Chamberlin Plc Regulatory News (CMH)

RNS Number : 6562X

Chamberlin PLC

28 November 2017

 

28 November 2017

AIM: CMH

 

CHAMBERLIN PLC

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

 

Half Year Results

For the six months to 30 September 2017

 

Key Points

 

· Total H1 revenues increased to £17.9m (2016: £14.7m), in line with management expectations

 

· Gross margin decreased to 15.9% (2016: 20.5%) - impacted by production issues within the foundry business:

- technical difficulties at the new machining facility created cost inefficiencies and extended cycle times

 

· Underlying loss before tax of £574,000 (2016: £38,000). Statutory loss before tax of £810,000 (2016: £370,000)

 

· Underlying loss per share 6.7p (2016: 1.0p). Statutory loss per share 13.8p (2016: 4.9p)

 

· Foundries revenues up 30.4% to £12.4m

- driven mainly by increased demand for turbo charger bearing housings

 

· Engineering revenues up 6.7% to £5.5m

- satisfactory performances at both Petrel and Exidor

 

· Management continues to work with the machine and tooling suppliers to rectify issues at machining operation and, while progress is being made, it is now clear that resolution of the technical problems is likely to take longer than expected and therefore the Group's performance will be materially impacted

- a claim against the machine supplier has been initiated and a constructive dialogue is underway.

- the Company expects to reach a satisfactory settlement and further information will be provided in due course.

 

· Turbo charger bearing housings remains a key growth driver for the Group, with demand growing

 

 

Chairman, Keith Butler-Wheelhouse, commented:

 

"While the first half of the year has delivered on our revenue expectations, margins have suffered due to the difficulties we have encountered with the start-up of our new machining facility. We are working closely with the machine and tooling suppliers to resolve the technical problems that have had a significant impact on our foundry margins, however it is now clear that resolution of the technical problems is likely to take longer than expected.

 

"As a result, cost inefficiencies, including the use of subcontractors and extended cycle times, will adversely affect the Group's performance. Raw material prices in the foundry operation have also increased. These costs will be recovered through a customer surcharge mechanism, however there is a short-term negative impact, given the time lag between price increases and their recovery.

 

"The Company is now actively pursuing a claim against the supplier of the new machining cells in view of the persistent technical failures and, expects to reach a satisfactory settlement. Further information regarding this will be provided in due course.

 

 "Our two engineering operations, Exidor and Petrel, continued to trade in line with expectations, and together these businesses delivered operating margin of 6.0% in the first half of the year, in line with the same period in 2016.

 

"Looking ahead to the full year, management still expects Group revenues to be substantially ahead of the prior year, but its profitability will be materially impacted. Demand for turbo charger bearing housings, a key growth driver for the Group, continues to grow."

 

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) No 596/2014

 

 

Enquiries

Chamberlin plc Kevin Nolan, Chief Executive David Roberts, Finance Director		T: 020 3178 6378 (today) / 01922 707100
Smith & Williamson Corporate Finance Limited (Nominated Adviser and Broker) Russell Cook, Katy Birkin		T: 020 7131 4000
KTZ Communications (Financial PR) Katie Tzouliadis, Irene Bermont-Penn, Emma Pearson		T: 020 3178 6378

 

 

CHAIRMAN'S STATEMENT

 

Introduction

 

The Group's first half revenues are in line with management expectations, reflecting overall good levels of demand across the foundry and engineering businesses. However, margins within the Group's foundry businesses have been adversely affected by production issues. At the new machining facility technical difficulties have created cost inefficiencies and extended cycle times. The Company is addressing these issues and is working very closely with the machine and tooling suppliers to rectify the situation.

 

Results

 

The Group generated revenues of £17.9m in the six months to September 2017 (2016: £14.7m).

 

The Group's gross profit was down to £2.8m (2016: £3.0m), resulting in gross margin of 15.9% (2016: 20.5%). This reflected the cost inefficiencies within our foundry businesses, principally associated with the start-up of our new machining facility.

 

Underlying loss before tax was £574,000 (2016: loss of £38,000) and the underlying loss per share was 6.7p (2016: loss of 1.0p).

 

On a statutory basis the Group generated a loss of £1,099,000 (2016: loss of £391,000). This is after impairment of deferred tax assets of £374,000 (2016: £nil). The statutory loss per share was 13.8p (2016: loss of 4.9p).

 

The net debt position at 30 September 2017 was £8.2m (30 September 2016: £5.3m; 31 March 2017: £6.8m). The Group has debt facilities of £9.1m.

 

Pension

 

The Group's net pension liability has fallen to £4.9m (31 March 2017: £5.2m). This was due to a decrease in the value of liabilities as a consequence of an increase in bond yields and therefore the discount rate. The triennial valuation as at 1 April 2016 was concluded in the period and has resulted in the current level of monthly cash payments paid into the scheme being maintained.

 

Operations

 

The two foundries at Walsall and Scunthorpe generated total revenues of £12.4m (2016: £9.5m). The new Walsall machining facility generated incremental revenues of £0.8m, with the balance of the sales increase being driven by higher demand for turbo charger bearing housings. Despite this strong growth, our foundry activities generated an operating loss of £0.2m (2016: profit of £0.3m) which mainly reflected technical difficulties at the new machining facility.

 

The engineering division, which comprises Exidor, the UK market leader in panic and emergency exit door hardware, and Petrel, which manufactures lighting and control equipment for use in hazardous areas, saw revenues increase by 6.7% to £5.5m (2016: £5.1m). The division achieved an operating profit of £0.3m (H1 2016: £0.3m), a rise of 5.8%.

 

Outlook

 

Management expects full year revenues to be substantially ahead of the prior year, in particular as demand for turbo charger bearing housings continues to grow. While this is encouraging, the technical problems that have had a significant impact on foundry margins remain. The team is currently working closely with the machine and tooling suppliers, however it is now clear that the resolution of the technical problems is likely to take longer than expected. As a result, cost inefficiencies, including the use of subcontractors and extended cycle times, will materially impact the Group's performance. Raw material prices in the foundry operation have also increased. These costs will be recovered through a customer surcharge mechanism, however there is a short-term negative impact, given the time lag between price increases and their recovery.

 

The Company is now actively pursuing a claim against the supplier of the new machining cells in view of the persistent technical failures, and a constructive negotiation has started. We expect to reach a satisfactory settlement, and further information regarding this will be provided in due course.

 

 

 

Keith Butler-Wheelhouse

Chairman

27 November 2017

 

 

Consolidated Income Statement

for the six months ended 30 September 2017

 

 

 

Note		Unauditedsix months ended30 September 2017			Unauditedsix months ended30 September 2016			Year ended31 March 2017
		Underlying	# Non-underlying	Total	Underlying	# Non-underlying	Total	Underlying	# Non-underlying	Total
		£000	£000	£000	£000	£000	£000	£000	£000	£000
Revenue	2	17,906	-	17,906	14,661	-	14,661	32,119	-	32,119
Cost of sales		(15,058)	-	(15,058)	(11,660)	-	(11,660)	(25,173)	-	(25,173)
Gross profit		2,848	-	2,848	3,001	-	3,001	6,946	-	6,946
Other operating expenses	7	(3,280)	(172)	(3,452)	(2,960)	(252)	(3,212)	(6,203)	(365)	(6,568)
Operating (loss)/ profit		(432)	(172)	(604)	41	(252)	(211)	743	(365)	378
Finance costs	3	(142)	(64)	(206)	(79)	(80)	(159)	(164)	(160)	(324)
(Loss)/ profit before tax		(574)	(236)	(810)	(38)	(332)	(370)	579	(525)	54
Tax credit/ (expense)	4	40	(329)	(289)	(83)	66	(17)	(205)	105	(100)
(Loss)/ profit for the period from continuing operations		(534)	(565)	(1,099)	(121)	(266)	(387)	374	(420)	(46)
Discontinued operations
Profit/ (loss) for the period from discontinued operations		-	-	-	47	(51)	(4)	219	(1,146)	(927)
(Loss)/ profit for the period from continuing operations attributable to equity holders of the Parent Company		(534)	(565)	(1,099)	(74)	(317)	(391)	593	(1,566)	(973)
(Loss)/ earnings per share from continuing operations:
Basic	5			(13.8)p			(4.9)p			(0.6)p
Underlying	5	(6.7)p			(1.0)p			4.7p
Diluted	5			(13.8)p			(4.9)p			(0.6)p
Diluted underlying	5	(6.7)p			(1.0)p			4.5p
Earnings/ (loss) per share from discontinued operations:
Basic	5			-			Nil p			(11.6)p
Underlying	5	-			0.1p			2.8p
Diluted	5			-			Nil p			(11.6)p
Diluted underlying	5	-			0.1p			2.6p
Total (loss)/ earnings per share:
Basic	5			(13.8)p			(4.9)p			(12.2)p
Underlying	5	(6.7)p			(0.9)p			7.5p
Diluted	5			(13.8)p			(4.9)p			(12.2)p
Diluted underlying	5	(6.7)p			(0.9)p			7.1p

 

# Non- underlying items represent exceptional costs 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 six months ended 30 September 2017

 

 

 

	Unauditedsix months ended 30 September2017		Unauditedsix months ended30 September2016		Year ended31 March 2017
		£000		£000		£000
Loss for the period		(1,099)		(391)		(973)
Other comprehensive income
Reclassification for cash flow hedges included in sales		(152)		(593)		(87)
Movements in fair value on cash flow hedges taken to other comprehensive income		165		253		419
Deferred tax on movements in cash flow hedges		(2)		61		(60)
Movement on deferred tax relating to rate change		-		-		1
Net other comprehensive expense that may be recycled to profit and loss		11		(279)		271
Re-measurement gains/ (losses)on pension assets and liabilities		291		(2,538)		(612)
Deferred/ current tax on re-measurement (losses)/ gains on pension assets and liabilities		(55)		507		122
Movement on deferred tax on measurement losses relating to rate change		-		-		(52)
Net other comprehensive income/(expense) that will not be reclassified to profit and loss		236		(2,031)		(542)
Other comprehensive expense for the period net of tax		247		(2,310)		(271)
Total comprehensive expense for the period attributable to equity holders of the Parent Company		(852)		(2,701)		(1,244)

 

 

 

 

 

 

Consolidated Balance Sheet

At 30 September 2017

 

 

 

		Unaudited30 September2017		Unaudited30 September2016		31 March2017
		£000		£000		£000
Non-current assets
Property, plant and equipment		10,380		8,878		10,179
Intangible assets		424		402		461
Deferred tax assets		1,141		1,936		1,498
		11,945		11,216		12,138
Current assets
Inventories		3,367		3,165		3,347
Trade and other receivables		7,617		7,047		7,556
		10,984		10,212		10,903
Total assets		22,929		21,428		23,041
Current liabilities
Financial liabilities		6,246		4,484		5,520
Trade and other payables		6,579		6,262		6,899
		12,825		10,746		12,419
Non-current liabilities
Financial liabilities		1,972		823		1,308
Deferred tax liabilities		17		59		27
Provisions		200		200		200
Defined benefit pension scheme deficit		4,850		7,182		5,209
		7,039		8,264		6,744
Total liabilities		19,864		19,010		19,163
Capital and reserves
Share capital		1,990		1,990		1,990
Share premium		1,269		1,269		1,269
Capital redemption reserve		109		109		109
Hedging reserve		(61)		(622)		(72)
Retained earnings		(242)		(328)		582
Total equity		3,065		2,418		3,878
Total equity and liabilities		22,929		21,428		23,041

 

 

 Consolidated Cash Flow Statement

for the six months ended 30 September 2017

 

 

 

		Unauditedsix months ended30 September2017		Unauditedsix months ended30 September2016		Year ended31 March2017
		£000		£000		£000
Operating activities
(Loss)/ profit for the period before tax		(810)		(370)		54
Adjustments for:
Net finance costs excluding pensions		142		79		164
Depreciation of property, plant and equipment		686		561		1,125
Amortisation of software		50		34		90
Amortisation of development costs		1		4		7
Profit on disposal of property plant and equipment		(21)		-		(1)
Share based payments		39		26		28
Difference between pension contributions paid and amounts recognised in the Income Statement		(67)		(48)		(95)
Increase in inventories		(20)		(298)		(676)
Increase in receivables		(388)		(903)		(1,664)
Increase in payables		229		264		1,220
Cash (outflow)/ inflow from continuing operations		(159)		(651)		252
Cash (outflow)/ inflow from discontinued operations		(142)		13		(358)
Net cash outflow from operating activities		(301)		(638)		(106)
Investing activities
Purchase of property, plant and equipment		(887)		(1,385)		(3,732)
Purchase of software		(14)		(2)		(41)
Development costs		-		(52)		(133)
Disposal of property, plant and equipment		21		10		9
Net cash outflow from investing activities		(880)		(1,429)		(3,897)
Financing activities
Interest paid		(142)		(79)		(164)
Repayment of asset loans		(81)		(81)		(162)
Net invoice finance drawdown		1,194		1,472		1,421
Import loan facility (repayment)/ drawdown		(879)		-		1,235
Finance leases taken out		891		672		1,583
Net cash inflow from financing activities		983		1,984		3,913
Net decrease in cash and cash equivalents		(198)		(83)		(90)
Cash and cash equivalents at the start of the period		(216)		(126)		(126)
Cash and cash equivalents at the end of the period		(414)		(209)		(216)
Cash and cash equivalents included in discontinued operations		(474)		(466)		(332)
Cash and cash equivalents for continuing operations		60		675		116
Cash and cash equivalents compromise:
Overdraft		(414)		(209)		(216)

 

 

Consolidated Statement of Changes in Equity

for the six months ended 30 September 2017

 

	Share capital	Share premium	Capital redemption reserve	Hedging reserve	Retained earnings	Attributable to equity holders of the parent
	£000	£000	£000	£000	£000	£000
At 1 April 2016	1,990	1,269	109	(343)	2,068	5,093
Loss for the period	-	-	-	-	(391)	(391)
Other comprehensive(expense for the period net of tax	-	-	-	(279)	(2,031)	(2,310)
Total comprehensive expense	-	-	-	(279)	(2,422)	(2,701)
Share based payments	-	-	-	-	26	26
Total of transactions with shareholders	-	-	-	-	26	26
At 30 September 2016	1,990	1,269	109	(622)	(328)	2,418
Loss for the period	-	-	-	-	(582)	(582)
Other comprehensive income for the period net of tax	-	-	-	550	1,489	2,039
Total comprehensive income	-	-	-	550	907	1,457
Share based payments	-	-	-	-	2	2
Deferred tax on employee share options	-	-	-	-	1	1
Total of transactions with shareholders	-	-	-	-	3	3
At 1 April 2017	1,990	1,269	109	(72)	582	3,878
Loss for the period	-	-	-	-	(1,099)	(1,099)
Other comprehensive income for the period net of tax	-	-	-	11	236	247
Total comprehensive income/ (expense)	-	-	-	11	(863)	(852)
Share based payments	-	-	-	-	39	39
Total of transactions with shareholders	-	-	-	-	39	39
At 30 September 2017	1,990	1,269	109	(61)	(242)	3,065

 

 

 

 

 

 

Independent review report to Chamberlin plc

 

Introduction

We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report of Chamberlin Plc for the six months ended 30 September 2017 which comprises of the Consolidated Income Statement, Consolidated Statement of Comprehensive Income, Consolidated Balance Sheet, Consolidated Statement of Cash Flows, Consolidated Statement of Changes in Equity and the related notes. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the company, in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board. Our review work has been undertaken so that we might state to the company those matters we are required to state to it in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company for our review work, for this report, or for the conclusion we have formed.

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors.

As disclosed in note 1, the annual financial statements of the Group are prepared in accordance with International Financial Reporting Standards as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union.

Our responsibility

Our responsibility is to express a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 September 2017 is not prepared, in all material respects, in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union.

 

Grant Thornton UK LLP

Statutory Auditor, Chartered Accountants

Birmingham27 November 2017

 

 

Notes to the Interim Financial statements

 

1 General information and accounting policies

 

This Interim Financial Report is unaudited, but has been reviewed by the Company's auditor having regard to the International Standard on Review Engagements (UK & Ireland) 2410 "Review of Financial Information Performed by the Independent Auditor of the Entity", issued by the Auditing Practices Board for use in the UK. A copy of their unmodified review report is attached.

 

The interim condensed consolidated financial statements do not comprise the Group's statutory accounts as defined by section 434 of the Companies Act 2006. Statutory accounts for the year ended 31 March 2017 were approved by the board of directors on 22 May 2017 and were filed at Companies House. The auditor's report on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under section 498(2) or (3) of the Companies Act 2006.

 

Basis of preparation

 

The annual financial statements of the Group are prepared in accordance with IFRS as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with the AIM Rules issued by the London Stock Exchange.

 

Accounting policies

 

The principal accounting policies applied in preparing the interim Financial Statements comply with IFRS as adopted by the European Union and are consistent with the policies set out in the Annual Report and Accounts for the year ended 31 March 2017.

 

No new standards or interpretations issued since 31 March 2017 have had a material impact on the accounting of the Group.

Hedge activities

At 30 September 2017 the Group held 18 months' worth of foreign currency forward contracts designated as hedges of expected future sales to customers in Europe for which the Group has highly probable forecasted transactions

Going concern

After making appropriate enquiries, the directors consider that the Group has adequate resources to continue in operation for the foreseeable future. In forming this view the directors have reviewed internal cashflow and profit forecasts in conjunction with the available headroom on the invoice finance and overdraft facility. For this reason, they continue to adopt the going concern basis in preparing the accounts.

2 Segmental analysis

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

 

	Segmental revenue					Segmental operating profit
	Unaudited  six months ended 30 Sep 2017   £000	Unaudited six months ended 30 Sep 2016   £000		Year ended 31 March 2017   £000		Unaudited six months ended 30 Sep 2017   £000	Unaudited six months ended 30 Sep 2016   £000	Year ended 31 March 2017   £000
Foundries	12,443	9,542		21,333		(166)	293	1,188
Engineering	5,463	5,119		10,786		328	310	816
Continuing operations	17,906	14,661		32,119		162	603	2,004
Discontinued operations	-	1,785		2,810		-	62	296
Segmental results	17,906	16,446		34,929		162	665	2,300
Reconciliation of reported segmental operating profit to (loss)/ profit before tax
						Unaudited six months ended 30 Sep 2017   £000	Unaudited six months ended 30 Sep 2016   £000	Year ended 31 March 2017   £000
Segmental operating profit						162	665	2,300
Shared costs						(594)	(562)	(1,261)
Exceptional and non-underlying costs						(172)	(252)	(365)
Net finance costs						(206)	(159)	(324)
Loss from discontinued operations						-	(62)	(296)
(Loss)/ profit before tax						(810)	(370)	54

 

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 and cable management.

 

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

 

 

3 Finance income and costs

	Unauditedsix months ended30 September 2017	Unauditedsix months ended30 September 2016	Year ended31 March 2017
	£000	£000	£000
Interest on bank overdraft	(142)	(79)	(164)
Net interest on net defined benefit pension liability	(64)	(80)	(160)
	(206)	(159)	(324)

 

 

4 Income tax expense

 

An effective rate of tax for the six months to 30 September 2017 of 36% (30 September 2016: 1%) has been used in these interim statements.

 

The effective rate of tax is higher than the standard rate because of writing off tax losses and deferred tax assets brought forward at Russell Ductile Castings Limited leading to an increased tax charge. The 2016 effective rate of tax is lower than the standard rate because of utilising losses brought forward to reduce the overall tax charge in the period.

 

The corporation tax rate fell from 20% for the year ended 31 March 2016 and 31 March 2017 to 19% from 1 April 2017. The rate will fall to 17% from 1 April 2020. It is not anticipated that the subsequent reduction to 17% will have a material effect on the Company's future current or deferred tax charges.

 

 

5 (Loss)/ earnings per share

 

The calculation of (loss)/ earnings per share is based on the profit attributable to shareholders and the weighted average number of ordinary shares in issue. In calculating the diluted (loss)/ earnings per share, adjustment has been made for the dilutive effect of outstanding share options. Underlying (loss)/ earnings per share, which excludes exceptional costs, net financing cost of pension obligation, administration costs of the pension scheme and share based compensation, less related tax thereon, as analysed below, has been disclosed as the Directors believe this allows a better assessment of the underlying trading performance of the Group.

 

	Unaudited six months ended 30 September 2017	Unaudited six months ended 30 September 2016	Year ended 31 March 2017
	£000	£000	£000
Continuing operations loss for basic earnings per share	(1,099)	(387)	(46)
Exceptional costs	21	138	138
Net financing cost and service cost on pension obligation	176	168	359
Share based payments charge	39	26	28
Deferred tax asset write off	374	-	-
Taxation effect of the above	(45)	(66)	(105)
(Loss)/ earnings for underlying earnings per share	(534)	(121)	374
	Unaudited six months ended 30 September 2017	Unaudited six months ended 30 September 2016	Year ended 31 March 2017
	£000	£000	£000
Discontinued operations loss for basic earnings per share	-	(4)	(927)
Exceptional costs	-	64	1,451
Taxation effect of the above	-	(13)	(305)
Earnings for underlying earnings per share	-	47	219

 

	Unaudited six months ended 30 September 2017	Unaudited six months ended 30 September 2016	Year ended 31 March 2017
	000	000	000
Weighted average number of ordinary shares	7,958	7,958	7,958
Adjustment to reflect dilutive shares under option	350	52	350
Diluted weighted average number of ordinary shares	8,308	8,010	8,308

 

As at 30 September 2016 and 30 September 2017 there is no adjustment to the 52,353 and 350,000 shares respectively under option for the loss per share calculation as they are required to be excluded from the weighted average number of shares as they are anti-dilutive for the period then ended. As at 31 March 2017 there is no adjustment in the total diluted loss per share calculation for the 350,000 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 for the period then ended.

 

 

6 Pensions

 

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

 

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

 

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

 

 

	30 September 2017	30 September 2016	31 March 2017
Salary increases	n/a	n/a	n/a
Pension increases (post 1997)	3.1%	2.9%	3.3%
Discount rate	2.6%	2.2%	2.5%
Inflation assumption - RPI	3.2%	3.0%	3.3%
Inflation assumption - CPI	2.2%	2.2%	2.3%

 

 

The demographic assumptions used for 30 September 2017, were the same as used in 31 March 2017, 30 September 2016 and the last full actuarial valuation performed as at 1 April 2016. The triennial valuation as at 1 April 2016 was concluded during the period and maintained the current level of monthly cash payments paid into the scheme. The contributions expected to be paid during the year to 31 March 2018 are £263,000. The triennial valuation as at 1 April 2016 increased the deficit reduction period from 2028 to 2038.

 

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

 

 

 

Funding status	Unaudited  six months to 30 September 2017 £000	Unaudited  six months to 30 September 2016 £000	Year to 31 March 2017 £000
Scheme assets at end of period	13,421	13,220	13,548
Benefit obligations at end of period	(18,272)	(20,402)	(18,757)
Deficit in scheme	(4,850)	(7,182)	(5,209)
Related deferred tax asset	825	1,293	886
Net pension liability	(4,025)	(5,889)	(4,323)

 

The decrease in the net pension liability since March 2017 is mainly due to a decrease in the value of liabilities as a consequence of an increase in bond yields increasing the discount rate.

 

 

7 Exceptional costs and non-underlying items

 

	Unaudited six months ended 30 September 2017	Unaudited six months ended 30 September 2016	Year ended 31 March 2017
	£000	£000	£000
Group reorganisation	21	138	138
Exceptional costs	21	138	138
Share based payment charge	39	26	28
Defined benefit pension scheme administration costs	112	88	199
Non-underlying other operating expenses	172	252	365

 

Non-underlying exceptional costs of discontinued operations	-	64	1,451
Taxation
Write off of deferred tax assets	374	-	-
- tax effect of non-underlying other operating expenses	(33)	(63)	(363)
	341	(63)	(363)

 

During the year ended March 2017, the Group continued to rationalise operations given the reduced levels of turnover seen in the Leicester and Scunthorpe foundries. Group reorganisation costs, including redundancy and recruitment, relate to this rationalisation.

 

During 2017 the Group took the decision to close the Leicester foundry. Non-underlying exceptional costs of discontinued operations, including asset impairment, redundancy and site clean-up costs, relate to this closure.

 

Further reorganisation and redundancy costs were incurred during the current period.

 

8 Net debt

 

	Unaudited six months ended 30 September 2017	Unaudited six months ended 30 September 2016	Year ended 31 March 2017
	£000	£000	£000
Financial liabilities
Bank overdraft	414	209	216
Current instalments due on finance leases	586	33	359
Current instalments due on asset finance loans	100	200	200
Import loan facility	356	-	1,235
Invoice finance liability	4,790	4,042	3,510
Financial liabilities due in less than one year	6,246	4,484	5,520
Instalments due on finance leases in greater than one year	1,972	723	1,308
Instalments due on asset finance loans in greater than one year	-	100	-
Total financial liabilities	1,972	823	1,308
Net debt	8,218	5,307	6,828
Available facility	9,090	6,960	9,601
Maximum available headroom	872	1,653	2,773

 

 

9 Interim report

 

Copies of this interim results statement will be available on the Group's website, www.chamberlin.co.uk, and from the Group's headquarters at Chuckery Road, Walsall, West Midlands, WS1 2DU.

 

This information is provided by RNS

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