Chamberlin Plc Regulatory News (CMH)

CMH

CHAMBERLIN PLC

("Chamberlin" or "the Group")

Half Year Results

For the six months to 30 September 2012

Key Points

·; Results show continuing progress despite softer market conditions, with profitability materially improved

·; Revenues of £22.6m (2011: £23.0m)

·; Underlying operating profit up 11% to £934,000 (2011: £841,000)

Statutory operating profit up 18% to £936,000 (2011: £796,000)

·; Underlying profit before tax up 15% to £914,000 (2011: £797,000)

Statutory profit before tax up 15% to £815,000 (2011: £710,000)

- driven by improved operational processes and product profitability

·; Cash generated from operations increased by 62% to £1.53m (2011: £947,000)

·; Net debt reduced by 130% to £887,000 (2011: £2.04m)

·; Underlying earnings per share up 9% to 8.1p (2011: 7.4p)

Statutory earnings per share up 7% to 8.0p (2011: 7.5p)

·; Interim dividend up 25% to 1.25p (2011: 1.0p)

·; Foundry activities - focus to enhance operational performance and management across the three foundries

·; Engineering operations - revenues ahead in both businesses

·; Board anticipates both challenges and opportunities in 2013, given general economic uncertainties and remains confident about Chamberlin's long term prospects

All underlying figures are stated before net financing costs on pension obligations, share-based payment costs and associated tax impact.

Chairman, Keith Butler-Wheelhouse, commented,

"I am pleased to report results for the six months to 30 September 2012, which show continued improvement in profitability, with underlying profit before tax up 15% to £914,000 despite revenues slightly lower due to a softening in market conditions. Chamberlin remains strongly cash generative, with cash generated from operations up 62% to £1.53m and this has enabled the Board to declare an increased interim dividend of 1.25 pence per share.

We continue to work on improving operational processes and product profitability, and have also strengthened our commercial management in each of our foundries. There are a number of uncertainties to the general economic outlook in 2013 but the Board believes that Chamberlin will respond well to the challenges and opportunities ahead."

Enquiries

CHAIRMAN'S STATEMENT

Introduction

I am pleased to report Chamberlin's results for the six months to 30 September 2012, which show a continuing improvement in the Group's profitability, with underlying profit before tax increased by 15% to £914,000, and strong cash generation. This has been achieved against softening market conditions as the European economies slowed and reflect in part our ongoing emphasis on improving the Group's operating performance.

As we enter the second half of the financial year, we continue to develop the business and notwithstanding the softer conditions, believe that Chamberlin remains well-placed in its markets.

Results

Revenues for the six months to 30 September 2012 were slightly down on the same period last year at £22.6m (2011: £23.0m). Nonetheless, the Group delivered a material improvement in profitability, generating underlying operating profit up 11% to £934,000 (2011: £841,000) and underlying profit before tax up 15% to £914,000 (2011: £797,000). Diluted underlying earnings per share improved by 9% to 8.1p (2011: 7.4p). All underlying figures are stated before net financing costs on pension obligations, share-based payment costs and associated tax impact.

On a statutory basis, profit before tax increased by 15% to £815,000 (2011: £710,000) and earnings per share increased by 7% to 8.0p (2011: 7.5p).

Chamberlin continues to generate strong cash flows and in the six months under review operating cash flow showed a 62% increase to £1,531,000 against the same period last year (2011: £947,000). The high level of cash generation enabled us to reduce our overdraft and net borrowings at 30 September 2012 showed a substantial decrease of £1,152,000 to £887,000 against the same point last year (30 September 2011: £2,039,000 and 31 March 2012: £1,558,000). The Group's borrowings continue to be financed by a £5.0m facility with HSBC.

Dividend

Given the continued improvement in operating profits and strong cash generation the Board is pleased to declare an increased interim dividend of 1.25p (2011: 1.0p). The interim dividend will be paid on 17th December 2012 to shareholders on the register at the close of business on 7th December 2012.

Operations

The material increase in profitability has resulted from two long standing initiatives; improved operational processes, especially in our foundries, and enhanced management of product profitability, which has been supported by upgrades to our business systems.

As part of our ongoing drive to improve the Group's operational performance, we have significantly strengthened our commercial management in each of the three foundry operations, upgrading skills and bringing in stronger commercial leadership. These changes will create an enhanced managerial structure and bring greater focus to each of the businesses. This shall in turn support our development in both our existing and new markets. In general, the engineering economy has slowed during the current year but I am pleased with the Group's new business initiatives and am confident that the newer relationships we are developing have very good revenue potential as these relationships mature.

Complex castings for the turbocharger industry continue to be an important area of focus for our business, and our Walsall foundry is a well-established supplier of bearing housings for both passenger car and commercial diesel turbochargers. Our projects here for two major customers, Borg Warner and IHI, are proceeding into production in line with our expectations. The technology shift towards turbocharged petrol engines is continuing as expected, driven by emissions legislation and rising fuel prices. Demand for turbochargers is forecast to continue to increase despite the lower growth expected in car volumes. This trend for motor manufacturers to apply turbochargers to petrol engines has attracted new OEM entrants to the turbocharger market in recent years and we believe that, in time, there is scope to win business supplying these OEMs. In the meantime, I am pleased to report that our existing strong customer relationships have enabled us to bid for and win orders for turbine casings. These will be made in temperature-resistant iron at our Leicester foundry. The first of these casings has recently been approved by our customer and volume production will begin, on schedule, in the final quarter of this financial year.

Our non-foundry businesses continue to make steady progress, with revenues in both operations higher than the same period last year. Exidor continues to be the UK market leader in specialist emergency exit hardware and is making good progress in the door closer market, especially into its export markets. Although certain sectors of this market are highly competitive, we are able to compete effectively in the premium part of the market. Petrel, our hazardous environments lighting business, has established a strong record for technical competence in this market but has not fully translated this reputation into revenue growth. We have recently appointed a new Managing Director to Petrel who brings a strong commercial track record to the business and we expect to see the benefits of this reflected in Petrel's future performance.

Outlook

Strategically, our plan for Chamberlin is to concentrate management effort on increasing sales in the existing businesses to maximise the use of our capacity. This, together with the improved productivity demonstrated in these results, will drive further increases in profitability. In the short term there are a number of uncertainties to the general economic outlook for 2013, including slower growth rates in Europe and globally, and euro exchange rates. In this environment, technical expertise, operational excellence, sound management and a focus on customers are critical to success. I am pleased to report that, in the months since I became Chairman, I have found these values embedded in the business and therefore I have no doubt Chamberlin will respond well to the challenges and opportunities ahead.

Keith Butler-Wheelhouse

Chairman

26 November 2012

Consolidated Income Statement

for the six months ended 30 September 2012

# Non- underlying items represent net financing costs on pension obligations, share based payment costs and associated tax impact.

Consolidated Statement of Comprehensive Income

for the six months ended 30 September 2012

Consolidated Balance Sheet

At 30 September 2012

 Consolidated Cash Flow Statement

for the six months ended 30 September 2012

Consolidated Statement of Changes in Equity

for the six months ended 30 September 2012

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 for the six months ended 30 September 2012 which comprises the Consolidated Income Statement, Consolidated Statement of Comprehensive Income, the Consolidated Balance Sheet, the Consolidated Cash Flow Statement, the Consolidated Statement of Changes in Equity and the related notes 1 to 7. 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 guidance contained in International Standard on Review Engagements 2410 (UK and Ireland) "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company, for our work, for this report, or for the conclusions we have formed.

Directors' Responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the AIM Rules issued by the London Stock Exchange which require that it is presented and prepared in a form consistent with that which will be adopted in the Company's annual financial statements having regard to the accounting standards applicable to such annual financial statements.

As disclosed in note 1, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with the AIM Rules issued by the London Stock Exchange.

Our Responsibility

Our responsibility is to express to the Company 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 2012 is not prepared, in all material respects, in accordance with the accounting policies outlined in Note 1, which comply with IFRSs as adopted by the European Union and in accordance with the AIM Rules issued by the London Stock Exchange.

Ernst & Young LLP,

Birmingham

26 November 2012

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 unqualified review opinion 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 2012 were approved by the board of directors on 21 May 2012 and were filed at Companies House. The auditors' 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 IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with the AIM Rules issued by the London Stock Exchange.

Accounting policies

The principal accounting policies, based on IFRS, applied in preparing the Interim Financial Statements are consistent with the policies set out in the Annual Report and Accounts for the year ended 31 March 2012. No new standards or interpretations issued since 31 March 2012 have had a material impact on the accounting of the Group

Hedge activities

At 30 September 2012 the Group held 12 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 budgets and other financial information. 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.

The Foundries segment is a supplier of iron castings, in raw or machined form, to a variety of industrial customers who incorporate the castings into their own products or carry out further machining or assembly operations on the castings before selling them on. The Engineering segment provides manufactured and imported products to distributors and end-users. The products fall into the categories of door hardware, hazardous area lighting and control gear, cable management and general ironmongery.

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

3 Finance income and costs

4 Income tax expense

An effective rate of tax for the six months to 30 September 2012 of 22% (30 September 2011: 20%) has been used in these interim statements.

The effective rate of tax is lower than the standard rate because of prior period research and development tax claims. The 2011 effective rate of tax was lower than the standard because of the utilisation of prior period losses.

On the 22 June 2011 the UK Chancellor of the Exchequer announced a number of tax reforms. The key change to Corporation tax that will apply to the Group is the reduction in the main Corporation tax rate, from 28% to 23% over a period of 4 years.

The Corporation tax rate fell from 26% for the year ended 31 March 2012 to 24% for the year ended 31 March 2013. The Corporation tax rate will fall to 23% from 1 April 2013, a rate change which was substantively enacted on 3 July 2012. The Chancellor has announced progressive reductions to 22% in corporation tax rates, with a 1% fall from 1 April 2014 but this change has not been substantively enacted.

It is not anticipated that the subsequent reduction to 22%, once substantively enacted, will have a material effect on the Company's future current or deferred tax charges.

5 Earnings per share

The calculation of earnings per share is based on the profit attributable to shareholders and the weighted average number of ordinary shares in issue. In calculating the diluted earnings per share, adjustment has been made for the dilutive effect of outstanding share options. Underlying earnings per share, which excludes net financing cost of pension obligation 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.

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 Company recognises all movements in the actuarial funding position of the scheme in each period. This is likely to lead to volatility in shareholders' equity from period to period.

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

The demographic assumptions used for 30 September 2012, were the same as used in 31 March 2012, 30 September 2011 and the last full actuarial valuation performed as at 1 April 2010.

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

The increase in the net pension liability is mainly due to negative investment returns combined with an increase in the value of liabilities as a consequence of a reduction in the discount rate. In addition the reduction in assumed future inflation in respect of deferred benefits noted above has partially offset the increase in scheme liabilities.

7 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.