Half-year Results

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 £17.9m (2016: £14.7m), 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 £574,000 (2016: £38,000).  Statutory loss before tax of £810,000 (2016: £370,000)

 

·      Underlying loss per share 6.7p (2016: 1.0p). Statutory loss per share 13.8p (2016: 4.9p)

 

·      Foundries revenues up 30.4% to £12.4m

-    driven mainly by increased demand for turbo charger bearing housings

 

·      Engineering revenues up 6.7% to £5.5m

-    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

Kevin Nolan, Chief Executive

David Roberts, Finance Director

 

T: 020 3178 6378 (today) / 01922 707100

 

 

 

 

Smith & Williamson Corporate Finance Limited

(Nominated Adviser and Broker)

Russell Cook, Katy Birkin

 

T: 020 7131 4000

 

 

 

KTZ Communications

(Financial PR)

Katie Tzouliadis, Irene Bermont-Penn, Emma Pearson

 

T: 020 3178 6378

 

 

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 £17.9m in the six months to September 2017 (2016: £14.7m).

 

The Group's gross profit was down to £2.8m (2016: £3.0m), 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 £574,000 (2016: loss of £38,000) and the underlying loss per share was 6.7p (2016: loss of 1.0p).

 

On a statutory basis the Group generated a loss of £1,099,000 (2016: loss of £391,000). This is after impairment of deferred tax assets of £374,000 (2016: £nil).  The statutory loss per share was 13.8p (2016: loss of 4.9p).

 

The net debt position at 30 September 2017 was £8.2m (30 September 2016: £5.3m; 31 March 2017: £6.8m).  The Group has debt facilities of £9.1m.

 

Pension

 

The Group's net pension liability has fallen to £4.9m (31 March 2017: £5.2m). 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 £12.4m (2016: £9.5m). The new Walsall machining facility generated incremental revenues of £0.8m, 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 £0.2m (2016: profit of £0.3m) 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 £5.5m (2016: £5.1m).  The division achieved an operating profit of £0.3m (H1 2016: £0.3m), 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

 

 

 

Note

Unaudited
six months ended
30 September 2017

Unaudited
six months ended
30 September 2016

Year ended
31 March 2017

 

 

 

Underlying

# Non-underlying

       Total

Underlying

# Non-underlying

Total

Underlying

# Non-underlying

        Total

 

 

£000

£000

£000

£000

£000

£000

£000

£000

£000

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:

 

 

 

 

 

 

 

 

 

 

Basic

5

 

 

-

 

 

Nil p

 

 

(11.6)p

Underlying

5

-

 

 

0.1p

 

 

2.8p

 

 

Diluted

5

 

 

-

 

 

Nil 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
six months ended
 30 September
2017

Unaudited
six months ended
30 September
2016


Year ended
31 March
 2017

 

 

£000

 

£000

 

£000

 

 

 

 

 

 

 

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)

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
30 September
2017

 

Unaudited
30 September
2016

 

31 March
2017

 

 

£000

 

£000

 

£000

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
six months ended
30 September
2017

 

Unaudited
six months ended
30 September
2016

 

Year ended
31 March
2017

 

 

£000

 

£000

 

£000

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

 

 

Share capital

Share premium

Capital redemption reserve

Hedging reserve

Retained earnings

Attributable to equity holders of the parent

 

 

 

 

 

 

 

 

£000

£000

£000

£000

£000

£000

 

 

 

 

 

 

 

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

 six months

ended

30 Sep

2017

 

£000

Unaudited

six months

ended

30 Sep

2016

 

£000

 

Year ended

31 March

2017

 

£000

Unaudited

six months

ended

30 Sep

2017

 

£000

Unaudited

six months

ended

30 Sep

2016

 

£000

 

Year ended

31 March

2017

 

£000

 

 

 

 

 

 

 

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

six months

ended

30 Sep

2017

 

£000

Unaudited

six months

ended

30 Sep

2016

 

£000

 

Year ended

31 March

2017

 

£000

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
six months ended
30 September

2017

Unaudited
six months ended
30 September

2016

Year ended
31 March

2017

 

£000

£000

£000

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

six months ended

30 September

2017

Unaudited

six months ended

30 September

2016

 

Year ended

31 March

2017

 

£000

£000

£000

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 off

374

-

-

Taxation effect of the above

(45)

(66)

(105)

 

(Loss)/ earnings for underlying earnings per share

 

(534)

 

(121)

 

374

 

 

 

 

 

 

 

 

 

 

Unaudited

six months ended

30 September

2017

Unaudited

six months ended

30 September

2016

 

Year ended

31 March

2017

 

£000

£000

£000

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

six months ended

30 September

2017

Unaudited

six months ended

30 September

2016

 

Year ended

31 March

2017

 

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

2017

30 September

2016

31 March

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 £263,000. 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:

 

 

 

 

 

Funding status

           Unaudited

 six months to

30 September

2017

£000

             Unaudited

 six months to

30 September

2016

£000

 

Year to

31 March

2017

£000

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

six months ended

30 September

2017

Unaudited

six months ended

30 September

2016

 

Year ended

31 March

2017

 

£000

£000

£000

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 tax assets

374

-

-

- 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

six months ended

30 September

2017

Unaudited

six months ended

30 September

2016

 

Year ended

31 March

2017

 

£000

£000

£000

 

 

 

 

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 finance loans in greater than one year

-

100

-

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.

 


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