TIDMCMH
RNS Number : 6750V
Chamberlin PLC
16 April 2021
AIM: CMH
16 April 2021
CHAMBERLIN plc
("Chamberlin", the "Company" or the "Group")
FINAL RESULTS
for the year ended 31 March 2020
Chamberlin plc (AIM: CMH.L) has today published the Company's
Report and Accounts for the year ended 31 March 2020 ("FY2020
Accounts"). The Company has also published the Company's interim
results for the six months to 30 September 2020 ("FY2021 Interim
Results"). Upon publication of the FY2020 Accounts and the FY2021
Interim Results, the Company anticipates that suspension of trading
in the Company's ordinary shares on AIM will be lifted with effect
from 8.00am today.
The FY2020 Accounts, including Notice of the Company's AGM, are
available on the Group's website, www.chamberlin.co.uk and will be
posted to Shareholders on 19 April 2021. The AGM, which will be
held as a closed meeting given the restrictions in relation to
COVID-19, will be held on 8 June 2021 at Chuckery Road, Walsall,
West Midlands, WS1 2DU.
Highlights
Financial
-- Revenue in the year to 31 March 2020 of GBP26.1m (2019:
GBP33.0m) reflecting challenging automotive sector over the
year
-- Underlying operating loss before tax* of GBP1.1m (2019:
GBP1.0m) despite the 21% reduction in revenue
-- Non-underlying items in the year of GBP0.9m (2019: GBP3.4m)
included GBP0.8m relating to the realignment of the cost base of
the Group
-- Net debt at 31 March 2020 decreased by GBP0.8m to GBP4.6m (2019: GBP5.4m)
Post balance Sheet Events
-- The publication of the FY2020 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
contact in December 2020 which has impacted on the Company's future
prospects.
-- Due to the inability to finalise the FY2020 Accounts, the
Company had been unable to publish the FY2021 Interim Results.
-- Trading in the Company's ordinary shares on AIM has been suspended since 4 January 2021
-- The Company announced a GBP3.5m share placing and
subscription on 26 March 2021 which has enabled the Company to
proceed with finalising the FY2020 Accounts. The Company is now
well positioned to take advantage of future growth
opportunities.
* 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.
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."
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
The year under review was a difficult period for Chamberlin.
Revenue was 21% below the prior year, with a loss before tax of
GBP2.3m, including GBP0.8m of restructuring costs. However,
downsizing, cost reductions and careful cash management allowed the
company to operate effectively.
The Board and Staff
In July 2019, Keith Jackson retired from the Board after 14
years, having joined as a Non-Executive Director in 2005. Keith
continues in his role as Trustee Chairman of the Chamberlin and
Hill Staff Pension and Life Assurance Scheme. David Flowerday has
replaced Keith as Chair of the Audit Committee. On behalf of the
Board, we would like to place on record our thanks to Keith for his
many years of service to Chamberlin. He has made a significant
contribution and we wish him well in the future. Subsequent to the
year end the Board was strengthened by the appointment of Trevor
Brown in March 2021. There have been no other changes to the
Board.
As part of the overall restructuring mentioned above, there has
been a consolidation of many positions - including senior roles -
in order to reduce costs. On behalf of the Board, I would like to
give our thanks to all our employees during what has been a
difficult and challenging period.
Subsequent events
COVID-19 hit us very hard in April 2020 and to a lesser degree
in the months since. 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 in order 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 first by Covid,
then by the loss of the BorgWarner contract and finally by the
share issue.
Outlook
This outlook statement was first prepared in November 2020,
prior to events concerning BorgWarner. As penned in November the
outlook was uncertain, principally due to COVID 19.
As rewritten in April 2021 the market outlook is more positive,
with all businesses enjoying sales levels above those of the prior
year in recent months, excluding the effect of BorgWarner. Whilst
the COVID 19 outlook in the UK is much brighter, things remain
uncertain, particularly in Continental Europe where many of our
customers are based.
The substantial further restructuring mentioned above will
reduce the overhead structure and the direct workforce to that
needed for the reduced turnover caused by the BorgWarner contract
termination.
The Company continues to explore additional opportunities for
all business units, including non- traditional products and
e-commerce.
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
Chief Executive's Review
Early in this financial year, Chamberlin's revenues suffered a
reduction with several factors hitting hard in the first half:-
-- A reduction in European car production adversely affected
both the Walsall foundry and machining facility
-- The troubles at British Steel impacted our Scunthorpe heavy castings foundry
-- Our emergency lighting business found many construction
projects were delayed by uncertainties in the UK economy associated
with Brexit.
Most importantly, and particularly for our dominant turbocharger
market, the continuing lack of clarity over future tariffs on trade
with the EU frustrated securing contracts on new models needed to
replace contracts on older vehicles reaching the end of their
production run.
This all reflected in first half revenues of GBP12.8m, a
reduction of 26% compared with the previous year. This necessitated
a substantial reduction in the cost base, which occurred during the
first half, with the number of employees reducing in line with
sales. The first half experienced a pre-tax loss of GBP1.8m which
included GBP0.7m of restructuring costs.
The restructuring programme was designed to right-size the cost
base to the expected future demand, with the latter buoyed in the
second half by the successful negotiation of several new
non-automotive contracts, and the potential to be further improved
by additional automotive work now the future trading regime with
the EU has been clarified.
In the second half, the increase in revenue from the new
non-automotive contracts helped to out-weigh the continuing effect
of automotive contracts winding down. Overall, second-half revenues
were 4% above those in the first half. The lower cost base enabled
the second-half pre-tax loss to be reduced to GBP0.5m, including a
further GBP0.1m restructuring costs and a small initial COVID-19
effect in March 2020. Excluding both, profit before tax for the
second half was essentially break-even.
Looking at the year, revenues at GBP26.1m were 21% below the
prior year, with a loss before tax of GBP2.3m, including GBP0.8m
restructuring costs. The lower activity enabled working capital to
be reduced, capital spend was constrained to the diminished
business opportunity and, despite the loss for the year, net debt
decreased from GBP5.4m to GBP4.6m.
Kevin Nolan
Chief Executive
Finance Review
Overview
Revenue reduced by 21% during the year to GBP26.1m (2019:
GBP33.0m) as trading conditions in our automotive market were
challenging. Gross profit margin decreased to 9.6% from 11.4% in
2019.
Underlying operating loss before tax only increased slightly to
GBP1.1m (2019: GBP1.0m) despite the 21% reduction in revenue.
Financing costs were 38% lower than 2019 at GBP0.3m (2019:
GBP0.5m) as a result of a reduction in net debt and a reduced
finance cost of pensions on a lower deficit.
Underlying loss before tax of GBP1.4m (2019: GBP1.5m loss) was
5% lower than 2019 due primarily to the lower financing costs.
The statutory loss before tax of GBP2.3m (2019: loss of GBP5.0m)
was 53% lower than 2019 as an asset impairment charge of GBP3.0m
taken in 2019 was not repeated.
Non-underlying items
Non-underlying items in the year of GBP0.9m (2019: GBP3.4m)
included GBP0.8m relating to the realignment of the cost base of
the Group and GBP0.1m of foreign currency related hedge
ineffectiveness resulting from Covid-19 induced revenue
reductions.
Tax
The effective rate of taxation on a statutory basis was 2%
compared to the mainstream corporation tax rate of 19%, primarily
as a result of not recognising deferred tax on trading losses due
to the inherent uncertainty surrounding future profitability.
Diluted loss per share
Underlying diluted loss per share from continuing operations of
18.7p (2019: 19.5p loss) was 4% lower than 2019, with total diluted
loss per share of 30.1p (2019: earnings of 18.2p).
Cash generation and financing
Operating cash inflow from continuing operations was GBP1.5m
(2019: outflow of GBP3.4m). This included a contractually agreed
advance payment from a customer of GBP1.5m and GBP0.4m of
corporation tax refunds received during the year offset by
restructuring costs of GBP0.7m.
Cash spent on property, plant and equipment and capitalised
software and development costs in the year was GBP0.4m (2019:
GBP1.2m).
Interest paid of GBP0.3m (2019: GBP0.4m) was lower than 2019 due
to lower average net debt in 2020.
Lease payments of GBP1.1m (2019: GBP0.8m) primarily relate to
assets at the Group's machining facility.
Net debt
Net debt at 31 March 2020 decreased by GBP0.8m to GBP4.6m (2019:
GBP5.4m). The Group debt facility has two elements: a GBP6.0m
invoice discounting facility limited to 90% of outstanding invoice
value and finance leases of GBP3.1m. The invoice discounting
facility has the following covenant at year-end, which was complied
with:
- Without prior written consent of HSBC, no dividends are
payable in the year ended 31 March 2020, and in subsequent years,
prior written consent of HSBC is required for the payment of any
dividends in excess of 50% of net profit after tax.
Foreign exchange
It is the Group's policy to minimise risk to exchange rate
movements affecting sales and purchases by economically hedging or
netting currency exposures at the time of commitment, or when there
is a high probability of future commitment, using currency
instruments (primarily forward exchange contracts). A proportion of
forecast exposures are hedged depending on the level of confidence
and hedging is topped up following regular reviews. On this basis
up to 90% of the Group's annual exposures are likely to be hedged
at any point in time and the Group's net transactional exposure to
different currencies varies from time to time.
Approximately 63% of the Group's revenues are denominated in
Euros. During the year to 31 March 2020, the average exchange rate
used to translate into GBP Sterling was EUR1.15 (31 March 2019:
EUR1.13).
Pension
The Group has one defined benefit pension scheme. It is closed
to future accrual, with the Group operating a defined contribution
pension scheme for its current employees. The deficit for the
defined benefit pension scheme at 31 March 2020 was GBP2.0m (2019:
GBP2.6m).
The Group's defined benefit pension scheme was closed to future
accrual in 2007. During the year the latest triennial valuation, as
at 31 March 2019, was concluded and contributions were set at
GBP0.3m for 2021, GBP0.33m for 2022 and GBP0.36m for 2023. The next
triennial valuation is due as at 31 March 2022.
Administration costs of the defined benefit pension scheme were
GBP0.2m in 2020 (2019: GBP0.2m) and are shown in other operating
expenses. The Group cash contribution during the year was GBP0.3m
(2019: GBP2.7m).
Audit Opinion
The auditors have reported on the accounts for the year ended 31
March 2020 and have given a modified audit opinion drawing
attention to a material uncertainty regarding going concern. The
Board has addressed these issues through the restructuring exercise
referred to above and through GBP3.5m raised by the share issue in
March 2021. As a consequence, the Directors have an expectation
that, in the circumstances of a reasonably foreseeable downside
scenario, the Group has adequate resources to continue to operate
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, as referred to in note 2 below. The Directors
continue to adopt the going concern basis, whilst recognising there
is material uncertainty relating to the above matter.
Neil Davies
Group Finance Director
Consolidated Income Statement
for the year ended 31 March 2020
Year ended 31 March 2020 Year ended 31 March 2019
-------------------------------------- ----------------------------------------
(+) Non- (+) Non-
Note Underlying underlying Total Underlying underlying Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Revenue 3 26,143 - 26,143 32,958 - 32,958
Cost of sales (23,632) - (23,632) (29,192) - (29,192)
Gross profit 2,511 - 2,511 3,766 - 3,766
Other operating
expenses 6 (3,635) (909) (4,544) (4,776) (3,448) (8,224)
----------- ------------- ---------- ----------- ------------- ------------
Operating loss (1,124) (909) (2,033) (1,010) (3,448) (4,458)
Finance costs 4 (310) - (310) (499) - (499)
----------- ------------- ---------- ----------- ------------- ------------
Loss before
tax (1,434) (909) (2,343) (1,509) (3,448) (4,957)
Tax (expense)/
credit (50) - (50) (39) 87 48
----------- ------------- ---------- ----------- ------------- ------------
Loss for the
year from continuing
operations (1,484) (909) (2,393) (1,548) (3,361) (4,909)
Discontinued
operations 7
Profit for the
year from discontinued
operations - - - - 6,435 6,435
----------- ------------- ---------- ----------- ------------- ------------
(Loss)/ profit
for the year
attributable to
equity holders
of the parent company (1,484) (909) (2,393) (1,548) 3,074 1,526
=========== ============= ========== =========== ============= ============
Underlying loss
per share from
continuing operations:
Basic 5 - - (18.7)p - - (19.5)p
Diluted 5 - - (18.7)p - - (19.5)p
Earnings per share
from discontinued
operations:
Basic 5 - - - - - 80.9p
Diluted 5 - - - - - 76.8p
Total (loss)
/earnings per
share:
Basic 5 - - (30.1)p - - 19.2p
Diluted 5 - - (30.1)p - - 18.2p
*Non-underlying items include restructuring costs, hedge
ineffectiveness, impairment, GMP equalisation, onerous leases and
share-based payment costs together with the associated tax impact.
Underlying and non-underlying figures for the year ended 31 March
2019 have been restated as detailed in Note 10.
Consolidated Statement of Comprehensive Income
for the year ended 31 March 2020
2020 2019
Note GBP000 GBP000
(Loss) / profit for the year (2,393) 1,526
Other comprehensive income
Movements in fair value of cash flow
hedges taken to other comprehensive
income (614) 134
Ineffective portion of movement in
cash flow hedges recycled to income
statement 138 -
Deferred tax on movement in cash
flow hedges 81 (23)
--------- -------
Net other comprehensive (expense)/income
that may be recycled to profit and
loss (395) 111
--------- -------
Re-measurement losses on pension
scheme assets and liabilities 9 460 76
Deferred tax expense on re-measurement
gain on pension scheme (87) (15)
Net other comprehensive income that
will not be recycled to profit and
loss 373 61
Other comprehensive (expense) / income
for the year net of tax (22) 172
Total comprehensive (expense) / income
for the year attributable to equity
holders of the parent company (2,415) 1,698
========= =======
Consolidated Balance Sheet
at 31 March 2020
Note 31 March 31 March
2020 2019
GBP000 GBP000
Non-current assets
Property, plant and equipment 7,209 7,769
Intangible assets 341 290
Deferred tax assets 611 906
--------- ---------
8,161 8,965
Current assets
Inventories 2,589 2,702
Trade and other receivables 6,082 6,052
Cash at Bank 457 291
9,128 9,045
Total assets 17,289 18,010
========= =========
Current liabilities
Financial liabilities 8 3,028 2,683
Trade and other payables 7,481 4,600
10,509 7,283
Non-current liabilities
Financial liabilities 8 2,037 2,966
Deferred tax 39 53
Provisions 200 200
Defined benefit pension scheme
deficit 9 1,959 2,640
--------- ---------
4,235 5,859
Total liabilities 14,744 13,142
--------- ---------
Capital and reserves
Share capital 1,990 1,990
Share premium 1,269 1,269
Capital redemption reserve 109 109
Hedging reserve (299) 96
Retained earnings (524) 1,404
--------- ---------
Total equity 2,545 4,868
Total equity and liabilities 17,289 18,010
========= =========
Consolidated Cash Flow Statement
for the year ended 31 March 2020
Year ended Year ended
31 March 31 March
2020 2019
GBP000 GBP000
Operating activities
Loss for the year before tax (2,343) (4,957)
Adjustments to reconcile (loss)
for the year to net cash (outflow)/
inflow from operating activities:
Net finance costs excluding pensions 310 499
Impairment charge on property,
plant and equipment - 3,043
Hedge ineffectiveness 138 -
Depreciation of property, plant
and equipment 980 1,688
Amortisation of software 52 59
Amortisation and impairment of
development costs 25 25
Profit on disposal of property,
plant and equipment (12) -
Foreign exchange rate movement (91) -
Share based payments 59 40
One-off contribution to defined
benefit pension scheme - (2,500)
Difference between pension contributions
paid and amounts recognised in
the Consolidated Income Statement (279) 25
(Increase)/ Decrease in inventories 113 (388)
Decrease/ (Increase) in receivables (95) 419
(Decrease)/ Increase in payables 2,265 (1,332)
Corporation tax received 424 -
---------------- -------------
Cash inflow / (outflow) from continuing
operations 1,546 (3,379)
Cash inflow from discontinued operations - 491
---------------- -------------
Net cash inflow / (outflow) from
operating activities 1,546 (2,888)
---------------- -------------
Investing activities
Purchase of property, plant and
equipment (316) (1,188)
Purchase of software (30) -
Development costs (20) (22)
Disposal of property, plant and
equipment 12 -
Proceeds from sale of subsidiary - 8,520
Cash and cash equivalents disposed - (1,146)
Investing activities from discontinued
operations - (125)
Net cash (outflow) / inflow from
investing activities (354) 6,039
---------------- -------------
Financing activities
Interest paid (252) (387)
Net invoice finance inflow / (outflow) 279 (1,832)
Import loan outflow - (873)
Principal element of lease payments (1,066) (781)
Finance leases taken - 1,291
Financing activities from discontinued
operations - 207
Net cash outflow from financing
activities (1,039) (2,375)
---------------- -------------
Net increase in cash and cash equivalents 153 776
Cash and cash equivalents at the
start of the year 291 (485)
Impact of foreign exchange rate 13 -
movements
Cash and cash equivalents at the
end of the year 457 291
================ =============
Cash and cash equivalents comprise:
Cash at bank 457 291
---------------- -------------
457 291
================ =============
Consolidated statement of changes in equity
Attributable
to equity
Share Capital holders
Share premium redemption Hedging Retained of the
capital account reserve reserve earnings parent
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Balance at 1 April
2018 1,990 1,269 109 (15) (197) 3,156
Profit for the year - - - - 1,526 1,526
Other comprehensive
income for the year
net of tax - - - 111 61 172
--------- --------- ------------ --------- ---------- -------------
Total comprehensive
income/ (expense) - - - 111 1,587 1,698
Share-based payment - - - - 40 40
Deferred tax on
employee share options - - - - (26) (26)
--------- --------- ------------ --------- ---------- -------------
Total of transactions
with shareholders - - - - 14 14
Balance at 1 April
2019 1,990 1,269 109 96 1,404 4,868
Loss for the year - - - - (2,393) (2,393)
Other comprehensive
income for the year
net of tax - - - (395) 373 (22)
--------- --------- ------------ --------- ---------- -------------
Total comprehensive
income - - - (395) (2,020) (2,415)
Share-based payments - - - - 59 59
Deferred tax on
employee share options - - - - 33 33
--------- --------- ------------ --------- ---------- -------------
Total of transactions
with shareholders - - - - 92 92
Balance at 31 March
2020 1,990 1,269 109 (299) (524) 2,545
========= ========= ============ ========= ========== =============
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.
Capital redemption reserve
The capital redemption reserve has arisen on the cancellation of
previously issued shares and represents the nominal value of those
shares cancelled.
Hedging reserve
The hedging reserve records the effective portion of the net
change in the fair value of the cash flow hedging instruments
related to hedged transactions that have not yet occurred.
Retained earnings
Retained earnings include the accumulated profits and losses
arising from the Consolidated Income Statement and certain items
from the Statement of Comprehensive Income attributable to equity
shareholders, less distributions to shareholders.
NOTES TO THE PRELIMINARY ANNOUNCEMENT
1. AUTHORISATION OF FINANCIAL STATEMENTS AND STATEMENT OF COMPLIANCE WITH IFRS
The Group and Company's financial statements of Chamberlin Plc
for the year ended 31 March 2020 were authorised for issue by the
board of directors on 15 April 2021 and the balance sheets were
signed on the Board's behalf by Kevin Nolan and Neil Davies. The
Company is a public limited company incorporated and domiciled in
England and Wales. The Company's ordinary shares are admitted to
trading on AIM, a market of the same name operated by the London
Stock Exchange. However, as disclosed in Note 11 Subsequent Events,
the Company's shares were suspended from trading on AIM with effect
from 4 January 2021.
The Group's financial statements have been prepared in
accordance with International Accounting Standards in conformity
with the requirements of the Companies Act 2006 as adopted by the
European Union.
The financial information set out in this announcement does not
constitute the statutory accounts of the Group for the years to 31
March 2020 or 31 March 2019 but is derived from the 2020 Annual
Report and Accounts. The Annual Report and Accounts for 2019 have
been delivered to the Registrar of Companies and the Group Annual
Report and Accounts for 2020 will be delivered to the Registrar of
Companies in due course. The auditors, Grant Thornton UK LLP, have
reported on the accounts for the year ended 31 March 2020 and have
given a modified audit opinion drawing attention to a material
uncertainty regarding going concern.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of preparation
The consolidated financial statements are presented in sterling
and all values are rounded to the nearest thousand pounds (GBP000)
except when otherwise indicated.
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 2020. There
were no new accounting standards adopted in the year that have a
material impact on the financial statements.
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.
3. SEGMENTAL ANALYSIS
For management purposes, the Group is organised into two
operating divisions according to the nature of the products and
services. Operating segments within those divisions are combined on
the basis of their similar long-term characteristics and similar
nature of their products, services and end users as follows:
The Foundries segment is a supplier of iron castings, in raw or
machined form, to a variety of industrial customers who incorporate
the castings into their own products or carry out further machining
or assembly operations on the castings before selling them on to
their customers.
The Engineering segment supplies manufactured products to
distributors and end-users operating in hazardous area and
industrial lighting markets.
Management monitors the operating results of its divisions
separately for the purposes of making decisions about resource
allocation and performance assessment. The Chief Operating Decision
Maker is the Chief Executive.
(i) By operating segment
Segmental operating
Segmental revenue profit
Year ended 2020 2019 2020 2019
GBP000 GBP000 GBP000 GBP000
Foundries 23,106 29,343 (84) (211)
Engineering 3,037 3,615 (45) 251
----------- -------------- ------------------- ------------
Segment results 26,143 32,958 (129) 40
=========== ============== =================== ============
Reconciliation of reported segmental
operating (loss) / profit
Segment operating (loss) / profit (129) 40
Shared costs (995) (1,050)
Non-underlying costs (909) (3,448)
Net finance costs (310) (499)
Loss before tax from continuing
operations (2,343) (4,957)
Segmental assets
Foundries 14,974 15,244
Engineering 1,247 1,402
------------------- ------------
16,221 16,646
------------------- ------------
Segmental liabilities
Foundries (6,880) (3,840)
Engineering (801) (794)
------------------- ------------
(7,681) (4,634)
------------------- ------------
Segmental net assets 8,540 12,012
Unallocated net liabilities (5,995) (7,144)
Total net assets 2,545 4,868
======================= ============
Unallocated net liabilities include the pension liability of
GBP1,959,000 (2019: GBP2,640,000), financial liabilities of
GBP4,608,000 (2019: GBP5,357,000) and deferred tax asset of
GBP572,000 (2019: GBP853,000).
Capital expenditure,
depreciation, amortisation
and impairment
Capital additions Foundries Engineering Total
2020 2019 2020 2019 2020 2019
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Property, plant and
equipment 426 1,047 - 8 426 1,055
Software 97 - 1 - 98 -
Development costs - - 30 22 30 22
Depreciation, amortisation Foundries Engineering Total
and impairment
2020 2019 2020 2019 2020 2019
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Property, plant and
equipment (965) (4,563) (15) (49) (980) (4,612)
Software (45) (52) (7) (7) (52) (59)
Development costs - - (25) (25) (25) (25)
(ii) By geographical segment
2020 2019
Revenue by location of customer: GBP000 GBP000
United Kingdom 9,008 12,203
Italy 2,051 3,743
Germany 2,602 3,124
Rest of Europe 11,863 13,024
Other countries 619 864
----------- -----------
26,143 32,958
=========== ===========
4. FINANCE COSTS
2020 2019
GBP000 GBP000
Bank overdraft and invoice finance interest
payable (164) (335)
Interest expense on lease liabilities and other
interest payable (88) (52)
Finance cost of pensions (58) (112)
------- -------
(310) (499)
======= =======
5. (LOSS)/ EARNINGS PER SHARE
The calculation of (loss)/ earnings per share is based on the
(loss)/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 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. Non-underlying items are detailed in note
6.
2020 2019
GBP000 GBP000
Continuing operations loss for basic earnings
per share (2,393) (4,909)
Non-underlying items 909 3,448
Taxation effect of the above - (87)
Loss for underlying loss per share (1,484) (1,548)
========= ===========
Underlying loss per share (pence) from continuing
operations:
Basic (18.7) (19.5)
Diluted (18.7) (19.5)
2020 2019
GBP000 GBP000
Discontinued operations earnings for basic
earnings per share - 6,435
Earnings for basic earnings per share (discontinued
operations) - 6,435
========= ===========
Earnings per share (pence) from discontinued
operations:
Basic - 80.9
Diluted - 76.8
Total (loss)/ earnings per share (pence):
Basic (30.1) 19.2
Diluted (30.1) 18.2
2020 2019
Number Number
'000 '000
Weighted average number of ordinary shares 7,958 7,958
Adjustment to reflect shares under options 217 424
--------- -----------
Weighted average number of ordinary shares
- fully diluted 8,175 8,382
========= ===========
There is no adjustment in the total diluted loss per share
calculation for the 217,000 (2019:424,000) 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.
6. NON-UNDERLYING ITEMS
2020 2019
GBP000 GBP000
Group reorganisation 712 54
Hedge ineffectiveness 138 -
Asset impairment - 3,043
Onerous leases - 16
GMP equalisation - 295
Share-based payment charge 59 40
------- -------
Non-underlying operating costs 909 3,448
Taxation
- tax effect of non-underlying costs - (87)
------- -------
909 3,361
------- -------
During the year ended 31 March 2020, the Group undertook a
Group-wide restructuring programme in order to realign the cost
base to the reduced levels of revenue. Group reorganisation costs
of GBP712,000, which include redundancy and related costs, relate
to this restructuring programme.
The hedge ineffectiveness charge of GBP138,000 in 2020 arises
from a short-term reduction in highly probable Euro denominated
sales as a result of economic disruption to our customers caused by
COVID-19.
The share-based payment charge in 2020 is GBP59,000 (2019:
GBP40,000).
In 2019, the Group undertook an impairment review of two of its
sites within the Foundry Division, which identified that the prior
carrying value of its assets could not be supported by their future
value to the business, resulting in the recognition of an
impairment charge of GBP3,043,000.
Furthermore in 2019, a Guaranteed Minimum Pension (GMP)
equalisation review was undertaken, which resulted in an increase
in the pension liability of GBP295,000.
7. DISCONTINUED OPERATIONS
On 19 December 2018 the Group sold its entire interest in Exidor
Limited. As a result the results of Exidor Limited were classified
as a discontinued operation in the prior year and presented as such
in the financial statements.
An analysis of the disposal calculation is
given below:
GBP000
Property, plant and equipment 1,135
Intangible assets 75
Deferred tax 70
Inventories 1,491
Trade and other receivables 1,882
Cash and cash equivalents 1,146
Trade and other payables (3,508)
-------------------
Net assets disposed 2,291
-------------------
Consideration 10,000
Working capital adjustment (98)
Debt adjustment (639)
Claim retention (350)
8,913
Disposal costs (393)
-------------------
Net cash received relating to disposal 8,520
===================
Cash proceeds 8,520
Net assets disposed (2,291)
-------------------
Profit on disposal 6,229
===================
Included in the consideration is a retention of GBP350,000
relating to a customer claim. This claim has not yet been finalised
and is still ongoing.
The results prior to 19 December 2018 for the discontinued
operations included in the consolidated income statement were:
2019
'000
Revenue 5,924
-------
Operating profit 305
Finance costs (23)
-------
Profit before tax 282
Tax (76)
Profit on disposal 6,229
Profit after tax from discontinued operations 6,435
=======
Exidor Limited contributed the following to the Group's
cashflow:
2019
'000
Operating activities 491
Investing activities (125)
Financing activities 207
-------
573
=======
8. NET DEBT
2020 2019
GBP000 GBP000
Net cash (457) (291)
Invoice finance facility 1,925 1,628
Lease liabilities 1,103 1,055
Net debt due in less than one year 2,571 2,392
Non-current liabilities
Lease liabilities 2,037 2,966
Total net debt 4,608 5,358
------- -------
Lease liabilities are secured against the specific item to which
they relate. These leases are repayable by monthly instalments for
a period of up to five years to February 2025. Interest is payable
at fixed amounts that range between 3.1% and 9.4%.
Invoice finance balances are secured against the trade
receivables of the Group and are repayable on demand. Interest is
payable at 2.3% over base rate. The maximum facility as at 31 March
2020 was GBP6,000,000 (2019: GBP7,750,000). Management have
assessed the treatment of the financing arrangements and have
determined it is appropriate to recognise trade receivables and
invoice finance liabilities separately.
9. PENSIONS ARRANGEMENTS
During the year, the Group operated funded defined benefit and
defined contribution pension schemes for the majority of its
employees, these being established under trusts with the assets
held separately from those of the Group. The pension operating cost
for the Group defined benefit scheme for 2020 was GBP199,000 (2019:
GBP124,000), with the increase being due to costs associated with
the triennial valuation, together with GBP58,000 of financing cost
(2019: GBP112,000).
The other schemes within the Group are defined contribution
schemes and the pension cost represents contributions payable. The
total cost of defined contribution schemes was GBP396,000 (2019:
GBP423,000). The notes below relate to the defined benefit
scheme.
The actuarial liabilities have been calculated using the
Projected Unit method. The major assumptions used by the actuary
were (in nominal terms):-
31 March 31 March 31 March
2020 2019 2018
Salary increases n/a n/a n/a
Pension increases (post 1997) 2.6% 3.2% 3.1%
Discount rate 2.3% 2.3% 2.5%
Inflation assumption - RPI 2.6% 3.3% 3.2%
Inflation assumption - CPI 1.7% 2.3% 2.2%
Demographic assumptions are all based on the S3PA (2019: S2PA)
mortality tables with a 1.25% annual increase. The post retirement
mortality assumptions allow for expected increases in longevity.
The current disclosures relate to assumptions based on longevity in
years following retirement as of the balance sheet date, with
future pensions relating to an employee retiring in 15 years from
the balance sheet date.
2020 2019
Years Years
Current pensioner at 65 - male 21.0 20.9
* female 23.2 23.1
Future pensioner at 65 - male 21.9 21.8
* female 24.3 24.2
The scheme was closed to future accrual with effect from 30
November 2007, after which the Company's regular contribution rate
reduced to zero (previously the rate had been 9.1% of members'
pensionable salaries).
The triennial valuation as at 31 March 2019 was completed during
the year and concluded that Company contributions would increase to
GBP300,000 for the year ended 31 March 2021, GBP330,000 for the
year ended 31 March 2022 and GBP360,000 for the year ended 31 March
2023, with the deficit reduction period reducing to 2032. The
Company has given security over the Group's land and buildings to
the pension scheme. There will be a further triennial review with
effect from 31 March 2022, which will establish future deficit
payments.
The scheme assets are stated at the market values at the
respective balance sheet dates. The assets and liabilities of the
scheme were:
2020 2019
GBP000 GBP000
Equities/ diversified growth
fund 12,534 14,286
Bonds 1,565 1,580
Insured pensioner assets 24 26
Cash 415 173
----------- -----------
Market value of assets 14,538 16,065
Actuarial value of liabilities (16,497) (18,705)
----------- -----------
Scheme deficit (1,959) (2,640)
Related deferred tax asset 333 448
----------- -----------
Net pension liability (1,626) (2,192)
----------- -----------
Net benefit expense recognised 2020 2019
in profit and loss GBP000 GBP000
Net interest cost (58) (112)
(58) (112)
--------- ---------
Re-measurement losses/ (gains) in other 2020 2019
comprehensive income GBP000 GBP000
Actuarial (gains) / losses arising from
changes in financial assumptions (593) 622
Actuarial gains arising from changes
in demographic assumptions (244) (151)
Experience adjustments (931) 91
Loss / (return) on assets (excluding
interest income) 1,308 (638)
------------- ----------
Total re-measurement gain shown in other
comprehensive income (460) (76)
------------- ----------
2020 2019
GBP000 GBP000
Actual loss on plan assets (946) (976)
------------- ----------
Movement in deficit during the 2020 2019
year GBP000 GBP000
Deficit in scheme at beginning
of year (2,640) (5,080)
Past service cost - (295)
Employer contributions 279 2,771
Net interest expense (58) (112)
Actuarial gain 460 76
-------- --------
Deficit in scheme at end of
year (1,959) (2,640)
-------- --------
Movement in scheme assets 2020 2019
GBP000 GBP000
Fair value at beginning of year 16,065 13,207
Interest income on scheme assets 362 338
Return on assets (excluding
interest income) (1,308) 638
Employer contributions 279 2,771
Benefits paid (860) (889)
------------- -----------
Fair value at end of year 14,538 16,065
------------- -----------
Movement in scheme liabilities 2020 2019
GBP000 GBP000
Benefit obligation at start of year 18,705 18,287
Interest cost 420 450
Actuarial (gains)/ losses arising from
changes in financial assumptions (593) 622
Actuarial gains arising from changes
in demographic assumptions (244) (151)
Experience adjustments (931) 91
Benefits paid (860) (889)
Past service cost - 295
------------- -----------
Benefit obligation at end of year 16,497 18,705
------------- -----------
The weighted average duration of the pension scheme liabilities
are 13 years (2019: 13.5 years).
A quantitative sensitivity analysis for significant assumptions
as at 31 March 2020 is as shown below:
2020
Present value of scheme liabilities when changing GBP000
the following assumptions:
Discount rate increased by 1% p.a. 14,635
RPI and CPI increased by 1% p.a. 17,340
Mortality- members assumed to be their actual
age as opposed to one year older 17,266
The sensitivity analysis above has been determined based on a
method that extrapolates the impact on defined benefit obligations
as a result of reasonable changes in key assumptions occurring at
the end of the year.
10. RESTATEMENT OF COMPARATIVES
During the year, a change has been made to the presentation of
administration costs and interest costs associated with the
Company's defined benefit pension scheme. Previously, these costs
were shown as non-underlying items. Management is now of the view
that such costs should be reported as part of underlying results
reflecting the ongoing recurring nature of these costs. As a result
of this presentational change, the underlying results in the
comparative periods have been restated. There is no change to
statutory results as a consequence of this presentational
change.
Impact on underlying loss for As reported Reclassification As restated
the year ended 31 March 2019 GBP'000 GBP'000 GBP'000
Underlying operating loss (886) (124) (1,010)
Underlying finance costs (387) (112) (499)
Underlying loss before taxation (1,273) (236) (1,509)
Taxation (63) 24 (39)
Underlying loss from continuing
operations (1,336) (212) (1,548)
11. 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 an 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.
12. REPORT AND ACCOUNTS
The FY2020 accounts are 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. The AGM, which will be a
closed meeting given the current restrictions in relation to
COVID-19, will be held on 8 June 2021 at Chuckery Road, Walsall,
West Midlands, WS1 2DU.
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END
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