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CMH Chamberlin News Story

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REG - Chamberlin PLC - Final Results <Origin Href="QuoteRef">CMH.L</Origin> - Part 1

RNS Number : 8949F
Chamberlin PLC
23 May 2017

CHAMBERLIN plc

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

FINAL RESULTS

for the year ended 31 March 2017

KEY POINTS

Continued encouraging progress, both strategically and operationally

o underpins expected significant growth in the current year and beyond

Revenues up 10% to 32.1m (2016: 29.1m)

Underlying profit before tax* increased significantly to 0.6m (2016: 0.2m)

Underlying diluted profit per share* more than tripled to 4.5p (2016: 1.4p)

IFRS diluted loss per share of 12.2p (2016: loss per share of 3.3p)

Capital expenditure of 3.9m (2016: 1.4m), included establishment of new machining facility:

o opens up new long term growth opportunities

o positions Chamberlin as the only fully integrated supplier of grey iron bearing housings in Europe

Net debt of 6.8m at year end, reflected machining facility investment

Foundry operations grew revenues by 8% to 21.3m

o major new automotive contract commenced in H2 as expected, with volumes rising in 2017

o new machining facility opened in Q4 to support move into fully machined components

o Walsall foundry's promotion to 'Category A' supplier in Q1 is providing additional growth opportunities

Engineering operations increased revenues by 15% to 10.8m

o initiatives in place to drive export sales and margins

Board remains confident of delivering further progress through 2017

* Underlying figures are stated before exceptional items, administration costs of the pension scheme and net financing costs on pension obligations, share based payment costs and the associated tax impact of these items.

Chairman, Keith Butler-Wheelhouse, commented:

"Chamberlin made important strategic and operational progress over the year, which will help to support a significant new phase of growth. Revenue increased by 10% to 32.1m and the underlying profit before tax increased significantly to 0.6m.

We have further developed Chamberlin's product offering with a significant investment in a machining facility in Walsall. Opened in the final quarter of the financial year, it improves our competitive positioning and will support further growth over the new financial year. It also underlines our ability to deliver a world class product at a globally competitive cost.

The Group remains well placed for further progress over the new financial year, supported by major new contracts."

Enquiries

Chamberlin plc (www.chamberlin.co.uk)

Kevin Nolan, Chief Executive

David Roberts, Finance Director

T: 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, Emma Pearson

T: 020 3178 6378

Chairman's Statement

Introduction

The Group delivered a significantly strengthened performance in the second half of the year, as expected, and financial results for the year are encouraging, with revenue growth of 10% at 32.1m and underlying profit before tax significantly increased to 0.6m from 0.2m last year.

These improved results were supported by both our foundry and engineering operations. Operating profit across our foundry activities rose by 55%, driven mainly by our Walsall foundry, and our engineering operations increased operating profit by 20% year-on-year.

We took some important strategic decisions in the year. Most significantly, we invested in a new machining facility in Walsall. The investment supports Chamberlin's move into fully machined components for automotive turbochargers. It also positions the Group as the only fully integrated supplier of grey iron bearing housings in Europe and is expected to open up new long term growth opportunities, as we have previously reported. We started production at the new facility in early 2017 and held a successful Open Day at the end of March 2017 which was attended by both customers and stakeholders.

The Board took the difficult decision of closing our non-core foundry at Leicester, which was the least specialised of the Group's foundries, at the end of 2016, and production at Leicester stopped in February 2017. An orderly decommissioning process is now underway.

Exidor has delivered good growth and management are implementing further initiatives to improve profitability. Petrel is showing encouraging growth by continuing to access new markets outside of its core oil and gas customer base, helped by the successful introduction of new LED product ranges.

Prospects for the current financial year remain very encouraging. The actions we have completed over the last year help to improve Chamberlin's competitive positioning and we are continuing to focus on margin development across both areas of operations. The automotive turbocharger sector is a growth area and with our new machining capability in operation, we are well placed to expand further. Production volumes from last year's major new automotive contract win should increase over 2017 and will help to support growth in revenue and profitability.

Results

Revenues for the year to 31 March 2017 increased by 10% to 32.1m (2016: 29.1m), with growth coming from new, cast-only, work at the Walsall foundry and increased market share from our two engineering businesses. This offset the loss of an industrial vehicle contract at our Scunthorpe facility. Revenues from the new machining facility, which opened in early 2017, made only a marginal contribution, as expected.

Underlying profit before tax increased significantly to 0.6m (2016: 0.2m) and diluted underlying profit per share more than tripled to 4.5p (2016: 1.4p).

On an IFRS basis, after accounting for restructuring costs of 0.1m (2016: 0.1m), administration and costs of the closed pension scheme of 0.4m (2016: 0.4m) and impairment of Leicester of 1.5m (2016: nil), the Group generated a loss of 1.0m (2016: loss of 0.3m). Diluted loss per share was 12.2p (2016: loss per share of 3.3p).

The net debt position at 31 March 2017 was 6.8m (2016: 3.2m), reflecting the investment in the new machining facility.

Dividend

In line with the current dividend policy, the Directors are not proposing the payment of a dividend for the period under review (2016: nil).

Staff

Our staff continue to demonstrate huge commitment and dedication as we develop the business, and on behalf of the Board, I would like to thank everyone for their hard work. The Group's improving business performance is supported by their talents and efforts.

Outlook

The Group is well positioned to deliver a further improvement in performance during the current financial year. Major new contract wins in the automotive turbocharger market support ongoing growth and our recently opened new machining plant helps to strengthen our market positioning and widen opportunities.

We look forward to reporting further progress at the Group's AGM on 20 July 2017.

Keith Butler-Wheelhouse

Chairman

22 May 2017

Chief Executive's Review

Chamberlin continues to make encouraging progress, building on our previous work to improve efficiencies and processes and to realign the cost base. The opening of our new machining operations in the fourth quarter of the financial year marked a high point for the Group and we remain excited about the additional growth opportunities the new facility brings. Our engineering operations are also progressing well and we intend to continue to focus on building export sales across both engineering businesses.

Foundries

Foundry revenues increased by 8% year-on-year to 21.3m (2016: 19.8m), with operating profit rising by 55% to 1.2m (2016: 0.8m).

Following our decision to close our non-core foundry at Leicester, the Group now operates two foundries, at Walsall and Scunthorpe, each with a different specialisation.

Our foundry at Walsall is our flagship operation and drives the majority of the foundry division's sales. Walsall's expertise is in producing small castings, typically below 3kg in weight, which have complex internal geometry. The complex geometry is achieved through the use of innovative core design and assembly techniques and, importantly, the foundry is capable of producing these castings in high volumes.

The automotive turbocharger segment is a major market for Walsall, with modern designs requiring precise alignment of cooling and lubrication passages to meet the increased performance demanded by modern engines. Legislation is a major driver of this market, with the requirement to reduce nitrogen dioxide emissions promoting the introduction of smaller, turbocharged petrol engines. Approximately 72% of Walsall's casting production is for petrol engines.

To support Chamberlin's growth in the automotive turbocharger market, we have invested an initial 2.1m in a machining facility near to our Walsall foundry which will enable us to supply turbo charger bearing housings which are fully machined in-house. This initiative is an exciting development which we expect to open up significant new long term growth opportunities. Walsall is one of only four specialist foundries in Europe with the technical capability of supplying castings for turbochargers and, with our new machining capability, the foundry is now the only fully integrated supplier of grey iron bearing housings in Europe.

The Scunthorpe foundry specialises in heavy castings weighing up to 6,000kg which have complex geometry and challenging metallurgy. These castings are used in applications where there is a requirement for high strength or high temperature performance, for instance in large process compressors, industrial gas turbines and mining, quarrying and construction equipment, and the majority of customers are Original Equipment Manufacturers ("OEMs"). Demand at the foundry was relatively subdued over the year but we have driven further operational improvement at the foundry and continue to work to deepen and broaden customer relationships.

Engineering

Revenues from the engineering operations, comprising our Exidor and Petrel businesses, increased by 15% year-on-year to 10.8m (2016: 9.4m) and operating profit rose by 20% to 0.8m (2016: 0.7m).

Our Exidor business is the UK market leader in panic and emergency exit door hardware. Its products are for life-critical applications and Exidor operates in a highly regulated market. Customers place great value on Exidor's heritage as a British designer and manufacturer, which delivers high quality, certified products. We are re-engineering the product range to support our growth drive and continue to target overseas sales while maintaining Exidor's leading position in the UK. The business delivered good growth and we are implementing lean manufacturing initiatives which will help to reduce costs and improve margins.

Petrel has a well-established reputation for designing and manufacturing high quality lighting and control equipment for use in hazardous or demanding environments. It supplies customers across the UK and Europe as well as internationally. Revenue growth over the year was very good and we are encouraged by the progress being made outside Petrel's traditional markets of oil & gas. The transition to LED lighting remains a key focus as well as developing the business's portable light fittings range. Approximately 31.3% of sales (2016: 11.8%) were generated from portable lighting and LED products over the year and this percentage should rise further. We have also expanded Petrel's commercial and technical resource to support ongoing growth.

Outlook

We expect further profitable revenue growth in the next financial year supported by major new contracts coming on stream.

Kevin Nolan

Chief Executive

22 May 2017

Finance Review

Overview

Sales increased by 10%during the year to 32.1m (2016: 29.1m). Gross profit margin increased to 21.6% from 20.3% in 2016.

Underlying profit before tax increased to 0.6m (2016: 0.2m). Diluted underlying earnings per share increased to 4.5p (2016: 1.4p).

The IFRS results show a loss of 1.0m (2016: 0.3m) and a statutory loss per share of 12.2p (2016: loss per share 3.3p).

The income statement has been presented to reflect that operations relating to the Leicester foundry are now discontinued, as required by IFRS 5.

Non-underlying exceptional items

Exceptional items in the year included 0.1m (2016: 0.5m) relating to the realignment of the cost base of the Group, and 1.5m (2016: nil) relating to the impairment of the Leicester assets and lease contracts.

Tax

The Group's underlying tax charge for the year was 0.2m (2016: 0.1m).

Cash generation and financing

Operating cash inflow from continuing operations was 0.3m (2016: 1.9m).

Capital expenditure for the year increased to 3.9m (2016: 1.4m). This was ahead of depreciation and amortisation of 1.2m (2016: 1.2m), reflecting the investment in the new machining facility.

Our overdraft and net borrowings at 31 March 2017 increased to 6.8m (2016: 3.2m).

Foreign exchange

It is the Group's policy to minimise risk to exchange rate movements affecting sales and purchases by economically hedging or netting currency exposures at the time of commitment, or when there is a high probability of future commitment, using currency instruments (primarily forward exchange contracts). A proportion of forecast exposures are hedged depending on the level of confidence and hedging is topped up following regular reviews. On this basis up to 50% of the Group's annual exposures are likely to be hedged at any point in time and the Group's net transactional exposure to different currencies varies from time to time.

Approximately 40% of the Group's revenues are denominated in Euros. During the year to 31 March 2017 the average exchange rate used to translate into GBP sterling was 1.26 (31 March 2016: 1.34).

Pension

The Group's defined benefit pension scheme was closed to future accrual in 2007. Following the last triennial valuation, as at 1 April 2013, contributions were set at 0.3m per year for the period under review increasing by 3% per year thereafter based on a deficit recovery period of 14 years. The triennial valuation as at 1 April 2016 has not yet been finalised. However, the Group is confident that this will not result in a materially increased deficit contribution, albeit at the expense of a longer deficit recovery period due to lower gilt yields.

The pension expense for the defined benefit scheme was 0.4m in 2017 (2016: 0.4m), and is shown in non-underlying. The Group cash contribution during the year was 0.3m (2016: 0.3m).

The Group operates a defined contribution pension scheme for its current employees. The cost of 0.4m (2016: 0.3m) is included within underlying operating performance.

The IAS 19 deficit at 31 March 2017 was 5.2m (2016: 4.7m). The increase principally reflects the decrease in the discount rate used to calculate scheme liabilities, as a consequence of a fall in bond yields over the last year, partially offset by the over performance of assets against expected levels.

David Roberts

22 May 2017

Consolidated Income Statement

for the year ended 31 March 2017

Year ended 31 March 2017

Year ended 31 March 2016

Note

Underlying

+Non-underlying

Total

Underlying

+ Non-

underlying

Total

000

000

000

000

000

000

Revenue

3

32,119

-

32,119

29,120

-

29,120

Cost of sales

(25,173)

-

(25,173)

(23,208)

-

(23,208)

Gross profit

6,946

-

6,946

5,912

-

5,912

Other operating expenses

6

(6,203)

(365)

(6,568)

(5,529)

(427)

(5,956)

Operating profit/ (loss)

743

(365)

378

383

(427)

(44)

Finance costs

4

(164)

(160)

(324)

(150)

(142)

(292)

Profit/ (loss) before tax

579

(525)

54

233

(569)

(336)

Tax (expense)/ credit

(205)

105

(100)

(119)

104

(15)

Profit/ (loss) for the year from continuing operations

374

(420)

(46)

114

(465)

(351)

Discontinued operations

Profit/ (loss) for the year from discontinued operations

219

(1,146)

(927)

336

(246)

90

Profit/ (loss) for the year

attributable to equity holders of the parent company

593

(1,566)

(973)

450

(711)

(261)

Earnings/ (loss) per share from continuing operations:

Basic

5

(0.6)p

(4.4)p

Underlying

5

4.7p

1.5p

Diluted

5

(0.6)p

(4.4)p

Diluted underlying

5

4.5p

1.4p

Earnings/ (loss) per share from discontinued operations:

Basic

5

(11.6)p

1.1p

Underlying

5

2.8p

4.2p

Diluted

5

(11.6)p

1.1p

Diluted underlying

5

2.6p

4.1p

Total earnings/ (loss) per share:

Basic

5

(12.2)p

(3.3)p

Underlying

5

7.5p

5.7p

Diluted

5

(12.2)p

(3.3)p

Diluted underlying

5

7.1p

5.5p

+ Non-underlying items represent exceptional items as disclosed in note 6, administration costs of the pension scheme and net financing costs on pension obligations, share based payment costs and the associated tax impact of these items.

Consolidated Statement of Comprehensive Income

for the year ended 31 March 2017

2017

2016

000

000

Deferred/ current tax on re-measurement losses on pension scheme

122

51

Movement on deferred tax on re-measurement losses relating to rate change

(52)

(93)

Net other comprehensive loss that will not be recycled to profit and loss

(542)

(296)

Other comprehensive loss for the year net of tax

(271)

(794)

Total comprehensive loss for the period attributable to equity holders of the parent Company

(1,244)

(1,055)

Consolidated Balance Sheet

at 31 March 2017

Note

31 March 2017

31 March 2016

000

000

Non-current assets

Property, plant and equipment

10,179

8,112

Intangible assets

461

387

Deferred tax assets

1,498

1,370

12,138

9,869

Current assets

Inventories

3,347

2,899

Trade and other receivables

7,556

6,195

10,903

9,094

Total assets

23,041

18,963

Current liabilities

Financial liabilities

7

5,520

2,941

Trade and other payables

6,899

5,727

12,419

8,668

Non-current liabilities

Financial liabilities

7

1,308

251

Deferred tax

27

59

Provisions

200

200

Defined benefit pension scheme deficit

8

5,209

4,692

6,744

5,202

Total liabilities

19,163

13,870

Capital and reserves

Share capital

1,990

1,990

Share premium

1,269

1,269

Capital redemption reserve

109

109

Hedging reserve

(72)

(343)

Retained earnings

582

2,068

Total equity

3,878

5,093

Total equity and liabilities

23,041

18,963

Consolidated Cash Flow Statement

for the year ended 31 March 2017

Year ended 31 March 2017

Year ended

31 March 2016

000

000

Operating activities

Profit/ (loss) for the year before tax

54

(336)

Adjustments to reconcile profit/ (loss) for the year to net cash (outflow)/ inflow from operating activities:

Net finance costs excluding pensions

164

150

Depreciation of property, plant and equipment

1,125

1,104

Amortisation of software

90

97

Amortisation and impairment of development costs

7

11

Profit on disposal of property, plant and equipment

(1)

(12)

Share based payments

28

53

Difference between pension contributions paid and amounts recognised in the Consolidated Income Statement

(95)

(106)

(Increase)/ decrease in inventories

(676)

934

(Increase)/ decrease in receivables

(1,664)

880

Increase/ (decrease) in payables

1,220

(874)

Income taxes received

-

1

Cash inflow from continuing operations

252

1,902

Cash (outflow)/ inflow from discontinued operations

(358)

378

Net cash (outflow)/ inflow from operating activities

(106)

2,280

Investing activities

Purchase of property, plant and equipment

(3,732)

(1,418)

Purchase of software

(41)

(31)

Development costs

(133)

(12)

Disposal of plant and equipment

9

33

Net cash outflow from investing activities

(3,897)

(1,428)

Financing activities

Interest paid

(164)

(150)

Repayment of asset loans

(162)

(162)

Net invoice finance draw down/ (repayment)

1,421

(459)

Import loan facility draw down

1,235

-

Finance leases taken out

1,583

84

Net cash inflow/ (outflow) from financing activities

3,913

(687)

Net (decrease)/increase in cash and cash equivalents

(90)

165

Cash and cash equivalents at the start of the year

(126)

(291)

Cash and cash equivalents at the end of the year

(216)

(126)

Cash and cash equivalents included in discontinued operations

(332)

(479)

Cash and cash equivalents for continuing operations

116

353

Cash and cash equivalents comprise:

Bank overdraft

(216)

(126)

(216)

(126)

Consolidated statement of changes in equity

Share capital

Share premium account

Capital redemption reserve

Hedging reserve

Retained earnings

Attributable to equity holders of the parent

000

000

000

000

000

000

Balance at 1 April 2015

1,990

1,269

109

155

2,586

6,109

Loss for the year

-

-

-

-

(261)

(261)

Other comprehensive income for the year net of tax

-

-

-

(498)

(296)

(794)

Total comprehensive income/ (expense)

-

-

-

(498)

(557)

(1,055)

Share based payment

-

-

-

-

53

53

Deferred tax on employee share options

-

-

-

-

(14)

(14)

Total of transactions with shareholders

-

-

-

-

39

39

Balance as at 1 April 2016

1,990

1,269

109

(343)

2,068

5,093

Loss for the year

-

-

-

-

(973)

(973)

Other comprehensive income for the year net of tax

-

-

-

271

(542)

(271)

Total comprehensive income/ (expense)

-

-

-

271

(1,515)

(1,244)

Share based payments

-

-

-

-

28

28

Deferred tax on employee share options

-

-

-

-

1

1

Total of transactions with shareholders

-

-

-

-

29

29

Balance at 31 March 2017

1,990

1,269

109

(72)

582

3,878

Share premium account

The share premium account balance includes the proceeds that were above the nominal value from issuance of the Company's equity share capital comprising 25p shares.

Capital redemption reserve

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

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 PRELIMINARY ANNOUNCEMENT

1. AUTHORISATION OF FINANCIAL STATEMENTS AND STATEMENT OF COMPLIANCE WITH IFRS

The Group's and Company's financial statements of Chamberlin for the year ended 31 March 2017 were authorised for issue by the board of directors on 22 May 2017 and the balance sheets were signed on the board's behalf by Kevin Nolan and David Roberts. The Company is a public limited Company incorporated and domiciled in England & Wales. The Company's ordinary shares are traded on the AIM market of the London Stock Exchange.

The Group's financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union. The Company's financial statements have been prepared in accordance with IFRS as adopted by the European Union and as applied in accordance with the provisions of the Companies Act 2006.

The financial information set out in this announcement does not constitute the statutory accounts of the Group for the years to 31 March 2017 or 31 March 2016 but is derived from the 2017 Annual Report and Accounts. The Annual Report and Accounts for 2016 have been delivered to the Registrar of Companies and the Group Annual Report and Accounts for 2017 will be delivered to the Registrar of Companies in due course. The auditors, Grant Thornton UK LLP, have reported on the accounts for the year ended 31 March 2017 and have given an unqualified report which does not contain a statement under Sections 498(2) or 498(3) of the Companies Act 2006 nor an emphasis of matter paragraph.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of preparation

The consolidated financial statements are presented in sterling and all values are rounded to the nearest thousand pounds (000) except when otherwise indicated. The Company has taken advantage of the exemption provided under section 408 of the Companies Act 2006 not to publish its individual income statement and related notes.

Basis of consolidation

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

Accounting policies

The preliminary announcement has been prepared on the same basis as the financial statements for the year ended 31 March 2017.

Going concern

After making enquiries, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the Financial Statements.

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 provides manufactured and imported products to distributors and end-users operating in the safety and security markets. The products fall into the categories of door hardware, hazardous area lighting and control gear.

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

Segmental revenue

Segmental operating profit

Year ended

2017

2016

2017

2016

000

000

000

000

Foundries

21,333

19,767

1,188

764

Engineering

10,786

9,353

816

679

Continuing operations

32,119

29,120

2,004

1,443

Discontinued operations

2,810

5,868

296

448

Segmental results

34,929

34,988

2,300

1,891

Reconciliation of reported segmental operating profit

Segment operating profit

2,300

1,891

Shared costs (excluding share based payment charge)

(1,261)

(1,060)

Exceptional and non-underlying costs

(365)

(427)

Net finance costs

(324)

(292)

Loss from discontinued operation

(296)

(448)

Profit/ (loss) before tax from continuing operations

54

(336)

Segmental assets

Foundries

16,861

13,560

Engineering

5,508

4,768

22,369

18,328

Segmental liabilities

Foundries

(5,051)

(4,313)

Engineering

(2,048)

(1,614)

(7,099)

(5,927)

Segmental net assets

15,270

12,401

Unallocated net liabilities

(11,392)

(7,308)

Total net assets

3,878

5,093

Unallocated net liabilities include the pension liability of 5,209,000 (2016: 4,692,000), financial liabilities of 6,828,000 (2016: 3,192,000), deferred tax asset of 645,000 (2016: 564,000) and other assets of Nil (2016: 12,000).

Capital expenditure, depreciation and amortisation and impairment

Capital additions

Foundries

Engineering

Total

2017

2016

2017

2016

2017

2016

000

000

000

000

000

000

Property, plant and equipment

3,611

1,381

127

87

3,738

1,468

Software

35

13

6

18

41

31

Development costs

-

-

133

12

133

12

Depreciation, amortisation and impairment

Foundries

Engineering

Total

2017

2016

2017

2016

2017

2016

000

000

000

000

000

000

Property, plant and equipment

(984)

(985)

(213)

(250)

(1,197)

(1,235)

Software

(81)

(85)

(12)

(12)

(93)

(97)

Development costs

-

-

(7)

(11)

(7)

(11)

(ii) By geographical segment

2017

2016

Revenue by location of customer

000

000

United Kingdom

15,031

15,588

Italy

4,702

3,343

Germany

3,736

4,192

Rest of Europe

6,159

3,824

Other countries

2,491

2,173

32,119

29,120

4. FINANCE COSTS

2017

2016

000

000

Bank overdraft interest payable

(164)

(150)

Finance cost of pensions

(160)

(142)

(324)

(292)

5. EARNINGS/ (LOSS) PER SHARE

The calculation of earnings/ (loss) per share is based on the profit attributable to shareholders and the weighted average number of ordinary shares in issue. In calculating the diluted earnings/ (loss) per share, adjustment has been made for the dilutive effect of outstanding share options. Underlying earnings/ (loss) per share, which excludes non-underlying items, as analysed below, has also been disclosed as the Directors believe this allows a better assessment of the underlying trading performance of the Group. Exceptional costs are detailed in note 6.

2017

2016

000

000

Loss for basic earnings per share

(973)

(261)

Exceptional costs- continuing operations

138

143

Exceptional costs- discontinued operations

1,451

320

Net financing costs and service cost on pension obligations

359

372

Share based payment charge

28

54

Taxation effect of the above

(410)

(178)

Profit for the year from discontinued operations

(219)

(336)

Earnings for underlying earnings per share

374

114

2017

2016

Number

'000

Number

'000

Weighted average number of ordinary shares

7,958

7,958

Adjustment to reflect shares under options

350

160

Weighted average number of ordinary shares - fully diluted

8,308

8,118

As at 31 March 2017 and 31 March 2016 there is no adjustment in the total diluted loss per share calculation for the 350,000 and 160,300 shares respectively under option as they are required to be excluded from the weighted average numberof shares for diluted loss per share as they are anti-dilutive for the period then ended.

6. EXCEPTIONAL COSTS AND NON-UNDERLYING

2017

2016

000

000

Group reorganisation

138

143

Exceptional costs

138

143

Share based payment charge

28

54

Defined benefit pension scheme administration costs

199

230

Non-underlying other operating expenses

365

427

Finance cost of pensions

160

142

Taxation

- tax effect of exceptional and non-underlying costs

(105)

(104)

420

465

Non-underlying exceptional costs of discontinued operation

1,451

320

Tax effect of exceptional costs

(305)

(74)

1,146

246

During 2016 and continuing into 2017 the Group continues to rationalise its cost base. 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 assetimpairment, redundancy and site clean up costs, relate to this closure.

7. FINANCIAL LIABILITIES

2017

2016

000

000

Current liabilities

Bank overdraft

216

126

Current instalments due on asset finance loans

200

200

Invoice finance facility

3,510

2,582

Import loan facility

1,235

-

Current instalments due on finance leases

359

33

5,520

2,941

Non-current liabilities

Instalments due on asset finance loans

-

200

Instalments due on finance leases

1,308

51

Total financial liabilities

6,828

3,192

The overdraft is held with HSBC Bank plc as part of the Group facility of 500,000, is secured on all assets of the business, is repayable on demand and is renewable in March 2018. Interest is payable at 2.0% (2016: 2.0%) over base rate.

Asset finance loans are secured against various items of plant and machinery across the Group. These loans are repayable by monthly instalments for a period of one year to March 2018. Interest is payable at 3.25% over base rate.

The import loan facility is used to facilitate the purchase of equipment for the new machine centre. Once each asset is commissioned the import loan facility is repaid in full, facilitated by a sale and lease back on finance lease. Interest is payable at 3.25% over base rate.

Other finance leases are secured against the specific item to which they relate. These leases are repayable by monthly instalments for a period of 5 years to March 2022. Interest is payable at fixed amounts that range between 3.1% and 6.1%.

Invoice finance balances are secured against the trade receivables of the Group and are repayable on demand. Interest is payable at 2.3% over base rate. The maximum facility as at 31 March 2017 is 7.0m. 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 2017 was199,000 (2016: 230,000) plus 160,000 of financing cost (2016: 142,000).

The other schemes within the Group are defined contribution schemes and the pension cost represents contributions payable. The total cost of defined contributions schemes was 353,000 (2016: 331,000). The notes below relate to the defined benefit scheme.

The actuarial liabilities have been calculated using the Projected Unit method. The major assumptions used by the actuary were (in nominal terms):-

31 March

2017

31 March

2016

31 March

2015

Salary increases

n/a

n/a

n/a

Pension increases (post 1997)

3.3%

2.9%

2.9%

Discount rate

2.5%

3.5%

3.2%

Inflation assumption - RPI

3.3%

2.9%

2.9%

Inflation assumption - CPI

2.3%

2.1%

1.8%

Demographic assumptions are all based on the S2PA (2016: S1NA) mortality tables with a 1% 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 pensions relating to an employee retiring in 2032.

2017

Years

2016

Years

Current pensioner at 65 - male

21.1

21.4

- female

22.9

23.7

Future pensioner at 65 - male

22.1

22.4

- female

24.0

24.8

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

The triennial valuation as at 1 April 2016 is currently being negotiated. The triennial valuation as at 1 April 2013 concluded that in return for maintaining the previous contribution arrangements and extendingthe deficit reduction period to 2028, the Company has given security over the Group's land and buildings to the pension scheme. With effect from 1 April 2017deficit reduction contributions will increase to 21,890 per month (previously 21,252 per month), with a 3% annual increase thereafter.

The contributions expected to be paid during the year to 31 March 2018 are 263,000.

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

2017

000

2016

000

Equities/ diversified growth fund

12,325

11,719

Bonds

1,143

1,123

Insured pensioner assets

30

9

Cash

50

123

Market value of assets

13,548

12,974

Actuarial value of liability

(18,757)

(17,666)

Scheme deficit

(5,209)

(4,692)

Related deferred tax asset

886

845

Net pension liability

(4,323)

(3,847)

Net benefit expense recognised in profit and loss

2017

000

2016

000

Operating costs

(199)

(230)

Net interest expense

(160)

(142)

(359)

(372)

Re-measurement losses/ (gains) in other comprehensive income

2017

000

2016

000

Actuarial losses/ (gains) arising from changes in financial assumptions

2,703

(575)

Actuarial gains arising from changes in demographic assumptions

(599)

-

Experience adjustments

(254)

(5)

Return on assets (excluding interest income)

(1,238)

834

612

254

2017

000

2016

000

Actual return on plan assets

1,673

(396)

Movement in deficit during the year

2017

000

2016

000

Deficit in scheme at beginning of year

(4,692)

(4,544)

Employer contributions

255

248

Net interest expense

(160)

(142)

Actuarial loss

(612)

(254)

Deficit in scheme at end of year

(5,209)

(4,692)

Movement in scheme assets

2017

000

2016

000

Fair value at beginning of year

12,974

14,008

Interest income on scheme assets

435

438

Return on assets (excluding interest income)

1,238

(834)

Employer contributions

255

248

Benefits paid

(1,354)

(886)

Fair value at end of year

13,548

12,974

Movement in scheme liabilities

2017

000

2016

000

Benefit obligation at start of year

17,666

18,552

Interest cost

595

580

Actuarial losses/ (gains) arising from changes in financial assumptions

2,703

(575)

Actuarial gains arising from changes in demographic assumptions

(599)

-

Experience adjustments

(254)

(5)

Benefits paid

(1,354)

(886)

Benefit obligation at end of year

18,757

17,666

The weighted average duration of the pension scheme liabilities are 14.0 years (2016: 14.5 years).

A quantitative sensitivity analysis for significant assumptions as at 31 March 2017 is as shown below:

Present value of scheme liabilities when changing the following assumptions:

2017

000

Discount rate increased by 1% p.a.

16,443

RPI and CPI increased by 1% p.a.

19,859

Mortality- members assumed to be their actual age as opposed to 1 year older

19,575

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

Copies of the Annual Report will be available on the Group's website, www.chamberlin.co.uk from 24 June 2017 and from the Group's head office at Chuckery Road, Walsall, West Midlands, WS1 2DU. The AGM will be held on 20 July 2017 at Chuckery Road, Walsall, West Midlands,WS1 2DU.


This information is provided by RNS
The company news service from the London Stock Exchange
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