Chamberlin Plc Regulatory News (CMH)

27 Nov 2007 07:00

Chamberlin PLC27 November 2007 27 November 2007 CHAMBERLIN plc Interim Results HIGHLIGHTS • Profit before tax and exceptionals up 24% to £651k • Underlying earnings per share up 24% to 6.1p • Net borrowing £0.5m, a gearing of 4.3% • Total Equity strengthened by £1.3m to £12.2m • Dividend maintained at 3.85p Unaudited Unaudited 6 months 6 months 30 September 30 September 2007 2006 £000 £000 Turnover 19,607 19,028Profit before tax and exceptional items 651 523Profit before tax 982 102Basic EPS 9.8p 0.9pUnderlying EPS 6.1p 4.9pDividend per share proposed 3.85p 3.85p For further information, contact details are: Chamberlin plc Tim Hair, Chief Executive 01922 707 100Mark Bache, Finance Director 01922 707 100 Landsbanki Securities (UK) Limited (NOMAD) Tom Hulme 020 7426 9593 CHAIRMAN'S STATEMENT I am pleased to report that the Group made good progress in the first half, withresults in line with management expectations. The action taken last year toupgrade controls has provided a sound platform on which to build and with a newmanagement culture established the team are delivering improvements throughoutthe business. Following the AGM our name has been changed to Chamberlin plc. Results & Dividend Revenues grew to £19.6m (2006/07: £19.0m). Foundries achieved sales growth of6%, with the engineering companies achieving 1% growth net of the impact ofprior year disposals from within Petrel. Profit before tax and exceptionalitems rose 24% to £651k (2006/07: £523k) with a corresponding increase inunderlying earnings per share to 6.1p (2006/07: 4.9p). Exceptional itemsinclude the profit of £468k from the sale of surplus property as previouslyreported. Gearing remains very low at 4.3%. The Board has decided to pay an unchanged interim dividend of 3.85p per share,payable on 17 December 2007 to all shareholders registered on 7 December 2007. Progress Our foundries have continued to enjoy sustained demand for their products andtheir performance improvement projects are making good progress. The Walsall foundry now trades as Chamberlin & Hill Castings, retaining ourstrong foundry brand which is well known in the engineering industry. Itsexpertise in the high-volume supply of complex castings has enabled Chamberlin &Hill to win new contracts in the hydraulics market, and in the longer termhydraulics represents a potential area for expansion. Demand for turbochargersfor automotive diesel engines remains strong and this drives our core market.Carbon dioxide emissions legislation is likely to create new opportunities asfuel efficiency requirements expand turbocharged petrol engines from performancecars into the mainstream market. The claim against Walsall foundry for allegednuisance, noted in previous reports, continues as does our vigorous defence ofall aspects of the claim. In our 2006/07 report we stated that Chamberlin &Hill Castings has begun implementing lean manufacturing and I am pleased to notethe excellent progress made in this area. Russell Ductile is recovering after the difficulties reported last year, withupgraded management delivering improved operational performance. During thefirst half we invested £400k in the Scunthorpe site to upgrade equipment andhave agreed an extended lease for the Leicester site that will permitcontinuation of our successful operation there for many years to come. Bothoperating sites are winning new contracts and we look forward to furtherprogress at Russell Ductile as the recovery phase continues. Petrel and Fred Duncombe, our light engineering businesses, continue toprogress. Petrel has completed work to fill gaps in its range of hazardous arealighting and control products, and is starting to win new business. Rangeextensions are being launched at Fred Duncombe and new sales strategies arebeing developed to compete more aggressively. Pensions We have commenced consultation with employees in connection with closing thefinal salary pension scheme to future accrual from December 2007. At the halfyear the pension deficit stood at £0.5m. Strategy We stated in our 2006/07 report that we intend to create a more broadly basedengineering group. The executive team have reviewed and rejected a number ofacquisition targets that do not meet our criteria, and remain active in thesearch for businesses that fit with the "difficult things, done well" themewhich underpins our strategic thinking. Our foundries will continue to play animportant role in the Group, and we will continue to invest to improve ourcapability whenever good opportunities are available. Outlook The current year is progressing in line with management expectations followingthe transition achieved in 2006/07. Our businesses are enjoying steady demandand competing effectively in both home and export markets. We look forward tothe future with confidence. TOM BROWNChairman Summarised Consolidated Income Statement for the six months ended 30 September 2007 Note Unaudited six months ended Unaudited six months ended Year ended 31 March 2007 30 September 2007 30 September 2006 Before Operating Total Before Operating Total Before Operating Total operating exceptionals operating exceptionals operating exceptionals exceptionals (note 9) exceptionals (note 9) exceptionals £000 £000 £000 £000 £000 £000 £000 £000 £000 Revenue fromcontinuingoperations 19,607 - 19,607 19,028 - 19,028 39,188 - 39,188 Operatingprofit/(loss)fromcontinuingoperations 619 331 950 521 (421) 100 332 (1,141) (809) Financeincome /(costs) 3 32 - 32 2 - 2 (22) - (22) Profit/(loss)before tax 651 331 982 523 (421) 102 310 (1,141) (831) Income tax(expense) /credit 4 (199) (56) (255) (159) 126 (33) 292 216 508 Profit/(loss)for theperiodfromcontinuing operations 452 275 727 364 (295) 69 602 (925) (323) Attributableto equityholders ofthe parent company 727 69 (323) Earnings/(loss) pershare: Basic 6 9.8p 0.9p (4.4p)Underlying 6 6.1p 4.9p 8.1pDiluted 6 9.6p 0.9p (4.4)pDilutedunderlying 6 6.0p 4.9p 8.0p An interim dividend of 3.85p per share has been declared by the directors,payable on 17 December 2007 (note 5). Summarised Consolidated Statement of Recognised Income and Expensefor the six months ended 30 September 2007 Note Unaudited six Unaudited six months ended months ended Year ended 30 September 30 September 31 March 2007 2006 2007 £000 £000 £000Actuarial gains / (losses)on pension assets andliabilities 7 1,524 (929) (2,132)Deferred tax (charge)/credit on actuarial gains/ (losses) (457) 279 640Net income / (expense)recognised directly inequity 1,067 (650) (1,492)Profit/(loss) for theperiod (before dividend) 727 69 (323) Total recognised incomeand expense for the periodattributable to equity holders of the parentcompany. 1,794 (581) (1,815) Summarised Consolidated Balance SheetAt 30 September 2007 Unaudited Unaudited 30 September 30 September 31 March 2007 2006 2007 £000 £000 £000Non-current assets Property, plant and 7,991 8,518 7,954 equipment Intangible assets - goodwill 201 201 201 Intangible assets - software 46 61 57 Intangible assets - development costs 171 219 195 Deferred tax assets 271 782 975 8,680 9,781 9,382Current assets Inventories 4,395 5,192 4,746 Trade and other receivables 8,492 8,227 7,370 Income taxes receivable - - 70 Cash and cash equivalents 2 - - Assets held for resale - - 219 12,889 13,419 12,405 Total assets 21,569 23,200 21,787 Current liabilities Financial liabilities 531 1,192 209 Trade and other payables 7,650 7,004 7,738 Income taxes payable 13 55 - 8,194 8,251 7,947 Non-current liabilities Defined benefit pension scheme 498 1,218 2,235deficit Deferred tax liabilities 658 1,273 663 1,156 2,491 2,898 Total liabilities 9,350 10,742 10,845 Capital and reserves Share capital 1,859 1,854 1,854 Share premium 862 829 828 Capital redemption reserve 109 109 109 Retained earnings 9,389 9,666 8,151 Total equity 12,219 12,458 10,942 Total equity and liabilities 21,569 23,200 21,787 Summarised Consolidated Cash Flow Statementfor the six months ended 30 September 2007 Unaudited six Unaudited six Year ended months ended months ended 31 March 30 September 30 September 2007 2007 2006 Operating activities £000 £000 £000 Operating profit / (loss) 950 100 (809)Adjustments for: Depreciation of property, 578 574 1,166 plant and equipment Amortisation of software 12 14 23Amortisation of development costs 23 10 34 (Profit) / loss on disposal of (477) 32 373property plant and equipment Share based payments 40 (11) (6) Other pension payments in excess of (213) (198) (384)income statement chargeOperating cash flow before movementsin working capital 913 521 397 Decrease in inventories 352 116 562 (Increase) / decrease in (1,122) (285) 572 receivables (Decrease) / increase in payables (88) (496) 237 Cash flow from operations 55 (144) 1,768 UK Corporation Tax received / 68 (210) (237)(paid) Net cash flow from operating 123 (354) 1,531activites Investing activities Purchase of property, plant and equipment (626) (916) (1,625) Purchase of software (1) (25) (27) Disposal of plant and 709 - 119 EquipmentNet cash flow from investing 82 (941) (1,533)activities Financing activities Interest paid (38) (48) (111) Pension element of finance income 70 50 90 Equity dividends paid (595) (592) (878) Issue of shares (including 38 100 99 premium)Net cash used in financing activities (525) (490) (800) Net decrease in cash and cashequivalents (320) (1,785) (802) Cash and cash equivalents at thestart of the period (209) 593 593 Cash and cash equivalents at the endof the period (529) (1,192) (209) Notes to the interim financial statements 1 General information and accounting policies The abridged financial information set out above does not constitute the Group'sstatutory accounts as defined under Section 240 of the Companies Act 1985. Theauditors made a report under Section 235 of the Companies Act 1985 on thefinancial statements for the year ended 31 March 2007, as filed at CompaniesHouse, from which part of the financial information is extracted. The report ofthe auditors on the accounts for the year ended 31 March 2007 was unqualifiedand there was no statement under either section 237(2) or section 237(3). Basis of preparation The accounts have been prepared under International Financial ReportingStandards ("IFRS") in the form of a condensed interim financial report. Accounting policies The principal accounting policies, based on IFRS, applied in preparing theInterim Financial Statements are consistent with the policies set out in theAnnual Report and Accounts for the year ended 31 March 2007. 2 Segmental analysis For management purposes, the Group is organised into two operating divisions:Foundries and Engineering, which are the primary segments for reportingpurposes. The secondary segmental format is geographical. Foundries Engineering Total Unaudited6 Unaudited Unaudited Unaudited 6 Unaudited6 Unaudited months 6 months Year 6 months months Year months 6 months Year ended ended ended ended ended ended ended ended ended 30 Sep 30 Sep 31 March 30 Sep 30 Sep 31 March 30 Sep 30 Sep 31 March 2007 2006 2007 2007 2006 2007 2007 2006 2007 £000 £000 £000 £000 £000 £000 £000 £000 £000 Revenue 15,974 15,029 31,287 3,633 3,999 7,901 19,607 19,028 39,188 Trading profit 614 523 681 282 220 157 896 743 838 Shared costs (277) (222) (506)Exceptionals 331 (421) (1,141) Operating profit 950 100 (809) Net assets Assets 15,310 16,391 14,665 5,441 5,745 5,788 20,751 22,136 20,453 Liabilities (5,179) (5,687) (6,405) (2,202) (1,317) (1,332) (7,381) (7,004) (7,737) Segmental netassets 10,131 10,704 8,260 3,239 4,428 4,456 13,370 15,132 12,716 Unallocated netliabilities (1,151) (2,674) (1,774) Total net assets 12,219 12,458 10,942 Movements infixed assetCapital additionsPPE * 569 728 1,345 57 188 280 626 916 1,625 Software 1 25 27 - - - 1 25 27 Capitalcommitments 188 326 97 - - - 188 326 97 Depreciation /amortisationPPE * (453) (432) (925) (125) (142) (241) (578) (574) (1,166) Software (10) (12) (17) (2) (2) (6) (12) (14) (23) Development (13) (6) (19) (10) (4) (15) (23) (10) (34) * Property, plant and equipment The Foundries segment is a supplier of iron castings, in raw or machined form,to a variety of industrial customers who incorporate the castings into their ownproducts or carry out further machining or assembly operations on the castingsbefore selling them on. The Engineering segment provides manufactured andimported products to distributors and end-users. The products fall into thecategories of door hardware, hazardous area lighting and control gear, cablemanagement and general ironmongery. Transactions between business segments are minimal and transfer prices are seton an arm's length basis in a manner similar to transactions with third parties.The Group's geographical segments are determined by the location of the Group'scustomers. The group's assets and costs incurred are all located within theUnited Kingdom. Unaudited six Unaudited six months ended 30 months ended 30 Year ended 31 September September MarchTurnover by geographical location 2007 2006 2007 £000 £000 £000 United Kingdom 15,605 15,120 30,680Rest of Europe 3,411 3,210 7,170Other countries 591 698 1,338 19,607 19,028 39,188 3 Finance income and costs Unaudited six Unaudited six months ended 30 months ended 30 Year ended 31 September September March 2007 2006 2007 £000 £000 £000 Net interest on bank accounts (38) (48) (112)Finance income of pension scheme (note 7) 70 50 90 32 2 (22) 4 Income tax expense An effective rate of tax for the six months to 30 September 2007 of 30% has beenused for corporation tax and 28% for deferred tax in respect of all calculationsin these interim statements. 5 Dividends Dividends comprise: Unaudited six Unaudited six months ended 30 months ended 30 Year ended 31 September September March Pence per share 2007 2006 2007 £000 £000 £000 2005/06 final dividend paid July 2006 8.00 593 5932006/07 interim dividend paid December 2006 3.85 285 2006/07 final dividend paid July 2007 8.00 595 595 593 878 2007/08 interim dividend proposed 3.85 286 The interim dividend of 3.85 pence per share (2006: 3.85p) will be paid on 17December 2007 to all shareholders on the register as at close of business on 7December 2007. 6 Earnings per share The calculation of basic earnings per share is based on the profit/(loss) aftertax of £727,000 (Interim 2006: £69,000; Full year 2006/07: £(323,000)) and theweighted average number of shares in issue of 7,426,117 (Interim 2006:7,388,204; Full year 2006/07: 7,546,139). The calculation of underlying earnings per share is based on profit before theeffects of operating exceptional items, and is disclosed in addition to basicearnings per share as the directors believe that it allows a better comparisonbetween the results of different periods, and therefore a better assessment ofthe comparative trading performance of the Group. Operating exceptional itemscomprise profit on sale of a surplus property, legal costs and inventory writedown as set out in note 9. The profit used in calculating underlying earnings per share was £452,000(Interim 2006: £364,000; Full year 2006/07: £602,000) and the weighted averagenumber of shares as for basic earnings per share above. Diluted earnings per share and diluted underlying earnings per share use thesame profit figures as for basic or underlying earnings per share asappropriate, but use a figure for the number of shares that takes account of thedilutive effect of outstanding share options. The figure used for the number ofshares was 7,569,038 (Interim 2006: 7,402,435; Full year 2006/07: 7,546,139). 7 Pensions The Group operates a defined benefit pension scheme and a number of definedcontribution pension schemes on behalf of its employees. For definedcontribution schemes, contributions paid in the period are charged to the incomestatement. For the defined benefit scheme, actuarial calculations are performedin accordance with IAS 19 in order to arrive at the amounts to be charged in theincome statement and recognised in the statement of recognised income andexpenses. The defined benefit scheme is closed to new entrants. Under IAS 19, the Company recognises all movements in the actuarial fundingposition of the scheme in each period. This is likely to lead to volatility inshareholders' equity from period to period. The IAS 19 figures are based on a number of actuarial assumptions as set outbelow, which the actuaries have confirmed they consider appropriate. Theprojected unit credit actuarial cost method has been used in the actuarialcalculations. 30 September 30 September 31 March 2007 2006 2007 Discount rate 5.6% 5.0% 5.2%Salary increases 3.4% 2.9% 2.9%Pension increases (pre '97) 2.5% 2.5% 2.5%Pension increases (post '97) 3.0% 2.9% 2.9%Inflation (RPI) 3.4% 2.9% 2.9% The demographic assumptions used for 30 September 2007 and 31 March 2007, aregenerally the same as used in the last full actuarial valuation performed as at1 April 2007.The assumptions for 30 September 2006 are based on actuarialvaluations as at 1 April 2004. The defined benefit scheme funding has changed under IAS 19 as follows: Unaudited 6 months Unaudited 6 to months to Year toFunding status 30 September 30 September 31 March 2007 2006 2007 £000 £000 £000 Movement in scheme assets Fair value at start of period 13,952 13,690 13,690 Expected return on scheme assets 450 398 793 Actuarial losses (139) (342) (38) Employer contributions 184 194 376 Member contributions 35 45 78 Estimated benefits paid (350) (628) (947) Fair value at end of period 14,132 13,357 13,952 Unaudited 6 months Unaudited 6 months Year to to to 31 MarchFunding status 30 September 30 September 2007 2007 2006 £000 £000 £000Movement in scheme liablilitiesBenefit obligations at start of period 16,187 14,177 14,177Current service cost 41 46 82Interest cost 380 348 703Member contributions 35 45 78Actuarial (gain)/ losses (1,663) 587 2,094Estimated benefits paid (350) (628) (947) Benefit obligations at end of period 14,630 14,575 16,187 Recoverable deficit in scheme (498) (1,218) ( 2,235) Related deferred tax asset 139 365 670 Net pension liability (359) (853) (1,565) Components of pension cost Current service cost 41 46 82 Total charge disclosed in operating profit 41 46 82 Expected return on pension scheme assets 450 398 793 Interest on pension liabilities recognised as finance cost (380) (348) (703) Net return disclosed in finance income 70 50 90 Analysis of amount recognised in consolidated Statement of Recognised Income and Expense ("SORIE") Actual return less expected return on assets (139) (342) (38) Experience gain / (loss) on liabilities 1,663 (587) (2,094) Actuarial gain / (loss) recognised in SORIE 1,524 (929) (2,132) 8 Consolidated statement of changes in equity Unaudited six months Unaudited six months Year ended 31 ended 30 September ended 30 September March 2007 2006 2007 £000 £000 £000 Equity at start of period 10,942 13,542 13,542Total recognised income and expense for the period 1,794 (581) (1,815)Dividends paid (see note 5) (595) (592) (878)Share based payments 40 (10) (6)Shares issued and allotted 38 99 99 Equity at end of period 12,219 12,458 10,942 Shares issued and allotted relate to shares issued to satisfy the exercise ofshare options during the period. 9 Exceptional items Operating exceptional items in the six months to 30 September 2007 and which, inthe opinion of the directors, do not form part of the underlying operating costs/(income) of the businesses, comprise: Unaudited six months Unaudited six months Year ended ended 30 September ended 30 September 31 March 2007 2006 2007 £000 £000 £000Profit/(loss) on disposal of property plant 468 - (302)and equipmentLegal expenses (72) - -Inventory write down (65) - -Severance costs - - (224)Other closure costs - (421) (495)Costs of transfer to AIM - - (120) 331 (421) (1,141) On 4 April 2007 the Group disposed of a surplus property at Fred Duncombe Ltdfor proceeds of £705,000. The net book value of the property was £219,000 andthe costs of disposal amounted to £18,000. Legal expenses have been incurred in respect of the claim noted in last twoyears accounts in respect of alleged statutory nuisance in relation to theoperations of our Walsall Foundry which has continued to be pursued by theclaimants. The Company is continuing to vigorously defend this claim. The inventory write down relates to items that had been incorrectly valued inRussell Ductile Castings Limited as at 31 March 2007. This information is provided by RNS The company news service from the London Stock Exchange