Interim Results
Chamberlin PLC
27 November 2007
27 November 2007
CHAMBERLIN plc
Interim Results
HIGHLIGHTS
• Profit before tax and exceptionals up 24% to £651k
• Underlying earnings per share up 24% to 6.1p
• Net borrowing £0.5m, a gearing of 4.3%
• Total Equity strengthened by £1.3m to £12.2m
• Dividend maintained at 3.85p
Unaudited Unaudited
6 months 6 months
30 September 30 September
2007 2006
£000 £000
Turnover 19,607 19,028
Profit before tax and exceptional items 651 523
Profit before tax 982 102
Basic EPS 9.8p 0.9p
Underlying EPS 6.1p 4.9p
Dividend per share proposed 3.85p 3.85p
For further information, contact details are:
Chamberlin plc
Tim Hair, Chief Executive 01922 707 100
Mark Bache, Finance Director 01922 707 100
Landsbanki Securities (UK) Limited (NOMAD)
Tom Hulme 020 7426 9593
CHAIRMAN'S STATEMENT
I am pleased to report that the Group made good progress in the first half, with
results in line with management expectations. The action taken last year to
upgrade controls has provided a sound platform on which to build and with a new
management culture established the team are delivering improvements throughout
the business. Following the AGM our name has been changed to Chamberlin plc.
Results & Dividend
Revenues grew to £19.6m (2006/07: £19.0m). Foundries achieved sales growth of
6%, with the engineering companies achieving 1% growth net of the impact of
prior year disposals from within Petrel. Profit before tax and exceptional
items rose 24% to £651k (2006/07: £523k) with a corresponding increase in
underlying earnings per share to 6.1p (2006/07: 4.9p). Exceptional items
include the profit of £468k from the sale of surplus property as previously
reported. Gearing remains very low at 4.3%.
The Board has decided to pay an unchanged interim dividend of 3.85p per share,
payable on 17 December 2007 to all shareholders registered on 7 December 2007.
Progress
Our foundries have continued to enjoy sustained demand for their products and
their performance improvement projects are making good progress.
The Walsall foundry now trades as Chamberlin & Hill Castings, retaining our
strong foundry brand which is well known in the engineering industry. Its
expertise in the high-volume supply of complex castings has enabled Chamberlin &
Hill to win new contracts in the hydraulics market, and in the longer term
hydraulics represents a potential area for expansion. Demand for turbochargers
for automotive diesel engines remains strong and this drives our core market.
Carbon dioxide emissions legislation is likely to create new opportunities as
fuel efficiency requirements expand turbocharged petrol engines from performance
cars into the mainstream market. The claim against Walsall foundry for alleged
nuisance, noted in previous reports, continues as does our vigorous defence of
all aspects of the claim. In our 2006/07 report we stated that Chamberlin &
Hill Castings has begun implementing lean manufacturing and I am pleased to note
the excellent progress made in this area.
Russell Ductile is recovering after the difficulties reported last year, with
upgraded management delivering improved operational performance. During the
first half we invested £400k in the Scunthorpe site to upgrade equipment and
have agreed an extended lease for the Leicester site that will permit
continuation of our successful operation there for many years to come. Both
operating sites are winning new contracts and we look forward to further
progress at Russell Ductile as the recovery phase continues.
Petrel and Fred Duncombe, our light engineering businesses, continue to
progress. Petrel has completed work to fill gaps in its range of hazardous area
lighting and control products, and is starting to win new business. Range
extensions are being launched at Fred Duncombe and new sales strategies are
being developed to compete more aggressively.
Pensions
We have commenced consultation with employees in connection with closing the
final salary pension scheme to future accrual from December 2007. At the half
year the pension deficit stood at £0.5m.
Strategy
We stated in our 2006/07 report that we intend to create a more broadly based
engineering group. The executive team have reviewed and rejected a number of
acquisition targets that do not meet our criteria, and remain active in the
search for businesses that fit with the 'difficult things, done well' theme
which underpins our strategic thinking. Our foundries will continue to play an
important role in the Group, and we will continue to invest to improve our
capability whenever good opportunities are available.
Outlook
The current year is progressing in line with management expectations following
the transition achieved in 2006/07. Our businesses are enjoying steady demand
and competing effectively in both home and export markets. We look forward to
the future with confidence.
TOM BROWN
Chairman
Summarised Consolidated Income Statement
for the six months ended 30 September 2007
Note Unaudited six months ended Unaudited six months ended Year ended 31 March 2007
30 September 2007 30 September 2006
Before Operating Total Before Operating Total Before Operating Total
operating exceptionals operating exceptionals operating exceptionals
exceptionals (note 9) exceptionals (note 9) exceptionals
£000 £000 £000 £000 £000 £000 £000 £000 £000
Revenue from
continuing
operations 19,607 - 19,607 19,028 - 19,028 39,188 - 39,188
Operating
profit/(loss)
from
continuing
operations 619 331 950 521 (421) 100 332 (1,141) (809)
Finance
income
/(costs) 3 32 - 32 2 - 2 (22) - (22)
Profit/(loss)
before tax 651 331 982 523 (421) 102 310 (1,141) (831)
Income tax
(expense) /
credit 4 (199) (56) (255) (159) 126 (33) 292 216 508
Profit/(loss)
for the
period
from
continuing
operations 452 275 727 364 (295) 69 602 (925) (323)
Attributable
to equity
holders of
the parent
company 727 69 (323)
Earnings/
(loss) per
share:
Basic 6 9.8p 0.9p (4.4p)
Underlying 6 6.1p 4.9p 8.1p
Diluted 6 9.6p 0.9p (4.4)p
Diluted
underlying 6 6.0p 4.9p 8.0p
An interim dividend of 3.85p per share has been declared by the directors,
payable on 17 December 2007 (note 5).
Summarised Consolidated Statement of Recognised Income and Expense
for the six months ended 30 September 2007
Note Unaudited six Unaudited six
months ended months ended Year ended
30 September 30 September 31 March
2007 2006 2007
£000 £000 £000
Actuarial gains / (losses)
on pension assets and
liabilities 7 1,524 (929) (2,132)
Deferred tax (charge)/
credit on actuarial gains
/ (losses) (457) 279 640
Net income / (expense)
recognised directly in
equity 1,067 (650) (1,492)
Profit/(loss) for the
period (before dividend) 727 69 (323)
Total recognised income
and expense for the period
attributable to equity
holders of the parent
company. 1,794 (581) (1,815)
Summarised Consolidated Balance Sheet
At 30 September 2007
Unaudited Unaudited
30 September 30 September 31 March
2007 2006 2007
£000 £000 £000
Non-current assets
Property, plant and 7,991 8,518 7,954
equipment
Intangible assets - goodwill 201 201 201
Intangible assets - software 46 61 57
Intangible assets - development costs 171 219 195
Deferred tax assets 271 782 975
8,680 9,781 9,382
Current assets
Inventories 4,395 5,192 4,746
Trade and other receivables 8,492 8,227 7,370
Income taxes receivable - - 70
Cash and cash equivalents 2 - -
Assets held for resale - - 219
12,889 13,419 12,405
Total assets 21,569 23,200 21,787
Current liabilities
Financial liabilities 531 1,192 209
Trade and other payables 7,650 7,004 7,738
Income taxes payable 13 55 -
8,194 8,251 7,947
Non-current liabilities
Defined benefit pension scheme 498 1,218 2,235
deficit
Deferred tax liabilities 658 1,273 663
1,156 2,491 2,898
Total liabilities 9,350 10,742 10,845
Capital and reserves
Share capital 1,859 1,854 1,854
Share premium 862 829 828
Capital redemption reserve 109 109 109
Retained earnings 9,389 9,666 8,151
Total equity 12,219 12,458 10,942
Total equity and liabilities 21,569 23,200 21,787
Summarised Consolidated Cash Flow Statement
for the six months ended 30 September 2007
Unaudited six Unaudited six Year ended
months ended months ended 31 March
30 September 30 September 2007
2007 2006
Operating activities £000 £000 £000
Operating profit / (loss) 950 100 (809)
Adjustments for:
Depreciation of property, 578 574 1,166
plant and equipment
Amortisation of software 12 14 23
Amortisation of development costs 23 10 34
(Profit) / loss on disposal of (477) 32 373
property plant and equipment
Share based payments 40 (11) (6)
Other pension payments in excess of (213) (198) (384)
income statement charge
Operating cash flow before movements
in working capital 913 521 397
Decrease in inventories 352 116 562
(Increase) / decrease in (1,122) (285) 572
receivables
(Decrease) / increase in payables (88) (496) 237
Cash flow from operations 55 (144) 1,768
UK Corporation Tax received / 68 (210) (237)
(paid)
Net cash flow from operating 123 (354) 1,531
activites
Investing activities
Purchase of property, plant
and equipment (626) (916) (1,625)
Purchase of software (1) (25) (27)
Disposal of plant and 709 - 119
Equipment
Net cash flow from investing 82 (941) (1,533)
activities
Financing activities
Interest paid (38) (48) (111)
Pension element of finance income 70 50 90
Equity dividends paid (595) (592) (878)
Issue of shares (including 38 100 99
premium)
Net cash used in financing activities (525) (490) (800)
Net decrease in cash and cash
equivalents (320) (1,785) (802)
Cash and cash equivalents at the
start of the period (209) 593 593
Cash and cash equivalents at the end
of the period (529) (1,192) (209)
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 240 of the Companies Act 1985. The
auditors made a report under Section 235 of the Companies Act 1985 on the
financial statements for the year ended 31 March 2007, 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 2007 was unqualified
and there was no statement under either section 237(2) or section 237(3).
Basis of preparation
The accounts have been prepared under International Financial Reporting
Standards ('IFRS') in the form of a condensed interim financial report.
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 2007.
2 Segmental analysis
For management purposes, the Group is organised into two operating divisions:
Foundries and Engineering, which are the primary segments for reporting
purposes. The secondary segmental format is geographical.
Foundries Engineering Total
Unaudited6 Unaudited Unaudited Unaudited 6 Unaudited6 Unaudited
months 6 months Year 6 months months Year months 6 months Year
ended ended ended ended ended ended ended ended ended
30 Sep 30 Sep 31 March 30 Sep 30 Sep 31 March 30 Sep 30 Sep 31 March
2007 2006 2007 2007 2006 2007 2007 2006 2007
£000 £000 £000 £000 £000 £000 £000 £000 £000
Revenue 15,974 15,029 31,287 3,633 3,999 7,901 19,607 19,028 39,188
Trading profit 614 523 681 282 220 157 896 743 838
Shared costs (277) (222) (506)
Exceptionals 331 (421) (1,141)
Operating profit 950 100 (809)
Net assets
Assets 15,310 16,391 14,665 5,441 5,745 5,788 20,751 22,136 20,453
Liabilities (5,179) (5,687) (6,405) (2,202) (1,317) (1,332) (7,381) (7,004) (7,737)
Segmental net
assets 10,131 10,704 8,260 3,239 4,428 4,456 13,370 15,132 12,716
Unallocated net
liabilities (1,151) (2,674) (1,774)
Total net assets 12,219 12,458 10,942
Movements in
fixed asset
Capital additions
PPE * 569 728 1,345 57 188 280 626 916 1,625
Software 1 25 27 - - - 1 25 27
Capital
commitments 188 326 97 - - - 188 326 97
Depreciation /
amortisation
PPE * (453) (432) (925) (125) (142) (241) (578) (574) (1,166)
Software (10) (12) (17) (2) (2) (6) (12) (14) (23)
Development (13) (6) (19) (10) (4) (15) (23) (10) (34)
* Property, plant and equipment
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.
Transactions between business segments are minimal and transfer prices are set
on an arm's length basis in a manner similar to transactions with third parties.
The Group's geographical segments are determined by the location of the Group's
customers. The group's assets and costs incurred are all located within the
United Kingdom.
Unaudited six Unaudited six
months ended 30 months ended 30 Year ended 31
September September March
Turnover by geographical location 2007 2006 2007
£000 £000 £000
United Kingdom 15,605 15,120 30,680
Rest of Europe 3,411 3,210 7,170
Other countries 591 698 1,338
19,607 19,028 39,188
3 Finance income and costs
Unaudited six Unaudited six
months ended 30 months ended 30 Year ended 31
September September March
2007 2006 2007
£000 £000 £000
Net interest on bank accounts (38) (48) (112)
Finance income of pension scheme (note 7) 70 50 90
32 2 (22)
4 Income tax expense
An effective rate of tax for the six months to 30 September 2007 of 30% has been
used for corporation tax and 28% for deferred tax in respect of all calculations
in these interim statements.
5 Dividends
Dividends comprise: Unaudited six Unaudited six
months ended 30 months ended 30 Year ended 31
September September March
Pence per share 2007 2006 2007
£000 £000 £000
2005/06 final dividend paid July 2006 8.00 593 593
2006/07 interim dividend paid December 2006 3.85 285
2006/07 final dividend paid July 2007 8.00 595
595 593 878
2007/08 interim dividend proposed 3.85 286
The interim dividend of 3.85 pence per share (2006: 3.85p) will be paid on 17
December 2007 to all shareholders on the register as at close of business on 7
December 2007.
6 Earnings per share
The calculation of basic earnings per share is based on the profit/(loss) after
tax of £727,000 (Interim 2006: £69,000; Full year 2006/07: £(323,000)) and the
weighted average number of shares in issue of 7,426,117 (Interim 2006:
7,388,204; Full year 2006/07: 7,546,139).
The calculation of underlying earnings per share is based on profit before the
effects of operating exceptional items, and is disclosed in addition to basic
earnings per share as the directors believe that it allows a better comparison
between the results of different periods, and therefore a better assessment of
the comparative trading performance of the Group. Operating exceptional items
comprise profit on sale of a surplus property, legal costs and inventory write
down as set out in note 9.
The profit used in calculating underlying earnings per share was £452,000
(Interim 2006: £364,000; Full year 2006/07: £602,000) and the weighted average
number of shares as for basic earnings per share above.
Diluted earnings per share and diluted underlying earnings per share use the
same profit figures as for basic or underlying earnings per share as
appropriate, but use a figure for the number of shares that takes account of the
dilutive effect of outstanding share options. The figure used for the number of
shares was 7,569,038 (Interim 2006: 7,402,435; Full year 2006/07: 7,546,139).
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 recognised income and
expenses. The defined benefit scheme is closed to new entrants.
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 30 September 31 March
2007 2006 2007
Discount rate 5.6% 5.0% 5.2%
Salary increases 3.4% 2.9% 2.9%
Pension increases (pre '97) 2.5% 2.5% 2.5%
Pension increases (post '97) 3.0% 2.9% 2.9%
Inflation (RPI) 3.4% 2.9% 2.9%
The demographic assumptions used for 30 September 2007 and 31 March 2007, are
generally the same as used in the last full actuarial valuation performed as at
1 April 2007.The assumptions for 30 September 2006 are based on actuarial
valuations as at 1 April 2004.
The defined benefit scheme funding has changed under IAS 19 as follows:
Unaudited 6 months Unaudited 6
to months to Year to
Funding status 30 September 30 September 31 March
2007 2006 2007
£000 £000 £000
Movement in scheme assets
Fair value at start of period 13,952 13,690 13,690
Expected return on scheme assets 450 398 793
Actuarial losses (139) (342) (38)
Employer contributions 184 194 376
Member contributions 35 45 78
Estimated benefits paid (350) (628) (947)
Fair value at end of period 14,132 13,357 13,952
Unaudited 6 months Unaudited 6 months Year to
to to 31 March
Funding status 30 September 30 September 2007
2007 2006 £000
£000 £000
Movement in scheme liablilities
Benefit obligations at start of period 16,187 14,177 14,177
Current service cost 41 46 82
Interest cost 380 348 703
Member contributions 35 45 78
Actuarial (gain)/ losses (1,663) 587 2,094
Estimated benefits paid (350) (628) (947)
Benefit obligations at end of period 14,630 14,575 16,187
Recoverable deficit in scheme (498) (1,218) ( 2,235)
Related deferred tax asset 139 365 670
Net pension liability (359) (853) (1,565)
Components of pension cost
Current service cost 41 46 82
Total charge disclosed in operating profit 41 46 82
Expected return on pension scheme assets 450 398 793
Interest on pension liabilities recognised as
finance cost (380) (348) (703)
Net return disclosed in finance income 70 50 90
Analysis of amount recognised in consolidated
Statement of Recognised Income and Expense ('SORIE')
Actual return less expected return on assets (139) (342) (38)
Experience gain / (loss) on liabilities 1,663 (587) (2,094)
Actuarial gain / (loss) recognised in SORIE 1,524 (929) (2,132)
8 Consolidated statement of changes in equity
Unaudited six months Unaudited six months Year ended 31
ended 30 September ended 30 September March
2007 2006 2007
£000 £000 £000
Equity at start of period 10,942 13,542 13,542
Total recognised income and expense for the period 1,794 (581) (1,815)
Dividends paid (see note 5) (595) (592) (878)
Share based payments 40 (10) (6)
Shares issued and allotted 38 99 99
Equity at end of period 12,219 12,458 10,942
Shares issued and allotted relate to shares issued to satisfy the exercise of
share options during the period.
9 Exceptional items
Operating exceptional items in the six months to 30 September 2007 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 Unaudited six months Year ended
ended 30 September ended 30 September 31 March
2007 2006 2007
£000 £000 £000
Profit/(loss) on disposal of property plant 468 - (302)
and equipment
Legal expenses (72) - -
Inventory write down (65) - -
Severance costs - - (224)
Other closure costs - (421) (495)
Costs of transfer to AIM - - (120)
331 (421) (1,141)
On 4 April 2007 the Group disposed of a surplus property at Fred Duncombe Ltd
for proceeds of £705,000. The net book value of the property was £219,000 and
the costs of disposal amounted to £18,000.
Legal expenses have been incurred in respect of the claim noted in last two
years accounts in respect of alleged statutory nuisance in relation to the
operations of our Walsall Foundry which has continued to be pursued by the
claimants. The Company is continuing to vigorously defend this claim.
The inventory write down relates to items that had been incorrectly valued in
Russell Ductile Castings Limited as at 31 March 2007.
This information is provided by RNS
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Friday, 10th January 2025
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