Last checked at 19 May 2015 07:00
19 May 2015
AIM: CMH
CHAMBERLIN plc
("Chamberlin", the "Company" or the "Group")
FINAL RESULTS
for the year ended 31 March 2015
KEY POINTS
· Significant improvement in performance on prior year - in line with market expectations and reflecting management team's business turnaround initiatives
· Revenues up 5.9% to £40.8m (2014: £38.6m)
· Underlying profit before tax* of £0.8m (2014: loss of £0.8m)
Profit before tax on an IFRS basis of £0.1m (2014: loss of £2.1m)
· Exceptional costs reduced to £0.4m (2014: £1.0m) - mainly related to turnaround measures
· Underlying diluted profit per share* of 7.2p (2014: loss per share of 7.6p)
IFRS diluted profit per share of 0.2p (2014: loss per share of 20.2p)
· Cash inflow from operations of £1.3m (2014: cash outflow of £1.5m)
· Net debt at 31 March 2014 of £3.8m (2014: £3.6m) - debt facility of £8.1m
· The Group is targeting continued growth in 2016 from the new contract wins announced in November 2014. However the current weak Euro exchange rate creates a significant headwind.
*All underlying figures are stated before ineffective hedge costs, exceptional items, administration costs of the pension scheme and net financing costs on pension obligations, share based payment costs and associated tax impact of these items.
Chairman, Keith Butler-Wheelhouse, commented,
"I am pleased to report a significant improvement in Chamberlin's performance which has led to a return to profitability. The improvement can be principally attributed to actions taken by management to address the cost base, a strong performance from our Walsall foundry, which saw improved conditions in the turbocharger bearing housing market, and improved sales and profits from the engineering division.
The Group's performance in the second half and beyond will be supported by the new contract wins and continuing progress at the engineering division. However, we are mindful of the current weak Euro exchange rate which creates a significant headwind for the current year.
We remain committed to delivering further progress and will provide a further update on trading at the AGM."
Enquiries
Chamberlin plc (www.chamberlin.co.uk) Kevin Nolan, Chief Executive David Roberts, Finance Director | T: 01922 707100
| |
Charles Stanley Securities (Nominated Adviser and Broker) Russell Cook / Carl Holmes | T: 020 7149 6000 | |
KTZ Communications (Financial PR) Katie Tzouliadis | T: 020 3178 6378 |
Chairman's Statement
Introduction
We are pleased to report a significant improvement in Chamberlin's results for the financial year. Revenues increased by 5.9% to £40.8m, and the Group has returned to profitability with a £1.6m turnaround, posting underlying profit before tax of £0.8m against a loss of £0.8m in the prior year.
The improvement in trading can be principally attributed to actions taken by management to address the cost base, a strong performance from our Walsall foundry, which saw improved conditions in the turbocharger bearing housing market, and improved sales and profits from the engineering division.
The management team focus remains on identifying measures to achieve further cost efficiencies and improve processes, and we are progressing these initiatives. At the same time, we are also working on business development and further refining our growth plans. We secured two new major contract wins in the year, which we reported on 17th October and 18th November.
Results
Revenues for the year ended 31 March 2015 were up 5.9% to £40.8m (2014: £38.6m) and the Group generated an underlying profit before tax of £0.8m (2014: loss of £0.8m).
The diluted underlying profit per share was 7.2p (2014: loss per share of 7.6p).
On an IFRS basis, the profit before tax was £0.1m (2014: loss of £2.1m), and diluted statutory earnings per share was 0.2p (2014: loss per share of 20.2p).
The net debt position at 31st March 2015 showed an increase of £0.2m to £3.8m from the net debt position at 31st March 2014 of £3.6m. Over the period, the Group generated operating cash inflow of £1.3m (2014: cash outflow £1.5m).
Dividend
No dividend is proposed for the period under review.
Staff
Our staff have contributed tremendous efforts over a very challenging year, and on behalf of the Board, I would like to thank everyone across the business for their hard work, which has helped to assist Chamberlin's continuing turnaround.
Strategy & Outlook
The management team is pleased to have returned Chamberlin to profitability. As we reported at the half year, there is still work to be done and we are paying particular attention to the Scunthorpe and Leicester foundries. Demand across the Group has been subdued at the start of the new financial year, and we are mindful of the current weak Euro exchange rate which will create headwinds for the business.
The Group's performance in the second half and beyond will be supported by the new contract wins and continuing progress at the engineering division.
We remain committed to delivering further progress and will provide a further update on trading at the AGM.
Keith Butler-Wheelhouse
Chairman
18 May 2015
Chief Executive's Review
Group sales are up 5.9% compared to 2014, with sales from the Foundry activities up 4.7% and good growth in the Engineering businesses of 9.4%.
Foundries
Foundry revenues increased by 4.7% year-on-year to £30.4m (2014: £29.1m). The total operating profit was £1.3m (2014: loss of £0.2m).
Our foundry at Walsall has significant expertise in small castings with complex internal geometry and typically below 3kg in weight. Its reputation in the development and production of castings with complex internal passages is well established and the complex geometry is achieved through the use of innovative core assembly techniques. Importantly, it is capable of producing these castings in mid-to-high volumes. The automotive turbocharger segment is a major market for the Walsall foundry with modern designs requiring precise alignment of cooling and lubrication passages to meet the increased performance demanded by modern engines. Turbochargers accounted for 40.3% of the Foundry Division sales over the year (2014: 35.0%). Legislation remains a major driver of this market, with the requirement to reduce CO2 emissions promoting the introduction of smaller, turbocharged petrol engines. The legislation-driven shift in technology continues to be very evident as manufacturers seek to comply with the new CO2 emission standards.
Our foundry in Leicester produces mid-size castings typically around 20kg, with moderately complex internal shapes although typically with demanding metallurgy requirements around temperature, strength and wear resistance.
Our foundry in Scunthorpe focuses on heavy castings weighing up to 6,000kg which have complex geometry and challenging metallurgy. These castings are used in applications where there is a requirement for high strength or high temperature performance. The foundry produces castings for large process compressors, industrial gas turbines and mining, quarrying and construction equipment.
Demand for both the Leicester and Scunthorpe foundries remained subdued and we have taken action to reduce the cost base at both foundries to ensure a lower breakeven point.
Engineering
Revenues from the engineering operations rose by 9.4% year-on-year to £10.4m (2013: £9.5m) and operating profits rose 47.0% to £1.0m (2014: £0.7m). This Division now accounts for approximately 25% of Group revenues.
Exidor
Exidor is the UK market leader in panic and emergency exit door hardware. The business has continued to consolidate its leading UK position in panic hardware and to improve its share of the door closer market, as well as to service the emerging need for physical security to protect high value retail infrastructure and critical national infrastructure. Exidor operates in a highly regulated market as its products are for life-critical applications and its customers place great value upon the assurance of genuinely British designed, manufactured and certified product. A major focus has been to increase export sales and I am pleased to report that Exidor has achieved significant success, aided by a more strategic approach to export market selection and development. We expect to see continuing growth in exports over the current year and beyond.
Petrel
Petrel Limited has a long established presence in lighting and control equipment for use in hazardous areas. It designs, develops and manufactures products for use in rigorous and demanding environments and has a reputation for high quality. The business supplies customers across the UK and Europe as well as internationally.
More recently, Petrel Limited established a portfolio of LED products, which provides customers with solutions that have the additional benefits of longer life, lower maintenance and reduced energy consumption. Being solid state components, LEDs are also less prone to damage and external shock making them ideal for use in harsh environments. The business is continuing to develop its LED offering as well as its portable light fittings range to ensure that customers benefit from ongoing advances in technology.
During 2015 11.6% of sales (2014: 1.7%) were from portable lighting and LED. Further growth opportunities are expected to come from both product offerings.
Outlook
We are encouraged by the significant improvement in the performance of the Group, which largely reflects both the stabilisation in revenues and the realigned cost base. There is scope to improve efficiencies and we remain highly focused on cost controls as we seek to develop growth initiatives. Although we are encouraged by the progress that we have made to date, in the current year this will be partially offset by the impact of the weak Euro exchange rate, which is currently providing a headwind to the business.
Kevin Nolan
Chief Executive
18 May 2015
Finance Review
Overview
Sales increased by 5.9% during the year to £40.8m (2014: £38.6m) and gross profit margin increased significantly from 15.9% in 2014 to 20.1% in 2015.
Underlying profit before tax is £0.8m (2014: loss of £0.8m). Diluted underlying earnings per share was 7.2p (2014: loss per share of 7.6p).
The IFRS results show operating profit of £0.4m (2014: loss of £1.9m), profit before tax of £0.1m (2014: loss of £2.1m) and statutory earnings per share of 0.2p (2014: loss per share 20.2p).
Exceptional items
Exceptional items in the year reduced significantly to £0.4m (2014: £1.0m), with the realignment of the cost base accounting for £0.3m of this figure. As a result the headcount of the Group has been reduced by 3.5% from 413 to 399. The environmental clean-up cost of £0.1m is not expected to recur.
Tax
The Group's underlying tax charge for the year was £0.2m (2014: credit of £0.2m) with an underlying effective rate of 27% (2014: 26%). The IFRS total tax charge for the year was £0.1m (2014: credit of £0.5m), an effective tax rate of 79% (2014: 24%).
Cash generation and financing
Operating cash inflow was £1.3m (2014: outflow of £1.5m).
Capital expenditure for the year increased to £1.4m (2014: £1.0m). This was in line with depreciation and amortisation of £1.3m (2014: £1.4m).
Our overdraft and net borrowings at 31 March 2015 increased to £3.8m (2014: £3.6m). The Group debt facility has three elements: £7.0m invoice discounting facility, £0.5m overdraft, and a £0.6m loan repayable over three years. The Group is now trading with a comfortable level of headroom within these facilities and with covenants set at levels appropriate for the Group and this revised debt structure.
Foreign exchange
It is the Group's policy to minimise risk to exchange rate movements affecting sales and purchases by economically hedging or netting currency exposures at the time of commitment, or when there is a high probability of future commitment, using currency instruments (primarily forward exchange contracts). A proportion of forecast exposures are hedged depending on the level of confidence and hedging is topped up following regular reviews. On this basis up to 50% of the Group's annual exposures are likely to be hedged at any point in time and the Group's net transactional exposure to different currencies varies from time to time.
Approximately 33% of the Group's revenues are denominated in Euros. During the year to 31 March 2015 the average exchange rate used to translate into GBP sterling was 1.24.
Pension
The Group's defined benefit pension scheme was closed to future accrual in 2007. Following the last triennial valuation, as at 1 April 2013, contributions were set at £0.3m per year for the period under review increasing by 3% per year thereafter based on a deficit recovery period of 14 years.
The pension expense for the defined benefit scheme was £0.2m in 2015 (2014: £0.3m), and is shown in non-underlying. The Group cash contribution during the year was £0.3m (2014: £0.4m).
The Group operates a defined contribution pension scheme for its current employees. The cost of £0.3m (2014: £0.3m) is included within underlying operating performance.
The IAS 19 deficit at 31 March 2015 was £4.5m (2014: £3.5m). The increase principally reflects the decrease in the discount rate used to calculate scheme liabilities, as a consequence of a rise in bond yields over the last year partially offset by outperformance of assets against expected levels.
David Roberts 18 May 2015
Consolidated Income Statement
for the year ended 31 March 2015
Year ended 31 March 2015 | Year ended 31 March 2014 | |||||||
Note | Underlying | + Non-underlying | Total | Underlying | + Non- underlying | Total | ||
£000 | £000 | £000 | £000 | £000 | £000 | |||
Revenue | 3. | 40,835 | - | 40,835 | 38,562 | - | 38,562 | |
Cost of sales | (32,612) | - | (32,612) | (32,413) | - | (32,413) | ||
Gross profit | 8,223 | - | 8,223 | 6,149 | - | 6,149 | ||
Other operating expenses | 7. | (7,236) | (583) | (7,819) | (6,905) | (1,142) | (8,047) | |
Operating profit/ (loss) | 987 | (583) | 404 | (756) | (1,142) | (1,898) | ||
Finance costs | 4. | (184) | (144) | (328) | (62) | (156) | (218) | |
Profit/ (loss) before tax | 803 | (727) | 76 | (818) | (1,298) | (2,116) | ||
Tax (expense)/ credit | (213) | 153 | (60) | 214 | 298 | 512 | ||
Profit /(loss) for the year from continuing operations attributable to equity holders of the parent Company | 590 | (574) | 16 | (604) | (1,000) | (1,604) | ||
Earnings per share | ||||||||
Basic | 6. | 0.2p | (20.2)p | |||||
Basic underlying | 6. | 7.4p | (7.6)p | |||||
Diluted | 6. | 0.2p | (20.2)p | |||||
Diluted underlying | 6. | 7.2p | (7.6)p | |||||
+ Non-underlying items represent exceptional items as disclosed in note 7, administration costs of the pension scheme and net financing costs on pension obligations, share based payment costs and associated tax impact of these items.
|
Consolidated Statement of Comprehensive Income
for the year ended 31 March 2015
2015 | 2014 | |||
£000 | £000 | |||
Profit/ (loss) for the year | 16 | (1,604) | ||
Other comprehensive income | ||||
Reclassification for cash flow hedge included sales | 193 | 162 | ||
Movements in fair value on cash flow hedges taken to other comprehensive income | (162) | 199 | ||
Deferred tax on movement in cash flow hedges | (6) | (79) | ||
Net other comprehensive income to be reclassified to profit or loss in subsequent periods | 25 | 282 | ||
Re-measurement (losses)/ gains on pension assets and liabilities | (1,150) | 338 | ||
Deferred/ current tax on re-measurement losses/ (gains) on pension scheme | 242 | (78) | ||
Movement on deferred tax on re-measurement losses relating to rate change | - | (104) | ||
Net other comprehensive (expense)/ income not to be reclassified to profit or loss in subsequent periods |
(908) |
156 | ||
Other comprehensive (expense)/ income for the period net of tax | (883) | 438 | ||
Total comprehensive expense for the period attributable to equity holders of the parent Company | (867) | (1,166) | ||
Consolidated Balance Sheet
at 31 March 2015
2015 | 2014 | |||
£000 | £000 | |||
Non-current assets | ||||
Property, plant and equipment | 7,900 | 7,907 | ||
Intangible assets | 452 | 456 | ||
Deferred tax assets | 1,382 | 1,196 | ||
9,734 | 9,559 | |||
Current assets | ||||
Inventories | 4,006 | 3,734 | ||
Trade and other receivables | 7,809 | 7,508 | ||
Current tax | 1 | 38 | ||
11,816 | 11,280 | |||
Total assets | 21,550 | 20,839 | ||
Current liabilities | ||||
Financial liabilities | 3,392 | 3,041 | ||
Trade and other payables | 6,801 | 6,641 | ||
Provisions | - | 26 | ||
10,193 | 9,708 | |||
Non current liabilities | ||||
Financial liabilities | 400 | 600 | ||
Deferred tax | 104 | 98 | ||
Provisions | 200 | - | ||
Defined benefit pension scheme deficit | 4,544 | 3,493 | ||
5,248 | 4,191 | |||
Total Liabilities | 15,441 | 13,899 | ||
Capital and reserves | ||||
Called up share capital | 1,990 | 1,990 | ||
Share premium account | 1,269 | 1,269 | ||
Capital redemption reserve | 109 | 109 | ||
Hedging reserve | 155 | 130 | ||
Retained earnings | 2,586 | 3,442 | ||
Total equity | 6,109 | 6,940 | ||
Total equity and liabilities | 21,550 | 20,839 | ||
Consolidated Cash Flow Statement
for the year ended 31 March 2015
2015 | 2014 | |||
£000 | £000 | |||
Operating activities | ||||
Profit/ (loss) for the year before tax | 76 | (2,116) | ||
Adjustments to reconcile profit for the year to net cash inflow/ (outflow) from operating activities: | ||||
Net finance costs excluding pensions | 184 | 62 | ||
Depreciation of property, plant and equipment | 1,180 | 1,259 | ||
Amortisation of software | 105 | 82 | ||
Amortisation and impairment of development costs | 8 | 86 | ||
Profit on disposal of property, plant and equipment | (6) | (29) | ||
Loss on disposal of intangibles | 11 | - | ||
Share based payments | 30 | 9 | ||
Difference between pension contributions paid and amounts recognised in the Consolidated Income Statement | (99) | (82) | ||
Increase in inventories | (272) | (403) | ||
(Increase)/ decrease in receivables | (268) | 627 | ||
Increase/ (decrease) in payables | 160 | (992) | ||
Increase in provisions | 174 | - | ||
Cash inflow/ (outflow) from operations | 1,283 | (1,497) | ||
Income taxes received | 37 | - | ||
Net cash (outflow)/ inflow from operating activities | 1,320 | (1,497) | ||
Investing activities | ||||
Purchase of property, plant and equipment | (1,261) | (1,018) | ||
Purchase of software | (120) | (4) | ||
Disposal of plant and equipment | 94 | 80 | ||
Net cash outflow from investing activities | (1,287) | (942) | ||
Financing activities | ||||
Interest paid | (184) | (62) | ||
Dividends paid | - | (159) | ||
Repayment of asset loans | (200) | 800 | ||
Net invoice finance draw down | 217 | 2,684 | ||
Net cash (outflow)/ inflow from financing activities | (167) | 3,263 | ||
Net (decrease)/ increase in cash and cash equivalents | (134) | 824 | ||
Cash and cash equivalents at the start of the year | (157) | (981) | ||
Cash and cash equivalents at the end of the year | (291) | (157) | ||
Cash and cash equivalents comprise: | ||||
Bank overdraft | (291) | (157) | ||
(291) | (157) | |||
Consolidated statement of changes in equity
Share capital | Capital redemption reserve | Share premium | Hedging reserve | Retained earnings | Attributable to equity holders of the parent | |
£000 | £000 | £000 | £000 | £000 | £000 | |
Balance at 31 March 2013 | 1,990 | 109 | 1,269 | (152) | 5,077 | 8,293 |
Loss for the year | - | - | - | - | (1,604) | (1,604) |
Other comprehensive income for the year net of tax | - | - | - | 282 | 156 | 438 |
Total comprehensive income | - | - | - | 282 | (1,448) | (1,166) |
Dividends paid | - | - | - | - | (159) | (159) |
Share based payments | - | - | - | - | 9 | 9 |
Deferred tax on employee share options | - | - | - | - | (37) | (37) |
Total of transactions with shareholders | - | - | - | - | (187) | (187) |
Balance as at 1 April 2014 | 1,990 | 109 | 1,269 | 130 | 3,442 | 6,940 |
Profit for the year | - | - | - | - | 16 | 16 |
Other comprehensive income for the year net of tax | - | - | - | 25 | (908) | (883) |
Total comprehensive income | - | - | - | 25 | (892) | (867) |
Share based payments | - | - | - | - | 30 | 30 |
Deferred tax on employee share options | - | - | - | - | 6 | 6 |
Total of transactions with shareholders | - | - | - | - | 36 | 36 |
Balance at 31 March 2015 | 1,990 | 109 | 1,269 | 155 | 2,586 | 6,109 |
Share premium account
The share premium account balance includes the proceeds that were above the nominal value from issuance of the Company's equity share capital comprising 25p shares.
Capital redemption reserve
The capital redemption reserve has arisen on the cancellation of previously issued shares and represents the nominal value of those shares cancelled.
Retained earnings
Retained earnings include the accumulated profits and losses arising from the Consolidated Income Statement and certain items from the Statement of Comprehensive Income attributable to equity shareholders, less distributions to shareholders.
Hedging reserve
The hedging reserve records the effective portion of the net change in the fair value of the cash flow hedging instruments related to hedged transactions that have not yet occurred.
NOTES TO THE PRELIMINARY ANNOUNCEMENT
1. AUTHORISATION OF FINANCIAL STATEMENTS AND STATEMENT OF COMPLIANCE WITH IFRS
The Group's and Company's financial statements of Chamberlin for the year ended 31 March 2015 were authorised for issue by the board of directors on 18 May 2015 and the balance sheets were signed on the board's behalf by Kevin Nolan and David Roberts. The Company is a public limited Company incorporated and domiciled in England & Wales. The Company's ordinary shares are traded on the AIM market of the London Stock Exchange.
The Group's financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS). The Company's financial statements have been prepared in accordance with IFRS as adopted by the European Union and as applied in accordance with the provisions of the Companies Act 2006.
The financial information set out in this announcement does not constitute the statutory accounts of the Group for the years to 31 March 2015 or 31 March 2014 but is derived from the 2015 Annual Report and Accounts. The Annual Report and Accounts for 2014 have been delivered to the Registrar of Companies and the Group Annual Report and Accounts for 2015 will be delivered to the Registrar of Companies in due course. The auditors, Grant Thornton UK LLP, have reported on the accounts for the year 31 March 2015 and have given an unqualified report which does not contain a statement under Sections 498(2) or 498(3) of the Companies Act 2006 nor an emphasis of matter paragraph.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of preparation
The consolidated financial statements are presented in sterling and all values are rounded to the nearest thousand pounds (£000) except when otherwise indicated. The Company has taken advantage of the exemption provided under section 408 of the Companies Act 2006 not to publish its individual income statement and related notes.
Basis of consolidation
The consolidated financial statements comprise the financial statements of Chamberlin plc and its subsidiaries as at 31 March each year. The financial statements of subsidiaries are prepared for the same reporting year as the parent Company, using consistent accounting policies. All inter-Company balances and transactions, including unrealised profits arising from intra-group transactions, have been eliminated in full. Subsidiaries are consolidated from the date on which control is transferred to the Group and cease to be consolidated from the date on which control is transferred out of the Group.
Accounting policies
The preliminary announcement has been prepared on the same basis as the financial statements for the year ended 31 March 2014.
3. SEGMENTAL ANALYSIS
For management purposes, the Group is organised into two operating divisions: Foundries and Engineering.
The Foundries segment is a supplier of iron castings, in raw or machined form, to a variety of industrial customers who incorporate the castings into their own products or carry out further machining or assembly operations on the castings before selling them on to their customers.
The Engineering segment provides manufactured and imported products to distributors and end-users operating in the safety and security markets. The products fall into the categories of door hardware, hazardous area lighting and control gear.
The Group's geographical segments are determined by the location of the Group's customers.
(i) By operating segment
Segmental revenue | Segmental operating profit | |||
Year ended | 2015 | 2014 | 2015 | 2014 |
£000 | £000 | £000 | £000 | |
Foundries | 30,432 | 29,056 | 1,259 | (244) |
Engineering | 10,403 | 9,506 | 988 | 672 |
Segmental Results | 40,835 | 38,562 | 2,247 | 428 |
Reconciliation of reported segmental operating profit | ||||
Segment operating profit | 2,247 | 428 | ||
Shared costs (excluding share based payment charge) | (1,260) | (1,184) | ||
Exceptional and non-underlying costs | (583) | (1,142) | ||
Net finance costs | (328) | (218) | ||
Profit before tax | 76 | (2,116) | ||
Segmental assets | ||||
Foundries | 15,221 | 15,453 | ||
Engineering | 5,617 | 4,927 | ||
Segmental net assets | 20,838 | 20,380 | ||
Segmental liabilities | ||||
Foundries | (4,844) | (5,342) | ||
Engineering | (2,157) | (1,325) | ||
Segmental net assets | (7,001) | (6,667) | ||
Unallocated net liabilities | (7,728) | (6,773) | ||
Total net assets | (6,109) | 6,940 | ||
| Capital expenditure, depreciation and amortisation |
| ||||||||
Capital additions | Foundries | Engineering | Total | |||||||
2015 | 2014 | 2015 | 2014 | 2015 | 2014 | |||||
£000 | £000 | £000 | £000 | £000 | £000 | |||||
Property, plant and equipment | 937 | 853 | 324 | 165 | 1,261 | 1,018 | ||||
Software | 80 | 3 | 40 | 1 | 120 | 4 | ||||
Depreciation and Amortisation | ||||||||||
Property, plant and equipment | (941) | (989) | (239) | (270) | (1,180) | (1,259) | ||||
Software | (83) | (67) | (22) | (15) | (105) | (82) | ||||
Development costs | - | (69) | (8) | (17) | (8) | (86) | ||||
(ii) By geographical segment
2015 | 2014 | |
Revenue by location of customer | £000 | £000 |
United Kingdom | 24,992 | 25,450 |
Germany | 6,997 | 6,482 |
Rest of Europe | 6,592 | 4,257 |
Other countries | 2,254 | 2,373 |
40,835 | 38,562 |
4. FINANCE COSTS AND FINANCE REVENUE
2015 | 2014 | |
£000 | £000 | |
Finance costs | ||
Bank overdraft interest payable | (184) | (62) |
Finance cost of pensions | (144) | (156) |
(328) | (218) |
5. DIVIDENDS PAID AND PROPOSED
2015 | 2014 | |
£000 | £000 | |
Paid equity dividends on ordinary shares | ||
2014 final dividend of nil p (2013: 2.00p) per share | - | 159 |
2015 interim dividend of nil p (2014: nil p) per share | - | - |
- | 159 | |
Proposed final dividend subject to shareholder approval | ||
2015 final dividend of nil p (2014: nil p) per share | - | - |
6. EARNINGS/ (LOSS) PER SHARE
The calculation of earnings/ (loss) 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/ (loss) per share, adjustment has been made for the dilutive effect of outstanding share options. Underlying earnings/ (loss) per share, which excludes non-underlying items, as analysed below, has also been disclosed as the Directors believe this allows a better assessment of the underlying trading performance of the Group. Exceptional costs are detailed in note 7.
2015 | 2014 | |
£000 | £000 | |
Earnings/ (loss) for basic earnings per share | 16 | (1,604) |
Exceptional costs | 417 | 1,002 |
Net financing costs and service cost on pension obligations | 280 | 287 |
Share based payment charge | 30 | 9 |
Taxation effect of the above | (153) | (298) |
Earnings/ (loss) for underlying earnings per share | 590 | (604) |
2015 | 2014 | |
Number '000 | Number '000 | |
Weighted average number of ordinary shares | 7,958 | 7,958 |
Adjustment to reflect shares under options | 212 | - |
Weighted average number of ordinary shares - fully diluted | 8,170 | 7,958 |
As at 31 March 2014 there is no adjustment for the 211,005 shares under option as they are required to be excluded from the weighted average number of shares for diluted (loss) per share as they are anti-dilutive for the period then ended.
7. EXCEPTIONAL COSTS AND NON-UNDERLYING
2015 | 2014 | |
£000 | £000 | |
Prior CEO leaving costs | - | 307 |
Group reorganisation | 314 | 695 |
Environmental clean up | 103 | - |
Exceptional costs | 417 | 1,002 |
Share based payment charge | 30 | 9 |
Defined benefit pension scheme administration costs | 136 | 131 |
Non-underlying other operating expenses | 583 | 1,142 |
Finance cost of pensions | 144 | 156 |
Taxation | ||
- tax effect of exceptional and non-underlying costs | (153) | (298) |
574 | 1,000 |
Prior CEO leaving costs relate to contractual payments made to the former CEO, Tim Hair, and costs associated with the recruitment of the current CEO, Kevin Nolan
During 2014 and continuing into 2015 the Group rationalised its Foundry operations into one division, enabling the elimination of duplication roles and implementation of best practice. Group reorganisation costs, including redundancy and recruitment, relate to this rationalisation.
Environmental cleanup costs relate to exceptional costs incurred in the clean-up of the Scunthorpe site.
8. FINANCIAL LIABILITIES
2015 | 2014 | |
£000 | £000 | |
Current liabilities | ||
Bank overdraft | 291 | 157 |
Current instalments due on asset finance loans | 200 | 200 |
Invoice finance facility | 2,901 | 2,684 |
3,392 | 3,041 | |
Non-current liabilities | ||
Instalments due on asset finance loans | 400 | 600 |
Total financial liabilities | 3,792 | 3,641 |
The overdraft is held with HSBC Bank plc as part of the Group facility of £500,000, is secured on all assets of the business, is repayable on demand and is renewable in March 2016. Interest is payable at 2.0% (2014: 2.0%) over base rate.
Asset finance loans are secured against various items of plant and machinery across the Group. These loans are repayable by monthly instalments for a period of three years to March 2018. Interest is payable at 3.25% over base rate. £200,000 is repayable within year 1-2 and a further £200,000 repayable in years 2-5.
Invoice finance balances are secured against the trade receivables of the Group, is repayable on demand and is renewable in March 2016. Interest is payable at 2.3% over base rate. The maximum facility as at 31 March 2015 is £6.0m, this was increased to £7.0m in April 2015. Management have assessed the treatment of the financing arrangements and have determined it is appropriate to recognise trade receivables and invoice finance liabilities separately.
9. PENSIONS ARRANGEMENTS
During the year, the Group operated funded defined benefit and defined contribution pension schemes for the majority of its employees, these being established under trusts with the assets held separately from those of the Group. The pension operating cost for the Group defined benefit scheme for 2015 was £136,000 (2014: £131,000) plus £144,000 of financing cost (2014: £156,000).
The other schemes within the Group are defined contribution schemes and the pension cost represents contributions payable. The total cost of defined contributions schemes was £312,000 (2014: £259,000). The notes below relate to the defined benefit scheme.
The actuarial liabilities have been calculated using the Projected Unit method. The major assumptions used by the actuary were (in nominal terms):-
31 March 2015 | 31 March 2014 | 31 March 2013 | |
Salary increases | n/a | n/a | n/a |
Pension increases (post 1997) | 2.9% | 3.2% | 3.2% |
Discount rate | 3.2% | 4.3% | 4.2% |
Inflation assumption - RPI | 2.9% | 3.2% | 3.3% |
Inflation assumption - CPI | 1.8% | 2.2% | 2.2% |
The post retirement mortality assumptions allow for expected increases in longevity. The current disclosures relate to assumptions based on longevity in years following retirement as of the balance sheet date, with future pensions relating to an employee retiring in 2032.
2015 Years | 2014 Years | ||
Current pensioner at 65 - male | 21.3 | 21.3 | |
- female | 23.6 | 23.6 | |
Future pensioner at 65 - male | 22.3 | 22.3 | |
- female | 24.8 | 24.7 |
The scheme was closed to future accrual with effect from 30th November 2007, after which the Company's regular contribution rate reduced to zero (previously the rate had been 9.1% of members' pensionable salaries).
During the year the triennial valuation as at 1 April 2014 was concluded. In return for maintaining the previous contribution arrangements and extending the deficit reduction period to 2028, the Company has given security over the Group's land and buildings to the pension scheme. With effect from 1 April 2015 deficit reduction contributions will increase to £20,633 per month (previously £20,032 per month), with a 3% annual increase thereafter.
The contributions expected to be paid during the year to 31 March 2016 are £248,000.
The scheme assets are stated at the market values at the respective balance sheet dates. The assets and liabilities of the scheme were:
2015 £000 | 2014 £000 | ||
Equities/ diversified growth fund | 12,451 | 7,328 | |
Gilts | - | 3,040 | |
Bonds | 1,417 | 2,360 | |
Insured pensioner assets | 9 | 10 | |
Cash | 131 | 118 | |
Market value of assets | 14,008 | 12,856 | |
Actuarial value of liability | (18,552) | (16,349) | |
Scheme deficit | (4,544) | (3,493) | |
Related deferred tax asset | 909 | 699 | |
Net pension liability | (3,635) | (2,794) | |
Net benefit expense recognised in profit and loss | 2015 £000 | 2014 £000 | |
Administration costs | (32) | (131) | |
Net interest expense | (144) | (156) | |
(176) | (287) | ||
Re-measurement losses/ (gains) in other comprehensive income | 2015 £000 | 2014 £000 | |
Actuarial losses/ (gains) arising from changes in financial assumptions | 2,196 | (269) | |
Actuarial losses arising from changes in demographic assumptions | - | 34 | |
Experience adjustments | 208 | (407) | |
Return on assets (excluding interest income) | (1,254) | 304 | |
1,150 | (338) | ||
2015 £000 | 2014 £000 | ||
Actual return on plan assets | 1,762 | 240 | |
Movement in deficit during the year | 2015 £000 | 2014 £000 | |
Deficit in scheme at beginning of year | (3,493) | (3,913) | |
Employer contributions | 275 | 369 | |
Net benefit expense | (176) | (287) | |
Actuarial (loss)/ gain | (1,150) | 338 | |
Deficit in scheme at end of year | (4,544) | (3,493) | |
Movement in scheme assets | 2015 £000 | 2014 £000 | |
Fair value at beginning of year | 12,856 | 13,137 | |
Interest income on scheme assets | 540 | 544 | |
Return on assets (excluding interest income) | 1,254 | (304) | |
Employer contributions | 275 | 369 | |
Benefits paid | (885) | (759) | |
Administrative costs | (32) | (131) | |
Fair value at end of year | 14,008 | 12,856 | |
Movement in scheme liabilities | 2015 £000 | 2014 £000 | |
Benefit obligation at start of year | 16,349 | 17,050 | |
Interest cost | 684 | 700 | |
Actuarial losses/ (gains) arising from changes in financial assumptions | 2,196 | (269) | |
Actuarial losses arising from changes in demographic assumptions | - | 34 | |
Experience adjustments | 208 | (407) | |
Benefits paid | (885) | (759) | |
Benefit obligation at end of year | 18,552 | 16,349 | |
The weighted average duration of the pension scheme liabilities are 14.5 years (2014: 14.5 years).
A quantitative sensitivity analysis for significant assumptions as at 31 March 2015 is as shown below:
Present value of scheme liabilities when changing the following assumptions: | 2015 £000 | ||
Discount rate increased by 1% p.a. | 16,254 | ||
RPI and CPI increased by 1% p.a. | 19,531 | ||
Mortality- members assumed to be their actual age as opposed to 1 year older | 19,245 | ||
The sensitivity analysis above has been determined based on a method that extrapolates the impact on defined benefit obligations as a result of reasonable changes in key assumptions occurring at the end of the year.
10. REPORT AND ACCOUNTS
Copies of the Annual Report will be available on the Group's website, www.chamberlin.co.uk and from the Group's head office at Chuckery Road, Walsall, West Midlands, WS1 2DU.