Chamberlin Plc Regulatory News (CMH)

30 November 2021

CHAMBERLIN plc

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

FINAL RESULTS

for the 14 month period ended 31 May 2021

Chamberlin plc (AIM: CMH.L), the specialist castings and engineering group, announces its Final Results for the 14 months to 31 May 2021:

Key Points

Financial

Underlying figures are stated before non-underlying costs (restructuring costs, hedge ineffectiveness, impairment, GMP equalisation, onerous leases and share based payment costs) together with the associated tax impact.

Operational

The annual report and accounts for the 14 month period ended 31 May 2021 ("2021 Accounts") and the Notice of AGM will be posted to shareholders today, and will be available on the Company's website: https://www.chamberlin.co.uk/, shortly. The AGM will be held at 11.00a.m. on 5 January 2022 at Chuckery Road, Walsall, West Midlands, WS1 2DU. Notice of a further shareholder meeting to be held as soon as the AGM has concluded on 5 January 2022 is also included in the 2021 Accounts. Further details on both meetings are set out in note 12 below.

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the UK version of the EU Market Abuse Regulation (2014/596) which is part of UK law by virtue of the European Union (Withdrawal) Act 2018, as amended and supplemented from time to time.

Chairman's Statement

This period in Chamberlin's history has been severely impacted by two significant events, firstly by an unprecedented global phenomenon in COVID-19, and secondly the early cancellation of all our contracts with our principal automotive customer, BorgWarner Turbo Systems Worldwide (BorgWarner). As a result of these damaging events, the financial performance and strength of the Group suffered considerably, with the Group loss before tax for the 14 month period to 31 May 2021 amounting to £10.4m, of which £6.5m related to charges arising from the loss of the BorgWarner contracts.

In order to stabilise the Group's financial position, we completed a share placing and subscription in March 2021 raising £3.5m. The equity raised enabled the Group to facilitate the necessary reduction in headcount to realign the cost base to the lower level of revenue post the decision by BorgWarner and to provide sufficient working capital to stabilise the business. We trust these events are now behind us.

The Board and Staff

In March 2021, the Board was strengthened by the appointment of Trevor Brown, initially as a Non-Executive Director, and in June 2021 as an Executive Director with responsibility for strategy. Trevor brings a wealth of entrepreneurial experience to the Board, which will be invaluable as we embark upon our new strategy for growth.

On 31 May 2021, both Neil Davies and David Flowerday stepped down as Directors of the Company. On behalf of the Board, I would like to again thank Neil and David for their contribution during our recent difficult times and to wish them well for the future. As part of the restructuring of the Group, on 31 May 2021 Kevin Nolan stepped down from his role as Chief Executive but remains a Non-Executive Director, retaining responsibility for key projects and client accounts and providing continuity, experience and support to the Board.

Subsequent to the period end on 1 June 2021, Kevin Price and Alan Tomlinson were appointed to the Board as Chief Executive and Finance Director respectively. Both Kevin and Alan have a strong working knowledge and experience of the Group's operations from their roles in the Chamberlin Group prior to their appointment to the Board. On behalf of the Board, I would like to welcome Kevin and Alan to their new roles.

The period under review has been a challenging one for the Group and the Board are acutely aware of the impact this has had on our staff. The disruption from COVID-19 led to shutdowns and the need to place large numbers of our employees on furlough, in some cases for extended periods of time, while the economies and markets in which we operate recovered. We were also severely impacted by the BorgWarner decision, which caused further uncertainty for all our employees as we embarked upon the necessary fund raise and subsequent restructure. I would like to place on record the Board's thanks for the dedication, professionalism and loyalty that our employees have continued to demonstrate during these unprecedented times.

Outlook

It is with considerable regret that the Board has to announce the huge losses that it has suffered for the period to 31 May 2021, albeit these were largely caused by events outside of Chamberlin's control. The combined impact of COVID-19 and the decision by BorgWarner inflicted near fatal damage to the very existence of the Company. However, the confidence that new and existing shareholders have shown by supporting the Group through the equity raise in March 2021 has enabled the Board to refocus the Group's strategy and future direction.

Encouragingly, revenues in the first-half of the new financial year have been in line with management's expectations, despite lower revenues from the automotive sector due to the semi-conductor shortage impacting that market globally. However, financial performance continues to be impacted by the global headwinds facing most companies, namely rising raw material and energy prices and supply chain and transportation disruption. Management have taken appropriate action to address these issues and believe that financial performance will improve, with management expecting the Group to return to a modest level of profitability in the second-half of the financial year.

As previously announced, the Board is focused on enhancing shareholder value over the medium to long term through diversification away from the declining, high-volume automotive sector and into markets with strong growth characteristics, where we can use our technical and design expertise to develop new products and provide new services. The Board has confidence that this change in strategic focus and mindset will provide the Group with greater opportunities to maintain sustainable, profitable growth in the medium-term for the benefit of all our shareholders and stakeholders.

Keith Butler-Wheelhouse

Chairman

Chief Executive's Review

The Group's performance during the 14 month period to 31 May 2021 has been overshadowed by two significant events that has led to substantial financial losses being incurred, the need to raise equity to continue in operation and a subsequent restructure of the business to right-size the cost base.

Group revenue of £26.4m for the 14 months to 31 May 2021 (Year to 31 March 2020: £26.1m) was 14% lower than prior year on a pro rata basis reflecting COVID-19 related headwinds in the first half and the impact of the cancellation of contracts in the second half by BorgWarner Turbo Systems Worldwide (BorgWarner). These events primarily affected the Walsall foundry and machining centre, which had to close completely in April 2020 due to the COVID-19 induced shutdowns of our European automotive customer's sites. Although revenue did partially recover once the Walsall sites re-opened, demand continued to fluctuate as further COVID-19 disruptions throughout the remainder of the period impacted our customers. This unpredictability was then further compounded by the news in December 2020 from BorgWarner of the early termination of the Group's contracts, which contributed £7.5m to revenue in the 14 month period to 31 May 2021.

Russell Ductile Castings' performance in the period was encouraging as it benefitted from less disruption from COVID-19 and reduced levels of competition as a number of competitor foundries were forced to close. Consequently, revenue for the 14 months to 31 May 2021 increased by almost 18% compared to the previous 12 months on a pro rata basis and the division turned an operating loss in the prior year into a profit in the period.

The performance of Petrel, our hazardous area lighting company, also showed promising improvement despite COVID-19 induced customer shutdowns and delays to the procurement of some large lighting projects in the first half. Financial performance in the last eight months of the period dramatically improved, with Petrel delivering £2.0m of revenue and £0.2m of operating profit during that period.

As a result of the COVID-19 disruptions and the impact of the BorgWarner decision, the Group has incurred a substantial loss before tax of £10.4m. It is obviously disappointing to be reporting such a significant loss but it is largely the result of £7.2m of non-underlying costs, primarily associated with the BorgWarner contract losses that will not be repeated. Of these non-underlying costs, £4.7m relate to non-cash impacting impairment of fixed assets and inventories, £1.3m relate to the subsequent restructuring, £0.7m relate to property dilapidation costs and £0.5m relate to legal and adviser costs.

The Group remained focussed on effective cash management throughout the period as the shutdowns from COVID-19 began to impact working capital, with the Group utilising the Government furlough scheme where necessary. However, following the loss of the BorgWarner contracts, it became evident that the Group would not be able to sustain its cash headroom without an injection of capital. Consequently, the Group raised £3.5m in March 2021 from a share issue to facilitate a restructuring and provide working capital, with net debt reduced at 31 May 2021 to £1.8m (31 March 2020: £4.6m).

With this tumultuous and difficult period now largely behind us, the Group is working through the recovery phase from these unprecedented events and implementing a strategy and platform to return the Group to profitability. In the new financial year, resources have been directed towards new product lines to rapidly reduce reliance on the automotive industry. The Board's aim over the medium term is to replace the majority of the Group's traditional, low margin contract-based production, with much higher margin, premium consumer products in markets with a strong opportunity for growth and where the Group can innovate, control distribution and sales to effect real and sustainable growth in revenue and profits. This strategy is already taking shape, with the establishment of two new customer-focussed brands in the fitness equipment and cast iron cookware markets:

Iron Foundry Weights

Iron Foundry Weights, Chamberlin's new trading name for its specialist home and commercial gym equipment business, is developing rapidly. The Group gained great success with the introduction of a range of kettlebells in November 2020 and since then has expanded its product offering to weight-plates and dumbbells, selling products direct to the consumer from our own website, www.ironfoundryweights.co.uk , and through Amazon in the UK, and more recently in Europe. Through our participation in The Arnold Sports Festival in October 2021, we also have a number of opportunities to sell our products to businesses in the fitness market. In November 2021 the Group's new range of precision machined "indestructible" dumbbells was released, using our unique "Shrink-Fit" assembly technology. The Company has also recently signed an endorsement agreement with social media ambassador Harrison Bird.

Emba

Chamberlin is making excellent progress with the development of premium-quality cast iron cookware - the Emba Cookware Range - which officially launched its initial product range on-line in November 2021. The rising popularity for premium quality, high value cast iron cookware is growing rapidly in the UK and the Board expects Chamberlin's Emba brand to be at the forefront of this market as the only true UK based designer and manufacturer.

Elsewhere at our Walsall foundry and machining facility, we are actively pursuing a strategy of reducing the reliance on the high-volume automotive sector by utilising our reputation for design and technical excellence to provide engineering solutions in a broader range of markets, including the automotive after-market. Chamberlin is also focused on maximising the capacity of its high-quality, technologically advanced machining centre, which includes the production of fitness equipment for the Iron Foundry Weights brand.

Russell Ductile Castings continues to have a substantial order book and the Board expects that it will continue to build on its positive performance in 2020-21 in the current financial year, benefitting from favourable market conditions, a strong product and technical capability and a growing trend of reshoring to the UK from overseas.

Petrel has continued to deliver excellent results in the new financial year, continuing the trend from the second half of the 2020-21 financial period. Furthermore, the launch of a new portable product hire service in October 2021 is expected to bring revenue opportunities in the second half.

The COVID-19 pandemic continues to present global challenges to trading conditions, including escalating raw material costs, supply chain shortages and a slowdown in the automotive industry due to widely publicised electronic control unit (ECU) availability. In response to these challenges, the management team continues to reduce costs, improve efficiencies, and optimise pricing to improve margins in order to restore sustainable profitability to the Group.

Although these challenges present difficulties in the short-term which require decisive management action, the Board believes that the strategy outlined above will drive significantly improved results over the medium term. Furthermore, some of these challenges also present significant opportunities. With supply chain constraints and transportation delays impacting the global flow of trade, we are seeing an increasing trend towards re-shoring manufacturing back to the UK from overseas. Made in the UK is a significant unique selling point across all our businesses and the Board believe we are well positioned to take advantage of the opportunities this will inevitably present.

Kevin Price

Chief Executive

Finance Review

Overview

Revenue for the 14 months ended 31 May 2021 of £26.4m (Year ended 31 March 2020: £26.1m) represents a 14% reduction on a pro rata basis compared to the prior year, largely due to COVID-19 disruptions in our markets and the effect of the cancellation of all contracts by BorgWarner Turbo Systems Worldwide.

Gross profit margin, defined as gross profit divided by revenue, decreased to 8.3% from 9.6% in 2020.

Underlying operating loss before tax increased to £2.9m (Year ended 31 March 2020: £1.1m) due to the impacts on the Group noted above.

Financing costs were £0.3m (Year ended 31 March 2020: £0.3m) representing a 14% reduction compared to prior year on a pro rata basis.

As a result of the above, the underlying loss before tax amounted to £3.2m (Year ended 31 March 2020: £1.4m loss).

The statutory loss before tax of £10.4m (Year ended 31 March 2020: £2.3m) reflected £7.2m of non-underlying items.

Non-underlying items

Non-underlying items of £7.2m (Year ended 31 March 2020: £0.9m) include significant non-cash impairments associated with the cancellation of the BorgWarner contracts of £4.7m, restructuring costs of £1.3m, adviser costs of £0.5m and property dilapidation costs of £0.7m.

Tax

The effective rate of taxation on a statutory basis was 8% compared to the mainstream corporation tax rate of 19%, primarily as a result of not recognising deferred tax on trading losses due to the inherent uncertainty surrounding future profitability.

Diluted loss per share

Underlying diluted loss per share of 13.7p (Year ended 31 March 2020: 18.7p) reflects the increase in underlying loss attributable to shareholders and the increase in the weighted average number of shares in issue following the share placing and subscription in March 2021.

Cash generation and financing

Operating cash outflow was £0.3m (Year ended 31 March 2020: inflow of £1.5m) which includes £0.5m of cash payments relating to non-underlying adviser costs.

Cash spent on property, plant and equipment and capitalised software and development costs in the 14 month period ended 31 May 2021 was £0.2m (Year to 31 March 2020: £0.4m).

New equity of £3.3m was raised in March 2021 following a share placing and subscription and is net of transaction costs of £0.2m.

Lease payments of £0.9m (Year ended 31 March 2020: £1.1m) primarily relate to assets at the Group's machining facility and were lower than the prior period due to a 6 month payment holiday agreed with HSBC during the height of the COVID-19 impact on the Group.

Net debt

Net debt at 31 May 2021 decreased by £2.8m to £1.8m (31 March 2020: £4.6m) as a result of the equity raise in March 2021. The Group debt facility has two elements: a £3.5m invoice discounting facility limited to 90% of outstanding invoice value and lease liabilities of £2.2m

Foreign exchange

It is the Group's policy to minimise risk arising from exchange rate movements affecting sales and purchases by economically hedging or netting currency exposures at the time of commitment, or when there is a high probability of future commitment, using forward exchange contracts. A proportion of forecast exposures are hedged depending on the level of confidence and hedging is topped up following regular reviews. On this basis up to 90% of the Group's annual exposures are likely to be hedged at any point in time and the Group's net transactional exposure to different currencies varies from time to time.

Approximately 43% of the Group's revenues in the 14 month period ended 31 May 2021 are denominated in Euros. This proportion of Euro revenues is expected to reduce significantly in the forthcoming financial year as BorgWarner revenues in the current period are not repeated.

During the 14 months ended 31 May 2021, the average exchange rate used to translate into GBP Sterling was €1.13 (Year ended 31 March 2020: €1.15).

Pension

The Group has one defined benefit pension scheme. It is closed to future accrual, with the Group operating a defined contribution pension scheme for its current employees. The deficit for the defined benefit pension scheme at 31 May 2021 reduced to £1.2m (31 March 2020: £2.0m) as significant asset return out-performance and changes in demographic assumptions out-weighed the increase in liabilities resulting from a reduction in bond yields and consequently the discount rate.

The Group's defined benefit pension scheme was closed to future accrual in 2007. The 31 March 2019 triennial valuation established that employer contributions are £0.30m for 2021, £0.33m for 2022 and £0.36m for 2023. The next triennial valuation is due as at 31 March 2022.

Administration costs of the defined benefit pension scheme were £0.2m in the 14 months ended 31 May 2021 (Year ended 31 March 2020: £0.2m), and are shown in other operating expenses. The Group cash contribution during the 14 months ended 31 May 2021 was £0.4m (Year ended 31 March 2020: £0.3m).

Audit Opinion

The auditors have reported on the accounts for the 14 month period ended 31 May 2021 and have given a modified audit opinion drawing attention to a material uncertainty regarding going concern. After making enquiries, the Directors have an expectation that, in the circumstances of reasonably foreseeable downside scenarios, the Group and Company have adequate resources to continue in operational existence for the foreseeable future.

However, the rate at which new work can be secured to replace the lost BorgWarner activity is difficult to predict. Furthermore, the ability to renew or source alternative invoice finance facilities or to agree deferred settlement terms with HMRC results in material uncertainty, which may cast significant doubt over the ability of the Group and the Company to realise its assets and discharge its liabilities in the normal course of business and hence continue as a going concern.

The Directors continue to adopt the going concern basis, whilst recognising there is material uncertainty relating to the above matters.

Alan Tomlinson

Group Finance Director

Consolidated Income Statement

for the 14 months ended 31 May 2021

Consolidated Statement of Comprehensive Income

for the 14 months ended 31 May 2021

Consolidated Balance Sheet

at 31 May 2021

Consolidated Cash Flow Statement

for the 14 months ended 31 May 2021

Consolidated statement of changes in equity

Share premium account

The share premium account balance includes the proceeds that were above the nominal value from issuance of the Company's equity share capital. Transaction costs directly associated with the share placing and subscription in March 2021 of £0.2m have been debited to share premium in the period.

Capital redemption reserve

The capital redemption reserve has arisen on the cancellation of previously issued shares and represents the nominal value of those shares cancelled.

Hedging reserve

The hedging reserve records the effective portion of the net change in the fair value of the cash flow hedging instruments related to hedged transactions that have not yet occurred.

Retained earnings

Retained earnings include the accumulated profits and losses arising from the Consolidated Income Statement and certain items from the Statement of Comprehensive Income attributable to equity shareholders, less distributions to shareholders.

NOTES TO THE ANNOUNCEMENT

The Group and Company's financial statements of Chamberlin Plc for the 14 months ended 31 May 2021 were authorised for issue by the board of directors on 30 November 2021 and the balance sheets were signed on the Board's behalf by Kevin Price and Alan Tomlinson. The Company is a public limited company incorporated and domiciled in England and Wales. The Company's ordinary shares are admitted to trading on AIM, a market of the same name operated by the London Stock Exchange.

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

The financial information set out in this announcement does not constitute the statutory accounts of the Group for the 14 months ended 31 May 2021 or for the year ended 31 March 2020 but is derived from the 2021 Annual Report and Accounts. The Annual Report and Accounts for the year ended 31 March 2020 have been delivered to the Registrar of Companies and the Group Annual Report and Accounts for 14 months ended 31 May 2021 will be delivered to the Registrar of Companies on 30 November 2021. The auditors, Crowe UK LLP, have reported on the accounts for the 14 months ended 31 May 2021 and have given a modified audit opinion drawing attention to a material uncertainty regarding going concern.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of preparation

The consolidated financial statements are presented in sterling and all values are rounded to the nearest thousand pounds (£000) except when otherwise indicated.

Basis of consolidation

The consolidated financial statements comprise the financial statements of Chamberlin plc and its subsidiaries as at 31 May following a change in the accounting period end from 31 March. The financial statements of subsidiaries are prepared for the same reporting year as the parent Company, using consistent accounting policies. All inter-Company balances and transactions, including unrealised profits arising from intra-group transactions, have been eliminated in full. Subsidiaries are consolidated from the date on which control is transferred to the Group and cease to be consolidated from the date on which control is transferred out of the Group.

Accounting policies

The preliminary announcement has been prepared on the same basis as the financial statements for the period ended 31 May 2021. There were no new accounting standards adopted in the year that have a material impact on the financial statements.

Going concern

On 16 December 2020, the Company was notified by its major customer, BorgWarner Turbo Systems Worldwide that it intended to cancel all contracts with effect from 22 January 2021. As a result, the Board and its advisers immediately implemented measures to reduce costs and preserve cash whilst exploring options to strengthen the balance sheet. The result of this process was the appointment of Trevor Brown as a Non-Executive Director in March 2021 and a share placing and subscription that raised equity for the Group of £3.5 million. The equity raise provided the cash resources necessary to undertake a restructuring to realign the Group's cost base to the lower level of ongoing revenue and to provide short-term working capital.

The Group's detailed forecast for the year ending 31 May 2022 and budget for the year ending 31 May 2023 reflect the Director's view of the most likely trading conditions. The forecast and budget indicate that existing bank facilities are expected to remain adequate.

The forecast and budget include revenue growth assumptions in the second half of the year to 31 May 2022 and continuing into the year ended 31 May 2023, which is needed to replace the lost BorgWarner contracts. These assumptions include growth into new E-commerce and consumer-led markets relating to fitness equipment and cookware following the recent launch of the Iron Foundry Weights (IFW) and Emba Cookware brands.

The Directors have applied reasonably foreseeable downside sensitivities to the forecast and budget, which assumes that sales growth from new E-commerce products is 50% lower than expectations, automotive volumes remain at current low levels and non-automotive sales growth is 50% lower than expectations. The budget, forecast and sensitised scenario exclude the possible receipt of compensation from BorgWarner and proceeds from the sales of under-utilised machinery. Furthermore, the Group is reliant on an invoice finance facility to fund its working capital needs. The renewal of the facility at the next annual review in March 2022 cannot be guaranteed, although there are no indications at the date of the approval of the financial statements that a renewal with the existing provider would not be granted or that alternative providers could not be found. In addition, the Directors have assumed that deferred settlement terms will be agreed with HMRC in relation to PAYE arrears of £1.3m for one subsidiary in the Group that have arisen in the period since the announcement by BorgWarner, having already agreed deferred settlement terms with HMRC for two subsidiaries.

As a consequence, after making enquiries, the Directors have an expectation that, in the circumstances of the reasonably foreseeable downside scenarios described above, the Group and Company have adequate resources to continue in operational existence for the foreseeable future.

However, the rate at which new work can be secured to replace the lost BorgWarner activity is difficult to predict. Furthermore, the ability to renew or source alternative invoice finance facilities or to agree deferred settlement terms with HMRC results in material uncertainty, which may cast significant doubt over the ability of the Group and the Company to realise its assets and discharge its liabilities in the normal course of business and hence continue as a going concern.

The Directors continue to adopt the going concern basis, whilst recognising there is material uncertainty relating to the above matters.

3. SEGMENTAL ANALYSIS

For management purposes, the Group is organised into two operating divisions according to the nature of the products and services. Operating segments within those divisions are combined on the basis of their similar long-term characteristics and similar nature of their products, services and end users as follows:

The Foundries segment is a supplier of iron castings, in raw or machined form, to a variety of industrial customers who incorporate the castings into their own products or carry out further machining or assembly operations on the castings before selling them on to their customers.

The Engineering segment supplies manufactured products to distributors and end-users operating in hazardous area and industrial lighting markets.

Management monitors the operating results of its divisions separately for the purposes of making decisions about resource allocation and performance assessment. The Chief Operating Decision Maker is the Chief Executive.

(i) By operating segment

Unallocated net liabilities include the pension liability of £1,190,000 (2020: £1,959,000), net debt of £1,835,000 (2020: £4,608,000) less a net deferred tax asset of £1,056,000 (2020: £572,000).

In addition to the above, property, plant and equipment in the Foundries division was impaired by £3,809,000 (2020: Nil).

(ii) By geographical segment

4. FINANCE COSTS

5. LOSS PER SHARE

The calculation of loss per share is based on the loss attributable to shareholders and the weighted average number of ordinary shares in issue. In calculating the diluted loss per share, adjustment has been made for the dilutive effect of outstanding share options where applicable. Underlying loss per share, which excludes non-underlying items, as disclosed in Note 6, has also been disclosed.

There is no adjustment in the diluted loss per share calculation for the 3,798,000 (2020:217,000) shares under option as they are required to be excluded from the weighted average number of shares for diluted loss per share as they are anti-dilutive. The weighted average number of shares used in the fully diluted calculation is therefore 17,387,000 (2020: 7,958,000).

6. NON-UNDERLYING ITEMS

As a result of the cancellation of all contracts by the Group's major customer, BorgWarner Turbo Systems Worldwide, announced on 16 December 2020, the Group embarked upon a significant restructuring programme to realign the cost base of the Foundry division to the reduced level of continuing revenue. Group reorganisation costs of £1,310,000, which include redundancy and associated costs, relate to this restructuring programme.

Following the cancellation of the Group's contracts by BorgWarner Turbo Systems Worldwide, the Group undertook a review of the carrying value of the assets in the Foundry division. This gave rise to an asset impairment charge of £4,601,000, of which £3,809,000 related to property, plant & equipment, £716,000 related to obsolete inventory and £107,000 related to irrecoverable receivables.

The dilapidations provision of £690,000 relates to the estimated costs for land and building leases that are nearing their end date.

The hedge ineffectiveness charge of £138,000 in 2020 arose from a short-term reduction in highly probable Euro denominated sales as a result of economic disruption to our customers caused by Covid-19.

The share-based payment charge in 2021 of £41,000 (2020: £59,000) relates to the fair value cost of share option schemes for the period.

7. NET DEBT

Lease liabilities are secured against the specific item to which they relate. These leases are repayable by monthly instalments for a period of up to four years to February 2025. Interest is payable at fixed amounts that range between 3.1% and 9.4%.

Invoice finance balances are secured against the trade receivables of the Group and are repayable on demand. Interest is payable at 2.75% over base rate. The maximum facility as at 31 March 2020 was £3,500,000 (2020: £6,000,000). Management have assessed the treatment of the financing arrangements and have determined it is appropriate to recognise trade receivables and invoice finance liabilities separately.

8. PENSIONS ARRANGEMENTS

During the year, the Group operated funded defined benefit and defined contribution pension schemes for the majority of its employees, these being established under trusts with the assets held separately from those of the Group. The pension operating cost for the Group defined benefit scheme for 2021 was £236,000 (2020: £199,000), with the increase being due to costs associated with the triennial valuation, together with £49,000 of financing cost (2020: £58,000).

The other scheme within the Group is a defined contribution scheme and the pension cost represents contributions payable. The total cost of the defined contribution scheme was £377,000 (2020: £396,000). 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):-

Demographic assumptions are all based on the S3PA (2019: S2PA) mortality tables with a 1.25% annual increase. The post retirement mortality assumptions allow for expected increases in longevity. The current disclosures relate to assumptions based on longevity in years following retirement as of the balance sheet date, with future pensioners relating to an employee retiring in 2032.

The scheme was closed to future accrual with effect from 30 November 2007, after which the Company's regular contribution rate reduced to zero (previously the rate had been 9.1% of members' pensionable salaries).

The latest triennial valuation was completed as at 31 March 2019 and concluded that Company contributions would increase to £300,000 for the year ended 31 March 2021, £330,000 for the year ended 31 March 2022 and £360,000 for the year ended 31 March 2023, with the deficit reduction period reducing to 2032. The Company has given security over the Group's land and buildings to the pension scheme. There will be a further triennial review with effect from 31 March 2022, which will establish future deficit payments.

The scheme assets are stated at the market values at the respective balance sheet dates. The assets and liabilities of the scheme were:

The weighted average duration of the pension scheme liabilities are 13 years (2020: 13 years).

A quantitative sensitivity analysis for significant assumptions as at 31 May 2021 is as shown below:

The sensitivity analysis above has been determined based on a method that extrapolates the impact on defined benefit obligations as a result of reasonable changes in key assumptions occurring at the end of the year.

9. REPORT AND ACCOUNTS

The Annual Report and Accounts for the 14 months ended 31 May 2021 are available on the Group's website, www.chamberlin.co.uk and from the Group's head office at Chuckery Road, Walsall, West Midlands, WS1 2DU. The AGM, which will be a closed meeting given the current restrictions in relation to COVID-19, will be held on 5 January 2022 at Chuckery Road, Walsall, West Midlands, WS1 2DU. An additional general meeting to be held as soon as the AGM has concluded on 5 January 2022 is being convened in light of the 2021 Accounts giving rise to a serious loss of capital event pursuant to section 656(1) of the Companies Act 2006. Both meetings will be subject to COVID 19 restrictions and, as such, any shareholder wishing to attend in person will be required to pre-register with the Company Secretary not less than 5 business day prior to the meeting by using the contact form for the Company Secretary on the following page of the Company's website: https://www.chamberlin.co.uk/contact/contact-us/company-secretary (please state "Chamberlin PLC: AGM" and include the shareholder's full name in the 'comments' box. Alternatively, shareholders will be able to ask questions of the board in advance of the meeting by also emailing the Company Secretary on the above link (any such questions to arrive not later than 48 hours before the relevant meeting). The Board will endeavour to answer all questions at the relevant meeting and publish a summary on the Company's website.