.

 

Our foundry at Walsall produces small castings, typically below 3kg in weight, in mid-to-high volumes.  It has well-established expertise in the development and production of castings with complex internal passages where the foundry process is the only cost-effective means of volume production.  A major market for the Walsall foundry is automotive turbochargers, where modern designs require careful alignment of cooling and lubrication passages to meet the increased performance demanded by modern engines.  In past reports I have commented that legislation to reduce CO2 emissions is promoting the introduction of smaller, turbocharged petrol engines and this technology shift is continuing.  New turbocharger original equipment manufacturers ("OEMs") have entered the market and are building production capacity to supply 2014 and 2015 requirements and the existing players are defending their market share.

 

CHC has a long-standing relationship with BorgWarner, the global market leader in turbocharger manufacture, and in recent years we have added IHI Charging Systems, another major manufacturer, to the customer base, having developed a family of castings for the company's turbochargers.  The production launch of this family of castings started in 2010 and the final part enters production in the first half of the current year.  CHC is quoting components for supply to both turbo OEMs in 2014/15, and is working on developing relationships with new OEMs.

 

The demand for turbochargers is dictated by the number of vehicles built, and our scheduled demand reduced in the fourth quarter of the financial year as the European car market slowed.  We expect demand to remain at these levels in the first half of the new financial year but, in general industry, projections show car build numbers in 2013 at the same overall level as 2012, implying a recovery towards the end of the year.

 

Our Walsall foundry also supplies turbocharger castings for commercial diesel engines and demand in this sector remains stable.  In 2012 we started to supply our first fully-machined turbocharger casting to this sector using a sub-contractor and after proving capability, we have been able to increase the number of castings where we take machining responsibility.  This approach fits well with the long-term goal of some of the turbocharger OEMs and we are currently evaluating other supply arrangements that will allow us to extend this offering to passenger car components.

 

The technical challenges in castings can be simplified to issues of geometry and metallurgy.  Walsall's focus is on producing small castings made of relatively straightforward grades of iron which have complex internal geometry.  Our foundry in Leicester, which produces mid size castings typically around 20kg, produces castings with moderately complex shapes which require demanding metallurgy to deal with challenges from temperature, strength and wear resistance.  A significant part of the Leicester foundry's output is accounted for by the construction equipment industry, and reduced demand from this sector adversely affected the foundry in the latter months of the financial year.  Demand remains subdued but Leicester can serve a variety of markets and work is underway to broaden the customer base.  Our most significant opportunity is the initiative to enter the market for turbocharger turbine casings, a high temperature application where Leicester can effectively supply the commercial diesel sector through the relationships made at Walsall.  Development of the first castings has proved successful and although final testing of our customer's product has taken longer than anticipated we expect to start supplying production volumes in the new financial year. 

 

Russell Ductile Castings ("RDC")

 

RDC, located in Scunthorpe, produces heavy castings weighting up to 6,000kg and delivers castings with complex geometry and challenging metallurgy.  Applications typically require high strength or high temperature performance and include castings for large process compressors, industrial gas turbines and mining, quarrying and construction equipment.  A significant proportion of output is supplied as a finished part, with RDC taking responsibility for machining which is managed through a range of sub-contractors.  The foundry is also the only UK producer of cast iron tunnel lining segments and I am pleased to note that a further contract, worth £0.8m, has been won to supply lining segments for an upgrade at Bond Street tube station. This follows a two year programme, which is now concluding, to supply Crossrail for approximately £3.0m of these parts.  We expect other projects are likely to take place in future years.

 

RDC was adversely affected by a slowdown in its key markets in the latter months of the financial year and demand remains subdued.  However, during the past year we completed a structured evaluation of potential markets and product applications and this has brought increased focus to our business development activity.  We have brought into the business experienced sales people from outside the foundry industry and although the process for winning new work in the engineering sector is seldom rapid we have seen some encouraging progress in developing new markets and new customer relationships.

 

RDC shares a number of customers and potential markets with our Leicester foundry, and the two sites are working closely to identify and pursue these shared opportunities.

 

Engineering

 

Exidor

 

Located in Cannock, Exidor has the leading position in the UK market for securing bolts for emergency exits, known as panic hardware, and more recently has expanded into the related market of door closers though the acquisition of assets of a failed company.  In the past year Exidor has maintained its position as UK market leader in panic hardware and continues to compete effectively in this market.  The door closer product saw significant margin pressure with increased component costs but we have taken remedial action to address this and restore profitability.  Under the leadership of a new Managing Director new applications for Exidor's products have been identified, which can be fulfilled by refinements of existing products, and a programme to increase exports is underway.  We expect both initiatives to create new growth opportunities over coming years. 

 

Petrel

 

Located in Birmingham, Petrel supplies certified lighting and control equipment for hazardous environments where there is a risk of explosion.  Petrel has a small share of this market, but is a well respected brand with the potential to grow.  We appointed a new Managing Director to the business in September who is driving the focus to develop Petrel's market share.  Structured selling techniques, improved distributor management and increased export activity are underway and product opportunities are being created by the increased availability of LED light sources.  We look forward to seeing the results of this effort in future results.

 

Outlook

 

We expect to see the prevailing softer market conditions persist over the first half of the new financial year.  Nonetheless, we continue to focus on business development and on improving processes.  This will stand us in good stead as demand returns and over the medium and long term, we believe there are significant organic growth opportunities for the Group. 

 

 

Tim Hair

Chief Executive

21 May 2013

 

Finance Review

 

Overview

Sales decreased by 7% during the year to £42.2m (2012: £45.5m) and gross profit margin decreased marginally from 19.5% in 2012 to 19.2% in 2013. As a large element of cost of sales is fixed costs that are incurred independently of movements in sales volumes, this slight reduction in gross profit margin masks a year on year increase in variable contribution. The year under review includes fixed costs of £5.8m (2012: £5.9m and 2011: £5.2m) and when these are excluded from gross profit to give an internal measure of variable contribution, the underlying variable margin has increased from 31.6% in 2011 to 32.5% in 2012 and 32.9% in 2013.  This demonstrates the continued improvements the Group is making despite challenges in the economy.

 

Foundry Division sales decreased by 10% to £33.7m, reflecting reduced demand across all three sites. Sales in the Engineering Division increased by 4% to £8.5m. Underlying Group operating profit decreased by 24% to £1.3m (2012: £1.7m).

 

Financing costs continue to reduce in line with borrowings, with bank overdraft interest in the current year down 47% to £41,000 (2012: £78,000).

 

Underlying profit before tax is £1.3m and shows a 23% reduction on the prior year (2012: £1.7m).  Underlying earnings per share reduced by 22% to 14.0p (2012: 18.3p).

 

The statutory results show statutory operating profit of £1.1m (2012: £1.6m), statutory profit before tax of £0.9m (2012: £1.4m) and statutory earnings per share of 10.0p (2012: 16.1p).

 

Tax

The Group's underlying tax charge for the year was £167,000 (2012: £242,000) with an underlying effective rate of 13% (2012: 15%). The tax allowances relating to our research and development spend reduced the Group's corporation tax liability to nil from £145,000 in the prior year. It is the Group's intention to continue to make research and development claims for tax purposes where possible. Tax payable for 2013 is £95,000.  The statutory total tax charge for the year was £66,000 (2012: £183,000).

 

Cash generation and financing

Cash conversion continues to be of high importance for the Group and all Group subsidiaries are focused on this.  Cash generated from operations was £2.3m (2012: £2.4m) which equates to over 170% of underlying operating profit and demonstrates the high level of cash generation. This extends the Group's impressive record of consistent positive cash generation in excess of underlying operating profits, which was maintained during the recession.

 

Capital expenditure for the year increased slightly to £1.5m (2012: £1.4m). This was marginally above depreciation and amortisation of £1.3m (2012: £1.3m) and reflects a departure from the normal practice of capital expenditure matching depreciation and was due to a deposit for new plant to be acquired in the new financial year, as referred to in the Chairman's Statement.

 

Group borrowings continue to be reduced with financial liabilities down by £0.6m to just under £1.0m at the year end (2012: £1.6m). This is the lowest year end overdraft since March 2007. The Group is funded through a £5.0m overdraft facility that is renewable annually.  The facility has been renewed through to 30 May 2014 and is not subject to any financial covenants.

 

Foreign exchange

In order to protect against future exchange rate movements the Group enters into forward currency contracts covering 80% of its forecast Euro denominated sales for the coming year. The Group has adopted hedge accounting in relation to these foreign currency contracts.

 

During the period a number of forward contracts were identified as being ineffective from an accounting point of view as the sales for which the contracts were hedged against fell to below the level where hedge accounting could be applied. As such a charge of £69,000 was taken to non-underlying items in the income statement where this would normally have gone through equity in the hedge reserve.  A movement in fair value of £326,000 in respect of effective hedges was recognised in equity.

 

Pension

The Group's defined benefit pension scheme was closed to future accrual in 2007. Following the last triennial valuation, as at 1 April 2010, contributions were set at £315,000 per year for the period under review increasing by 3% per year thereafter. Based on current assumptions, this would eliminate the deficit by 2020. A triennial valuation as at 1 April 2013 is currently underway.

 

The IAS 19 deficit at 31 March 2013 was £3.9m (2012: £3.1m). The increase principally reflects the reduction in the discount rate used to calculate scheme liabilities, as a consequence of a fall in bond yields over the last year.

 

Share based payments

During the year a credit of £69,000 (2012: charge of £148,000) relating to share based payments was recorded in the income statement. This reflects the shares that were forfeited upon the removal of Mark Bache from the Board and a reversal of prior year charges related to subsidiary management who left during the year.

 

All outstanding share options are exercisable at the year end and as such no further amount relating to the current share options is expected to be recorded in the income statement.

 

Exceptional items

 

The current year includes exceptional items of £222,000 (2012: £nil). Of the total amount, £186,000 relates to the removal of the former finance director and £36,000 relates to legal costs associated with a back pay dispute at Russell Ductile Castings Limited. These are explained further in note 7.

 

 

Tim Hair

21 May 2013

 

 

 

 

 

 

 

 

 

 

Consolidated Income Statement

for the year ended 31 March 2013

 



Year ended 31 March 2013


Year ended 31 March 2012


Note

Underlying

Non-Underlying

Total


Underlying

Non-Underlying

Total



£000

£000

£000


£000

£000

£000










Revenue

3.

42,266

(69)

42,197


45,532

-

45,532

Cost of sales


(34,146)

-

(34,146)


(36,652)

-

(36,652)

Gross profit


8,120

(69)

8,051


8,880

-

8,880










Other operating expenses

7.

 

(6,798)

 

(222)

 

(7,020)


 

(7,145)

 

-

 

(7,145)

Trading profit


1,322

1,031


1,735

-

1,735

Share based payment credit/ (charge)


-

69

69


-

(148)

(148)



















Operating profit/ (loss)


1,322

(222)

1,100


1,735

(148)

1,587










Finance costs


(41)

(200)

(241)


(78)

(79)

(157)









Profit/ (loss) before tax


1,281

(422)

859


1,657

(227)

1,430










Tax (expense)/ credit


(167)

101

(66)


(242)

59

(183)

Profit/(loss) for the year from continuing operations attributable to equity holders of the parent Company


 

 

 

 

1,114

 

 

 

 

(321)

 

 

 

 

793


 

 

 

 

1,415

 

 

 

 

(168)

1,247









Earnings per share









Basic

6.



10.0p




16.1p

basic underlying

6.

14.0p




18.3p



Diluted

6.



9.6p




14.5p

diluted underlying

6.

13.4p




16.5p



                                                                                                                               

* Non-underlying items represent ineffective hedge costs, exceptional items as disclosed in note 7, net financing costs on pension obligations, share based payment costs and associated tax impact of these items.

 

 

Consolidated Statement of Comprehensive Income

for the year ended 31 March 2013

 






2013

£000


2012

£000






Profit for the year


793


1,247

Other comprehensive income










Movements in fair value on cash flow hedges taken to other comprehensive income


 

(229)


 

250

Reclassification for cash flow hedge included in cost of sales


(199)


229

Deferred tax on movement in cash flow hedges


102


(120)

Actuarial losses on pension assets and liabilities


(1,056)


(1,206)

Deferred tax on actuarial losses on pension scheme*


302


404

Current tax relating to actuarial losses on pension scheme*


(49)


(90)

Movement on deferred tax on actuarial losses relating to rate change


 

(41)


 

(61)

Other comprehensive income for the period net of tax


(1,170)


(594)






Total comprehensive income for the period attributable to equity holders of the parent Company


 

(377)


 

653






 

* The presentation of the prior period tax movement related to pension scheme funding and actuarial losses has been grossed up to reflect the split between current and deferred tax.

 



Consolidated Balance Sheet

at 31 March 2013

 
















2013

£000


2012

£000

Non-current assets





  Property, plant and equipment


8,199


8,121

  Intangible assets


620


642

  Deferred tax assets


1,158


1,056



9,977


9,819






Current assets





  Inventories


3,331


3,846

  Trade and other receivables


8,072


8,959



11,403


12,805






Total assets


21,380


22,624






Current liabilities





  Financial liabilities


981


1,558

  Trade and other payables


7,931


8,684

  Current tax


95


145

  Provisions


26


-



9,033


10,387






Non current liabilities





  Deferred tax


141


133

Defined benefit pension scheme   

Deficit


3,913


3,061



4,054


3,194






Total Liabilities


13,087


13,581






Capital and reserves





  Called up share capital


1,990


1,987

  Share premium account


1,269


1,269

  Capital redemption reserve


109


109

  Hedging reserve


(152)


174

  Retained earnings


5,077


5,504

Total equity


8,293


9,043











Total equity and liabilities


21,380


22,624






 

 

Consolidated Cash Flow Statement

for the year ended 31 March 2013

 



2013


2012

Operating activities


£000


£000






Profit for the year before tax


859


1,430

Adjustments to reconcile profit for the year to net cash inflow from operating activities:





Net finance costs excluding pensions


41


78

Depreciation of property, plant and

equipment


 

1,190


 

1,219

Amortisation of software


102


79

Amortisation of development costs


49


48

Profit on disposal of property, plant

and equipment


 

(13)


 

(68)

Share based payments


(69)


148

Difference between pension contributions paid and amounts recognised in the Income Statement


(204)


(347)

Decrease/ (increase) in inventories


515


(877)

Decrease in receivables


757


873

Decrease in payables


(993)


(68)

Increase/(decrease) in provisions


26


(85)

Net cash inflow from operating activities


2,260


2,430











Investing activities





Purchase of property, plant and

equipment


 

(1,353)


 

(1,185)

Purchase of software


(60)


(243)

Development costs


(69)


(32)

Disposal of plant and equipment


98


83

Net cash outflow from investing activities


(1,384)


(1,377)

Financing activities





  Interest paid


(41)


(78)

  Proceeds from issue of share capital


-


500

  Dividends paid


(258)


(152)






Net cash inflow/ (outflow) from financing activities


(299)


270






Net increase in financial liabilities


577


1,323






Financial liabilities at the start of the year


(1,558)


(2,881)






Financial liabilities at the end of the year


(981)


(1,558)






Financial liabilities comprise:





   Bank overdraft


(981)


(1,558)



(981)


(1,558)






 



Consolidated statement of changes in equity

 


 

 

Share capital

 

Capital redemption reserve

 

 

Share premium

 

 

Hedging reserve

 

 

Retained earnings

 

Attributable to equity holders of the parent









£000

£000

£000

£000

£000

£000








Balance at 1 April 2011

1,859

109

862

(185)

5,134

7,779

Profit for the year

-

-

-

-

1,247

1,247

Other comprehensive income for the year net of tax

 

-

 

-

 

-

 

359

 

(953)

 

(594)

Total comprehensive income

-

-

-

359

294

653

Share placement

93

-

407

-

-

500

Shares issued on exercise of share options

35

-

-

-

(35)

-

Dividends paid

-

-

-

-

(152)

(152)

Share based payments

-

-

-

-

113

113

Deferred tax on employee share options

 

-

 

-

 

-

 

-

 

150

 

150

Balance at 31 March 2012

1,987

109

1,269

174

5,504

9,043

Profit for the year 

 

-

-

-

-

793

793

Other comprehensive income for the year net of tax

 

-

 

-

 

-

 

(326)

 

(844)

 

(1,170)

Total comprehensive income

-

-

-

(326)

(51)

(377)

Shares issued on exercise of share options

3

-

-

-

(3)

-

Dividends paid

-

-

-

-

(258)

(258)

Share based payments

-

-

-

-

(11)

(11)

Deferred tax on employee share options

 

-

 

-

 

-

 

-

 

(104)

 

(104)

Balance at 31 March 2013

1,990

109

1,269

(152)

5,077

8,293








 

 

Share Premium Account

The share premium account balance includes the proceeds that were above the nominal value from issuance of the Company's equity share capital comprising 25p shares.

 

Capital redemption reserve

The capital redemption reserve has arisen on the cancellation of previously issued shares and represents the nominal value of those shares cancelled.

 

Retained earnings

Retained earnings include the accumulated profits and losses arising from the Consolidated Income Statement and certain items from the Statement of Comprehensive Income attributable to equity shareholders, less distributions to shareholders.

 

Hedging Reserve

The hedging reserve records the effective portion of the net change in the fair value of the cash flow hedging instruments related to hedged transactions that have not yet occurred.

 

 

 

NOTES TO THE PRELIMINARY ANNOUNCEMENT

 

1.             AUTHORISATION OF FINANCIAL STATEMENTS AND STATEMENT OF COMPLIANCE WITH IFRS

 

The Group's and Company's financial statements of Chamberlin for the year ended 31 March 2013 were authorised for issue by the board of directors on 21 May 2013 and the balance sheets were signed on the board's behalf by Tim Hair, Keith Butler-Wheelhouse and Keith Jackson.  The Company is a public limited Company incorporated and domiciled in England & Wales. The Company's ordinary shares are traded on the AIM market of the London Stock Exchange.

 

The Group's financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS).  The Company's financial statements have been prepared in accordance with IFRS as adopted by the European Union and as applied in accordance with the provisions of the Companies Act 2006.

 

The financial information set out in this announcement does not constitute the statutory accounts of the Group for the years to 31 March 2013 or 31 March 2012 but is derived from the 2013 Annual Report and Accounts.  The Annual Report and Accounts for 2012 have been delivered to the Registrar of Companies and the Group Annual Report and Accounts for 2013 will be delivered to the Registrar of Companies in due course. The auditors, Ernst & Young LLP, have reported on the accounts for the years to 31 March 2012 and 31 March 2013 and have given an unqualified report which does not contain a statement under Sections 498(2) or 498(3) of the Companies Act 2006 nor an emphasis of matter paragraph. 

 

 

2.             SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of preparation

The consolidated financial statements are presented in sterling and all values are rounded to the nearest thousand pounds (£000) except when otherwise indicated.  The Company has taken advantage of the exemption provided under section 408 of the Companies Act 2006 not to publish its individual income statement and related notes.

 

Basis of consolidation

The consolidated financial statements comprise the financial statements of Chamberlin plc and its subsidiaries as at 31 March each year. The financial statements of subsidiaries are prepared for the same reporting year as the parent Company, using consistent accounting policies. All inter-Company balances and transactions, including unrealised profits arising from intra-group transactions, have been eliminated in full.   Subsidiaries are consolidated from the date on which control is transferred to the Group and cease to be consolidated from the date on which control is transferred out of the Group.

 

Accounting policies

The preliminary announcement has been prepared on the same basis as the financial statements for the year ended 31 March 2012. No new standards or interpretations issued since 31 March 2012 have had a material impact on the accounting of the Group.

 

Presentation of the Consolidated Income Statement

The Income Statement is allocated between Underlying items which relate to the trading activities of the business and Non-underlying items which are either non-recurring or are valued using market derived data which is outside of management's control.

 

 

3.             SEGMENTAL ANALYSIS

 

For management purposes, the Group is organised into two operating divisions: Foundries and Engineering.

 

The Foundries segment is a supplier of iron castings, in raw or machined form, to a variety of industrial customers who incorporate the castings into their own products or carry out further machining or assembly operations on the castings before selling them on to their customers.

 

The Engineering segment provides manufactured and imported products to distributors and end-users operating in the safety and security markets.  The products fall into the categories of door hardware, hazardous area lighting and control gear.

 

The Group's geographical segments are determined by the location of the Group's customers. 

 

(i)            By operating segment



Segmental revenue

Segmental operating profit

Year ended



2013

2012

2013

2012




£000

£000

£000

£000

Foundries



33,674

37,354

1,709

2,076

Engineering



8,523

8,178

331

478








Segmental Results



42,197

45,532

2,040

2,554








Reconciliation of reported segmental operating profit







Segment operating profit





2,040

2,554

Shared costs (including share based payment charge)





(718)

(967)

Exceptional costs





(222)

-

Net finance costs





(241)

(157)

Profit before tax





859

1,430








Segmental assets














Foundries





15,428

15,951

Engineering





4,756

4,629

Segmental net assets





20,184

20,580








Segmental liabilities














Foundries





(6,437)

(6,184)

Engineering





(1,615)

(1,741)

Segmental net assets





(8,052)

(7,925)















Unallocated net liabilities





(3,839)

(3,612)








Total net assets





8,293

9,043








 

Unallocated net liabilities include the pension liability of £3,913,000 (2012: £3,061,000), financial liabilities of £981,000 (2012: £1,558,000), deferred tax asset of £1,017,000 (2012: £923,000) and other assets of £39,000 (2012: £84,000).

 

 

 

 

 

 

 

 

 

 

Capital expenditure, depreciation and amortisation







 

Capital additions

Foundries

Engineering

Total


 


2013

2012

2013

2012

2013

2012

 


£000

£000

£000

£000

£000

£000

 

Property, plant and   equipment

1,118

818

235

367

1,353

1,185

 

Software

60

237

-

6

60

243

 

Development costs

46

-

23

32

69

32

 








 

Depreciation and Amortisation







 








 

Property, plant and equipment

(948)

(945)

(242)

(274)

(1,190)

(1,219)

 

Software

(87)

(64)

(15)

(15)

(102)

(79)

 

Development costs

(35)

(42)

(14)

(6)

(49)

(48)

 

 

 

(ii)           By geographical segment


2013

2012

Revenue by location of customer

£000

£000




United Kingdom

28,534

31,956

Germany

7,091

7,196

Rest of Europe

3,896

3,413

Other countries

2,676

2,967


42,197

45,532

 

 

4.             FINANCE COSTS AND FINANCE REVENUE


2013

2012


£000

£000

Finance costs



Bank overdraft interest payable

(41)

(78)

Finance cost of pensions

(200)

(79)


(241)

(157)

 

 

5.             DIVIDENDS PAID AND PROPOSED


2013

2012


£000

£000

Paid equity dividends on ordinary shares



 2012 final dividend of 2.00p (2011: 1.00p) per share

159

75

 2013 interim dividend of 1.25p (2012: 1.00p) per share

99

77


258

152

Proposed final dividend subject to shareholder approval



  2013 final dividend of 2.00p (2012: 2.00p) per share

159

159

 

 

 

 

6.             EARNINGS PER SHARE

 

The calculation of 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 earnings per share, adjustment has been made for the dilutive effect of outstanding share options.  Underlying earnings per share, which excludes non-underlying items, as analysed below, has also been disclosed as the Directors believe this allows a better assessment of the underlying trading performance of the Group. Exceptional costs are detailed in note 7.

 


2013

2012


£000

£000

Profit for basic earnings per share

793

1,247

Ineffective hedges

69

-

Taxation on ineffective hedges

(17)

-

Exceptional costs

222

-

Taxation effect of exceptional costs

(53)

-

Net Financing Costs on pension obligations

200

79

Taxation effect of pension obligation

(48)

(21)

Share based payment (credit)/ charge

(69)

148

Taxation effect of share based payment charge

17

(38)

Earnings for underlying earnings per share

1,114

1,415




 

 

 




2013

2012


Number

Number

Weighted average number of ordinary shares

7,950

7,731

Adjustment to reflect shares under options

349

844

Weighted average number of ordinary shares - fully diluted

8,299

8,575




 

7.  EXCEPTIONAL COSTS


2013

2012


£000

£000




Removal of former Finance Director

186

-

Legal costs

36

-


222

-

Taxation



 - tax effect of exceptional costs

(53)

-


(53)

-

 

On 11 December 2012 the Company removed Mark Bache as Finance Director. Costs associated with his removal include a payment under an employment settlement agreement in March 2013, legal costs associated with his removal and costs associated with the recruitment of a successor.

 

Legal costs are in relation to a dispute for back pay at Russell Ductile Castings Limited and comprise the amount offered to settle the dispute along with legal costs incurred to date and expected future legal costs expected to be incurred.

 

8.             REPORT AND ACCOUNTS

 

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

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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