TIDMCMH

RNS Number : 2718W

Chamberlin PLC

21 December 2021

21 December 2021

AIM: CMH

CHAMBERLIN PLC

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

Interim Results

for the six months ended 30 November 2021

Chamberlin plc (AIM: CMH) announces its interim results for the six months ended 30 November 2021.

Key Points

-- H1 2021 operational performance significantly improved compared to prior year with the Group delivering a profit after tax for the first time in five years.

-- Revenue of GBP8.0m (H1 2020: GBP11.0m) reflects loss of revenue attributable to BorgWarner offset by strong growth at Russell Ductile Castings ("RDC") and Petrel, and initial revenues from new business to consumer E-commerce brands - Emba cookware ("Emba") and Iron Foundry Weights ("IFW").

-- The result before tax was broadly break-even (H1 2020: GBP0.6m loss), with profit after tax of GBP0.1m (H1 2020: GBP0.7m loss).

Chairman, Keith Butler-Wheelhouse, commented:

"I am delighted to report that the difficulties of the past 18 months are now largely behind us. The actions taken by the Company in the first half have stabilised the Group and delivered a profit after tax for the first time in five years. Chamberlin is now well placed to deliver profitable growth in the second half, driven by a new strategic direction into expanding markets across all our businesses."

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.

Enquiries

 
  Chamberlin plc                                T: 01922 707100 
    Kevin Price, Chief Executive 
    Alan Tomlinson, Finance Director 
 
   Cenkos Securities plc (Nominated Adviser      T: 020 7397 8900 
    and Broker) 
 
    Stephen Keys, Katy Birkin 
 
     Peterhouse Capital Limited (Joint Broker)     T: 020 7469 0930 
     Lucy Williams 
     Duncan Vasey 
 

Chairman's Statement

Chamberlin plc (AIM: CMH) announces its interim results for the six months ended 30 November 2021.

Revenues in the first six months reduced from GBP11.0m in the prior period to GBP8.0m, primarily reflecting the loss of revenue attributable to BorgWarner that ceased in the previous financial period. Encouragingly, revenues at both RDC and Petrel were markedly ahead of the prior year with revenue growing, in aggregate, by 20%. RDC achieved organic revenue growth of 12% driven by increasing demand across a number of sectors, particularly the renewables market.

Despite the reduction in revenue, the operational performance of the Group showed promising progress, with improvement from an operating loss before non-underlying items of GBP0.2m in the comparative period to a broadly break-even position in the first half. This was despite significant headwinds associated with global supply chain issues that have caused the cost of raw materials, energy and transportation to escalate well beyond what would be considered to be business as usual. As a result of the swift and decisive actions taken by the management team, Chamberlin has been able to mitigate these adverse impacts and to protect the profitability of the Group. In addition, in the first half, the Group has absorbed the initial marketing costs incurred in establishing Chamberlin's two new E-commerce businesses - Emba and IFW.

Following interest costs of GBP0.1m, the loss before taxation reduced to GBP0.1m in the first half from GBP0.6m in the prior period. This reduction in losses was driven by substantially improved operating profit from RDC and Petrel and the benefits from the rationalisation of the cost base at Chamberlin & Hill Castings and the Group's head office undertaken at the end of the previous financial period. With the Group anticipating a return to profitability in the second half of the year, the Group expects to begin to utilise the significant amount of tax trading losses accumulated in prior years, which have an estimated tax value of around GBP4.0m. After a tax credit of GBP0.2m, the Group has reported a profit attributable to shareholders of GBP0.1m (H1 2020: GBP0.7m loss), for the first time in five years.

As announced on 16 September 2021, the Company commenced a review of the use of its substantial property assets with the objective of strengthening the balance sheet and improving operational and investment returns from Group resources. This review continues and ensuring that the Group has the necessary resources to deliver on its growth strategy remains a key focus for the Board.

Outlook

Chamberlin is now confident it has a platform on which to build the business to the next level. The initial product ranges at Chamberlin & Hill Castings have been launched under the Group's new E-commerce brands, Emba cookware and Iron Foundry Weights, and both have a pipeline of new products under development at the design or prototype stage.

The launch of our Emba cookware at the BBC Good Food Show at the end of November 2021 was particularly well received by consumers, who provided positive validation of both the quality of the Emba products and the potential level of interest in premium, UK made cast iron cookware. With the initial product range launched and direct access to our products available through our Emba cookware website (embacookware.co.uk) as well as via Amazon, we are now embarking on more penetrative marketing strategies for sales direct to consumers, together with targeted marketing to businesses. Chamberlin has a unique opportunity in the growing UK cast iron cookware market to acquire market share as the sole UK based manufacturer and distributor of these products. With the in-house capability to design, manufacture and distribute new products into a global marketplace, the Board firmly believe that further development and investment in Emba cookware will position the brand to be a significant contributor to growth over the coming months and years.

The IFW brand was launched in May 2021 and significant interest has been generated in the product range from a number of well-respected fitness industry market participants. Although IFW was initially successful from direct selling to the consumer, the Board believe that the more lucrative opportunities will derive from partnerships or commercial arrangements with established businesses in the fitness industry, where the Group can offer high-quality, bespoke UK made products that have a significantly reduced carbon footprint compared to products imported from overseas. Chamberlin has the existing capability to not only design and manufacture cast iron fitness products but is also actively investing in repurposing its state-of-the-art machining facility to be able to produce its new range of steel precision machined "indestructible" dumbbells, with our unique "Shrink-Fit" assembly technology.

In Chamberlin & Hill Casting's legacy markets, uncertainty continued through the fourth quarter of the calendar year regarding the global availability of micro-chips for the automotive sector. Despite signs of strong consumer demand for new cars, the pace of the recovery in volumes to pre-Covid-19 pandemic levels cannot be estimated with any degree of certainty. Although our existing high-volume programmes are subject to factors outside of our control, our reputation for quality and delivery has ensured that we continue to be nominated for prestigious low-volume programmes at attractive margins. In the UK construction sector, we continue to improve our order book by remaining competitive on price and providing a reliable, quality UK based solution to supply chain disruptions. The CNC machining division of Chamberlin & Hill Castings has taken some important steps towards re-building its customer base and backfilling idle capacity. The appointment of two new members to the commercial team and the recent nomination for a second diesel generator component programme give the management team confidence in a robust recovery.

RDC has enjoyed a particularly successful 12-18 months, driven by a burgeoning order book and growing pipeline of opportunities. The main driver for this success has been a combination of reduced competition in the UK as a number of competitor foundries have been forced out of business and, more recently, an increasing desire to source products from the UK rather than overseas due to the often prohibitive transportation costs, excessive lead times and the impact on the global environment. The Board are seeking to take advantage of this unique set of circumstances by embarking on a programme to expand both the production capacity by 30% and types of product that can be manufactured at RDC's facilities. Building on RDC's recent successes is a key priority for the Board and includes exploring opportunities to design and manufacture its own products.

Petrel, the Group's hazardous area-light manufacturer and distributor, has also continued to go from strength to strength in the last 12 months. Orders have recovered from the Covid-19 induced low in the first half of 2020, with significant new orders secured, particularly in the defence and shipping sectors. Management have quickly identified a market shift towards the online distribution of its products and in recent months has developed significant commercial agreements with key online market participants that will enable Petrel to maintain its revenue growth potential. A further example of Petrel's ability to respond to market needs was the launch in October 2021 of a new portable product hire service. In addition, management continue to monitor trends in the market by adapting Petrel's existing product range and developing new products to expand its offering as new technology continues to evolve.

The Board is confident that Chamberlin is now positioned for a growing and profitable future and that this is expected to be reflected in shareholder returns as the Group progresses its revised strategy.

Keith Butler-Wheelhouse

Chairman

Consolidated Income Statement

for the six months ended 30 November 2021

 
 
                                             Unaudited                                 Unaudited 
                                          six months ended                          six months ended                          14 months ended 
                      Note                30 November 2021                         30 September 2020                             31 May 2021 
                                                       #                                           #                                       # 
                             Underlying   Non-underlying         Total   Underlying   Non-underlying     Total   Underlying   Non-underlying          Total 
                                 GBP000           GBP000        GBP000       GBP000           GBP000    GBP000       GBP000           GBP000         GBP000 
 
 Revenue                2         8,013                -         8,013       11,044                -    11,044       26,444                -         26,444 
 Cost of sales                  (6,636)                -       (6,636)      (9,458)                -   (9,458)     (24,262)                -       (24,262) 
 Gross profit                     1,377                -         1,377        1,586                -     1,586        2,182                -          2,182 
 Other operating 
  expenses              7       (1,409)               50       (1,359)      (1,798)            (247)   (2,045)      (5,083)          (7,193)       (12,276) 
                            -----------  ---------------  ------------  -----------  ---------------  --------  -----------  ---------------  ------------- 
 Operating 
  (loss)/profit                    (32)               50            18        (212)            (247)     (459)      (2,901)          (7,193)       (10,094) 
 Interest receivable                  -                -             -            -                -         -           13                -             13 
  Finance costs          3        (104)                -         (104)         (99)                -      (99)        (310)                -          (310) 
                            -----------  ---------------  ------------  -----------  ---------------  --------  -----------  ---------------  ------------- 
 (Loss)/profit 
  before tax                      (136)               50          (86)        (311)            (247)     (558)      (3,198)          (7,193)       (10,391) 
 Tax credit/(expense)   4           188                -           188        (104)                -     (104)          817                -            817 
                            -----------  ---------------  ------------  -----------  ---------------  --------  -----------  ---------------  ------------- 
 Profit/(loss) 
  for the period 
  attributable 
  to equity holders 
  of the Parent 
  Company                            52               50           102        (415)            (247)     (662)      (2,381)          (7,193)        (9,574) 
                       ---  -----------  ---------------  ------------  -----------  ---------------  --------  -----------  ---------------  ------------- 
 
 
   Earnings/(loss) 
   per share: 
 Basic                  5          0.1p                -          0.1p       (5.2)p           (3.1)p    (8.3)p      (13.7)p          (41.4)p        (55.1)p 
 Diluted                           0.1p                -          0.1p       (5.2)p           (3.1)p    (8.3)p      (13.7)p          (41.4)p        (55.1)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 six months ended 30 November 2021

 
                                        Unaudited 
                                       six months           Unaudited 
                                            ended    six months ended    14 months ended 
                                      30 November        30 September             31 May 
                                             2021                2020               2021 
                                           GBP000              GBP000             GBP000 
 
 Profit/(loss) for the 
  period                                      102               (662)            (9,574) 
                                    -------------  ------------------  ----------------- 
 Other comprehensive 
  income 
 Ineffective portion                            -                 124                  - 
  of movement in cash 
  flow hedges recycled 
  to income statement 
 Movements in fair value 
  of cash flow hedges 
  taken to other comprehensive 
  income                                     (69)               (102)                650 
 Deferred tax on movements 
  in cash flow hedges                          17                  17              (133) 
                                    -------------  ------------------  ----------------- 
 Net other comprehensive 
  (expense)/income that 
  may be recycled to 
  profit and loss                            (52)                  39                517 
                                    -------------  ------------------  ----------------- 
 
   Re-measurement (losses)/gains 
   on pension scheme assets 
   and liabilities                           (42)               (611)                463 
 Deferred tax on re-measurement 
  (losses)/ gains on 
  pension assets and 
  liabilities                                   8                 116                  7 
 Net other comprehensive 
  (expense)/ income that 
  will not be reclassified 
  to profit and loss                         (34)               (495)                470 
                                    -------------  ------------------  ----------------- 
 
   Other comprehensive 
   (expense)/income for 
   the period net of tax                     (86)               (456)                987 
 Total comprehensive 
  income/(expense) for 
  the period attributable 
  to equity holders of 
  the Parent Company                           16             (1,118)            (8,587) 
                                    =============  ==================  ================= 
 

Consolidated Balance Sheet

at 30 November 2021

 
                                     Unaudited       Unaudited 
                                   30 November    30 September    31 May 
                                          2021            2020      2021 
                                        GBP000          GBP000    GBP000 
 Non-current assets 
  Property, plant and 
   equipment                             2,515           6,809     2,431 
  Intangible assets                        244             303       263 
  Deferred tax assets                    1,402             657     1,206 
                                 -------------  --------------  -------- 
                                         4,161           7,769     3,900 
                                 -------------  --------------  -------- 
 Current assets 
  Inventories                            2,264           2,577     1,698 
  Trade and other receivables            3,160           4,434     3,932 
  Cash at bank                               6             505     1,038 
                                         5,430           7,516     6,668 
                                 -------------  --------------  -------- 
 Total assets                            9,591          15,285    10,568 
                                 =============  ==============  ======== 
 
 Current liabilities 
  Financial liabilities                  2,573           3,264     1,715 
  Trade and other payables               6,429           5,937     8,031 
                                         9,002           9,201     9,746 
                                 -------------  --------------  -------- 
 Non-current liabilities 
  Financial liabilities                  1,007           1,941     1,158 
  Deferred tax liabilities                 107              57       150 
  Provisions                               890             200       890 
  Defined benefit pension 
   scheme deficit                        1,077           2,442     1,190 
                                         3,081           4,640     3,388 
 
 Total liabilities                      12,083          13,841    13,134 
                                 -------------  --------------  -------- 
 
 Capital and reserves 
  Share capital                          2,051           1,990     2,051 
  Share premium                          4,720           1,269     4,720 
  Capital redemption 
   reserve                                 109             109       109 
  Hedging reserve                          166           (260)       218 
  Retained earnings                    (9,538)         (1,664)   (9,664) 
                                 -------------  --------------  -------- 
 Total equity                          (2,492)           1,444   (2,566) 
                                 -------------  --------------  -------- 
 
 Total equity and liabilities            9,591          15,285    10,568 
                                 =============  ==============  ======== 
 

Consolidated Cash Flow Statement

for the six months ended 30 November 2021

 
                                                    Unaudited            Unaudited 
                                                   six months           six months        14 months 
                                                        ended                ended            ended 
                                                  30 November         30 September           31 May 
                                                         2021                 2020             2021 
                                                       GBP000               GBP000           GBP000 
 Operating activities 
 Loss for the period before 
  tax                                                    (86)                (558)         (10,391) 
 Adjustments for: 
 Interest receivable                                        -                    -             (13) 
  Net finance costs                                       104                   99              310 
 Impairment charge on property, 
  plant and equipment, inventory 
  and receivables                                        (84)                    -            4,632 
 Dilapidations provision                                    -                    -              690 
 Hedge ineffectiveness                                      -                  124                - 
 Depreciation of property, 
  plant and equipment                                     176                  483            1,135 
 Amortisation of software                                   9                   29               53 
 Amortisation of development 
  costs                                                    14                   10               33 
 Loss on disposal of property 
  plant and equipment                                       -                    -              135 
  Foreign exchange rate 
   movements                                              (1)                 (22)               37 
 Share-based payments                                      34                   17               41 
 Defined benefit pension 
  contributions paid                                    (165)                (150)            (355) 
 Group reorganisation costs                           (1,246)                    -                - 
  paid 
 (Increase)/decrease in 
  inventories                                           (566)                   13              175 
 Decrease in receivables                                  779                1,711            2,036 
 (Decrease)/increase in 
  payables                                              (442)              (1,652)            1,009 
 Corporation tax received                                   -                    -              129 
                                                -------------       --------------       ---------- 
 Net cash (outflow)/inflow 
  from operating activities                           (1,474)                  104            (344) 
                                                -------------       --------------       ---------- 
 
 Investing activities 
  Purchase of property, 
   plant and equipment                                  (197)                 (73)            (183) 
  Purchase of software                                    (4)                    -              (3) 
  Development costs                                         -                    -              (5) 
 
 Net cash outflow from 
  investing activities                                  (201)                 (73)            (191) 
                                                -------------       --------------       ---------- 
 
 Financing activities 
  Interest received                                         -                    -               13 
  Interest paid                                          (94)                 (77)            (261) 
  Net invoice finance drawdown/(repaid)                 1,011                  301          (1,202) 
  New share capital issued                                  -                    -            3,312 
  Proceeds from convertible 
   loan                                                     -                    -              200 
  Finance lease payments                                (274)                (208)            (946) 
 
   Net cash inflow from financing 
   activities                                             643                   16            1,116 
                                                -------------       --------------       ---------- 
 
 Net (decrease)/increase 
  in cash and cash equivalents                        (1,032)                   47              581 
 
 Cash and cash equivalents 
  at the start of the period                            1,038                  457              457 
  Impact of foreign exchange 
   rate movements                                           -                    1                - 
 
 
   Cash and cash equivalents 
   at the end of the period                                 6                  505            1,038 
                                                =============       ==============       ========== 
 
 
 Cash and cash equivalents 
  compromise: 
 
   Cash at bank                                             6                  505            1,038 
                                                =============       ==============       ========== 
 

Consolidated Statement of Changes in Equity

for the six months ended 30 November 2021

 
                                                                    Capital 
                                                                 redemption    Hedging     Retained 
                                Share capital   Share premium       reserve    reserve     earnings    Total equity 
 
                                       GBP000          GBP000        GBP000     GBP000       GBP000          GBP000 
 
 At 1 April 2020                        1,990           1,269           109      (299)        (524)           2,545 
 Loss for the period                        -               -             -          -        (662)           (662) 
 Other comprehensive 
  income/(expense) for 
  the period net of 
  tax                                       -               -             -         39        (495)           (456) 
                               --------------  --------------  ------------  ---------  -----------  -------------- 
 Total comprehensive 
  income/(expense)                          -               -             -         39      (1,157)         (1,118) 
 Share-based payments                       -               -             -          -           17              17 
 Deferred tax on share-based                -               -             -          -            -               - 
  payments 
 Total of transactions 
  with shareholders                         -               -             -          -           17              17 
 At 30 September 2020                   1,990           1,269           109      (260)      (1,664)           1,444 
 
 Loss for the period                        -               -             -          -      (8,912)         (8,912) 
 Other comprehensive 
  income for the period 
  net of tax                                -               -             -        478          965           1,443 
                               --------------  --------------  ------------  ---------  -----------  -------------- 
 Total comprehensive 
  income/(expense)                          -               -             -        478      (7,947)         (7,469) 
 New share capital 
  issued                                   61           3,451             -          -            -           3,512 
 Share-based payments                       -               -             -          -           24              24 
 Deferred tax on share-based 
  payments                                  -               -             -          -         (77)            (77) 
                               --------------  --------------  ------------  ---------  -----------  -------------- 
 Total of transactions 
  with shareholders                        61           3,451             -          -         (53)           3,459 
 At 1 June 2021                         2,051           4,720           109        218      (9,664)         (2,566) 
 
 Profit for the period                      -               -             -          -          102             102 
 Other comprehensive 
  expense for the period 
  net of tax                                -               -             -       (52)         (34)            (86) 
 Total comprehensive 
  (expense)/income                          -               -             -       (52)           68              16 
 Share-based payments                       -               -             -          -           34              34 
 Deferred tax on share-based 
  payments                                  -               -             -          -           24              24 
 Total of transactions 
  with shareholders                         -               -             -          -           58              58 
 At 30 November 2021                    2,051           4,720           109        166      (9,538)         (2,492) 
                               ==============  ==============  ============  =========  ===========  ============== 
 

Notes to the Interim Financial statements

   1          General information and accounting policies 

The unaudited interim condensed consolidated financial statements do not comprise the Group's statutory accounts as defined by section 434 of the Companies Act 2006. Statutory accounts for the 14 months ended 31 May 2021 were approved by the Board of Directors on 30 November 2021 and filed at Companies House. The auditor's report on those accounts was unqualified but contained an emphasis of matter paragraph relating to a material uncertainty regarding going concern.

Basis of preparation

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

The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with AIM Rules issued by the London Stock Exchange.

Accounting policies

The principal accounting policies applied in preparing the interim Financial Statements comply with IFRS as adopted by the European Union and are consistent with the policies set out in the Annual Report and Accounts for the 14 months ended 31 May 2021.

No new standards or interpretations issued since 31 May 2021 have had a material impact on the financial statements of the Group.

Going concern

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.

   2               Segmental analysis 

For management purposes, the Group is organised into two operating divisions: Foundries and Engineering. The operating segments reporting format reflects the Group's management and internal reporting structures for the Chief Operating Decision Maker.

 
                                       Revenue                              Operating (loss)/ profit 
                         Unaudited       Unaudited                    Unaudited       Unaudited 
                        six months      six months     14 months     six months      six months     14 months 
                             ended           ended         ended          ended           ended         ended 
                       30 November    30 September        31 May    30 November    30 September        31 May 
                              2021            2020          2021           2021            2020          2021 
 
                            GBP000          GBP000        GBP000         GBP000          GBP000        GBP000 
 
 Foundries                   6,469           9,958        23,321            120             201       (1,931) 
 Engineering                 1,544           1,086         3,123            193              21           191 
                     -------------  --------------  ------------  -------------  --------------  ------------ 
 Segmental results           8,013          11,044        26,444            313             222       (1,740) 
                     -------------  --------------  ------------ 
 Shared costs                                                             (345)           (434)       (1,161) 
 Non-underlying 
  items (Note 
  7)                                                                         50           (247)       (7,193) 
 Net finance 
  costs                                                                   (104)            (99)         (297) 
 Loss before 
  tax                                                                      (86)           (558)      (10,391) 
                                                                  =============  ==============  ============ 
 
 

The Foundries segment is a supplier of iron castings, in raw or machined form, to a variety of industrial customers who incorporate the castings into their own products or carry out further machining or assembly operations on the castings before selling them on. The Engineering segment provides manufactured hazardous area lighting products to distributors and end-users.

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

   3               Finance costs 
 
                                               Unaudited       Unaudited 
                                              six months      six months   14 months 
                                                   ended           ended       ended 
                                             30 November    30 September      31 May 
                                                    2021            2020        2021 
                                                  GBP000          GBP000      GBP000 
 Interest on bank financing facilities              (23)            (52)       (103) 
 Interest expense on lease liabilities              (71)            (25)       (158) 
 Net interest on defined benefit pension 
  liability                                         (10)            (22)        (49) 
                                           -------------  --------------  ---------- 
                                                   (104)            (99)       (310) 
                                           =============  ==============  ========== 
 
   4               Income tax expense 

An estimated effective rate of tax for the six months to 30 November 2021 of 218.6% (30 September 2020: 18.6%) has been used in these interim statements. This rate differs to the standard corporation tax rate of 19% due primarily due to the recognition of a deferred tax asset on certain trading losses, accelerated capital allowances and short-term timing differences. The corporation tax rate remained at 19% for the 14 months ended 31 May 2021.

   5               Earnings/(loss) per share 

The calculation of earnings/(loss) per share is based on the profit/(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 earnings/(loss) per share, which excludes non-underlying items and the related tax thereon as disclosed in Note 7, as analysed below, has been disclosed as the Directors believe this allows a better assessment of the underlying trading performance of the Group.

 
                                           Unaudited       Unaudited   14 months 
                                    six months ended      six months       ended 
                                         30 November           ended      31 May 
                                                2021    30 September        2021 
                                                                2020 
                                              GBP000          GBP000      GBP000 
 Profit/(loss) after tax for 
  basic earnings per share                       102           (662)     (9,574) 
 Non-underlying operating items                 (50)             247       7,193 
 Taxation effect of the above                      -               -           - 
                                  ------------------  --------------  ---------- 
 
   Profit/(loss) for underlying 
   earnings per share                             52           (415)     (2,381) 
                                  ------------------  --------------  ---------- 
 
 
 
 
 
                                                Unaudited       Unaudited   14 months 
                                         six months ended      six months       ended 
                                              30 November           ended      31 May 
                                                     2021    30 September        2021 
                                                                     2020 
                                                      000             000         000 
 Weighted average number of ordinary 
  shares                                           69,625           7,958      17,387 
 Adjustment to reflect dilutive 
  shares under option                               3,581             217       3,798 
                                       ------------------  --------------  ---------- 
 
   Diluted weighted average number 
   of ordinary shares                              73,206           8,175      21,185 
                                       ------------------  --------------  ---------- 
 

There is no adjustment for the shares under option in the diluted loss per share calculation for the six months ended 30 September 2020 and the 14 months ended 31 May 2021 as they are required to be excluded from the weighted average number of shares as they are anti-dilutive.

   6               Pensions 

The Group operates a defined benefit pension scheme and a defined contribution pension scheme on behalf of its employees. For the defined contribution scheme, contributions paid in the period are charged to the income statement. For the defined benefit scheme, actuarial calculations are performed in accordance with IAS 19 in order to arrive at the amounts to be charged in the income statement and recognised in the statement of comprehensive income. The defined benefit scheme is closed to new entrants and future accrual.

Under IAS 19, the Group recognises all movements in the actuarial funding position of the scheme in each period. This is likely to lead to volatility in shareholders' equity from period to period.

The IAS 19 figures are based on a number of actuarial assumptions as set out below, which the actuaries have confirmed they consider appropriate. The projected unit credit actuarial cost method has been used in the actuarial calculations.

 
                                  30 November   30 September   31 May 
                                         2021           2020     2021 
 
 Salary increases                         n/a            n/a      n/a 
 Pension increases (post 1997)           3.2%           2.8%     3.1% 
 Discount rate                           1.6%           1.4%    1.85% 
 Inflation assumption - RPI              3.3%          2.85%     3.2% 
 Inflation assumption - CPI              2.6%          1.95%     2.5% 
 

The demographic assumptions used for 30 November 2021 were the same as those used at 31 May 2021, and were based on the last full actuarial valuation performed as at 31 March 2019. The contributions expected to be paid during the year to 31 May 2022 are GBP335,000. The next triennial valuation is due as at 31 March 2022.

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

 
                                                Unaudited                   Unaudited 
                                              30 November                30 September     31 May 
   Funding status                                    2021                        2020       2021 
                                                   GBP000                      GBP000     GBP000 
 Scheme assets at end of period                    16,156                      15,789     15,601 
 Benefit obligations at end of 
  period                                         (17,233)                    (18,231)   (16,791) 
                                  -----------------------  --------------------------  --------- 
 Deficit in scheme                                (1,077)                     (2,442)    (1,190) 
 Related deferred tax asset                           269                         415        297 
                                  -----------------------  --------------------------  --------- 
 Net pension liability                              (808)                     (2,027)      (893) 
                                  =======================  ==========================  ========= 
 
 

The reduction in the net pension liability since 31 May 2021 is mainly due to employer contributions and investment returns partially offset by an increase in the value of liabilities as a consequence of a reduction in bond yields reducing the discount rate.

   7               Non-underlying items 
 
                                               Unaudited       Unaudited   14 months 
                                              six months      six months       ended 
                                                   ended           ended      31 May 
                                             30 November    30 September        2021 
                                                    2021            2020 
                                                  GBP000          GBP000      GBP000 
 Group reorganisation                                  -             106       1,310 
 Adviser costs relating to corporate 
  restructuring                                        -               -         520 
 Hedge ineffectiveness                                 -             124           - 
 Impairment of property, plant 
  and equipment                                        -               -       3,809 
 Impairment of inventory and receivables            (84)               -         823 
 Dilapidations provision                               -               -         690 
 Share-based payment charge                           34              17          41 
                                           -------------  --------------  ---------- 
 Non-underlying operating income/(costs)            (50)             247       7,193 
 Taxation 
 - tax effect of non-underlying                        -               -             - 
  costs 
 
                                                    (50)             247         7,193 
                                           =============  ==============  ============ 
 
 

In the six months ended 30 November 2021, the Group secured the recovery of receivables of GBP84,000 that had previously been impaired.

   8               Net debt 
 
                                     Unaudited       Unaudited 
                                   30 November    30 September     31 May 
                                          2021            2020       2021 
                                        GBP000          GBP000     GBP000 
 Financial liabilities 
 Net cash                                  (6)           (505)    (1,038) 
 Lease liabilities                       1,065           1,003      1,050 
 Invoice finance liability               1,508           2,261        665 
                                 -------------  --------------  --------- 
 Net debt due in less than one 
  year                                   2,567           2,759        677 
                                 -------------  --------------  --------- 
 
 Lease liabilities due in more 
  than one year                          1,007           1,941      1,158 
 
 Net debt                                3,574           4,700      1,835 
                                 =============  ==============  ========= 
 
   9              Interim report 

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

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