TIDMCMH
RNS Number : 0353U
Chamberlin PLC
30 November 2021
30 November 2021
CHAMBERLIN plc
("Chamberlin", the "Company" or the "Group")
FINAL RESULTS
for the 14 month period ended 31 May 2021
Chamberlin plc (AIM: CMH.L), the specialist castings and
engineering group, announces its Final Results for the 14 months to
31 May 2021:
Key Points
Financial
-- Revenue of GBP26.4m for 14 months to 31 May 2021 (Year to 31
March 2020: GBP26.1m) was 14% lower than prior year on a pro rata
basis reflecting COVID-19 related headwinds in the first half and
the impact of the cancellation of contracts in the second half by
BorgWarner
-- Underlying operating loss of GBP2.9m (Year to 31 March 2020:
GBP1.1m loss), reflecting COVID-19 induced shutdowns, a slow
recovery in activity levels across the automotive sector and the
impact of the cancellation of the BorgWarner contracts
-- Underlying loss before taxation of GBP3.2m (Year to 31 March 2020: GBP1.4m)
-- Non-underlying costs of GBP7.2m include significant non-cash
impairments associated with the cancellation of the BorgWarner
contracts of GBP4.7m, restructuring costs of GBP1.3m, adviser costs
of GBP0.5m and property dilapidation costs of GBP0.7m
-- Statutory loss before tax of GBP10.4m (Year to 31 March 2020: GBP2.3m)
-- Underlying diluted loss per share of 13.7p (Year to 31 March 2020: 18.7p)
-- Total diluted loss per share of 55.1p (Year to 31 March 2020: 30.1p)
-- Net debt reduced to GBP1.8m (31 March 2020: GBP4.6m)
following GBP3.5m equity raise in March 2021
Underlying figures are stated before non-underlying costs
(restructuring costs, hedge ineffectiveness, impairment, GMP
equalisation, onerous leases and share based payment costs)
together with the associated tax impact.
Operational
-- Foundry revenues fell by 13% on a pro rata basis to GBP23.3m
(Year to 31 March 2020: GBP23.1m) reflecting the difficulties noted
above regarding COVID-19 and BorgWarner at Chamberlin & Hill
Castings partially offset by an 18% increase at Russell Ductile
Castings
-- Foundry operating loss of GBP1.9m (Year to 31 March 2020:
GBP0.1m) driven by the issues at Chamberlin & Hill Castings
partially offset by a return to profitability at Russell Ductile
Castings
-- Engineering revenues of GBP3.1m decreased by 12% on a pro
rata basis (Year to 31 March 2020: GBP3.0m), primarily due to
COVID-19 induced customer shutdowns in the first half. Operating
performance was strong, with an operating profit for the 14 months
of GBP0.2m (Year to 31 March 2020: breakeven) which was largely
generated in the second half
The annual report and accounts for the 14 month period ended 31
May 2021 ("2021 Accounts") and the Notice of AGM will be posted to
shareholders today, and will be available on the Company's website:
https://www.chamberlin.co.uk/, shortly. The AGM will be held at
11.00a.m. on 5 January 2022 at Chuckery Road, Walsall, West
Midlands, WS1 2DU. Notice of a further shareholder meeting to be
held as soon as the AGM has concluded on 5 January 2022 is also
included in the 2021 Accounts. Further details on both meetings are
set out in note 12 below.
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the UK version of the EU Market Abuse Regulation (2014/596) which
is part of UK law by virtue of the European Union (Withdrawal) Act
2018, as amended and supplemented from time to time.
Chamberlin plc T: 01922 707100
Kevin Price, Chief Executive
Alan Tomlinson, Finance Director
Cenkos Securities plc T: 020 7397 8900
(Nominated Adviser and Joint Broker)
Katy Birkin
Stephen Keys
Peterhouse Capital Limited T: 020 7469 0930
(Joint Broker)
Lucy Williams
Duncan Vasey
Chairman's Statement
This period in Chamberlin's history has been severely impacted
by two significant events, firstly by an unprecedented global
phenomenon in COVID-19, and secondly the early cancellation of all
our contracts with our principal automotive customer, BorgWarner
Turbo Systems Worldwide (BorgWarner). As a result of these damaging
events, the financial performance and strength of the Group
suffered considerably, with the Group loss before tax for the 14
month period to 31 May 2021 amounting to GBP10.4m, of which GBP6.5m
related to charges arising from the loss of the BorgWarner
contracts.
In order to stabilise the Group's financial position, we
completed a share placing and subscription in March 2021 raising
GBP3.5m. The equity raised enabled the Group to facilitate the
necessary reduction in headcount to realign the cost base to the
lower level of revenue post the decision by BorgWarner and to
provide sufficient working capital to stabilise the business. We
trust these events are now behind us.
The Board and Staff
In March 2021, the Board was strengthened by the appointment of
Trevor Brown, initially as a Non-Executive Director, and in June
2021 as an Executive Director with responsibility for strategy.
Trevor brings a wealth of entrepreneurial experience to the Board,
which will be invaluable as we embark upon our new strategy for
growth.
On 31 May 2021, both Neil Davies and David Flowerday stepped
down as Directors of the Company. On behalf of the Board, I would
like to again thank Neil and David for their contribution during
our recent difficult times and to wish them well for the future. As
part of the restructuring of the Group, on 31 May 2021 Kevin Nolan
stepped down from his role as Chief Executive but remains a
Non-Executive Director, retaining responsibility for key projects
and client accounts and providing continuity, experience and
support to the Board.
Subsequent to the period end on 1 June 2021, Kevin Price and
Alan Tomlinson were appointed to the Board as Chief Executive and
Finance Director respectively. Both Kevin and Alan have a strong
working knowledge and experience of the Group's operations from
their roles in the Chamberlin Group prior to their appointment to
the Board. On behalf of the Board, I would like to welcome Kevin
and Alan to their new roles.
The period under review has been a challenging one for the Group
and the Board are acutely aware of the impact this has had on our
staff. The disruption from COVID-19 led to shutdowns and the need
to place large numbers of our employees on furlough, in some cases
for extended periods of time, while the economies and markets in
which we operate recovered. We were also severely impacted by the
BorgWarner decision, which caused further uncertainty for all our
employees as we embarked upon the necessary fund raise and
subsequent restructure. I would like to place on record the Board's
thanks for the dedication, professionalism and loyalty that our
employees have continued to demonstrate during these unprecedented
times.
Outlook
It is with considerable regret that the Board has to announce
the huge losses that it has suffered for the period to 31 May 2021,
albeit these were largely caused by events outside of Chamberlin's
control. The combined impact of COVID-19 and the decision by
BorgWarner inflicted near fatal damage to the very existence of the
Company. However, the confidence that new and existing shareholders
have shown by supporting the Group through the equity raise in
March 2021 has enabled the Board to refocus the Group's strategy
and future direction.
Encouragingly, revenues in the first-half of the new financial
year have been in line with management's expectations, despite
lower revenues from the automotive sector due to the semi-conductor
shortage impacting that market globally. However, financial
performance continues to be impacted by the global headwinds facing
most companies, namely rising raw material and energy prices and
supply chain and transportation disruption. Management have taken
appropriate action to address these issues and believe that
financial performance will improve, with management expecting the
Group to return to a modest level of profitability in the
second-half of the financial year.
As previously announced, the Board is focused on enhancing
shareholder value over the medium to long term through
diversification away from the declining, high-volume automotive
sector and into markets with strong growth characteristics, where
we can use our technical and design expertise to develop new
products and provide new services. The Board has confidence that
this change in strategic focus and mindset will provide the Group
with greater opportunities to maintain sustainable, profitable
growth in the medium-term for the benefit of all our shareholders
and stakeholders.
Keith Butler-Wheelhouse
Chairman
Chief Executive's Review
The Group's performance during the 14 month period to 31 May
2021 has been overshadowed by two significant events that has led
to substantial financial losses being incurred, the need to raise
equity to continue in operation and a subsequent restructure of the
business to right-size the cost base.
Group revenue of GBP26.4m for the 14 months to 31 May 2021 (Year
to 31 March 2020: GBP26.1m) was 14% lower than prior year on a pro
rata basis reflecting COVID-19 related headwinds in the first half
and the impact of the cancellation of contracts in the second half
by BorgWarner Turbo Systems Worldwide (BorgWarner). These events
primarily affected the Walsall foundry and machining centre, which
had to close completely in April 2020 due to the COVID-19 induced
shutdowns of our European automotive customer's sites. Although
revenue did partially recover once the Walsall sites re-opened,
demand continued to fluctuate as further COVID-19 disruptions
throughout the remainder of the period impacted our customers. This
unpredictability was then further compounded by the news in
December 2020 from BorgWarner of the early termination of the
Group's contracts, which contributed GBP7.5m to revenue in the 14
month period to 31 May 2021.
Russell Ductile Castings' performance in the period was
encouraging as it benefitted from less disruption from COVID-19 and
reduced levels of competition as a number of competitor foundries
were forced to close. Consequently, revenue for the 14 months to 31
May 2021 increased by almost 18% compared to the previous 12 months
on a pro rata basis and the division turned an operating loss in
the prior year into a profit in the period.
The performance of Petrel, our hazardous area lighting company,
also showed promising improvement despite COVID-19 induced customer
shutdowns and delays to the procurement of some large lighting
projects in the first half. Financial performance in the last eight
months of the period dramatically improved, with Petrel delivering
GBP2.0m of revenue and GBP0.2m of operating profit during that
period.
As a result of the COVID-19 disruptions and the impact of the
BorgWarner decision, the Group has incurred a substantial loss
before tax of GBP10.4m. It is obviously disappointing to be
reporting such a significant loss but it is largely the result of
GBP7.2m of non-underlying costs, primarily associated with the
BorgWarner contract losses that will not be repeated. Of these
non-underlying costs, GBP4.7m relate to non-cash impacting
impairment of fixed assets and inventories, GBP1.3m relate to the
subsequent restructuring, GBP0.7m relate to property dilapidation
costs and GBP0.5m relate to legal and adviser costs.
The Group remained focussed on effective cash management
throughout the period as the shutdowns from COVID-19 began to
impact working capital, with the Group utilising the Government
furlough scheme where necessary. However, following the loss of the
BorgWarner contracts, it became evident that the Group would not be
able to sustain its cash headroom without an injection of capital.
Consequently, the Group raised GBP3.5m in March 2021 from a share
issue to facilitate a restructuring and provide working capital,
with net debt reduced at 31 May 2021 to GBP1.8m (31 March 2020:
GBP4.6m).
With this tumultuous and difficult period now largely behind us,
the Group is working through the recovery phase from these
unprecedented events and implementing a strategy and platform to
return the Group to profitability. In the new financial year,
resources have been directed towards new product lines to rapidly
reduce reliance on the automotive industry. The Board's aim over
the medium term is to replace the majority of the Group's
traditional, low margin contract-based production, with much higher
margin, premium consumer products in markets with a strong
opportunity for growth and where the Group can innovate, control
distribution and sales to effect real and sustainable growth in
revenue and profits. This strategy is already taking shape, with
the establishment of two new customer-focussed brands in the
fitness equipment and cast iron cookware markets:
Iron Foundry Weights
Iron Foundry Weights, Chamberlin's new trading name for its
specialist home and commercial gym equipment business, is
developing rapidly. The Group gained great success with the
introduction of a range of kettlebells in November 2020 and since
then has expanded its product offering to weight-plates and
dumbbells, selling products direct to the consumer from our own
website, www.ironfoundryweights.co.uk , and through Amazon in the
UK, and more recently in Europe. Through our participation in The
Arnold Sports Festival in October 2021, we also have a number of
opportunities to sell our products to businesses in the fitness
market. In November 2021 the Group's new range of precision
machined "indestructible" dumbbells was released, using our unique
"Shrink-Fit" assembly technology. The Company has also recently
signed an endorsement agreement with social media ambassador
Harrison Bird.
Emba
Chamberlin is making excellent progress with the development of
premium-quality cast iron cookware - the Emba Cookware Range -
which officially launched its initial product range on-line in
November 2021. The rising popularity for premium quality, high
value cast iron cookware is growing rapidly in the UK and the Board
expects Chamberlin's Emba brand to be at the forefront of this
market as the only true UK based designer and manufacturer.
Elsewhere at our Walsall foundry and machining facility, we are
actively pursuing a strategy of reducing the reliance on the
high-volume automotive sector by utilising our reputation for
design and technical excellence to provide engineering solutions in
a broader range of markets, including the automotive after-market.
Chamberlin is also focused on maximising the capacity of its
high-quality, technologically advanced machining centre, which
includes the production of fitness equipment for the Iron Foundry
Weights brand.
Russell Ductile Castings continues to have a substantial order
book and the Board expects that it will continue to build on its
positive performance in 2020-21 in the current financial year,
benefitting from favourable market conditions, a strong product and
technical capability and a growing trend of reshoring to the UK
from overseas.
Petrel has continued to deliver excellent results in the new
financial year, continuing the trend from the second half of the
2020-21 financial period. Furthermore, the launch of a new portable
product hire service in October 2021 is expected to bring revenue
opportunities in the second half.
The COVID-19 pandemic continues to present global challenges to
trading conditions, including escalating raw material costs, supply
chain shortages and a slowdown in the automotive industry due to
widely publicised electronic control unit (ECU) availability. In
response to these challenges, the management team continues to
reduce costs, improve efficiencies, and optimise pricing to improve
margins in order to restore sustainable profitability to the
Group.
Although these challenges present difficulties in the short-term
which require decisive management action, the Board believes that
the strategy outlined above will drive significantly improved
results over the medium term. Furthermore, some of these challenges
also present significant opportunities. With supply chain
constraints and transportation delays impacting the global flow of
trade, we are seeing an increasing trend towards re-shoring
manufacturing back to the UK from overseas. Made in the UK is a
significant unique selling point across all our businesses and the
Board believe we are well positioned to take advantage of the
opportunities this will inevitably present.
Kevin Price
Chief Executive
Finance Review
Overview
Revenue for the 14 months ended 31 May 2021 of GBP26.4m (Year
ended 31 March 2020: GBP26.1m) represents a 14% reduction on a pro
rata basis compared to the prior year, largely due to COVID-19
disruptions in our markets and the effect of the cancellation of
all contracts by BorgWarner Turbo Systems Worldwide.
Gross profit margin, defined as gross profit divided by revenue,
decreased to 8.3% from 9.6% in 2020.
Underlying operating loss before tax increased to GBP2.9m (Year
ended 31 March 2020: GBP1.1m) due to the impacts on the Group noted
above.
Financing costs were GBP0.3m (Year ended 31 March 2020: GBP0.3m)
representing a 14% reduction compared to prior year on a pro rata
basis.
As a result of the above, the underlying loss before tax
amounted to GBP3.2m (Year ended 31 March 2020: GBP1.4m loss).
The statutory loss before tax of GBP10.4m (Year ended 31 March
2020: GBP2.3m) reflected GBP7.2m of non-underlying items.
Non-underlying items
Non-underlying items of GBP7.2m (Year ended 31 March 2020:
GBP0.9m) include significant non-cash impairments associated with
the cancellation of the BorgWarner contracts of GBP4.7m,
restructuring costs of GBP1.3m, adviser costs of GBP0.5m and
property dilapidation costs of GBP0.7m.
Tax
The effective rate of taxation on a statutory basis was 8%
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 of 13.7p (Year ended 31 March
2020: 18.7p) reflects the increase in underlying loss attributable
to shareholders and the increase in the weighted average number of
shares in issue following the share placing and subscription in
March 2021.
Cash generation and financing
Operating cash outflow was GBP0.3m (Year ended 31 March 2020:
inflow of GBP1.5m) which includes GBP0.5m of cash payments relating
to non-underlying adviser costs.
Cash spent on property, plant and equipment and capitalised
software and development costs in the 14 month period ended 31 May
2021 was GBP0.2m (Year to 31 March 2020: GBP0.4m).
New equity of GBP3.3m was raised in March 2021 following a share
placing and subscription and is net of transaction costs of
GBP0.2m.
Lease payments of GBP0.9m (Year ended 31 March 2020: GBP1.1m)
primarily relate to assets at the Group's machining facility and
were lower than the prior period due to a 6 month payment holiday
agreed with HSBC during the height of the COVID-19 impact on the
Group.
Net debt
Net debt at 31 May 2021 decreased by GBP2.8m to GBP1.8m (31
March 2020: GBP4.6m) as a result of the equity raise in March 2021.
The Group debt facility has two elements: a GBP3.5m invoice
discounting facility limited to 90% of outstanding invoice value
and lease liabilities of GBP2.2m
Foreign exchange
It is the Group's policy to minimise risk arising from 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
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 43% of the Group's revenues in the 14 month period
ended 31 May 2021 are denominated in Euros. This proportion of Euro
revenues is expected to reduce significantly in the forthcoming
financial year as BorgWarner revenues in the current period are not
repeated.
During the 14 months ended 31 May 2021, the average exchange
rate used to translate into GBP Sterling was EUR1.13 (Year ended 31
March 2020: EUR1.15).
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 May 2021 reduced to GBP1.2m
(31 March 2020: GBP2.0m) as significant asset return
out-performance and changes in demographic assumptions out-weighed
the increase in liabilities resulting from a reduction in bond
yields and consequently the discount rate.
The Group's defined benefit pension scheme was closed to future
accrual in 2007. The 31 March 2019 triennial valuation established
that employer contributions are GBP0.30m 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 the 14 months ended 31 May 2021 (Year ended 31 March
2020: GBP0.2m), and are shown in other operating expenses. The
Group cash contribution during the 14 months ended 31 May 2021 was
GBP0.4m (Year ended 31 March 2020: GBP0.3m).
Audit Opinion
The auditors have reported on the accounts for the 14 month
period ended 31 May 2021 and have given a modified audit opinion
drawing attention to a material uncertainty regarding going
concern. After making enquiries, the Directors have an expectation
that, in the circumstances of reasonably foreseeable downside
scenarios, 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. Furthermore,
the ability to renew or source alternative invoice finance
facilities or to agree deferred settlement terms with HMRC results
in material uncertainty, which may cast significant doubt over the
ability of the Group and the 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
matters.
Alan Tomlinson
Group Finance Director
Consolidated Income Statement
for the 14 months ended 31 May 2021
14 months ended 31 May Year ended 31 March 2020
2021
----------------------------------------- -----------------------------------------
(+) Non- (+) Non-
Note Underlying underlying Total Underlying underlying Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Revenue 3 26,444 - 26,444 26,143 - 26,143
Cost of sales (24,262) - (24,262) (23,632) - (23,632)
Gross profit 2,182 - 2,182 2,511 - 2,511
Other operating
expenses 6 (5,083) (7,193) (12,276) (3,635) (909) (4,544)
------------ -------------- ----------- ------------ -------------- -----------
Operating loss (2,901) (7,193) (10,094) (1,124) (909) (2,033)
Bank interest
receivable 13 - 13 - - -
Finance costs 4 (310) - (310) (310) - (310)
------------ -------------- ----------- ------------ -------------- -----------
Loss before
tax (3,198) (7,193) (10,391) (1,434) (909) (2,343)
Tax credit/(expense) 817 - 817 (50) - (50)
------------ -------------- ----------- ------------ -------------- -----------
Loss for the period
attributable to
equity holders
of the parent company (2,381) (7,193) (9,574) (1,484) (909) (2,393)
============ ============== =========== ============ ============== ===========
Underlying loss
per share:
Basic 5 (13.7)p - - (18.7)p - -
Diluted 5 (13.7)p - - (18.7)p - -
Total loss
per share:
Basic 5 - - (55.1)p - - (30.1)p
Diluted 5 - - (55.1)p - - (30.1)p
*Non-underlying items include restructuring costs, hedge ineffectiveness,
impairment of assets, dilapidation costs and share-based payment
costs together with the associated tax impact.
Consolidated Statement of Comprehensive Income
for the 14 months ended 31 May 2021
14 months Year ended
ended 31 31 March
May 2021 2020
Note GBP000 GBP000
Loss for the period (9,574) (2,393)
Other comprehensive income /(expense)
Movements in fair value of cash flow
hedges taken to other comprehensive
income 650 (614)
Ineffective portion of movement in
cash flow hedges recycled to income
statement - 138
Deferred tax on movement in cash
flow hedges (133) 81
----------- ------------
Net other comprehensive income/(expense)
that may be recycled to profit and
loss 517 (395)
----------- ------------
Remeasurement gain on pension scheme
assets and liabilities 8 463 460
Deferred tax on remeasurement gain
on pension scheme 7 (87)
Net other comprehensive income that
will not be recycled to profit and
loss 470 373
Other comprehensive income/(expense)
for the period net of tax 987 (22)
Total comprehensive expense for the
period attributable to equity holders
of the parent company (8,547) (2,415)
=========== ============
Consolidated Balance Sheet
at 31 May 2021
Note 31 May 31 March
2021 2020
GBP000 GBP000
Non-current assets
Property, plant and equipment 2,431 7,209
Intangible assets 263 341
Deferred tax assets 1,206 611
--------- ----------
3,900 8,161
Current assets
Inventories 1,698 2,589
Trade and other receivables 3,932 6,082
Cash at Bank 1,038 457
6,668 9,128
Total assets 10,568 17,289
========= ==========
Current liabilities
Financial liabilities 7 1,715 3,028
Trade and other payables 8,031 7,481
9,746 10,509
Non-current liabilities
Financial liabilities 7 1,158 2,037
Deferred tax 150 39
Provisions 890 200
Defined benefit pension scheme
deficit 8 1,190 1,959
--------- ----------
3,388 4,235
Total liabilities 13,134 14,744
--------- ----------
Capital and reserves
Share capital 2,051 1,990
Share premium 4,720 1,269
Capital redemption reserve 109 109
Hedging reserve 218 (299)
Retained earnings (9,664) (524)
--------- ----------
Total equity (2,566) 2,545
Total equity and liabilities 10,568 17,289
========= ==========
Consolidated Cash Flow Statement
for the 14 months ended 31 May 2021
14 months Year ended
ended 31 31 March
May 2021 2020
GBP000 GBP000
Operating activities
Loss for the period before tax (10,391) (2,343)
Adjustments to reconcile (loss)
for the year to net cash (outflow)/
inflow from operating activities:
Interest receivable 13 -
Finance costs 310 310
Impairment charge on property,
plant and equipment, inventory
and receivables 4,632 -
Dilapidations provision 690 -
Hedge ineffectiveness - 138
Depreciation of property, plant
and equipment 1,135 980
Amortisation of software 53 52
Amortisation and impairment of
development costs 33 25
Profit on disposal of property,
plant and equipment 135 (12)
Foreign exchange rate movement 37 (91)
Share-based payments 41 59
Defined benefit pension contributions
paid (355) (279)
Decrease in inventories 175 113
Decrease/ (Increase) in receivables 2,036 (95)
Increase in payables 1,009 2,265
Corporation tax received 129 424
------------- -----------------
Net cash (outflow)/inflow from
operating activities (344) 1,546
------------- -----------------
Investing activities
Purchase of property, plant and
equipment (183) (316)
Purchase of software (3) (30)
Development costs (5) (20)
Disposal of property, plant and
equipment - 12
Net cash outflow from investing
activities (191) (354)
------------- -----------------
Financing activities
Interest received 13 -
Interest paid (261) (252)
Net invoice finance (outflow)/inflow (1,202) 279
New share capital issued 3,312 -
Proceeds from convertible loan 200 -
Principal element of lease payments (946) (1,066)
Net cash inflow/(outflow) from
financing activities 1,116 (1,039)
------------- -----------------
Net increase in cash and cash equivalents 581 153
Cash and cash equivalents at the
start of the year 457 291
Impact of foreign exchange rate
movements - 13
Cash and cash equivalents at the
end of the year 1,038 457
============= =================
Cash and cash equivalents comprise:
Cash at bank 1,038 457
------------- -----------------
1,038 457
============= =================
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
2019 1,990 1,269 109 96 1,404 4,868
Loss for the year - - - - (2,393) (2,393)
Other comprehensive
(expense)/income
for the year net
of tax - - - (395) 373 (22)
---------- ---------- ------------- ---------- ----------- --------------
Total comprehensive
expense - - - (395) (2,020) (2,415)
Share-based payment - - - - 59 59
Deferred tax on
share-based payment - - - - 33 33
---------- ---------- ------------- ---------- ----------- --------------
Total of transactions
with shareholders - - - - 92 92
Balance at 1 April
2020 1,990 1,269 109 (299) (524) 2,545
Loss for the period - - - - (9,574) (9,574)
Other comprehensive
income for the period
net of tax - - - 517 470 987
---------- ---------- ------------- ---------- ----------- --------------
Total comprehensive
income/(expense) - - - 517 (9,104) (8,587)
New share capital
issued 61 3,451 - - - 3,512
Share-based payments - - - - 41 41
Deferred tax on
share-based payment - - - - (77) (77)
---------- ---------- ------------- ---------- ----------- --------------
Total of transactions
with shareholders 61 3,451 - - (36) 3,476
Balance at 31 May
2021 2,051 4,720 109 218 (9,664) (2,566)
========== ========== ============= ========== =========== ==============
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. Transaction costs directly associated with the share
placing and subscription in March 2021 of GBP0.2m have been debited
to share premium in the period.
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 ANNOUNCEMENT
1. AUTHORISATION OF FINANCIAL STATEMENTS AND STATEMENT OF COMPLIANCE WITH IFRS
The Group and Company's financial statements of Chamberlin Plc
for the 14 months ended 31 May 2021 were authorised for issue by
the board of directors on 30 November 2021 and the balance sheets
were signed on the Board's behalf by Kevin Price and Alan
Tomlinson. 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.
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 14 months
ended 31 May 2021 or for the year ended 31 March 2020 but is
derived from the 2021 Annual Report and Accounts. The Annual Report
and Accounts for the year ended 31 March 2020 have been delivered
to the Registrar of Companies and the Group Annual Report and
Accounts for 14 months ended 31 May 2021 will be delivered to the
Registrar of Companies on 30 November 2021. The auditors, Crowe UK
LLP, have reported on the accounts for the 14 months ended 31 May
2021 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 May
following a change in the accounting period end from 31 March. 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 period ended 31 May 2021. There
were no new accounting standards adopted in the year that have a
material impact on the financial statements.
Going concern
On 16 December 2020, the Company was notified by its major
customer, BorgWarner Turbo Systems Worldwide that it intended to
cancel all contracts with effect from 22 January 2021. As a result,
the Board and its advisers immediately implemented measures to
reduce costs and preserve cash whilst exploring options to
strengthen the balance sheet. The result of this process was the
appointment of Trevor Brown as a Non-Executive Director in March
2021 and a share placing and subscription that raised equity for
the Group of GBP3.5 million. The equity raise provided the cash
resources necessary to undertake a restructuring to realign the
Group's cost base to the lower level of ongoing revenue and to
provide short-term working capital.
The Group's detailed forecast for the year ending 31 May 2022
and budget for the year ending 31 May 2023 reflect the Director's
view of the most likely trading conditions. The forecast and budget
indicate that existing bank facilities are expected to remain
adequate.
The forecast and budget include revenue growth assumptions in
the second half of the year to 31 May 2022 and continuing into the
year ended 31 May 2023, which is needed to replace the lost
BorgWarner contracts. These assumptions include growth into new
E-commerce and consumer-led markets relating to fitness equipment
and cookware following the recent launch of the Iron Foundry
Weights (IFW) and Emba Cookware brands.
The Directors have applied reasonably foreseeable downside
sensitivities to the forecast and budget, which assumes that sales
growth from new E-commerce products is 50% lower than expectations,
automotive volumes remain at current low levels and non-automotive
sales growth is 50% lower than expectations. The budget, forecast
and sensitised scenario exclude the possible receipt of
compensation from BorgWarner and proceeds from the sales of
under-utilised machinery. Furthermore, the Group is reliant on an
invoice finance facility to fund its working capital needs. The
renewal of the facility at the next annual review in March 2022
cannot be guaranteed, although there are no indications at the date
of the approval of the financial statements that a renewal with the
existing provider would not be granted or that alternative
providers could not be found. In addition, the Directors have
assumed that deferred settlement terms will be agreed with HMRC in
relation to PAYE arrears of GBP1.3m for one subsidiary in the Group
that have arisen in the period since the announcement by
BorgWarner, having already agreed deferred settlement terms with
HMRC for two subsidiaries.
As a consequence, after making enquiries, the Directors have an
expectation that, in the circumstances of the reasonably
foreseeable downside scenarios 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. Furthermore,
the ability to renew or source alternative invoice finance
facilities or to agree deferred settlement terms with HMRC results
in material uncertainty, which may cast significant doubt over the
ability of the Group and the 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
matters.
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 (loss)/profit
14 months Year ended 14 months Year ended
ended 31 March ended 31 March
31 May 2020 31 May 2020
2021 2021
GBP000 GBP000 GBP000 GBP000
Foundries 23,321 23,106 (1,931) (84)
Engineering 3,123 3,037 191 (45)
------------------- ------------ ----------- --------------
Segment results 26,444 26,143 (1,740) (129)
=================== ============ =========== ==============
Reconciliation of reported segmental
operating (loss) / profit
Segment operating loss (1,740) (129)
Shared costs (1,161) (995)
Non-underlying costs (7,193) (909)
Net finance costs (297) (310)
Loss before tax from continuing
operations (10,391) (2,343)
Segmental assets 14 months Year ended
ended 31 March
31 May 2020
2021
GBP000 GBP000
Foundries 7,211 14,974
Engineering 1,113 1,247
----------- --------------
8,324 16,221
----------- --------------
Segmental liabilities
Foundries (7,674) (6,880)
Engineering (1,247) (801)
----------- --------------
(8,921) (7,681)
----------- --------------
Segmental net (liabilities)/assets (597) 8,540
Unallocated net liabilities (1,969) (5,995)
Total net assets (2,566) 2,545
========================= ==============
Unallocated net liabilities include the pension liability of
GBP1,190,000 (2020: GBP1,959,000), net debt of GBP1,835,000 (2020:
GBP4,608,000) less a net deferred tax asset of GBP1,056,000 (2020:
GBP572,000).
Capital
expenditure,
depreciation,
amortisation
and impairment
Capital additions Foundries Engineering Total
14 months Year 14 months Year 14 months Year
ended ended ended ended ended ended
31 May 31 31 May 31 March 31 May 31 March
2021 March 2021 2020 2021 2020
2020
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Property, plant and
equipment 177 426 20 - 197 426
Software 3 97 - 1 3 98
Development costs - - 5 30 5 30
Depreciation, Foundries Engineering Total
amortisation
and impairment
14 months Year 14 months Year 14 months Year
ended ended ended ended ended ended
31 May 31 March 31 May 31 March 31 May 31 March
2021 2020 2021 2020 2021 2020
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Property, plant and
equipment (1,113) (965) (22) (15) (1,135) (980)
Software (47) (45) (6) (7) (53) (52)
Development costs - - (33) (25) (33) (25)
In addition to the above, property, plant and equipment in the
Foundries division was impaired by GBP3,809,000 (2020: Nil).
(ii) By geographical segment
14 months Year ended
ended 31 March
31 May 2020
2021
Revenue by location of customer: GBP000 GBP000
United Kingdom 13,944 9,008
Italy 1,351 2,051
Germany 2,595 2,602
Rest of Europe 7,425 11,863
Other countries 1,129 619
----------- ----------
26,444 26,143
=========== ==========
4. FINANCE COSTS
14 months Year
ended ended
31 May 31 March
2021 2020
GBP000 GBP000
Bank overdraft and invoice finance interest
payable (103) (164)
Interest expense on lease liabilities and other
interest payable (158) (88)
Finance cost of pensions (49) (58)
----------- -----------
(310) (310)
=========== ===========
5. LOSS PER SHARE
The calculation of loss per share is based on the loss
attributable to shareholders and the weighted average number of
ordinary shares in issue. In calculating the diluted loss per
share, adjustment has been made for the dilutive effect of
outstanding share options where applicable. Underlying loss per
share, which excludes non-underlying items, as disclosed in Note 6,
has also been disclosed.
14 months Year ended
ended 31 March
31 May 2020
2021
GBP000 GBP000
Loss for basic earnings per share (9,574) (2,393)
Non-underlying items 7,193 909
Taxation effect of the above - -
Loss for underlying loss per share (2,381) (1,484)
=========== ============
Underlying loss per share (pence):
Basic (13.7) (18.7)
Diluted (13.7) (18.7)
Total loss per share (pence):
Basic (55.1) (30.1)
Diluted (55.1) (30.1)
2021 2020
Number Number
'000 '000
Weighted average number of ordinary shares 17,387 7,958
Adjustment to reflect shares under options 3,798 217
----------- ------------
Weighted average number of ordinary shares
- fully diluted 21,185 8,175
=========== ============
There is no adjustment in the diluted loss per share calculation
for the 3,798,000 (2020:217,000) 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. The weighted
average number of shares used in the fully diluted calculation is
therefore 17,387,000 (2020: 7,958,000).
6. NON-UNDERLYING ITEMS
14 months Year ended
ended 31 March
31 May 2020
2021
GBP000 GBP000
Group reorganisation 1,310 712
Adviser costs relating to corporate restructuring 520 -
Hedge ineffectiveness - 138
Impairment of property, plant and equipment 3,809 -
Impairment of inventory and receivables 823 -
Dilapidations provision 690 -
Share-based payment charge 41 59
----------- ------------
Non-underlying operating costs 7,193 909
Taxation
- tax effect of non-underlying costs - -
----------- ------------
7,193 909
----------- ------------
As a result of the cancellation of all contracts by the Group's
major customer, BorgWarner Turbo Systems Worldwide, announced on 16
December 2020, the Group embarked upon a significant restructuring
programme to realign the cost base of the Foundry division to the
reduced level of continuing revenue. Group reorganisation costs of
GBP1,310,000, which include redundancy and associated costs, relate
to this restructuring programme.
Following the cancellation of the Group's contracts by
BorgWarner Turbo Systems Worldwide, the Group undertook a review of
the carrying value of the assets in the Foundry division. This gave
rise to an asset impairment charge of GBP4,601,000, of which
GBP3,809,000 related to property, plant & equipment, GBP716,000
related to obsolete inventory and GBP107,000 related to
irrecoverable receivables.
The dilapidations provision of GBP690,000 relates to the
estimated costs for land and building leases that are nearing their
end date.
The hedge ineffectiveness charge of GBP138,000 in 2020 arose
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 2021 of GBP41,000 (2020:
GBP59,000) relates to the fair value cost of share option schemes
for the period.
7. NET DEBT
31 May 31 March
2021 2020
GBP000 GBP000
Net cash (1,038) (457)
Invoice finance facility 665 1,925
Lease liabilities 1,050 1,103
Net debt due in less than one year 677 2,571
Non-current liabilities
Lease liabilities 1,158 2,037
Total net debt 1,835 4,608
--------- ----------
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 four 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 2.75% over base rate. The maximum facility as at 31
March 2020 was GBP3,500,000 (2020: GBP6,000,000). Management have
assessed the treatment of the financing arrangements and have
determined it is appropriate to recognise trade receivables and
invoice finance liabilities separately.
8. 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 2021 was GBP236,000 (2020:
GBP199,000), with the increase being due to costs associated with
the triennial valuation, together with GBP49,000 of financing cost
(2020: GBP58,000).
The other scheme within the Group is a defined contribution
scheme and the pension cost represents contributions payable. The
total cost of the defined contribution scheme was GBP377,000 (2020:
GBP396,000). 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 May 31 March 31 March
2021 2020 2019
Salary increases n/a n/a n/a
Pension increases (post 1997) 3.1% 2.6% 3.2%
Discount rate 1.85% 2.3% 2.3%
Inflation assumption - RPI 3.2% 2.6% 3.3%
Inflation assumption - CPI 2.5% 1.7% 2.3%
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 pensioners relating to an employee retiring in 2032.
2021 2020
Years Years
Current pensioner at 65 - male 20.5 21.0
- female 22.9 23.2
Future pensioner at 65 - male 21.3 21.9
- female 24.0 24.3
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 latest triennial valuation was completed as at 31 March 2019
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:
2021 2020
GBP000 GBP000
Equities/ diversified growth
fund 5,273 12,534
Bonds - 1,565
Liability Driven Investments 2,993 -
Buy and Maintain Credit 2,211 -
Multi-Sector Credit 4,962 -
Insured pensioner assets 21 24
Cash 141 415
---------- ------------
Market value of assets 15,601 14,538
Actuarial value of liabilities (16,791) (16,497)
---------- ------------
Scheme deficit (1,190) (1,959)
Related deferred tax asset 297 333
---------- ------------
Net pension liability (893) (1,626)
Net benefit expense recognised 2021 2020
in profit and loss GBP000 GBP000
Net interest cost (49) (58)
(49) (58)
---------- ----------
Re-measurement losses/ (gains) in other 2021 2020
comprehensive income GBP000 GBP000
Actuarial losses/(gains) arising from
changes in financial assumptions 1,510 (593)
Actuarial gains arising from changes
in demographic assumptions (429) (244)
Experience adjustments 171 (931)
(Return)/loss on assets (excluding interest
income) (1,715) 1,308
--------- --------------
Total re-measurement gain shown in other
comprehensive income (463) (460)
--------- --------------
2021 2020
GBP000 GBP000
Actual return/(loss) on plan
assets 2,092 (946)
--------- --------------
Movement in deficit during the 2021 2020
period GBP000 GBP000
Deficit in scheme at beginning
of period (1,959) (2,640)
Employer contributions 355 279
Net interest expense (49) (58)
Actuarial gain 463 460
--------- ---------
Deficit in scheme at end of
period (1,190) (1,959)
--------- ---------
Movement in scheme assets 2021 2020
GBP000 GBP000
Fair value at beginning of period 14,538 16,065
Interest income on scheme assets 377 362
Return on assets (excluding
interest income) 1,715 (1,308)
Employer contributions 355 279
Benefits paid (1,384) (860)
--------- --------------
Fair value at end of period 15,601 14,538
--------- --------------
Movement in scheme liabilities 2021 2020
GBP000 GBP000
Benefit obligation at start of period 16,497 18,705
Interest cost 426 420
Actuarial (gains)/ losses arising from
changes in financial assumptions 1,510 (593)
Actuarial gains arising from changes
in demographic assumptions (429) (244)
Experience adjustments 171 (931)
Benefits paid (1,384) (860)
Benefit obligation at end of period 16,791 16,497
--------- --------------
The weighted average duration of the pension scheme liabilities
are 13 years (2020: 13 years).
A quantitative sensitivity analysis for significant assumptions
as at 31 May 2021 is as shown below:
2021
Present value of scheme liabilities when changing GBP000
the following assumptions:
Discount rate increased by 1% p.a. 14,859
RPI and CPI increased by 1% p.a. 17,705
Mortality- members assumed to be their actual
age as opposed to one year older 17,653
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.
9. REPORT AND ACCOUNTS
The Annual Report and Accounts for the 14 months ended 31 May
2021 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 5
January 2022 at Chuckery Road, Walsall, West Midlands, WS1 2DU. An
additional general meeting to be held as soon as the AGM has
concluded on 5 January 2022 is being convened in light of the 2021
Accounts giving rise to a serious loss of capital event pursuant to
section 656(1) of the Companies Act 2006. Both meetings will be
subject to COVID 19 restrictions and, as such, any shareholder
wishing to attend in person will be required to pre-register with
the Company Secretary not less than 5 business day prior to the
meeting by using the contact form for the Company Secretary on the
following page of the Company's website:
https://www.chamberlin.co.uk/contact/contact-us/company-secretary
(please state "Chamberlin PLC: AGM" and include the shareholder's
full name in the 'comments' box. Alternatively, shareholders will
be able to ask questions of the board in advance of the meeting by
also emailing the Company Secretary on the above link (any such
questions to arrive not later than 48 hours before the relevant
meeting). The Board will endeavour to answer all questions at the
relevant meeting and publish a summary on the Company's
website.
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