27 November 2009
CMH
CHAMBERLIN PLC
("Chamberlin" or "the Group")
Interim Results
For the six months to 30 September 2009
Key Points
|
Full impact of recession evident in H1 results - H2 expected to show improvement |
||
|
|
|
|
|
Management action has enabled Chamberlin to weather the storm in better shape than many peers |
||
|
- |
production capability remains intact but cost base is lower |
|
|
|
|
|
|
Revenues of £14.2m (2008: £23.5m) - reflected aggressive de-stocking in manufacturing sector |
||
|
|
|
|
|
Underlying operating loss* of £635,000 (2008: £905,000 profit) - decrease minimised by prompt management actions |
||
|
- |
Statutory operating loss of £871,000 (2008: £712,000 profit) |
|
|
|
|
|
|
Underlying loss before tax* of £809,000 (2008: £803,000 profit) |
||
|
- |
Statutory loss before tax of £713,000 (2008: £1,019,000 profit) |
|
|
|
|
|
|
Positive operating cash flow at £100,000 (2008: outflow of £67,000) |
||
|
|
|
|
|
Underlying loss per share* of 9.35p (2008: 8.6p earnings) |
||
|
- |
Statutory loss per share 8.42p (2008: 10.7p earnings) |
|
|
|
|
|
|
Major new customer contract for turbocharger castings |
||
|
- |
expected to generate significant revenues from Q4 |
|
|
|
|
|
|
Demand in most areas of business now stabilised and some sectors showing signs of recovery |
||
|
|
|
|
|
Board optimistic about improved prospects |
* 2009 figures stated before exceptional costs of £236,000 and unrealised foreign currency income of £332,000. (2008 figures stated before exceptional costs of £193,000 and unrealised foreign currency income of £409,000).
Chairman, Tom Brown, commented,
"While the six months of the current financial year have been very demanding, set against recession and aggressive de-stocking in the manufacturing sector, I believe that we have weathered the storm in better shape than many in our sector. We have maintained our output capability and remain technically very strong and operationally efficient. We are therefore in a position to leverage our competitive advantages as recovery comes through.
Although the trading environment will continue to be challenging, we believe that demand has largely stabilised in most areas of the business and some sectors appear to be showing signs of recovery. We are confident of delivering improved results in the second half of the current financial year although, given the operationally geared nature of the business, the volume of orders actually achieved will greatly influence the exact outcome.
Beyond that, with our production capacity still fully intact, our proven technical ability and a lower cost base, we look forward to a significantly improving trend as the economy recovers."
Enquiries
Chamberlin plc |
|
|
Tim Hair, Chief Executive |
|
T: 01922 707100 |
Mark Bache, Finance Director |
|
|
|
|
|
Charles Stanley Securities |
|
T: 020 7149 6000 |
(Nominated Adviser) |
|
|
Russell Cook |
|
|
|
|
|
Biddicks (Financial PR) Katie Tzouliadis |
|
T: 020 7448 1000 |
CHAIRMAN'S STATEMENT
Trading conditions over the six months to 30 September 2009 were markedly worse than the same period in 2008, when we were seeing improving profitability as well as the other benefits of our business modernisation and investment programme.
While the six months of the current financial year have been very demanding, set against recession and aggressive de-stocking in the manufacturing sector, I believe that we have weathered the storm in better shape than many in our sector. We have maintained our output capability and remain technically very strong and operationally efficient. We are therefore in a position to leverage our competitive advantages as recovery comes through.
Results
Revenues for the six months to 30 September 2009 reduced by 40% to £14.2m from £23.5m last year. Although some of this reduction was due to the removal of material surcharges, the majority resulted from reduced demand in the sectors we supply, exacerbated by customer de-stocking. I am however pleased to note that, despite this very large drop in sales, the actions taken by management have limited the impact on operating profit, with a first half underlying loss of £635,000 compared with an operating profit of £905,000 in the previous year. A reduction of £9m in sales at average gross margin would typically be expected to result in a profit impact of around £3m and it is a credit to the prompt and decisive actions of the executive team that the impact has been so limited.
Interest cost decreased to £57,000 (2008: £85,000) due to a reduction in the interest rate charged, although this was offset by an increase in non-cash pension charges which caused financial costs to increase to £174,000 (2008: £102,000).
Exceptional costs of £236,000 were incurred as the business was restructured in response to the downturn. In restructuring, we have been able to remove permanently certain overhead costs, which will reduce our break-even point in future years.
Net borrowings at 30 September 2009 increased to £3.5m, up from £3.3m at 31 March 2009. We achieved modest positive net cash flow from operations, helped by cost reductions and an intense focus on working capital. We restricted capital expenditure to less than half the level of depreciation but the exceptional costs incurred led to a growth in borrowings which was modest given the overall trading environment. The Group continues to operate within its banking facilities and we maintain an excellent working relationship with HSBC, the Group's bankers.
Since the year end on 31 March 2009, the pension deficit has increased by £1.0m to £2.8m, with strong investment returns offset by increased liabilities as a result of a reduction in the discount rate.
Operations
Chamberlin serves a wide range of market sectors, with much of our production exported either directly or indirectly. As a result the impact of the downturn has been spread across the past 12 months and has varied greatly between sectors in both extent and timing. Our engineering companies, which account for 15% of the Group's activity, have seen only a modest decline in sales over the last 12 months. Demand from the passenger car sector (which typically comprises13% of Group sales) dropped dramatically in the second half of last year and this was followed by a reduction in demand for mid-range castings as construction and commercial vehicle volumes declined. These latter markets remained weak through the first half of the current financial year but we experienced a steady recovery in passenger car demand during the second quarter. This coincided with a downturn in demand for heavy castings which had been unaffected until that point. At present, our shipments to the car industry are stable at around 70% of peak volume and are profitable at that level. Other sectors now appear to be either stable or showing some early signs of recovery.
Throughout the downturn Chamberlin sites have maintained their standards of high customer service levels and improved quality, delivery reliability and flexibility to customers. We have also continued our improvement programmes, upgrading the Group's Enterprise Resource Planning systems at our Walsall and Leicester sites and making significant progress in operational performance.
Our Walsall foundry is well established as a leading supplier to the European turbocharger industry and in the past year has been engaged in joint technical development and prototype supply to a major new customer in this sector. Recently the foundry has received approval to supply production volumes of the first castings and will begin a gradual supply increase during the fourth quarter of the financial year. These parts, together with others currently in development, are expected to account for over £3m of sales in the 2011/12 financial year. These volumes will be incremental to the recovering demand from existing customers.
I have previously commented on the turnaround of Russell Ductile Castings, our heavyweight foundry with operations in Leicester and Scunthorpe. With the turnaround complete, we have now restructured the management of the Group's foundry businesses, and in July the Leicester site came under the control of the Chamberlin & Hill Castings management team based at Walsall, leaving the Russell Ductile team free to focus on the development of the Scunthorpe business. This change has already generated significant synergies and will allow us to take full advantage of opportunities across the casting market as the economy recovers.
In the current climate, I feel that it is especially important to acknowledge the contributions of our employees, all of whom have been subject to a pay freeze in the past year. We greatly appreciate the support and commitment our staff, at all levels, have shown.
Strategy
During the past year, management has focused on the immediate challenges presented by the downturn. Coupled with a shortage of suitable targets, this has led to the deferral of the Board's broader strategy to expand the Group through acquisition. Calmer conditions in recent weeks have allowed management to return to more strategic matters and, as expected, a number of interesting opportunities have already been identified. We believe that over the next twelve months there will be good opportunities to acquire businesses that fit our criteria, summarised as "difficult things done well," and look forward to taking the first steps towards an expanded Group.
Outlook
The recent downturn has tested both Chamberlin and its management and has demonstrated the fundamental strength of both.
Although the trading environment will continue to be challenging, we believe that demand has largely stabilised in most areas of the business and some sectors appear to be showing signs of recovery. We are confident of delivering improved results in the second half of the current financial year although, given the operationally geared nature of the business, the volume of orders actually achieved will greatly influence the exact outcome.
Beyond that, with our production capacity still fully intact, our proven technical ability and a lower cost base, we look forward to a significantly improving trend as the economy recovers.
Tom Brown
Chairman
27 November 2009
CHAMBERLIN plc
Summarised Consolidated Income Statement
for the six months ended 30 September 2009
|
Unaudited six months ended 30 September 2009 |
Unaudited six months ended 30 September 2008 (Restated *) |
Year ended 31 March 2009 |
|||||||
|
Note |
Before exceptional Items |
Exceptional items (note 8) |
Total |
Before exceptional items |
Exceptional items (note 8) |
Total |
Before exceptional items |
Exceptional items (note 8) |
Total |
|
|
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
14,215 |
- |
14,215 |
23,539 |
- |
23,539 |
39,940 |
- |
39,940 |
|
|
|
|
|
|
|
|
|
|
|
Cost of sales |
|
(12,119) |
- |
(12,119) |
(19,429) |
- |
(19,429) |
(33,783) |
- |
(33,783) |
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
2,096 |
- |
2,096 |
4,110 |
- |
4,110 |
6,157 |
- |
6,157 |
|
|
|
|
|
|
|
|
|
|
|
Other operating expenses |
|
(2,731) |
(236) |
(2,967) |
(3,205) |
(193) |
(3,398) |
(5,697) |
(446) |
(6,143) |
|
|
|
|
|
|
|
|
|
|
|
Operating (loss)/ profit from continuing operations |
|
(635) |
(236) |
(871) |
905 |
(193) |
712 |
460 |
(446) |
14 |
|
|
|
|
|
|
|
|
|
|
|
Finance costs |
3 |
(174) |
- |
(174) |
(102) |
- |
(102) |
(201) |
- |
(201) |
|
|
|
|
|
|
|
|
|
|
|
(Loss)/profit from continuing operations before tax and unrealised foreign currency gain/(loss) |
|
(809) |
(236) |
(1,045) |
803 |
(193) |
610 |
259 |
(446) |
(187) |
|
|
|
|
|
|
|
|
|
|
|
Unrealised foreign currency gain/(loss) |
|
332 |
- |
332 |
409 |
- |
409 |
(311) |
- |
(311) |
|
|
|
|
|
|
|
|
|
|
|
(Loss)/profit from continuing operations before tax |
|
(477) |
(236) |
(713) |
1,212 |
(193) |
1,019 |
(52) |
(446) |
(498) |
|
|
|
|
|
|
|
|
|
|
|
Tax credit/(expense) |
4 |
21 |
66 |
87 |
(1,342) |
586 |
(756) |
(5) |
(346) |
(351) |
|
|
|
|
|
|
|
|
|
|
|
(Loss)/profit for the period from continuing operations |
|
(456) |
(170) |
(626) |
(130) |
393 |
263 |
(57) |
(792) |
(849) |
|
|
|
|
|
|
|
|
|
|
|
Attributable to equity holders of the parent company |
|
|
|
(626) |
|
|
263 |
|
|
(849) |
|
|
|
|
|
|
|
|
|
|
|
Earnings per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
6 |
|
|
(8.42)p |
|
|
10.7p |
|
|
(11.4)p |
Underlying |
6 |
(9.35)p |
|
|
8.6p |
|
|
2.2p |
|
|
Diluted |
6 |
|
|
(8.42)p |
|
|
10.5p |
|
|
(11.4)p |
Diluted underlying |
6 |
(9.35)p |
|
|
8.5p |
|
|
2.1p |
|
|
* Restated for deferred tax, see note 1.
Consolidated Statement of Comprehensive Income
for the six months ended 30 September 2009
Note |
Unaudited six months ended 30 September 2009 |
|
Unaudited six months ended 30 September 2008 (Restated *) |
|
Year ended 31 March 2009 |
|
|
|
£000 |
|
£000 |
|
£000 |
|
|
|
|
|
|
|
(Loss)/profit for the period |
|
(626) |
|
263 |
|
(849) |
Other comprehensive income |
|
|
|
|
|
|
Actuarial (losses)/ gains on pension assets and liabilities |
|
(1,024) |
|
170 |
|
(982) |
Deferred tax credit/ (charge) on actuarial (losses)/gains |
|
287 |
|
(48) |
|
275 |
Other comprehensive income for the period net of tax |
|
(737) |
|
122 |
|
(707) |
|
|
|
|
|
|
|
Total comprehensive income for the period attributable to equity holders of the parent company. |
|
(1,363) |
|
385 |
|
(1,556) |
|
|
|
|
|
|
|
* Restated for deferred tax, see note 1.
Summarised Consolidated Balance Sheet
At 30 September 2009
|
|
Unaudited 30 September 2009 |
|
Unaudited 30 September (Restated*) 2008 |
|
31 March 2009 |
|
|
£000 |
|
£000 |
|
£000 |
Non-current assets |
|
|
|
|
|
|
Property, plant and equipment |
|
8,644 |
|
8,648 |
|
8,968 |
Intangible assets |
|
681 |
|
433 |
|
690 |
Deferred tax assets |
|
935 |
|
300 |
|
809 |
|
|
10,260 |
|
9,381 |
|
10,467 |
Current assets |
|
|
|
|
|
|
Inventories |
|
3,905 |
|
4,848 |
|
5,078 |
Trade and other receivables |
|
5,679 |
|
9,679 |
|
6,004 |
|
|
9,584 |
|
14,527 |
|
11,082 |
Total assets |
|
19,844 |
|
23,908 |
|
21,549 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
Financial liabilities |
|
3,530 |
|
2,728 |
|
3,258 |
Trade and other payables |
|
5,244 |
|
8,308 |
|
6,614 |
Provisions |
|
40 |
|
- |
|
48 |
Income taxes payable |
|
- |
|
98 |
|
- |
|
|
8,814 |
|
11,134 |
|
9,920 |
Non-current liabilities |
|
|
|
|
|
|
Defined benefit pension scheme deficit |
|
2,840 |
|
796 |
|
1,828 |
Deferred tax liabilities |
|
92 |
|
462 |
|
340 |
|
|
2,932 |
|
1,258 |
|
2,168 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities |
|
11,746 |
|
12,392 |
|
12,088 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital and reserves |
|
|
|
|
|
|
Share capital |
|
1,859 |
|
1,859 |
|
1,859 |
Share premium |
|
862 |
|
862 |
|
862 |
Capital redemption reserve |
|
109 |
|
109 |
|
109 |
Retained earnings |
|
5,268 |
|
8,686 |
|
6,631 |
Total equity |
|
8,098 |
|
11,516 |
|
9,461 |
|
|
|
|
|
|
|
Total equity and liabilities |
|
19,844 |
|
23,908 |
|
21,549 |
|
|
|
|
|
|
|
* Restated for deferred tax, see note 1.
Consolidated Cash Flow Statement
for the six months ended 30 September 2009
|
|
Unaudited six months ended 30 September 2009 |
|
Unaudited six months ended 30 September 2008 (Restated*) |
|
Year ended 31 March 2009 |
||||
Operating activities |
|
£000 |
|
£000 |
|
£000 |
||||
|
|
|
|
|
|
|
||||
(Loss)/profit for the year |
|
(626) |
|
263 |
|
(849) |
||||
Adjustments for: |
|
|
|
|
|
|
||||
Taxation |
|
(87) |
|
756 |
|
351 |
||||
Net finance costs |
|
174 |
|
102 |
|
201 |
||||
Depreciation of property, plant and equipment |
|
571 |
|
563 |
|
1,058 |
||||
Amortisation of software |
|
26 |
|
21 |
|
45 |
||||
Amortisation of development costs |
|
50 |
|
23 |
|
52 |
||||
Profit on disposal of property plant and equipment |
|
- |
|
(10) |
|
(11) |
||||
Share based payments |
|
- |
|
37 |
|
12 |
||||
Pension element of finance cost |
|
(117) |
|
(17) |
|
(39) |
||||
Difference between pension contributions paid and amounts recognized in the Income Statement |
|
(11) |
|
(112) |
|
(231) |
||||
Decrease / (increase) in inventories |
|
1,173 |
|
(231) |
|
(462) |
||||
Decrease/ (increase in receivables |
|
325 |
|
(959) |
|
2,715 |
||||
Decrease in payables |
|
(1,370) |
|
(503) |
|
(1,537) |
||||
Decrease in provisions |
|
(8) |
|
- |
|
(612) |
||||
Net cash flow from operating activities |
|
100 |
|
(67) |
|
693 |
||||
|
|
|
|
|
|
|
||||
Investing activities |
|
|
|
|
|
|
||||
Purchase of property, plant and equipment |
|
(247) |
|
(878) |
|
(1,725) |
||||
Purchase of software |
|
(68) |
|
(94) |
|
(224) |
||||
Development costs |
|
- |
|
- |
|
(184) |
||||
Disposal of property, plant and Equipment |
|
- |
|
22 |
|
59 |
||||
Net cash flow from investing activities |
|
(315) |
|
(950) |
|
(2,074) |
||||
|
|
|
|
|
|
|
||||
Financing activities |
|
|
|
|
|
|
||||
Interest paid |
|
(57) |
|
(85) |
|
(162) |
||||
Equity dividends paid |
|
- |
|
(595) |
|
(684) |
||||
Net cash used in financing activities |
|
(57) |
|
(680) |
|
(846) |
||||
|
|
|
|
|
|
|
||||
Net decrease in cash and cash equivalents |
|
(272) |
|
(1,697) |
|
(2,227) |
||||
|
|
|
|
|
|
|
||||
Cash and cash equivalents at the start of the period |
|
(3,258) |
|
(1,031) |
|
(1,031) |
||||
Cash and cash equivalents at the end of the period |
|
(3,530) |
|
(2,728) |
|
(3,258) |
||||
|
|
|
|
|
|
|
||||
Cash and cash equivalents compromise: |
|
(3,530) |
|
(2,728) |
|
(3,258) |
||||
Financial liabilities |
|
(3,530) |
|
(2,728) |
|
(3,258) |
* Restated for deferred tax, see note 1.
Consolidated Statement of Changes in Equity
for the six months ended 30 September 2009
|
Share capital |
Capital redemption reserve |
Share premium |
Retained earnings |
Attributable to equity holders of the parent |
|
|
|
|
(Restated *) |
|
|
£000 |
£000 |
£000 |
£000 |
£000 |
|
|
|
|
|
|
At 1 April 2008 |
1,859 |
109 |
862 |
8,859 |
11,689 |
Total comprehensive income |
- |
- |
- |
385 |
385 |
Dividends paid |
- |
- |
- |
(595) |
(595) |
Share based payments |
- |
- |
- |
37 |
37 |
At 30 September 2008 |
1,859 |
109 |
862 |
8,686 |
11,516 |
|
|
|
|
|
|
Total comprehensive income |
- |
- |
- |
(1,941) |
(1,941) |
Dividends paid |
- |
- |
- |
(89) |
(89) |
Share based payments |
- |
- |
- |
(25) |
(25) |
At 1 April 2009 |
1,859 |
109 |
862 |
6,631 |
9,461 |
|
|
|
|
|
|
Total comprehensive income |
- |
- |
- |
(1,363) |
(1,363) |
At 30 September 2009 |
1,859 |
109 |
862 |
5,268 |
8,098 |
|
|
|
|
|
|
* Restated for deferred tax, see note 1.
Notes to the interim financial statements
1 General information and accounting policies
The abridged financial information set out above does not constitute the Group's statutory accounts as defined under Section 434 of the Companies Act 2006. The auditors made a report under Section 235 of the Companies Act 1985 on the financial statements for the year ended 31 March 2009, as filed at Companies House, from which part of the financial information is extracted. The report of the auditors on the accounts for the year ended 31 March 2009 was unqualified and there was no statement under either section 237(2) or section 237(3) of the Companies Act 1985.
Basis of preparation
The annual financial statements of the group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with the AIM Rules issued by the London Stock Exchange.
Accounting policies
The principal accounting policies, based on IFRS, applied in preparing the Interim Financial Statements are consistent with the policies set out in the Annual Report and Accounts for the year ended 31 March 2009, except for the adoption of new standards and interpretations as of 1 April 2009, noted below:
IAS 34 (Interim reporting) has not been adopted as it does not apply to companies listed on AIM.
IFRS 2 Share-based payments - vesting conditions and cancellations
The standard has been amended to clarify the definition of vesting conditions and to prescribe the accounting treatment of an award that is effectively cancelled because a non-vesting condition is not satisfied. The adoption of this treatment did not have any impact on the financial position or performance of the Group.
IFRS 7 Financial Instruments: Disclosures
The amended standard requires additional disclosure about fair value measurement and liquidity risk. The fair value measurement disclosures and liquidity risk disclosures are not significantly impacted by the amendments.
IFRS 8 Operating Segments
This standard requires disclosure of information about the Group's operating segments and replaces the requirement to determine primary (business) and secondary (geographical) reporting segments of the Group. Adoption of this standard did not have any effect on the financial position or performance of the Group. The Group determined that the operating segments were the same as the business segments previously identified under IAS 14 Segment Reporting. Additional disclosures about each of these segments are shown in Note 2, including revised comparative information.
IAS 1 Revised Presentation of Financial Statements
The revised standard separates owner and non-owner changes in equity. The statement of changes in equity includes details of transactions with owners, with non-owner changes in equity presented as a single line. In addition, the standard introduces the statement of comprehensive income: it presents all items of recognised income and expense, either in one single statement, or in two linked statements. The Group has elected to present two statements.
Going concern
After making appropriate enquiries, the directors consider that the Group has adequate resources to continue in operation for the foreseeable future. In forming this view the directors have reviewed budgets and other financial information. For this reason, they continue to adopt the going concern basis in preparing the accounts.
Restatement of deferred tax
As set out in the 2009 Annual Report, after a detailed review of the Group's historic deferred tax provisions it has been concluded that liabilities in respect of capital gains rolled over into goodwill on the acquisition of Fred Duncombe Ltd in 1989 and Heyes Lighting Ltd (now part of Petrel Ltd) in 1987 have been incorrectly included within the financial statements in previous years. This gives rise to a restatement of the deferred tax liability, reducing it by £443,000 and increasing retained earnings by a corresponding amount. In addition the deferred tax charge in respect of the phasing out of Industrial Buildings Allowances (IBAs) introduced in the Finance Act 2008 was incorrectly stated in the Interim Report for the six months ended 30 September 2008. The restatement as it affects the balance sheet is as follows:
|
|
|
|||
|
Restated |
As previously reported |
|
|
|
|
|
£000 |
|
|
|
|
|
|
|
|
|
Deferred tax asset |
300 |
559 |
|
|
|
Deferred tax liability |
462 |
632 |
|
|
|
Retained earnings at 30 September 2008 |
8,686 |
8,775 |
|
|
|
Tax expense for 6 months to 30 September 2008 |
756 |
224 |
|
|
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.
|
Segmental revenue |
Segmental operating (loss)/ profit |
||||
|
Unaudited 6 months ended 30 Sep 2009 £000 |
Unaudited 6 months ended 30 Sep 2008 £000 |
Year ended 31 March 2009 £000 |
Unaudited 6 months ended 30 Sep 2009 £000 |
Unaudited 6 months ended 30 Sep 2008 £000 |
Year ended 31 March 2009 £000 |
|
|
|
|
|
|
|
Foundries |
11,109 |
19,902 |
33,217 |
(367) |
1,051 |
723 |
Engineering |
3,106 |
3,637 |
6,723 |
71 |
186 |
260 |
Segmental results |
14,215 |
23,539 |
39,940 |
(296) |
1,237 |
983 |
|
|
|
|
|
|
|
Reconciliation of reported segmental revenue and operating (loss)/ profit |
||||||
Segmental results |
|
|
|
(296) |
1,237 |
983 |
Shared costs |
|
|
|
(339) |
(332) |
(523) |
Exceptionals |
|
|
|
(236) |
(193) |
(446) |
Total revenue/operating (loss)/profit reported |
|
|
|
(871) |
712 |
14 |
Financing costs |
|
(174) |
(102) |
(201) |
||
Unrealised foreign exchange gain/(loss) |
332 |
409 |
(311) |
|||
(Loss)/profit before tax |
(713) |
1,019 |
(498) |
|||
|
|
|
|
|
|
|
The Foundries segment is a supplier of iron castings, in raw or machined form, to a variety of industrial customers who incorporate the castings into their own products or carry out further machining or assembly operations on the castings before selling them on. The Engineering segment provides manufactured and imported products to distributors and end-users. The products fall into the categories of door hardware, hazardous area lighting and control gear, cable management and general ironmongery.
There are no transactions between business segments.
Group financing and income tax are managed on a group basis and are not allocated to operating segments.
3 Finance income and costs
|
Unaudited six months ended 30 September 2009 |
Unaudited six months ended 30 September 2008 |
Year ended 31 March 2009 |
|
£000 |
£000 |
£000 |
Net interest on bank overdraft |
(53) |
(75) |
(162) |
Finance cost of pension scheme |
(117) |
(17) |
(39) |
Other interest |
(4) |
(10) |
- |
|
(174) |
(102) |
(201) |
4 Income tax expense
An effective rate of tax for the six months to 30 September 2009 of 12% has been used in these interim statements.
The effective rate of tax is lower than the standard rate because losses arising in the year could not be utilised and the deferred tax asset has not been recognised.
5 Dividends
Dividends comprise: |
Pence per share |
Unaudited six months ended 30 September 2009 |
Unaudited six months ended 30 September 2008 |
Year ended 31 March 2009 |
|
|
£000 |
£000 |
£000 |
2007/08 final dividend paid July 2008 |
8.00 |
- |
595 |
595 |
2008/09 interim dividend paid December 2008 |
1.20 |
- |
- |
89 |
|
- |
595 |
684 |
|
|
|
|
|
6 Earnings per share
The calculation of earnings per share is based on the profit attributable to shareholders and the weighted average number of ordinary shares in issue. In calculating the diluted earnings per share, adjustment has been made for the dilutive effect of outstanding share options. Underlying earnings per share, which excludes exceptional items and unrealised foreign exchange movements, as analysed below, has been disclosed as the Directors believe this allows a better assessment of the underlying trading performance of the Group.
Operating exceptionals are detailed in note 8.
|
Unaudited six months ended 30 September 2009 |
Unaudited six months ended 30 September 2008 (Restated *) |
Year ended 31 March 2009 |
|
£000 |
£000 |
£000 |
Earnings for basic earnings per share |
(626) |
263 |
(849) |
Exceptional items |
236 |
193 |
446 |
Taxation effect of exceptional items |
(66) |
(54) |
(125) |
Unrealised foreign currency (gain)/loss |
(332) |
(409) |
311 |
Taxation effect of unrealised foreign currency (gain)/loss |
93 |
115 |
(87) |
Deferred tax effect of the abolition of IBAs included in exceptional items |
- |
532 |
471 |
Earnings for underlying earnings per share |
(695) |
640 |
167 |
|
Unaudited six months ended 30 September 2009 |
Unaudited six months ended 30 September 2008 |
Year ended 31 March 2009 |
|
000 |
000 |
000 |
Weighted average number of ordinary shares |
7,438 |
7,438 |
7,438 |
Adjustment to reflect shares under option |
508 |
122 |
508 |
Diluted weighted average number of ordinary shares |
7,946 |
7,560 |
7,946 |
* Restated for deferred tax, see note 1.
7 Pensions
The Group operates a defined benefit pension scheme and a number of defined contribution pension schemes on behalf of its employees. For defined contribution schemes, contributions paid in the period are charged to the income statement. For the defined benefit scheme, actuarial calculations are performed in accordance with IAS 19 in order to arrive at the amounts to be charged in the income statement and recognised in the statement of comprehensive income. The defined benefit scheme is closed to new entrants and future accrual.
Under IAS 19, the Company recognises all movements in the actuarial funding position of the scheme in each period. This is likely to lead to volatility in shareholders' equity from period to period.
The IAS 19 figures are based on a number of actuarial assumptions as set out below, which the actuaries have confirmed they consider appropriate. The projected unit credit actuarial cost method has been used in the actuarial calculations.
|
30 September 2009 |
30 September 2008 |
31 March 2009 |
|
|
|
|
Salary increases |
n/a |
n/a |
n/a |
Pension increases (post 1997) |
3.2% |
3.7% |
3.1% |
Discount rate |
5.5% |
6.9% |
7.0% |
Inflation (RPI) |
3.2% |
3.7% |
3.1% |
The demographic assumptions used for 30 September 2009, 31 March 2009 and 30 September 2008 are the same as used in the last full actuarial valuation performed as at 1 April 2007.
The defined benefit scheme funding has changed under IAS 19 as follows:
Funding status |
Unaudited 6 months to 30 September 2009 £000 |
Unaudited 6 months to 30 September 2008 £000 |
Year to 31 March 2009 £000 |
|
|
|
|
Scheme assets at end of period |
11,833 |
11,412 |
9,817 |
Benefit obligations at end of period |
14,673 |
12,208 |
11,645 |
|
|
|
|
Deficit in scheme |
(2,840) |
(796) |
(1,828) |
Related deferred tax asset |
795 |
223 |
512 |
Net pension liability |
(2,045) |
(573) |
(1,316) |
|
|
|
|
The increase in the net pension liability is mainly due to positive investment returns offset by a reduction in the discount rate used to value liabilities.
8 Exceptional items
Operating exceptional items in the six months to 30 September 2009 and which, in the opinion of the directors, do not form part of the underlying operating costs/(income) of the businesses, comprise:
|
Unaudited six months ended 30 September 2009 |
Unaudited six months ended 30 September 2008 (Restated*) |
Year ended 31 March 2009 |
|
£000 |
£000 |
£000 |
Reorganisation and severance costs |
(236) |
- |
(253) |
Legal costs |
- |
(193) |
(193) |
|
|
|
|
|
(236) |
(193) |
(446) |
|
|
|
|
Taxation |
|
|
|
- tax effect of operating exceptionals |
66 |
54 |
125 |
- abolition of IBAs |
- |
532 |
(471) |
|
|
|
|
|
66 |
586 |
(346) |
Reorganisation costs in six months ended 30 Sepetember 2009 related to redundancy and severance costs incurred as a consequence of transferring the management of the Leicester foundry to Chamberlin and Hill Castings Ltd.
Severance costs in the year ended 31 March 2009 relate to redundancies incurred following a downturn in demand.
Legal costs relates to the final costs of settling the claim for alleged nuisance which has been noted in the last two years accounts. This together with an amount provided at 31 March 2008, comprises the Group's own legal expenses plus the cost of settlement with the claimants and their lawyers.
Restated for deferred tax, see note 1.
9 Report and Accounts
Copies of the interim report for the Company for the period ended 30 September 2009 will be available on the Group's website at www.chamberlin.co.uk.