ANNUAL REPORT
AND ACCOUNTS
for the year ended 31 March 2020
STOCK CODE: CMH
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DIFFICULT
THINGS
DONE
WELL
DIFFICULT
THINGS
DONE
WELL
Success in UK engineering
has not been easy to
achieve in recent years,
but its requirements can
be simply stated; winners
must do difficult things
and must do them well.
We define “difficult things” as
activities with high engineering
content delivering technically
demanding products or
processes. To take profitable
advantage of them, it is essential
that a business is properly
managed and performs well.
”The year under review has been
difficult. However, down-sizing
cost reductions and careful cash
management allowed the Group to
operate effectively.
Chairman, Keith Butler-Wheelhouse
Investment Proposition
Æ Operating in markets with high barriers to entry
protected by process know-how or market
regulation
Æ Operating across diversified markets with sales
driven by the global engineering economy – 66%
of sales are exported
Æ Growth opportunity in the turbocharger castings
market benefiting from regulatory drivers
Æ Strong, credible management team with a
proven track record
Æ Focused UK manufacturing in
niche markets
Visit us online
For more information on Chamberlin Group
operations please visit our website at
www.chamberlin.co.uk
ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2020chamberlin plc Highlights
Financial
Æ Revenue of £26.1m (2019: £33.0m) was 21%
lower than prior year reflecting tough trading
conditions in the first half
Æ Second-half revenues increased by 4%
compared to the first half
Æ Underlying operating loss before non-underlying
costs of £1.1m (2019: £1.0m loss), with the
second half broadly break-even
Æ Underlying loss before taxation reduced to
£1.4m (2019: £1.5m), reflecting lower financing
costs on reduced net debt
Æ Non-underlying costs of £0.9m include
significant downsizing costs of £0.8m, mostly
taken in the first half, which contributed to the
improved operating result in the second half
Æ Statutory loss before tax reduced to £2.3m
(2019: £5.0m) as impairment charge taken in
2019 was not repeated
Æ Underlying diluted loss per share for continuing
operations reduced to 18.7p (2019: 19.5p)
Æ Total diluted loss per share of 30.1p (2019:
earnings per share of 18.2p)
Æ Net debt reduced to £4.6m (2019: £5.4m)
Operational
Æ Foundry revenues fell by 21% to £23.1m
(2019: £29.3m) reflecting difficult trading
conditions in the automotive sector
Æ Foundry operating loss reduced to £0.1m
(2019: £0.2m loss) driven by strong profit
contribution of £0.4m in the second half
Æ Engineering revenues decreased by 16% to
£3.0m (2019: £3.6m), primarily due to Brexit
uncertainties impacting customer demand,
with the operating result reducing to break-
even (2019: £0.2m profit)
REVENUE
£26.1m
2020
2019
26.1
33.0
STATUTORY LOSS
BEFORE TAX
(£2.3m)
2020
2019
(2.3)
(5.0)
UNDERLYING LOSS
BEFORE TAX
(£1.4m)
2020
2019
(1.4)
(1.5)
TOTAL (LOSS)/
EARNINGS
PER SHARE
(30.1p)
2020
2019
(30.1)
19.2
Overview
Contents
OVERVIEW
Highlights
Chairman’s Statement
Group Overview
STRATEGIC REPORT
Chief Executive’s Review (including
performance review of Engineering and
Foundry divisions)
Measurements and Targets
Principal Risks and Uncertainties
CORPORATE GOVERNANCE
The Board
Corporate Governance Report
Remuneration Report
Directors’ Report
01
02
03
04
06
07
11
12
16
18
Statement of Directors’ Responsibilities 20
FINANCIAL STATEMENTS
Introduction
Primary Statements
Section 1 – Basis of Preparation
Section 2 – Results of the Year
23
24
32
33
Section 3 – Operating Assets and Liabilities 41
Section 4 – Capital Structure
Section 5 – Other Supporting Notes
Independent Auditor’s Report
Audit Committee Report
Parent Company Financial Statements
Five Year Financial Summary
Shareholder Information
50
52
68
74
75
78
79
Underlying figures are stated before non-underlying costs
(restructuring costs, hedge ineffectiveness, impairment, GMP
equalisation, onerous leases and share based payment costs)
together with the associated tax impact.
Underlying comparative figures have been restated as
disclosed in Note 27.
01
www.chamberlin.co.ukSTOCK CODE: CMHOverview CHAIRMAN’S
STATEMENT
KEITH BUTLER-WHEELHOUSE
CHAIRMAN
”The year under review
was a difficult period for
Chamberlin. However,
downsizing cost
reductions and careful
cash management
allowed the Company to
operate effectively. Future
expectations will depend
on a continued increase in
non-automotive activity,
reasonable turbocharger
related business and the
impact of COVID-19
diminishing.”
The year under review was a difficult
period for Chamberlin. Revenue was
21% below the prior year, with a loss
before tax of £2.3m, including £0.8m
of restructuring costs. However,
downsizing, cost reductions and
careful cash management allowed the
Company to operate effectively.
The Board and Staff
In July 2019, Keith Jackson retired
from the Board after 14 years, having
joined as a Non-Executive Director in
2005. Keith will continue in his role as
Trustee Chairman of the Chamberlin
and Hill Staff Pension and Life Assurance
Scheme. David Flowerday has replaced
Keith as chair of the Audit Committee.
On behalf of the Board, we would like to
place on record our thanks to Keith for
his many years of service to Chamberlin.
He has made a significant contribution
and we wish him well in the future.
Subsequent to the year end the Board
was strengthened by the appointment of
Trevor Brown in March 2021. There have
been no other changes to the Board.
As part of the overall restructuring
mentioned above, there has been
a consolidation of many positions,
including senior roles, in order to reduce
costs. On behalf of the Board, I would like
to give our thanks to all our employees
during what has been a difficult and
challenging period.
Subsequent events
COVID-19 hit us very hard in April 2020
and to a lesser degree in the months
since. In December 2020 our principal
customer BorgWarner gave notice of the
early termination of all existing contracts,
dealing a body blow to the company.
This required Chamberlin to seek
additional finance in order to remain
solvent and pursue substantial further
restructuring. A share issue was
successfully undertaken in March 2021
generating £3.5m before costs.
The publication of these accounts was
delayed first by Covid, then by the loss of
the BorgWarner contract and finally by
the share issue.
Outlook
This outlook statement was first
prepared in November 2020, prior to
events concerning BorgWarner. As
penned in November the outlook was
uncertain, principally due to COVID 19.
As rewritten in April 2021 the market
outlook is more positive, with all
businesses enjoying sales levels above
those of the prior year in recent months,
excluding the effect of BorgWarner.
Whilst the COVID-19 outlook in the UK is
much brighter, things remain uncertain,
particularly in Continental Europe where
many of our customers are based.
The substantial further restructuring
mentioned above will reduce the
overhead structure and the direct
workforce to that needed for the
reduced turnover caused by the
BorgWarner contract termination.
The Company continues to explore
additional opportunities for all business
units, including non- traditional products
and e-commerce.
Management are confident that sales at
Chamberlin will stabilise in the first half of
the 2021/22 financial year and will then
grow from the post BorgWarner low,
with the growth gathering pace in the
second half. The Board expects growth
from all business units and a return to
profitability and cash generation post
our restructuring.
KEITH BUTLER_WHEELHOUSE
CHAIRMAN
15 April 2021
02
ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2020chamberlin plc GROUP AT
A GLANCE
GROUP OVERVIEW
Product Areas
Chamberlin operates across four locations
in the UK. The Foundry Division specialises in
technically demanding castings in complex
shapes and in specialist metallurgies.
Work is allocated across its two foundry sites and
one machining facility based on size and metallurgy
as follows:
Æ Light Castings based in Walsall produce castings
up to 20kg in grey iron.
Æ Heavy Castings based in Scunthorpe make
100kg and 6 tonne castings, again in a wide
variety of iron grades.
Æ The machining centre, opened in 2017,
supports the light castings made in Walsall.
The engineering business supplies to regulated
markets operating from a site in Birmingham.
UK Manufacturing
FOUNDRIES
1 Plc Head Office & Chamberlin & Hill
Castings, Walsall
2 Chamberlin & Hill Castings,
machining facility, Walsall
3 Russell Ductile Castings,
Scunthorpe
ENGINEERING
4 Petrel, Birmingham
Global Sales
Engineering activity outside of the UK
is a key driver of demand.
Direct exports account for 66% of output with our
customers located in Europe, America, the Middle East and
Asia. Global demand for engineered products is strong and
our customers are typically leaders in their sectors.
3
1
2
4
03
www.chamberlin.co.ukSTOCK CODE: CMHOverview CHIEF EXECUTIVE’S
REVIEW
KEVIN NOLAN
CHIEF EXECUTIVE
”A reduction in first-half
revenues necessitated
action to right-size the
cost base. This action
laid the foundation for
an improved operating
performance in the
second-half of the year.
”
been clarified.
In the second half, the increase in
revenue from the new non-automotive
contracts helped to outweigh the
continuing effect of automotive
contracts winding down. Overall,
second-half revenues were 4% above
those in the first half. The lower cost
base enabled the second half pre-tax
loss to be reduced to £0.5m, including a
further £0.1m restructuring costs and
a small initial COVID-19 effect in March.
Excluding both, profit before tax for the
second half was essentially break-even.
Looking at the year, revenues at £26.1m
were 21% below the prior year, with
a loss before tax of £2.3m, including
£0.8m restructuring costs.
The lower activity enabled working
capital to be reduced, capital spend was
constrained to the diminished business
opportunity and, despite the loss for the
year, net debt decreased from £5.4m to
£4.6m.
KEVIN NOLAN
CHIEF EXECUTIVE
15 April 2021
Early in this financial year, Chamberlin’s
revenues suffered a reduction, with
several factors impacting the Group in
the first half:
Æ A reduction in European car
production adversely affected both
the Walsall foundry and machining
facility.
Æ The issues at British Steel impacted
our Scunthorpe heavy castings
foundry
Æ Petrel, our emergency lighting
business, found many construction
projects were delayed by
uncertainties in the UK economy
associated with Brexit.
Most importantly, and particularly for
our dominant turbocharger market,
the continuing lack of clarity over future
tariffs on trade with the EU frustrated
securing contracts on new models
needed to replace contracts on older
vehicles reaching the end of their
production run.
This all reflected in first half revenues of
£12.8m, a reduction of 26% compared
with the previous year. This necessitated
a substantial reduction in the cost base,
which occurred during the first half, with
the number of employees reducing in
line with sales. The Group produced a
pre-tax loss of £1.8m in the first half,
which included £0.7m of restructuring
costs.
The restructuring programme was
designed to right-size the cost base
to the expected future demand, with
the latter buoyed in the second half by
the successful negotiation of several
new non-automotive contracts, and
the potential to be further improved
by additional automotive work now the
future trading regime with the EU has
04
ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2020chamberlin plc
PERFORMANCE
REVIEW
FOUNDRY Division
Our three foundry division
sites cast a range of
products ranging from 1kg
up to 6,000kg and deliver
castings with complex
geometry and challenging
metallurgy.
Operating (loss)/profit
2019
2020
438
133
(344)
(211)
(522)
(84)
H1 H2 Total
H1 H2 Total
ENGINEERING Division
Our engineering site
produces lighting for use
in hazardous and explosive
environments and other
industrial applications.
Operating (loss)/profit
2019
251
2020
119
132
18
H1 H2 Total
(63)
(45)
H1 H2 Total
Revenue split
24%
76%
Heavy Castings
Light Castings
Revenue split
100%
Hazardous
environments
05
www.chamberlin.co.ukSTOCK CODE: CMHStrategic Report MEASUREMENTS
AND TARGETS
Business performance is measured through Group-wide
targets and improvement measures.
Each Chamberlin business unit participates in an annual round
of planning meetings with the Executive Management, during
which performance and future plans for that business are
reviewed and updated.These business plans are all aligned with
the Group business strategy and include specific local and
divisional targets and key performance indicators (‘KPIs’).
In addition, individual business reviews take place throughout
the year on a regular basis enabling the Board to assess
performance against tactical and strategic milestones.
Key Performance Indicators (KPIs)
KPIs are used to measure and evaluate Group performance
against targets and monitor various activities throughout the
Group. The main key performance indicators employed in the
Group are set out below:
KPI
RETURN
ON SALES
(%)
The ratio of the segment’s
trading profit to the
segment’s sales.
The trading profit is defined
in the segmental analysis in
Note 3.
CASH FLOW
(£M)
The net decrease/
(increase) in net debt
Foundries
Engineering
(0.4)
(1.5)
GROUP
Year ended 31 March 2020
(4.3)
2020
2019
(0.4)
(0.7)
2020
2019
(1.5)
6.9
2020
2019
0.8
2020
2019
4.2
(4.3)
(3.1)
0.8
RETURN ON
NET ASSETS
(%)
The ratio of the segment’s
trading profit to the
segment’s net assets (as
analysed in Note 3).
SALES PER
EMPLOYEE
(£000)
The ratio of the segment’s
sales to the segment’s
average number of
employees.
ACCIDENT
FREQUENCY
RATE
The number of accidents
per 100,000 hours worked
averaged for the full year.
(1.0)
(10.1)
(44.2)
(1.0)
(1.9)
2020
2019
(10.1)
41.4
2020
2019
100.0
108.5
97.2
100.0
104.1
2020
2019
108.5
109.5
2020
2019
(44.2)
(20.7)
97.2
100.8
9.4
9.4
2.1
8.6
2020
2019
17.0
2.1
2.2
2020
2019
8.6
13.2
2020
2019
2020
2019
2020
2019
The Directors note that the KPIs reflect the trading conditions of the Group during the year.
Calculations are based on numbers disclosed in the segmental analysis in Note 3 to the accounts and are shown before non-
underlying items as detailed in Note 11 to the accounts. The Group percentages incorporate shared costs.
06
ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2020chamberlin plc PRINCIPAL RISKS
AND UNCERTAINTIES
Management throughout the Group uses a common model to identify and assess the impact of risks to their businesses. The
Group’s risk management process is described further in the Corporate Governance Report on pages 12 to 15.
Risk
COVID-19
Description of risk & potential impact
Mitigation
Global pandemic (also known as the coronavirus) has had
a severe impact world-wide on both product demand,
human behaviour and also working practices.
Brexit/foreign currency
fluctuation
Machine shop capacity
utilisation
Raw material pricing
fluctuation
Failure of our
health, safety and
environmental (‘HSE’)
controls resulting in
harm to employees or
other stakeholders
IT failure/system
collapse
and loss of data
Market deterioration
Approximately 63% of Group revenue is derived in Euros.
Significant Brexit disruption in the event of no trade deal
with the EU could lead to exchange rate fluctuations and
the imposition of tariffs on goods sold to and purchased
from the EU which could have a material impact on the
financial performance of the Group.
As mentioned in the outlook statement, a major customer
has informed Chamberlin of an earlier than planned
transition to the next product evolution, with the new
product awarded to another supplier. This reduction in
revenue could have a material impact on the financial
performance of the Group.
The price of many raw materials is dependent upon
movements in commodity prices, especially iron.
We recognise that we have a duty of care to our
employees. We have made great progress in recent years
but understand the impact on our employees from the
failure of this obligation. This could result in injury or death
to our employees or to others and environmental damage
with the consequential impact of reputational damage and
risk of regulator action.
We utilise a significant number of IT systems to support
the Group’s production, technology, marketing, sales and
financial functions. Failure of any of the systems, corruptions
or loss of data could have a major impact on operations.
We are a capital intensive business with a high level of
fixed costs. Deterioration in our key markets could have a
material impact on the financial performance of the Group.
Production failures
Due to the complex technical nature and fine production
tolerances of our products, an unstable production
process can result in significant scrap, which could have a
significantly adverse impact on results.
The Group is managing the business, especially cash, extremely
closely, and has taken various actions to mitigate the impact
of COVID-19. It has taken advantage of various Government
financial initiatives such as the Job Retention Scheme and
deferment of VAT payments.
The Group has revisited working practices, such as social
distancing from fellow employees and working from home,and
have adjusted said practices accordingly.
The Group sells Euros forward in order to provide an effective
hedge.
The Group continues to monitor and assess the potential
post-Brexit trading relationships with EU member states.
A claim is being pursued against the customer for breach of
contract, costs are being minimised, and additional business
opportunities to increase revenue are being actively sought.
The Group negotiates, where appropriate, price surcharge
arrangements into its customer contracts.
Established processes are in place to ensure that health, safety
and environmental matters are appropriately addressed and
any such risks are minimised including monthly reporting
to, and review at the Executive Committee. Specialist HSE
employees provide support and guidance to businesses
including the conduct of regular risk control and health and
safety audits.
Development and regular testing of business continuity plans.
Ensuring business continuity plans are robust and address
temporary unavailability of IT systems. Strategy to upgrade and
replace key systems.
The Group sells into a wide variety of different markets, selling
a diversified product range. We strive to work with our key
customers to introduce new products and are constantly
seeking to identify new business segments and geographical
locations into which to sell our products.
The Group seeks to employ a skilled workforce backed by a
highly experienced technical and production team in order to
provide the relevant experience and skill set to mitigate any
production failures.
The Group’s approach to managing other financial risk is set out in Note 24 to the financial statements.
07
www.chamberlin.co.ukSTOCK CODE: CMHStrategic Report PRINCIPAL RISKS
AND UNCERTAINTIES
Director’s statutory duties
The Companies (Miscellaneous Reporting) Regulations 2018 (‘2018 MRR’) require Directors to explain how they considered the
interests of key stakeholders and the broader matters set out in section 172(1) (A) to (F) of the Companies Act 2006 (‘S172’)
when performing their duty to promote the success of the Group under S172. This includes considering the interest of other
stakeholders which will have an impact on the long-term success of the group. This S172 statement, which is reported for the
first time, explains how the Directors:
Æ have engaged with employees, suppliers, customers and others; and
Æ have had regard to employee interests, the need to foster the company’s business relationships with suppliers, customers
and others, and the effect of that regards, including on the principal decisions taken by the company during the financial year.
The Board of Directors, in the course of their collective and individual daily activities and decision- making, are continually mindful
of their duties under S172 to act in good faith, in a way that promotes the success of the Company for the benefit of its members
and other key stakeholders. In order to fulfil their duties, the Board has regard to the following matters:
08
ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2020chamberlin plc Matter
Board’s approach
Further details
Each year, the Board produces a three-year strategic
plan that establishes the future direction and goals of
the business. This strategic review provides the guiding
principles for decisions that need to be made on a day to
day basis.
The Board recognises that the Group’s employees are
fundamental to the successful delivery of its strategic
objectives. The Board is particularly aware that the
nature of foundry operations means that the working
environment of our employees can be challenging and
therefore health and safety issues are always a priority.
The success of the business is dependent upon strong
relationships with our customers and suppliers. We work
closely with customers to understand their needs and
to provide products that meet the exacting standards
they require. Day to day management of customer and
supplier relationships is delegated to business unit senior
management, with the Chief Executive and Finance
Director providing support and guidance where required.
The Board is mindful of it’s obligations to the wider
community in which it operates and the impact on the
environment of our operations, particularly in relation to
the Foundry division given the nature of the business.
The environmental impact of our operations are carefully
monitored and regular discussions are held with local
councils and communities, in particular in relation to air
quality issues which are a bi-product of the production
process.
The Board promotes a culture of high standards, ethics
and integrity in all of its business dealings and expects all
employees to act appropriately in all dealings with external
parties.
The Board believes that all shareholders should be treated
equally, with no particular group of shareholders unfairly
favoured over any other. The Board believes that open
communication with all shareholders is key to achieving this
objective.
The likely consequence
of any decision in the
long term
The interests of the
Company’s employees
The need to foster
business relationships
with suppliers,
customers and others
The impact of the
Company’s actions on
the community and the
environment
Maintaining high
standards of business
conduct
The need to act fairly
between shareholders
KEVIN NOLAN
CHIEF EXECUTIVE
15 April 2021
Paragraph 9 of the Corporate Governance Report on page 14.
Paragraph 3 of the Corporate Governance Report on page 12.
Paragraph (a) of the Directors’ Report on page 18.
Paragraph 3 of the Corporate Governance Report on page 12.
Paragraph 3 of the Corporate Governance Report on page 12.
Paragraph (b) of the Directors’ Report on page 18.
Paragraph 8 of the Corporate Governance Report on page 14.
Paragraph 2 on page 12 and paragraph 10 on page 15 of the
Corporate Governance Report.
09
www.chamberlin.co.ukSTOCK CODE: CMHStrategic Report The Board
Corporate Governance Report
Directors’ Remuneration Report
Directors’ Report
11
12 – 15
16 – 17
18 – 21
G
O
V
E
R
N
A
N
C
E
10
ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2020chamberlin plc THE BOARD
EXECUTIVE DIRECTORS
KEVIN NOLAN
NEIL DAVIES
Aged 64, Kevin joined the Board and was
appointed Chief Executive on 9 September
2013. Kevin has over 30 years’ senior level
experience in the engineering sector and
joined Chamberlin from global materials
engineering group, Wall Colmonoy Ltd,
where he was Managing Director. He
previously worked for Doncasters Group
Ltd, the international engineering group
that manufactures precision components
and assemblies, where he successfully led
the expansion of a number of the Group’s
business units and latterly was appointed
Divisional Managing Director of Doncasters’
largest division, Doncasters Turbine Airfoils and
Structural Castings Division.
Aged 52, Neil joined the Board and was
appointed Finance Director and Company
Secretary on 10 December 2018. Neil has over
20 years’ experience in senior finance roles
within high volume manufacturing. He joined
Chamberlin from International Automotive
Components Group, the international supplier
of interior systems and components to the
global automotive sector, where he was
Finance Director for six years. Prior to that, he
was UK Finance Director of Mann+Hummel
(UK) Limited, the German manufacturing
group. In his earlier career, Neil worked in the
petro-chemical sector, most notably for Shell,
Air Products and Invensys. Neil, a member
of the Chartered Institute of Management
Accountants, is also the Company Secretary.
INDEPENDENT NON-EXECUTIVE DIRECTORS
KEITH BUTLER-WHEELHOUSE
DAVID FLOWERDAY
TREVOR BROWN
Aged 75, Keith joined the Board and was
appointed Non-Executive Chairman in March
2012. Previously Keith was Chief Executive of
Smiths Group plc, Saab Automobile Sweden
and Delta Motor Corporation South Africa.
He is currently Non-Executive Director of
Plastics Capital plc and previously served as a
Non-Executive Director with Atlas Copco AB,
General Motors Europe, J Sainsbury plc and
NIU Solutions.
Aged 68, David joined the Board in April 2018.
He previously held positions of Strategy
Director, Group Financial Controller, and
Flex-tek Managing Director at Smiths Group
plc. He currently is a strategy consultant
and additionally is Chairman of Dartmouth
Trust. David is Chairman of the Remuneration
Committee and the Audit Committee and a
member of the Nominations Committee.
Aged 74. Trevor Brown was appointed to the
Board in March 2021 and has worked as a
director in a number of businesses over many
years and is currently CEO of IQ-AI Limited
and CEO of Braveheart Investment Group
plc. He was previously a director of Feedback
plc, Management Resource Solutions plc,
Advanced Oncotherapy plc and Non-Executive
Director of Remote Monitored Systems plc.
11
www.chamberlin.co.ukSTOCK CODE: CMHGovernance CORPORATE
GOVERNANCE REPORT
Governance Statement
The Board of Directors of the Company fully endorses the
importance of good corporate governance and has adopted
the Quoted Companies Alliance Corporate Governance Code
(2018) (the “QCA Code”), which they believe is the most
appropriate recognised governance code for a company of
its size with shares admitted to trading on the AIM market of
the London Stock Exchange. The QCA Code provides the
Company with the framework to help ensure that a strong level
of governance is maintained, enabling the Company to embed
the governance culture that exists within the organisation as
part of building a successful and sustainable business for all its
stakeholders.. Details of the Group’s compliance with the code
are set out below:
1.
Establish a strategy and business model which
promote long-term value for Shareholders
Chamberlin is a well-established specialist provider of small
and large castings in the Tier 2 automotive sector (automotive
turbocharger market) and high-quality lighting for hazardous
areas and industrial applications.
The Group has a strong revenue model with the majority of
revenue arising from recurring agreements.
Further details are provided in the Chairman’s’ Statement,
Chief Executive’s Business Review and Strategic Report.
2.
Seek to understand and meet Shareholder
needs and expectations
Chamberlin highly values regular two-way engagement with
Shareholders to discuss strategy and performance levels. The
Executive Directors invest considerable time in ensuring both
current and potential future investors have the opportunity
to fully understand the business alongside being able to
understand the needs of investors and analysts.
We offer to meet with all institutional investors that wish to do
so at least twice a year in the results period. These meetings
include a presentation of the latest financial performance,
a wider business update and discussion on the longer-term
plan. These meetings are normally attended by the Group
Chief Executive and Group Finance Director. We also welcome
engagement with our key Shareholders throughout the year.
We answer and respond to any Shareholder calls or
correspondence on an individual and personal basis as they
are received and then endeavour to keep in contact with the
Shareholder.
3.
Take into account wider stakeholder and social
responsibilities and their implications for
long-term success
Chamberlin aims to ensure that the highest standards of
corporate behaviour are maintained throughout its business.
We do this through monitoring and actively managing
our impact on the locations where we operate and our
relationships with key stakeholders. The main mechanisms
for wider stakeholder engagement and feedback can be
summarised as follows:
Health and Safety
Health and safety is a key issue for the board, management
and employees. Our policies require all sites to operate to high
standards with the objective of continuous improvement in
health and safety performance.
Health and safety management is aligned to the operations of
the business. All employees are responsible for ensuring that
health and safety policies are implemented and for identifying
opportunities for improvement. The business is supported in
this by a number a qualified health and safety professionals.
All sites are required to report on health and safety
performance on a monthly basis to the Board. The key health
and safety performance indicators focus on accident reporting.
These indicators are used to monitor the effectiveness
the health and safety systems and to drive improvements.
Health and safety is the first standard agenda item at all Board
meetings.
Suppliers
The third-party supply base can be the key to the success
of the Chamberlin business. As such, there are processes in
place within each of the business units to actively manage
supplier relationships in the normal course of business, taking
appropriate feedback and developing actions as necessary.
Employees
The Group’s employment policy includes a commitment to the
principles of equal opportunity for all, and specifically prohibits
discrimination of any type. Our policy is always to ensure that all
persons are treated fairly irrespective of their colour, race, sex,
sexual orientation, age or youth, religion, political beliefs, trade
union membership or non-membership, marital and physical
or mental status or any other factors including pregnancy and
maternity. Chamberlin aims to involve its employees in the
activities of the business.
The AGM presents the main opportunity for engagement with
private Shareholders. This meeting is typically well attended by
the Board and often several senior managers from across the
business.
Employees are informed of business performance via a
number of routes including shop floor visual performance
charts, management/employee briefings, dialogue with trade
union representatives and health and safety meetings.
12
ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2020chamberlin plc Community
Chamberlin recognises the role that local communities play
in our business, and we aim to be a responsible partner in
the localities in which we operate throughout the UK. We
encourage all of our businesses to support the needs of their
local communities through contributing to local charities and
community initiatives.
Examples of recent initiatives include:
Æ Involvement of our employees on the governing boards of
local schools and colleges;
Æ Partnership with a local further education college to develop
in house training facilities;
Æ Sponsorship of local initiatives such as funding a school
football team and a children’s garden project.
4.
Embed effective risk management,
considering both opportunities and threats,
throughout the organisation
Financial control
The Group has an established framework of financial controls,
the effectiveness of which is reviewed regularly by senior
management, the Board and the Audit Committee. Key areas
of control are as follows:
Æ The Board has responsibility for approving all annual
budgets, longer-term strategy and plans, dividend policy,
financial and funding structure of the Group and any
material investments.
Æ Key performance metrics are reported to the Executive
Directors weekly, including invoicing, sales orders, order
book and cash.
Æ Financial performance on a monthly basis is reported to
the Board comparing to forecast, budget and prior year.
Æ There is a comprehensive forecast process in place
providing the Board with an updated view of the likely
performance for the financial year on a monthly basis (in
the absence of ad hoc material events) including revenue,
profit and cash.
Æ Monthly management meetings are held with each business
in the Group, chaired by the Group Chief Executive.
Æ A robust system of controls exist to cover all types of cost
including recruitment, promotions, salary costs and capital
expenditure. All payments are approved by senior finance
staff.
Æ Return on investment and payback are tracked for all prior
acquisitions as well as other types of investments. These
are reported to the Board on a monthly basis.
Other controls
The Board continually reviews whether the system of controls
and risk management in place is appropriate for the size,
complexity and risk profile of the Group. The controls currently
in place include:
Æ Monthly management meetings for each business,
chaired by the Group Chief Executive and attended by
the Group Finance Director, provide the mechanism for
reporting identified risks and setting required actions to
mitigate. Any risks of a material nature are then reported
to the Board through the monthly Board meeting. These
meetings incorporate a monthly health and safety review
meeting in which each site responsible officer reports on
current status against set criteria. A monthly health and
safety dashboard is also reported to the Board. These
mechanisms facilitate ensuring each site has appropriate
roles and processes in place including first aiders, fire
wardens, regular fire alarm tests and regular health and
safety checks.
Æ All contracts are approved by the Finance Director prior to
signing.
Æ Dedicated resource and appropriate tools are in place that
proactively monitor the Group’s IT infrastructure to ensure
high levels of security are maintained, as well as looking to
continually improve. This is reviewed at regular intervals
with the Group Finance Director.
A summary of the Group’s principal risks, potential impact and
mitigations are included in the Strategic Report.
5. Maintain the Board as a well-functioning
balanced team led by the Chair;
The Board has been led by the Chairman, Keith Butler-
Wheelhouse, since 2012 and comprises two Executive
Directors and three Non-Executive Directors. Board decisions
are made at regular Board meetings following discussions
between all five Directors, with the Non-Executive Directors
providing the necessary challenge and balance to proposals
made by the Executive Directors.
6. Ensure that between them the directors have
the necessary up to date experience, skills and
capabilities
Details of the Director’s careers and experience can be found
on page 11 The Board.
13
www.chamberlin.co.ukSTOCK CODE: CMHGovernance CORPORATE
GOVERNANCE REPORT CONTINUED
7. Evaluate Board performance based on clear
and relevant objectives, seeking continuous
improvement
The Directors consider seriously the effectiveness of the
Board, Committees and individual performance.
The Board meets formally seven times a year with ad hoc
Board meetings as the business demands. Details of the
Directors’ attendance at board meetings are set out on page
15. There is a strong flow of communication between the
Directors, in particular the relationship between the CEO and
Chairman. The agenda is set with the consultation of both
the CEO and Chairman, with consideration being given to
both standing agenda items and the strategic and operational
needs of the business. Papers are circulated well in advance
of the meetings, giving Directors ample time to review the
documentation and enabling an effective meeting. Resulting
actions are tracked for appropriate delivery and follow up.
In addition to the above, the Directors have a wide knowledge
of the business and requirements of director’s fiduciary duties.
The Directors have access to the Company’s NOMAD and
auditors.
On-going review of the functioning of the Board and ensuring
that the highest level of governance is maintained whilst being
mindful of the size and stage of development of the Company.
The Board has not to date adopted a board performance
evaluation process however this is something that the Board
may consider in future.
The Board and executives’ performance will be judged on the
delivery of certain desired outcomes as summarised in the
annual report.
8. Promote a corporate culture that is based on
ethical values and behaviours
All Directors, managers and employees at Chamberlin plc are
required to exercise high standards of ethics and integrity in
conducting the Group’s business. Specifically they should
adhere to both the letter and spirit of relevant laws and
regulations. The Group applies these standards to all of its
dealings with customers, suppliers, employees and other
stakeholders.
The Board has adopted a Whistleblowing Policy and Procedure,
to encourage employees to raise concerns about misconduct
or malpractice, and to ensure that such concerns can be
reviewed and considered fairly and properly. This forms part of
the Board’s processes for monitoring adherence to the ethical
values and behaviours expected from the Group’s employees.
The Board has recently introduced formal anti-bribery policies
and procedures to comply with the requirements of the Bribery
Act 2010.
The Group values its reputation for ethical behaviour and
for honesty and transparency. Its aim therefore is to limit its
exposure to bribery by:
Æ Setting out a clear anti-bribery policy;
Æ Encouraging its employees to be vigilant and to report any
suspicion of bribery;
Æ Rigorously investigating instances of alleged bribery and
assisting the police and other appropriate authorities in any
resultant prosecution;
Æ Taking firm and vigorous action against any individual(s)
involved in bribery.
9. Maintain governance structures and processes
that are fit for purpose and support good
decision-making by the Board
The Board retains ultimate accountability for good governance
and is responsible for monitoring the activities of the executive
team. The Chairman has the responsibility of ensuring that
the Board discharges its responsibilities. No one individual has
unfettered powers of decision. The roles of Chairman and CEO
are split in accordance with best practice.
The Chairman has the responsibility of ensuring that the
Board discharges its responsibilities and is also responsible
for facilitating full and constructive contributions from each
member of the Board in determination of the Group’s strategy
and overall commercial objectives.
The role of the CEO is to provide the vision for the strategic
direction of the Group and to ensure that the Group has
sufficient resources to be able to deliver its strategy and
goals. The CEO is responsible for the day to day running of
the Group, providing leadership to the senior management
team and establishing a framework that enables the Group to
operate in an efficient manner to achieve its objectives and in
line with the strategy. The CEO is also responsible for ensuring
that appropriate risk management policies and procedures
are implemented to minimise exposure risk, be they financial,
ethical, environmental, health and safety or operational risks.
The Audit Committee, which consists of two Non-Executive
Directors, David Flowerday (Chairman) and Keith Butler-
Wheelhouse, meets at least twice per year with the external
auditors in attendance when required. It has formal terms of
reference which include reviewing and monitoring internal
financial control and risk management systems, consideration
of the annual, interim and auditor’s reports and making
recommendations to the Board in relation to the appointment
and remuneration of auditors. The Audit Committee also
assists the Board in ensuring that appropriate accounting
policies, financial systems, internal controls and compliance
procedures are in place. It also reviews the relationship
14
ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2020chamberlin plc between the Group and the external auditors in terms of the
provision of non-audit services and ensuring that auditor
independence and objectivity is maintained.
including reserved matters such as acquisitions and disposals,
the raising of finance, entry or exit to and from key markets and
all commercial and legal matters impacting the Group.
The auditors have direct access to the Chairman of the
Audit Committee and a formal “whistle-blowing” policy
is in operation, in relation to any concerns staff may have
concerning the propriety of Group operations and activities.
No issues or incidents have come to light as a result of this
policy. All proposals for the provision of non-audit services by
the external auditor are pre-approved by the Audit Committee
or its delegated member, the overriding consideration being
to ensure that the provision of non-audit services does not
impact the external auditor’s independence and objectivity.
The Remuneration Committee comprises two Non-Executive
Directors: David Flowerday (Chairman) and Keith Butler-
Wheelhouse. The committee meets when necessary, usually
at least twice per year, and is responsible for determining the
remuneration packages of the Executive Directors and of the
Chairman.
The Board retains full and effective control over the Company
and holds regular Board meetings at which financial,
operational and other reports are considered and where
appropriate voted upon. The Board is responsible for the
Group’s strategy and key financial and compliance issues,
Summary of attendance at meetings
10. Communicate how the Company is governed
and is performing by maintaining a dialogue with
shareholders and other relevant stakeholders
Details of the Company’s Governance structure is contained
within this report and our compliance with the QCA code is also
published on our website.
The performance of the business is communicated to
shareholders through the Annual Report, which together
with the notice of AGM, interim report and regulatory
announcements released throughout the year are available
to all shareholders and can be downloaded from the investors
section of our website. The website also includes interim and
annual reports issued for at least the last five years.
We update shareholders via notifications to the market
through a regulatory news service (“RNS”) on matters of a
material substance and regulatory nature.
The primary contact for shareholders in the first instance is the
Chairman of the Board, who can be contacted via the contact
details on the corporate website.
Board meetings
7
Note 1
7
7
3
7
Nominations
Committee
Remuneration
Committee
Audit Committee
1
Note 1
1
n/a
1
–
1
Note 1
1
n/a
1
1
2
Note 1
2
2
1
2
7
1
n/a
2
Number of meetings in the year
Trevor Brown
Keith Butler-Wheelhouse
Neil Davies
Keith Jackson
David Flowerday
Kevin Nolan
Note 1 Appointed 8 March 2021
n/a – indicates that a Director was not a member of a particular committee.
By order of the Board
NEIL DAVIES
COMPANY SECRETARY
15 APRIL 2021
15
www.chamberlin.co.ukSTOCK CODE: CMHGovernance DIRECTORS’
REMUNERATION REPORT
Service Contracts
All Executive Directors who served during the year have rolling
service contracts terminable on no more than one year’s
notice.
Non-Executive Directors
Remuneration of the Non-Executive Directors, apart from
the Chairman, is approved each year by the Chairman and the
Executive Directors. The Chairman’s remuneration is approved
by the Remuneration Committee.
Directors’ Remuneration
Basic
salary
£000
Benefits
£000
Annual
bonus
£000
221
161
–
–
56
10
26
474
525
2
1
–
–
–
–
–
3
3
–
–
–
–
–
–
–
–
31
Total remuneration
excluding pensions
2020
£000
223
162
–
–
56
10
26
477
2019
£000
244
64
116
–
75
30
30
559
Executive
Kevin Nolan*
Neil Davies
David Roberts
Non-Executive
Trevor Brown***
Keith Butler-
Wheelhouse
Keith Jackson**
David Flowerday
Total 2020
Total 2019
* Highest paid Director in 2020 and 2019.
** Retired 23 July 2019.
*** Appointed 8 March 2021
Benefits include all assessable tax benefits arising from
employment by the Company, and relate mainly to the
provision of private medical insurance. The figures above
represent emoluments earned as Directors during the relevant
financial year. Such emoluments are paid in the same financial
year with the exception of bonuses, which are paid in the year
following that in which they are earned.
Remuneration Committee
The Remuneration Committee comprises two Non-Executive
Directors: David Flowerday (Chairman) and Keith Butler-
Wheelhouse, following the retirement of Keith Jackson on 23
July 2019. The Committee meets when necessary, usually
at least twice per year, and is responsible for determining the
remuneration packages of the Executive Directors and of the
Chairman.
COVID-19 Response
The Remuneration Committee resolved that sacrifices at
senior level were required, bearing in mind the serious threat to
the Company. Accordingly, the Chairman has agreed to reduce
his fee to £30,000 per annum, and Mr Flowerday has agreed
to reduce his to £15,000 per annum. The total non-executive
remuneration has now reduced to about a third of the level
a year previously. The Committee has also resolved that the
2019/20 Executive bonus plan be suspended.
Policy on Remuneration of Executive Directors
and Senior Executives
The Committee aims to ensure that remuneration packages
offered are designed to attract, maintain and motivate high-
calibre Directors and senior executives, without paying more
than necessary for the purpose. The remuneration policy
attempts to match the interests of the Executives with those
of Shareholders by providing:
(a) Basic salary and benefits
Executive Directors’ basic salaries are reviewed each year,
taking into account the performance of the individual and rates
of salary for similar jobs in companies of comparable size. The
main benefits provided are a company car allowance and health
insurance.
The Company operates a defined contribution pension
scheme for the majority of its employees, including Executive
Directors. No performance-related bonuses nor benefits in
kind are included in pensionable salary.
(b) Annual performance-related bonus scheme
In order to link executive remuneration to Group performance,
Executive Directors participate in bonus schemes appropriate
to their objectives. For the year ended 31 March 2020 the
bonus in respect of Kevin Nolan and Neil Davies was linked to
Group profit and net debt and the achievement of personal
objectives. The maximum amount of bonus payable is 100% of
their basic salary.
(c) Share options
No new options have been granted in the year to
31 March 2020.
16
ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2020chamberlin plc Directors’ Pensions
No retirement benefits accrued during the year, or prior years, to Directors under the Chamberlin & Hill Staff Pension and Life
Assurance Scheme (2019: nil), which is a closed defined benefit scheme.
Contributions into personal pension plans
Kevin Nolan
Neil Davies
Percentage of
basic salary
10%
10%
Contribution
paid
2020
£000
21
15
Contribution
paid
2019
£000
21
5
For Directors who have served during the year, no other pension contributions were paid other than as disclosed above.
Directors’ Options
Kevin Nolan
Kevin Nolan
31 March
2019
207,363
216,616
423,979
Granted
in year
–
–
–
Exercised
in year
–
–
–
Lapsed or
forfeited
in year
(207,363)
–
(207,363)
31 March
2020
–
216,616
216,616
Option
exercise
price
25.0p*
97.5p
Exercisable between
14.12.19 – 14.12.26
19.06.21 – 19.06.28
*
These options were initially granted at a nil exercise price. The options were with the agreement of the holders reissued during 2019 at a 25p exercise price.
The options will normally become exercisable on or after the third anniversary of the date of grant subject to the satisfaction of
performance conditions set by the Remuneration Committee of the Company at the time of grant. The proportion of awards
that become exercisable varies on a straight-line basis, from 20% to 100%, depending upon the average share price in the
three-month period ending on the anniversary of the date of grant. A share price of 80p is required for 20% of the options to be
exercisable and 120p for 100% of the options to be exercisable.
No new options were granted during the year.
No consideration is payable for the grant of an option.
No share options have been exercised in 2020 or 2019.
There have been no changes in the interests set out above between 1 April 2020 and 15 April 2021.
The mid-market price of the shares at 31 March 2020 was 18.0p and during the year ranged between 18.0p and 44.0p.
On behalf of the Board
DAVID FLOWERDAY
CHAIRMAN, REMUNERATION COMMITTEE
15 April 2021
17
www.chamberlin.co.ukSTOCK CODE: CMHGovernance DIRECTORS’ REPORT
The Directors present their report together with the audited
financial statements for the year ended 31 March 2020.
The Company is registered in England and its registration
number is 00076928.
(a) Employees
Staff numbers and associated costs are shown in Note 5 to
the accounts. The segmental split of the average number of
employees is as follows:
Foundries
Engineering
Head office*
Group
Year to
31 March 2020
Year to
31 March 2019
231
28
10
269
282
33
12
327
* includes Non-Executive Directors.
The Group’s employment policy includes a commitment to the
principles of equal opportunity for all, and specifically prohibits
discrimination of any type. Our policy is always to ensure that all
persons are treated fairly irrespective of their colour, race, sex,
sexual orientation, age or youth, religion, political beliefs, trade
union membership or non-membership, marital and physical
or mental status, or any other factors including pregnancy and
maternity.
In particular, the Group gives full consideration to applications
for employment from disabled persons where the
requirements of the job can be adequately fulfilled by a disabled
person. We endeavour to provide those who have physical or
mental disabilities with specific assistance, and arrangements
are made to enable them to work for us wherever and
whenever this is reasonably practical. We expect all employees
to comply in every respect with the Group’s employment
policies at all times.
The Group has arrangements in place for the involvement
of all employees in the activities of the business, including
management/employee briefings, dialogue with trade union
representatives and health and safety meetings. A safety policy
is in place throughout the Group and all employees are required
to be aware of their responsibilities under the Health and
Safety at Work Act. A copy of the policy and all relevant Codes
of Practice are available at the workplace. It is the policy of the
Group to recognise that the training of employees is important
to the efficiency of the business and each employee’s welfare
and safety. Promotion is encouraged within the organisation
and it is Group policy to promote from within wherever this is
appropriate.
(b) Environment
The Board recognises that our operations have an effect
on the local, regional and global environment, and as a
consequence of this, the Board is committed to continuous
improvements in environmental performance and the
prevention of pollution.
Specifically, the Group has and will:
Æ comply with the requirements of all relevant environmental
legislation, meeting any set emission limits and standards
laid down, and use best available techniques in order to
control impacts on the environment;
Æ maintain and develop environmental management
policies and practices to continually monitor and progress
the minimisation of the effects of the business on the
environment. Environmental management is considered
to be a key part of the business strategy at all levels within
the Group;
Æ actively encourage the minimisation of waste from all
aspects of the business and promote the benefits of
recycling and re-use;
Æ reduce energy use and emissions of carbon dioxide
by increasing energy efficiency through all parts of the
Group and to seek new opportunities of improving energy
efficiency as part of the overall improvement of the
business;
Æ consider environmental factors in respect of the growth
of the business, seeking as far as is practical to reduce
harmful environmental impacts and to integrate new
developments into the local environment; and
Æ actively encourage the consideration of the environmental
impact of all raw materials and services purchased by the
business, and where practical to use the options with
the least impact and to reduce the consumption of raw
materials.
(c) Research and Development
The Group’s research and development activities in the year,
as in previous years, consist primarily of devising methods
for achieving the casting of complex shaped and/or multi-
cored products in the foundry businesses and the design and
development of new products in our engineering business,
principally hazardous area lighting products. The Board views
such activities as key to the future prosperity of the business.
Expenditure expensed through the income statement is
shown in Note 7 and expenditure capitalised in Note 13 to the
accounts.
18
ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2020chamberlin plc Financial instruments
The Company’s policy in respect of financial instruments is
disclosed in Note 24.
Dividends
The Directors do not recommend the payment of a final
dividend (2019: nil p). No interim dividend (2019: nil p) has been
paid during the year.
Directors
Details of the Directors of the Company and their interests
in the shares of the Company are shown below. The interests
of the Directors in share options are shown in the Directors’
Remuneration Report on page 17.
See Board of Directors on page 11 for details of all Directors
during the year, including appointments and resignations.
Directors’ Shareholdings
Beneficial interests of the Directors in the shares of the
Company, including those of their immediate families were:
Trevor Brown
At 31 March
2020
Number of
shares
–
At 31 March
2019
Number of
shares
–
Keith Butler-Wheelhouse
120,127
120,127
Kevin Nolan
Neil Davies
David Flowerday
–
–
–
–
–
–
capital of the Company at 15 April 2021.
Authority to purchase own shares
At the Annual General Meeting in 2019, the Board was given
authority to purchase and cancel up to 795,812 of its own
shares representing just under 10% of the Company’s then
existing issued share capital, through market purchases on
AIM. The maximum price to be paid on any exercise of the
authority was restricted to 105% of the average of the middle
market quotation for the shares for the five dealing days
immediately preceding the day of a purchase. The minimum
price that may be paid for each share is 25 pence (the then
nominal value of an ordinary shares). No purchases have been
made.
That authority to make market purchases has since expired.
The Directors are now seeking the approval of Shareholders for
the renewal of this authority upon the same terms, to allow the
Company to purchase and cancel up to 6,962,478 of its own
shares, again representing just under 10% of its issued share
capital at 15 April 2021.
The authority is sought by way of a special resolution, details
of which are also included at item 13 in the notice of meeting.
This authority will only be exercised if the Directors, in the
light of market conditions prevailing at the time, expect it to
result in an increase in earnings per share, and if it is in the best
interests of the Shareholders generally. Account will also be
taken of the effect on gearing and the overall position of the
Company.
In the period between 1 April 2020 and 15 April 2021, Trevor
Brown purchased 20,833,333 and Keith Butler-Wheellhouse
purchased 500,000 ordinary shares of 0.1p each at a
subscription price of 6p each. There have been no other
changes in the above shareholdings.
These authorities are to be for the period commencing on
the date of passing of the requisite resolutions until the
earlier of the next Annual General Meeting and 15 months.
The proposed resolutions are set out as items 10 to 13 in the
notice of meeting on pages 79 and 80.
Special Business at the Annual General Meeting
Directors’ authority to allot shares
As in previous years, (and indeed at the recent general meeting
held on 8 March 2021), approval will be sought to renew the
authority given to the Directors to allot shares in the Company.
Authority will be sought to allot shares in the Company up to
an aggregate nominal amount of £23,208 (which represents
approximately 33% of the issued ordinary share capital of
the Company as at 15 April 2021). This limit is in line with the
guidelines issued by the Association of British Insurers.
Authority will also be sought from Shareholders to allow the
Directors to issue new shares for cash to persons other than
to existing members up to a maximum nominal amount of
£6,962. This sum represents 6,962,478 ordinary shares of
0.1 pence each, being equivalent to 10% of the issued share
19
www.chamberlin.co.ukSTOCK CODE: CMHGovernance DIRECTORS’ REPORT CONTINUED
Significant Shareholders
At 15 April 2021, the Company was aware of the following
interests of 3% or more of the Company’s share capital, other
than those of Directors:
Number of
shares
% of issued share
capital
Chelverton UK Dividend Trust Plc
AXA Investment Managers S.A.
6,000,000
4,475,000
8.6
6.4
At the Annual General Meeting to be held on 8 June 2021 (see
the Notice of Annual General Meeting on pages 79 and 80), all
of the Directors will retire and, being eligible, offer themselves
for election and re-election as applicable.
No Director had a material interest during the year in any
significant contract with the Company or with any subsidiary
undertaking. The Group provides indemnities to the Directors
in respect of liabilities or claims arising in the performance
of their duties. For all the Directors serving during the year,
and up to the date of this Annual Report, there are indemnity
arrangements in place with each Director in respect of costs
defending civil, criminal and regulatory proceedings brought
against them in their capacity as Directors, where not covered
by insurance and subject always to the limitations set by the
Companies Act 2006.
Directors’ Responsibility Statement
The Directors are responsible for preparing the Strategic
Report, Directors’ Report and financial statements in
accordance with applicable law and regulations. Company law
requires the Directors to prepare financial statements for each
financial year. Under that law, the Directors have prepared the
Group financial statements in accordance with International
Accounting Standards in conformity with the requirements of
the Companies Act 2006.
Under Company law, the Directors must not approve the
financial statements unless they are satisfied that they give a
true and fair view of the state of affairs and profit or loss of the
Company and the Group for that period. In preparing these
financial statements, the Directors are required to:
Æ select suitable accounting policies and then apply them
consistently;
Æ make judgments and accounting estimates that are
reasonable and prudent;
Æ state whether applicable International Accounting
Standards in conformity with the requirements of the
Companies Act 2006 have been followed, subject to any
material departures disclosed and explained in the financial
statements; and
Æ prepare the financial statements on the going concern
basis unless it is inappropriate to presume that the
Company and Group will continue in business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Group’s
transactions and disclose, with reasonable accuracy at
any time, the financial position of the Group and enable
them to ensure that the financial statements comply with
the Companies Act 2006. They are also responsible for
safeguarding the assets of the Group and hence for taking
reasonable steps for the prevention and detection of fraud and
other irregularities.
The Directors confirm that:
Æ so far as each Director is aware there is no relevant audit
information of which the Company’s Auditor is unaware;
and
Æ the Directors have taken all steps that they ought to have
taken to make themselves aware of any relevant audit
information and to establish that the Company’s Auditor is
aware of that information.
The Directors are responsible for the maintenance and
integrity of the corporate and financial information included
on the Group’s website. Legislation in the United Kingdom
governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
Going Concern
The group is funded principally by an invoice finance facility of
up to 90% of the value of outstanding invoices, subject to a
maximum of £6.0m (previously £7.75m as this included the
Exidor business which was sold in December 2018), and by
£3.1m finance leases for major items of capital equipment.
At the balance sheet date £1.9m was drawn under the invoice
finance facility. The IF facility is a rolling contract with 3 months
notice and has been in place for 7 years with no change in
terms and conditions. It is reviewed annually every March but
there was a post COVID-19 review in October 2020 where it
was confirmed that the IF facility was renewed. The available
headroom under the invoice finance facility at 31 March 2020
was £2.5m. As at 31 October 2020 the available headroom
was £1.0m. Finance leases liabilities are repayable by 2025,
with agreement from the bank for repayments to be deferred
during the current COVID-19 crisis. The group also occupies
various properties under right of use leases, the future
payments giving rise to liabilities of £0.9m.
20
ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2020chamberlin plc Directors’ Statement as to Disclosure of
Information to Auditors
The Directors who were members of the Board at the time of
approving the Directors’ Report are listed on page 11. Having
made enquiries of fellow Directors and of the Company’s
Auditor, each of these Directors confirms that:
Æ to the best of each Director’s knowledge and belief, there is
no information relevant to the preparation of their report of
which the Company’s Auditor is unaware; and
Æ each Director has taken all the steps a Director might
reasonably be expected to have taken to be aware of
relevant audit information and to establish that the
Company’s Auditor is aware of that information.
Post Balance Sheet Events
On 16 December 2020, the Company announced that it had
received notice from its major customer, BorgWarner Turbo
Systems Worldwide Headquarters GmbH, of its intention
to cancel all contracts with effect from 22 January 2021.
Following this announcement, it became evident that the
Company was not in a position to publish its 2020 Accounts
by 31 December 2020 in accordance with AIM listing rules.
Consequently, the Company’s shares were suspended from
trading on AIM with effect from 4 January 2021. Further details
of the subsequent equity raise that secured the continuing
solvency of the Group can be found in note 28.
Auditor
A resolution will be proposed to reappoint Grant Thornton UK
LLP as Auditor and to authorise the Directors to determine
their remuneration.
By order of the Board
NEIL DAVIES
COMPANY SECRETARY
15 April 2021
During April 2020, Chamberlin’s two Walsall factories were
mainly closed, and in this month the company incurred a
loss before tax of £0.4m. Trading in subsequent months has
been in line with expectations, although losses continue to be
incurred but at a lower run rate compared to April.
The Group’s detailed budget for the year ending 31 March
2022 and extended forecast for the six months to 30
September 2022 take into account the £3.3m net funds
raised from the Share Placing and Subscription announced on
26 March 2021 and the Director’s view of most likely trading
conditions. These forecasts and projections indicate that
existing bank facilities are expected to remain adequate. The
budget and extended forecast provides for significant revenue
growth in the second half of the year to 31 March 2022 and
the six months to 30 September 2022, which is needed to
replace the lost BorgWarner contracts. The budget includes
the significant but necessary benefits and costs of the
restructuring that will be required to right-size the cost-base to
the lower level of revenue. As the implementation and delivery
of the restructuring benefits and costs are within the control
of the Directors, no downside sensitivities have been applied
in relation to these. The Directors have, however, applied
reasonably foreseeable downside sensitivities to the budget
and forecast, which assumes that sales growth from October
2021 onwards is only 3% above the first half average and the
machine shop has no sales output. In the detailed budget,
extended forecast and sensitised scenario, the possible
receipt of compensation from BorgWarner has been entirely
discounted, as has any sales of no-longer required machinery.
As a consequence, after making enquiries, the Directors have
an expectation that, in the circumstances of a reasonably
foreseeable downside scenario as described above, the
Group and Company have adequate resources to continue in
operational existence for the foreseeable future.
However, the rate at which new work can be secured to replace
the lost BorgWarner activity is difficult to predict resulting in
material uncertainty, which may cast significant doubt over the
ability of the Group and the Company to realise its assets and
discharge its liabilities in the normal course of business and
hence continue as a going concern.
The Directors continue to adopt the going concern basis,
whilst recognising there is material uncertainty relating to the
above matter.
Matters Covered in the Strategic Report
Key performance indicators and principal risks have been
covered in the Strategic Report.
21
www.chamberlin.co.ukSTOCK CODE: CMHGovernance Introduction
Primary Statements
Section 1
– Basis of Preparation
Section 2
– Results of the Year
Section 3
– Operating Assets and Liabilities
Section 4
– Capital Structure and Financing Costs
Section 5
– Other Supporting Notes
Independent Auditor’s Report
Audit Committe Report
Parent Company Financial Statements
Five Year Financial Summary
23
24–31
32
33–40
41–49
50–51
52–67
68–73
74
75–77
78
F
I
N
A
N
C
A
L
I
S
T
A
T
E
M
E
N
T
S
22
ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2020chamberlin plc
INTRODUCTION
NEIL DAVIES
FINANCE DIRECTOR
Welcome to the financial statements
section of our Annual Report.
The Directors have included the annual
financial review on the following pages as
commentary on the primary statements.
While the accounting policies adopted by
the Group are an important part of our
Annual Report, we recognise that many
readers of the financial statements
prefer to use these as a reference tool.
These policies are now included towards
the end of the financial statements,
rather than at the beginning.
We included 28 Notes to the Group
financial statements in the previous
year and while all of this information
is necessary to ensure we comply
with International Financial Reporting
Standards, it does not always make it
easy to find what you are looking for. We
have therefore structured the notes into
five categories (as outlined in the table
of contents on the following pages) for
easier navigation.
Introduction and
Table of Contents
These financial statements have
been presented in a manner which
attempts to make them less complex
and more relevant to Shareholders. We
have grouped notes in sections under
five headings: ‘Basis of Preparation’,
‘Results of the Year’, ‘Operating Assets
and Liabilities’, ‘Capital Structure and
Financing Costs’ and ‘Other Notes’.
The purpose of this format is to provide
readers with a clear understanding of
what drives the financial performance of
the Group.
Notes to the financial statements
provide additional information required
by statute or accounting standards
to explain a particular feature of the
financial statements. The notes that
follow will also provide explanations and
additional disclosure to assist readers’
understanding and interpretation of
the Annual Report and the financial
statements.
NEIL DAVIES
FINANCE DIRECTOR
15 April 2021
23
www.chamberlin.co.ukSTOCK CODE: CMHFinancial Statements CONSOLIDATED
INCOME STATEMENT
FOR THE YEAR ENDED 31 MARCH 2020
Year ended 31 March 2020
Year ended 31 March 2019
Revenue
Cost of sales
Gross profit
Other operating expenses
Operating loss
Finance costs
Loss before tax
Tax (expense)/credit
Loss for the year from continuing operations
Discontinued operations
Profit for the year from discontinued operations
(Loss)/profit for the year attributable to equity
holders of the parent company
Underlying loss per share from continuing
operations:
Basic
Diluted
Earnings per share from discontinued operations:
Basic
Diluted
Total (loss)/earnings per share:
Basic
Diluted
3
4
6
8
9
10
10
10
10
10
10
Notes
Underlying
£000
Non-
underlying*
£000
Total
£000
Underlying
£000
Non-
underlying*
£000
26,143
(23,632)
2,511
(3,635)
(1,124)
(310)
(1,434)
(50)
(1,484)
–
–
–
(909)
(909)
–
(909)
–
(909)
26,143
(23,632)
2,511
(4,544)
(2,033)
(310)
(2,343)
(50)
(2,393)
32,958
(29,192)
3,766
(4,776)
(1,010)
(499)
(1,509)
(39)
(1,548)
–
–
–
(3,448)
(3,448)
–
(3,448)
87
(3,361)
Total
£000
32,958
(29,192)
3,766
(8,224)
(4,458)
(499)
(4,957)
48
(4,909)
–
–
–
–
6,435
6,435
(1,484)
(909)
(2,393)
(1,548)
3,074
1,526
–
–
–
–
–
–
–
–
–
–
–
–
(18.7)p
(18.7)p
–
–
(30.1)p
(30.1)p
–
–
–
–
–
–
–
–
–
–
–
–
(19.5)p
(19.5)p
80.9p
76.8p
19.2p
18.2p
* Non-underlying items include restructuring costs, hedge ineffectiveness, impairment, GMP equalisation, onerous leases and share-based payment costs together with the associated tax
impact. Underlying and non-underlying figures for the year ended 31 March 2019 have been restated as detailed in Note 27.
24
ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2020chamberlin plc
COMMENTARY ON THE CONSOLIDATED
INCOME STATEMENT
Overview
Revenue reduced by 21% during the year to £26.1m (2019: £33.0m) as trading conditions in our automotive market were
challenging. Gross profit margin, defined as gross profit divided by revenue, decreased to 9.6% from 11.4% in 2019.
Underlying operating loss before tax only increased slightly to £1.1m (2019: £1.0m) despite the 21% reduction in revenue.
Financing costs were 38% lower than 2019 at £0.3m (2019: £0.5m) as a result of a reduction in net debt and a reduced finance
cost of pensions on a lower deficit.
Underlying loss before tax of £1.4m (2019: £1.5m loss) was 5% lower than 2019 due primarily to the lower financing costs.
The statutory loss before tax of £2.3m (2019: loss of £5.0m) was 53% lower than 2019 as an asset impairment charge of £3.0m
taken in 2019 was not repeated.
Non-underlying items
Non-underlying items in the year of £0.9m (2019: £3.4m) included £0.8m relating to the realignment of the cost base of the
Group and £0.1m of foreign currency related hedge ineffectiveness resulting from Covid-19 induced revenue reductions.
Tax
The effective rate of taxation on a statutory basis was 2% compared to the mainstream corporation tax rate of 19%, primarily as
a result of not recognising deferred tax on trading losses due to the inherent uncertainty surrounding future profitability.
Diluted loss per share
Underlying diluted loss per share from continuing operations of 18.7p (2019: 19.5p loss) was 4% lower than 2019, with total
diluted loss per share of 30.1p (2019: earnings of 18.2p).
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 90% of the Group’s annual exposures are likely
to be hedged at any point in time and the Group’s net transactional exposure to different currencies varies from time to time.
Approximately 63% of the Group’s revenues are denominated in Euros. During the year to 31 March 2020, the average exchange
rate used to translate into GBP Sterling was €1.15 (31 March 2019: €1.13).
25
www.chamberlin.co.ukSTOCK CODE: CMHFinancial Statements CONSOLIDATED STATEMENT
OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MARCH 2020
(Loss)/profit for the year
Other comprehensive income
Movements in fair value of cash flow hedges taken to other comprehensive income
Ineffective portion of movement in cash flow hedges recycled to income statement
Deferred tax on movement in cash flow hedges
Net other comprehensive (expense)/income that may be recycled to profit and loss
Remeasurement gain on pension scheme assets and liabilities
Deferred tax on remeasurement gain on pension scheme
Net other comprehensive income that will not be recycled to profit and loss
Other comprehensive (expense)/income for the year net of tax
Total comprehensive (expense)/income for the year attributable to equity holders of the
parent company
Notes
8
21
8
2020
£000
(2,393)
(614)
138
81
(395)
460
(87)
373
(22)
2019
£000
1,526
134
-
(23)
111
76
(15)
61
172
(2,415)
1,698
COMMENTARY ON THE CONSOLIDATED
STATEMENT OF COMPREHENSIVE INCOME
Accounting Standards require certain gains and losses on assets and liabilities, instead of being recorded in the Consolidated
Income Statement, to be credited or charged to reserves and recorded in the consolidated statement of other comprehensive
income. In accordance with the amendment to IAS 1, these items are now allocated between those items that may and those
items that may not eventually be recycled to the Consolidated Income Statement.
The settlement of cash flow hedge derivatives, which are used to protect the Group from foreign exchange exposure are
subject to marked to market valuations, with the effective portion of movements included within the consolidated statement of
comprehensive income. These items (including the related taxation effect) amounted to a loss of £0.4m in 2020 (2019: profit of
£0.1m).
Remeasurement gains and losses relating to the Group’s defined benefit pension obligations are also booked to other
comprehensive income. These are explained in detail in Note 21 in Section 5.
26
ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2020chamberlin plc CONSOLIDATED STATEMENT
OF CHANGES IN EQUITY
Balance at 1 April 2018
Profit for the year
Other comprehensive income for the year net of tax
Total comprehensive income
Share-based payment
Deferred tax on employee share options
Total of transactions with Shareholders
Balance at 1 April 2019
Loss for the year
Other comprehensive (expense)/income for the year
net of tax
Total comprehensive expense
Share-based payment
Deferred tax on employee share options
Total of transactions with Shareholders
Share
capital
£000
1,990
Share
premium
account
£000
1,269
Capital
redemption
reserve
£000
109
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,990
1,269
109
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Hedging
reserve
£000
Retained
earnings
£000
Attributable to
equity holders
of the parent
£000
(15)
–
111
111
–
–
–
96
–
(395)
(395)
–
–
–
(197)
1,526
61
1,587
40
(26)
14
1,404
(2,393)
373
(2,020)
59
33
92
3,156
1,526
172
1,698
40
(26)
14
4,868
(2,393)
(22)
(2,415)
59
33
92
Balance at 31 March 2020
1,990
1,269
109
(299)
(524)
2,545
COMMENTARY ON CONSOLIDATED
STATEMENT OF CHANGES IN EQUITY
Share premium account
The share premium account balance includes the proceeds that were above the nominal value from issuance of the Company’s
equity share capital .
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.
27
www.chamberlin.co.ukSTOCK CODE: CMHFinancial Statements
CONSOLIDATED BALANCE SHEET
AT 31 MARCH 2020
Non-current assets
Property, plant and equipment
Intangible assets
Deferred tax asset
Current assets
Inventories
Trade and other receivables
Cash at bank
Total assets
Current liabilities
Financial liabilities
Trade and other payables
Non current liabilities
Financial liabilities
Deferred tax
Provisions
Defined benefit pension scheme deficit
Total liabilities
Capital and reserves
Share capital
Share premium
Capital redemption reserve
Hedging reserve
Retained earnings
Total equity
Total equity and liabilities
KEVIN NOLAN
NEIL DAVIES
DIRECTORS
The accounts were approved by the Board of Directors on 15 April 2021
31 March
2020
£000
31 March
2019
£000
Notes
12
13
17
14
15
16
16
17
17
17
21
18
7,209
341
611
8,161
2,589
6,082
457
9,128
17,289
3,028
7,481
10,509
2,037
39
200
1,959
4,235
14,744
1,990
1,269
109
(299)
(524)
2,545
17,289
7,769
290
906
8,965
2,702
6,052
291
9,045
18,010
2,683
4,600
7,283
2,966
53
200
2,640
5,859
13,142
1,990
1,269
109
96
1,404
4,868
18,010
28
ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2020chamberlin plc
COMMENTARY ON THE CONSOLIDATED
BALANCE SHEET
Property, plant and equipment (PPE)
The net book value of the Group’s investment in PPE at 31 March 2020 was £7.2m (2019: £7.8m). Capital expenditure on PPE of
£0.3m (2019: £1.2m) represented 32% (2019: 71%) of depreciation of £1.0m (2019: £1.7m).
Working capital
Working capital, comprising inventories, trade and other receivables, and trade and other payables represented 5% of annual sales
(2019: 13%) as at year-end.
Overdue receivables, defined as receivables that are past their agreed terms with the customer, at 31 March 2020 reduced to 2%
(2019: 20%).
Pensions
The Group has one defined benefit pension scheme. It is closed to future accrual, with the Group operating a defined
contribution pension scheme for its current employees.
The deficit for the defined benefit pension scheme at 31 March 2020 was £2.0m (2019: £2.6m).
The Group’s defined benefit pension scheme was closed to future accrual in 2007. During the year the latest triennial valuation,
as at 31 March 2019, was concluded and contributions were set at £0.3m for 2021, £0.33m for 2022 and £0.36m for 2023. The
next triennial valuation is due as at 31 March 2022.
Administration costs of the defined benefit pension scheme were £0.2m in 2020 (2019: £0.2m), and are shown in other operating
expenses. The Group cash contribution during the year was £0.3m (2019: £2.7m).
29
www.chamberlin.co.ukSTOCK CODE: CMHFinancial Statements CONSOLIDATED
CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 MARCH 2020
Operating activities
Loss for the year before tax
Adjustments to reconcile (loss) for the year to net cash (outflow)/ inflow from operating
activities:
Net finance costs
Impairment charge on property, plant and equipment
Hedge ineffectiveness
Depreciation of property, plant and equipment
Amortisation of software
Amortisation and impairment of development costs
Profit on disposal of property, plant and equipment
Foreign exchange rate movements
Share-based payments
One-off contribution to defined benefit pension scheme
Difference between pension contributions paid and amounts recognised in the
Consolidated Income Statement
Decrease/(increase) in inventories
(Increase)/decrease in receivables
Increase/(decrease) in payables
Corporation tax received
Net cash inflow/(outflow) from continuing operations
Cash inflow from discontinued operations
Net cash inflow/(outflow) from operating activities
Investing activities
Purchase of property, plant and equipment
Purchase of software
Development costs
Disposal of property, plant and equipment
Proceeds from sale of subsidiary
Cash and cash equivalents disposed
Investing activities from discontinued operations
Net cash (outflow)/inflow from investing activities
Year ended
31 March
2020
£000
Year ended
31 March
2019
£000
Note
(2,343)
(4,957)
6
11
12
13
13
19
21
14
12
13
13
310
–
138
980
52
25
(12)
(91)
59
–
(279)
113
(95)
2,265
424
1,546
–
1,546
(316)
(20)
(30)
12
–
–
–
(354)
499
3,043
–
1,688
59
25
–
–
40
(2,500)
25
(388)
419
(1,332)
–
(3,379)
491
(2,888)
(1,188)
–
(22)
–
8,520
(1,146)
(125)
6,039
30
ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2020chamberlin plc Financing activities
Interest paid
Net invoice finance inflow/(outflow)
Import loan outflow
Principal element of lease payments
Finance leases taken
Financing activities from discontinued operations
Net cash outflow from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at the start of the year
Impact of foreign exchange rate movements
Cash and cash equivalents at the end of the year
Cash and cash equivalents comprise:
Cash at bank
Year ended
31 March
2020
£000
Year ended
31 March
2019
£000
(252)
279
–
(1,066)
–
–
(1,039)
153
291
13
457
457
457
(387)
(1,832)
(873)
(781)
1,291
207
(2,375)
776
(485)
–
291
291
291
Note
6
26
26
26
COMMENTARY ON THE CONSOLIDATED
CASH FLOW STATEMENT
Operating Cash Flow
Operating cash inflow from continuing operations was £1.5m (2019: outflow of £3.4m). This included a contractually agreed
advance payment from a customer of £1.5m and £0.4m of corporation tax refunds received during the year offset by
restructuring costs of £0.7m.
Cash spent on property, plant and equipment and capitalised software and development costs in the year was £0.4m (2019: £1.2m).
Net proceeds from the sale of subsidiary in 2019 of £8.5m related to the disposal of Exidor Limited.
Interest paid of £0.3m (2019: £0.4m) was lower than 2019 due to lower average net debt in 2020.
Lease payments of £1.1m (2019: £0.8m) primarily relate to assets at the Group’s machining facility.
Closing Net Debt
Net debt at 31 March 2020 decreased by £0.8m to £4.6m (2019: £5.4m). The Group debt facility has two elements: a £6.0m
invoice discounting facility limited to 90% of outstanding invoice value and finance leases of £3.1m. The invoice discounting
facility has the following covenant at year-end, which was complied with:
Æ Without prior written consent of HSBC, no dividends are payable in the year ended 31 March 2020, and in subsequent years,
prior written consent of HSBC is required for the payment of any dividends in excess of 50% of net profit after tax.
31
www.chamberlin.co.ukSTOCK CODE: CMHFinancial Statements SECTION 1
BASIS OF PREPARATION
1 Authorisation of financial statements and statement of compliance with IFRS
The Group and Company’s financial statements of Chamberlin Plc (the ‘Company’) for the year ended 31 March 2020 were
authorised for issue by the Board of Directors on 15 April 2021, and the balance sheets were signed on the Board’s behalf by
Kevin Nolan and Neil Davies. The Company is a public limited company incorporated and domiciled in England and Wales. The
Company’s ordinary shares are admitted to trading on AIM, a market of the same name operated by the London Stock Exchange.
However, as mentioned in the Post Balance Sheet Events paragraph of the Director’s Report on page 21, the Company’s shares
were suspended from trading on AIM with effect from 4 January 2021.
The Group’s financial statements have been prepared in accordance with International Accounting Standards in conformity with
the requirements of the Companies Act 2006. The Company’s financial statements have been prepared in accordance with
Financial Reporting Standard 101 ‘The Reduced Disclosure Framework’.
2 New standards adopted
There are no new accounting standards adopted in the year that have a material impact on the financial statements.
There are no new accounting standards effective in the next financial year that are expected to have a material impact on the
financial statements.
32
ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2020chamberlin plc SECTION 2
RESULTS OF THE YEAR
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 the similar nature
of their products, services and end users as follows:
The Foundries segment supplies iron castings, in raw or machined form, to a variety of industrial customers who incorporate the
castings into their own products or carry out further machining or assembly operations on the castings before selling them on to their
customers.
The Engineering segment supplies manufactured products to distributors and end-users operating in hazardous area and industrial
lighting markets.
Management monitors the operating results of its divisions separately for the purposes of making decisions about resource allocation
and performance assessment. The Chief Operating Decision Maker is the Chief Executive.
(i) By operating segment
Year ended
Foundries
Engineering
Segment results
Reconciliation of reported segmental operating (loss)/profit
Segment operating (loss)/profit
Shared costs
Non-underlying costs (Note 11)
Net finance costs (Note 6)
Loss before tax
Segmental assets
Foundries
Engineering
Segmental liabilities
Foundries
Engineering
Segmental net assets
Unallocated net liabilities
Total net assets
Segmental revenue
2020
£000
23,106
3,037
26,143
2019
£000
29,343
3,615
32,958
Segmental operating
profit/(loss)
2020
£000
2019
£000
(84)
(45)
(129)
(129)
(995)
(909)
(310)
(2,343)
14,974
1,247
16,221
(6,880)
(801)
(7,681)
8,540
(5,995)
2,545
(211)
251
40
40
(1,050)
(3,448)
(499)
(4,957)
15,244
1,402
16,646
(3,840)
(794)
(4,634)
12,012
(7,144)
4,868
Unallocated net liabilities include the pension liability of £1,959,000 (2019: £2,640,000), financial liabilities of £4,608,000 (2019:
£5,357,000) and deferred tax asset of £572,000 (2019: £853,000).
33
www.chamberlin.co.ukSTOCK CODE: CMHFinancial Statements SECTION 2 CONTINUED
RESULTS OF THE YEAR
3 Segmental analysis continued
Capital expenditure, depreciation, amortisation and impairment
Capital additions
Property, plant and equipment (Note 12)
Software (Note 13)
Development costs (Note 13)
Depreciation, amortisation
and impairment
Property, plant and equipment (Note 12)
Software (Note 13)
Development costs (Note 13)
(ii) Geographical information
Revenue by location of customer
United Kingdom
Italy
Germany
Rest of Europe
Other countries
Foundries
2020
£000
426
97
–
(965)
(45)
–
2019
£000
1,047
–
–
(4,563)
(52)
–
Engineering
2020
£000
–
1
30
(15)
(7)
(25)
2019
£000
8
–
22
(49)
(7)
(25)
Total
2020
£000
426
98
30
(980)
(52)
(25)
The Group’s assets and costs are all located within the United Kingdom.
The Group has one individual customer in Italy that represents 8% of Group revenue (2019: 11%).
4 Other operating expenses
Distribution costs
Administration and selling expenses
Operating expenses before exceptional items
Exceptional and non-underlying items (Note 11)
Operating expenses
34
2019
£000
1,055
–
22
(4,612)
(59)
(25)
2019
£000
12,203
3,743
3,124
13,024
864
32,958
2019
£000
838
3,938
4,776
3,448
8,224
2020
£000
9,008
2,051
2,602
11,863
619
26,143
2020
£000
386
3,249
3,635
909
4,544
ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2020chamberlin plc 5 Staff numbers and costs
The average number of people employed by the Group during the year was:
Management and administration
Production
Total employees
The aggregate employment costs, including redundancy, of these employees were as follows:
Wages and salaries
Social security costs
Other pension costs (Note 21)
Share-based payment expense (Note 19)
The average number of people employed by the Company during the year was:
Management and administration
The aggregate employment costs, including redundancy, of these employees were as follows:
Wages and salaries
Social security costs
Other pension costs
Share-based payment expense (Note 19)
Directors’ remuneration summary
Directors’ remuneration
Company contributions to money purchase pension scheme
Share-based payment charge of options granted to Directors (see Note 19)
Number of Directors accruing benefits under:
Defined contribution pension schemes
2020
Number
40
229
269
2020
£000
8,707
1,056
396
59
10,218
2020
Number
10
2020
£000
818
95
49
59
1,021
2020
£000
477
36
59
2019
Number
46
281
327
2019
£000
12,176
1,183
423
40
13,822
2019
Number
12
2019
£000
599
103
52
40
794
2019
£000
559
37
40
Number
Number
2
3
Directors’ remuneration is analysed in detail in the Directors’ Remuneration Report on pages 16 and 17.
The total amount payable to the highest paid Director in respect of remuneration was £223,000 (2019: £244,000). Company pension
contributions of £21,000 (2019: £21,000) were made to a money purchase pension scheme on his behalf.
35
www.chamberlin.co.ukSTOCK CODE: CMHFinancial Statements SECTION 2 CONTINUED
RESULTS OF THE YEAR
6 Finance costs
Bank overdraft and invoice finance interest payable
Interest expense on lease liabilities and other interest payable
Finance cost of pensions (see Note 21)
7 Operating profit/ (loss)
This is stated after charging/(crediting):
Profit on disposal of fixed assets
Depreciation of owned assets
Depreciation of right-of-use assets:
Land and buildings
Plant and machinery
Motor vehicles
Software
Amortisation of owned software
Non-underlying items (Note 11)
Research and development expenditure (excluding capitalised development costs: Note 13)
Amortisation of development costs
Cost of inventories recognised as an expense
Exchange gain
Auditor's remuneration:
Group audit fees
Audit fees for statutory accounts of subsidiaries
Audit related assurance services
Non-audit related services
Rentals under operating leases*:
Hire of plant and equipment
Motor vehicles
Land and buildings
* This is the expense for short-term low value leases excluded from IFRS 16 right-of-use assets.
2020
£000
(164)
(88)
(58)
(310)
2020
£000
(12)
279
88
587
26
11
41
909
–
25
2019
£000
(335)
(52)
(112)
(499)
2019
£000
–
1,030
83
546
29
-
59
3,448
–
25
10,863
11,585
(91)
(57)
73
30
7
–
92
–
106
27
30
7
–
36
23
91
36
ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2020chamberlin plc
8 Taxation
Current tax:
UK Corporation tax at 19% (2019: 19%)
Adjustments in respect of prior years
Deferred tax:
Origination and reversal of temporary differences
Adjustments in respect of prior years
Change in tax rate
Tax expense/(credit) reported in the consolidated income statement
2020
£000
-
(259)
(259)
310
41
(42)
309
50
2019
£000
697
-
697
(385)
(321)
(39)
(745)
(48)
Following changes that were substantively enacted on 17 March 2020, the corporation tax rate will remain at 19% from 1 April 2020
rather than the previously enacted rate of 17%.
No brought forward tax losses of the Group were utilised in the year (2019: £nil).
In addition to the amount charged to the consolidated income statement, tax movements recognised through other comprehensive
income and equity were as follows:
Current tax:
Deferred tax:
Retirement benefit obligation
Fair value movements on cash flow hedges
Tax charge reported in the consolidated statement of comprehensive income
Current tax:
Deferred tax:
Employee share options
Tax (credit)/charge reported in the consolidated statement of changes in equity
Reconciliation of total tax charge
Loss on ordinary activities before tax
Corporation tax charge at standard rate of 19% (2019: 19%) on loss before tax
Adjusted by the effects of:
Expenses not deductible for tax purposes TAX PURPOSES
Income not taxable
Unprovided deferred tax differences
Adjustments in respect of prior years
Rate differential on timing differences
Total tax expense/(credit) reported in the consolidated income statement
2020
£000
–
–
87
(81)
6
6
2020
£000
–
–
(33)
(33)
2020
£000
(2,343)
(445)
31
–
724
(218)
(42)
50
2019
£000
–
–
15
23
38
38
2019
£000
–
–
26
26
2019
£000
(4,957)
(942)
1,370
(245)
33
(225)
(39)
(48)
37
www.chamberlin.co.ukSTOCK CODE: CMHFinancial Statements SECTION 2 CONTINUED
RESULTS OF THE YEAR
9 Discontinued operations
On 19 December 2018, the Group sold its entire interest in Exidor Limited.
As a result, the results of Exidor Limited were classified as a discontinued operation in the prior year and presented as such in the
financial statements.
An analysis of the disposal calculation is given below:
Property, plant and equipment
Intangible assets
Deferred tax
Inventories
Trade and other receivables
Cash and cash equivalents
Trade and other payables
Net assets disposed
Headline consideration
Adjustment for movement in working capital
Adjustment for movement in debt
Claim retention
Disposal costs
Net cash received relating to disposal
Cash proceeds
Net assets disposed
Profit on disposal
2019
£000
1,135
75
70
1,491
1,882
1,146
(3,508)
2,291
10,000
(98)
(639)
(350)
8,913
(393)
8,520
8,520
(2,291)
6,229
Included in the consideration is a retention of £350,000 relating to a customer claim. This claim has not yet been finalised and is still
ongoing.
The results prior to 19 December 2018 for the discontinued operations included in the Consolidated Income Statement were:
Revenue
Operating profit
Finance costs
Profit before tax
Tax
Profit on disposal of discontinued operations
Profit after tax from discontinued operations
Exidor Limited contributed the following to the Group’s cashflows:
Operating activities
Investing activities
Financing activities
38
2019
£000
5,924
305
(23)
282
(76)
6,229
6,435
2019
£000
491
(125)
207
573
ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2020chamberlin plc (Loss)/earnings per share
10
The calculation of (loss)/earnings per share is based on the (loss)/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, as analysed below, which excludes non-underlying items as defined in Note 29 on page 66, has
also been disclosed as the Directors believe this allows a better assessment of the underlying trading performance of the Group.
Continuing operations loss for basic earnings per share
Non-underlying items
Taxation effect of the above
Loss for underlying loss per share (continuing operations)
Underlying loss per share (pence) from continuing operations:
Basic
Diluted
Discontinued operations earnings for basic earnings per share
Earnings for basic earnings per share (discontinued operations)
Earnings per share (pence) from discontinued operations:
Basic
Diluted
Total (loss)/earnings per share (pence):
Basic
Diluted
Weighted average number of ordinary shares
Adjustment to reflect shares under options
Weighted average number of ordinary shares – fully diluted
2020
£000
(2,393)
909
–
(1,484)
(18.7)
(18.7)
2020
£000
–
–
–
–
(30.1)
(30.1)
2020
Number
’000
7,958
217
8,175
2019
£000
(4,909)
3,448
(87)
(1,548)
(19.5)
(19.5)
2019
£000
6,435
6,435
80.9
76.8
19.2
18.2
2019
Number
’000
7,958
424
8,382
There is no adjustment in the total diluted loss per share calculation for the 217,000 (2019:424,000) 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.
39
www.chamberlin.co.ukSTOCK CODE: CMHFinancial Statements SECTION 2 CONTINUED
RESULTS OF THE YEAR
11 Non-underlying items
Group reorganisation
Hedge ineffectiveness
Asset impairment
Onerous leases
GMP equalisation
Share-based payment charge
Non-underlying operating costs
Taxation
Tax effect of non-underlying costs
2020
£000
712
138
–
–
–
59
909
–
909
2019
£000
54
–
3,043
16
295
40
3,448
(87)
3,361
During the year ended 31 March 2020, the Group undertook a Group-wide restructuring programme in order to realign the cost base
to the reduced levels of revenue.
Group reorganisation costs of £712,000, which include redundancy and related costs, relate to this restructuring programme.
The hedge ineffectiveness charge of £138,000 in 2020 arises from a short-term reduction in highly probable Euro denominated sales as
a result of economic disruption to our customers caused by COVID-19.
The share-based payment charge in 2020 is £59,000 (2019: £40,000).
In 2019, the Group undertook an impairment review of two of its sites within the Foundry Division, which identified that the prior
carrying value of its assets could not be supported by their future value to the business, resulting in the recognition of an impairment
charge of £3,043,000.
Furthermore in 2019, a Guaranteed Minimum Pension (GMP) equalisation review was undertaken, which resulted in an increase in
the pension liability of £295,000.
40
ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2020chamberlin plc SECTION 3
OPERATING ASSETS AND LIABILITIES
12 Property, plant and equipment
Group
Cost
At 1 April 2018
Additions
Disposals
Disposal of subsidiary undertakings (Note 9)
At 31 March 2019
Additions
Disposals
At 31 March 2020
Depreciation/impairment
At 1 April 2018
Charge for year
Impairment charge
Disposals
Disposal of subsidiary undertakings (Note 9)
At 31 March 2019
Charge for year
Disposals
At 31 March 2020
Net book value
At 31 March 2020
At 31 March 2019
At 1 April 2018
Net book value of land and buildings comprises:
Freehold
Short leasehold (leasehold improvements)
Land and
buildings
£000
Plant and
machinery
£000
Motor
vehicles
£000
7,088
22
–
(954)
6,156
147
–
6,303
2,838
331
1,068
–
(378)
3,859
219
–
4,078
2,225
2,297
4,250
25,171
1,091
(8)
(3,070)
23,184
258
–
23,442
17,014
1,328
1,925
(1)
(2,511)
17,755
735
–
18,490
4,952
5,429
8,157
95
75
(8)
(16)
146
21
(13)
154
48
29
50
(8)
(16)
103
26
(7)
122
32
43
47
2020
£000
2,209
16
2,225
Total
£000
32,354
1,188
(16)
(4,040)
29,486
426
(13)
29,899
19,900
1,688
3,043
(9)
(2,905)
21,717
980
(7)
22,690
7,209
7,769
12,454
2019
£000
2,297
–
2,297
Additions to right-of-use assets in the year amounted to £111,000 (2019: £371,000).
41
www.chamberlin.co.ukSTOCK CODE: CMHFinancial Statements SECTION 3 CONTINUED
OPERATING ASSETS AND LIABILITIES
12 Property, plant and equipment continued
Right-of-use assets net book value included in the above comprise:
At 31 March 2019
At 31 March 2020
Land and
buildings
£000
633
545
Plant and
machinery
£000
4,482
4,029
Motor
vehicles
£000
43
32
Total
£000
5,158
4,606
The maturity analysis of lease liabilities associated with right-of-use assets are disclosed in Note 24. The interest cost and the cash
flows associated with these lease liabilities are disclosed in Note 6 and the consolidated cash flow statement respectively.
Company
Cost
At 1 April 2018
Additions
At 31 March 2019
Additions
Disposals
At 31 March 2020
Depreciation
At 1 April 2018
Charge for year
At 31 March 2019
Charge for year
Disposals
At 31 March 2020
Net book value
At 31 March 2020
At 31 March 2019
At 1 April 2018
Land and
buildings
£000
Plant and
machinery
£000
Motor
vehicles
£000
1,670
–
1,670
–
–
1,670
925
27
952
27
–
979
691
718
745
97
1
98
17
–
115
74
6
80
7
–
87
28
18
23
47
75
122
21
(13)
130
–
79
79
26
(7)
98
32
43
47
Total
£000
1,814
76
1,890
38
(13)
1,915
999
112
1,111
60
(7)
1,164
751
779
815
The net book value of motor vehicles in the Company of £32,000 (2019: £43,000) relates entirely to right-of-use assets under lease.
Freehold land included above not subject to depreciation amounted to:
2020
2019
Group
£000
Company
£000
275
275
275
275
42
ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2020chamberlin plc 12 Property, plant and equipment continued
Impairment testing
The Group has identified indications of impairment at two of its cash-generating units (CGUs), within the foundry segment, and as
such has performed an impairment review on the carrying value of the property, plant and equipment and intangible assets at these
CGUs. The decline in profitability and the losses generated are the impairment indications which have led to the impairment review
being performed.
Impairment has been assessed by comparing the book value of assets against their recoverable amounts. The recoverable amount of a
CGUs assets is the higher of its fair value less costs to sell and its value in use. Value in use is determined using cashflow projections
from the three year financial plan approved by the Board. The projected cashflows reflect the latest expectations of demand for
products in years one to three and are extrapolated to year ten using a 2.0% growth rate that approximates to the long-term growth
rate of the UK economy. The projected cashflows reflect an expected return to profitability in 2020/21 and a full realisation of cost-
saving programmes that require a certain gestation period to fully mature. The key sensitivities around these projections are the
return of sales volumes and the full fruition of cost-saving initiatives. In light of the adverse impact that Covid-19 is currently having
on market conditions and the uncertainty surrounding the extent and timing of a future economic recovery in the Group’s UK and
worldwide markets, the Board have applied significant downside sensitivity analysis to the financial plans that models reductions to
cash flows of 33% in years one to three, 50% in years four to seven and 66% in years eight to ten.
The key assumptions in these calculations are the long-term growth rates and discount rate applied to the forecast cashflows in
addition to the achievement of the forecasts themselves. The long-term growth rate used is based on economic forecasts of the long-
term growth rate for the UK. The pre-tax discount rate used is based on the Group pre-tax weighted average cost of capital of 11.1%.
Based on the assumptions noted above, including the downside sensitivities arising from Covid-19 induced uncertainty, the Board
concluded that the recoverable amount of the CGUs were higher than the book value of the CGUs assets and as such no impairment
charge is deemed necessary.
43
www.chamberlin.co.ukSTOCK CODE: CMHFinancial Statements SECTION 3 CONTINUED
OPERATING ASSETS AND LIABILITIES
13
Intangible assets
Software
Development costs
Software
Cost
At 1 April 2018
Disposal of subsidiary undertakings (Note 9)
At 31 March 2019
Additions
At 31 March 2020
Amortisation/impairment
At 1 April 2018
Charge for the year
Disposal of subsidiary undertakings (Note 9)
At 31 March 2019
Charge for year
At 31 March 2020
Net book value
At 31 March 2020
At 31 March 2019
At 1 April 2018
Group
Company
2020
£000
249
92
341
2019
£000
203
87
290
2020
£000
22
–
22
2019
£000
2
–
2
Group
£000
Company
£000
1,008
(33)
975
98
1,073
736
59
(23)
772
52
824
249
203
272
27
–
27
25
52
24
1
–
25
5
30
22
2
3
Software has an estimated useful life of between three and ten years
In the Group, software includes right-of-use assets with a net book value of £67,000 (2019: £nil) relating to assets held under leases.
Additions in the year relating to right-of-use assets amounted to £78,000 (2019: £nil).
In the Company, software includes right-of use assets with a net book value of £16,000 (2019: £nil) relating to assets held under leases.
Additions in the year relating to right-of-use assets amounted to £18,000 (2019: £nil).
44
ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2020chamberlin plc 13
Intangible assets continued
Development costs capitalised
Cost
At 1 April 2018
Additions
Disposal of subsidiary undertakings (Note 9)
At 31 March 2019
Additions
At 31st March 2020
Amortisation/ impairment
At 1 April 2018
Charge for year
Disposal of subsidiary undertakings (Note 9)
At 31 March 2019
Charge for year
At 31 March 2020
Net book value
At 31 March 2020
At 31 March 2019
At 1 April 2018
Group
£000
Company
£000
424
22
(86)
360
30
390
269
25
(21)
273
25
298
92
87
155
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Development costs capitalised relate to specific major projects which result in an asset being created which is then amortised over
the primary income-generating period of the associated product. For the above items this has been estimated at five years from the
commencement of commercial sales.
14
Inventories
Raw materials
Work in progress
Finished goods
Group
2020
£000
811
696
1,082
2,589
2019
£000
911
812
979
2,702
Company
2020
£000
–
–
–
–
2019
£000
–
–
–
–
Stock recognised in cost of sales during the period as an expense was £10,863,000 (2019: £11,585,000). The impairment charge for
stock during the year was £25,000 (2019: £2,000). There is no material difference in the value of stock held on the balance sheet and its
replacement cost.
45
www.chamberlin.co.ukSTOCK CODE: CMHFinancial Statements SECTION 3 CONTINUED
OPERATING ASSETS AND LIABILITIES
15 Trade and other receivables
Trade receivables
Amounts due from subsidiary undertakings
Other receivables
Corporation tax
Prepayments
Group
Company
2020
£000
5,222
–
411
–
449
6,082
2019
£000
5,189
–
232
165
466
6,052
2020
£000
12
3,696
133
–
15
3,856
2019
£000
112
3,761
39
132
14
4,058
Invoice finance liabilities are directly secured against the trade receivables of the Group. The Group retains the risk and rewards, such
as default, associated with the holding of trade receivables. The Group has trade receivables as at 31 March 2020 of £5,222,000 (2019:
£5,189,000) against which an invoice finance liability of £1,925,000 (2019: £1,628,000) was secured. The total available invoice finance
facility as at 31 March 2020 was £6,000,000 (2019: £7,750,000).
Trade receivables are denominated in the following currencies:
Sterling
Euro
Group
Company
2020
£000
2,080
3,142
5,222
2019
£000
2,722
2,467
5,189
2020
£000
12
–
12
2019
£000
112
–
112
Of the carrying amount of trade receivables of £5,222,000 (2019: £5,189,000), £3,708,000 (2019: £4,181,000) is against five major
customers.
Trade receivables are non-interest bearing and are generally on terms of 30 to 60 days and are shown net of a provision for
impairment. As at 31 March 2020, trade receivables at a nominal value of £219,000 (2019: £345,000) were impaired and fully provided
for. Movements in the provision for impairment of receivables were as follows:
At 1 April 2019
Disposal of Exidor Limited
Charge for year
Amounts written off
Provision increase
At 31 March 2020
Group
2020
£000
345
–
17
(143)
–
219
2019
£000
23
(6)
203
(6)
131
345
Company
2020
£000
2019
£000
–
–
–
–
–
–
–
–
–
–
–
–
46
ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2020chamberlin plc 15 Trade and other receivables continued
The analysis of trade receivables that were past due but not impaired is as follows:
2020
2019
Neither past
due nor
impaired
£000
5,088
4,166
Total
£000
5,222
5,189
Past due
<30 days
£000
30-60 days
£000
60-90 days
£000
90-120 days
£000
>120 days
£000
35
707
3
90
8
186
43
31
45
9
The credit quality of trade receivables that are neither past due nor impaired is assessed by reference to external credit ratings, where
available, otherwise historical information relating to the counterparty default rates is used.
Debtors where external credit ratings have been sought
Debtors where internal credit assessments have been made
Group
Company
2020
£000
5,210
12
5,222
2019
£000
4,986
203
5,189
2020
£000
–
–
–
Of the balance in respect of counterparties with internal ratings, nil% (2019: 3%) is in respect of new customers, and 100%
(2019: 97%) existing customers with no history of defaults.
Amounts due from subsidiary companies are interest free and repayable on demand.
Income taxes receivable
UK corporation tax
16 Current liabilities
Financial liabilities
Bank overdraft
Invoice finance facility
Lease liabilities
Group
Company
2020
£000
–
2019
£000
165
2020
£000
–
Group
Company
2020
£000
–
1,925
1,103
3,028
2019
£000
–
1,628
1,055
2,683
2020
£000
1,654
–
38
1,692
2019
£000
–
–
–
2019
£000
132
2019
£000
23
–
34
57
47
www.chamberlin.co.ukSTOCK CODE: CMHFinancial Statements SECTION 3 CONTINUED
OPERATING ASSETS AND LIABILITIES
16 Current liabilities continued
The Group has no net overdraft facility. However, under the terms of the Group’s banking arrangements, individual companies within
the Group are permitted to have an overdraft position, provided the Group’s net position is cash positive.
Lease liabilities are secured against the specific item to which they relate. These leases are repayable by monthly instalments for a
maximum period of five years to February 2025. Interest is payable at fixed amounts that range between 3.1% and 9.4%.
Invoice finance balances are secured against the trade receivables of the Group and are repayable on demand. Interest is payable at
2.3% over base rate. The maximum facility as at 31 March 2020 was £6,000,000 (2019: £7,750,000). Management has assessed the
treatment of the financing arrangements and has determined it is appropriate to recognise trade receivables and invoice finance
liabilities separately.
Trade and other payables
Trade payables
Amounts owed to other Group companies
Other taxation and social security
Other payables
Accruals
Fair value of derivative forward contracts
Group
Company
2020
£000
3,730
–
708
1,931
617
495
7,481
2019
£000
2,665
–
432
499
1,004
–
4,600
2020
£000
126
470
28
257
115
–
996
2019
£000
71
527
31
403
268
–
1,300
Trade payables are non-interest bearing and are normally on terms of 30 to 60 days.
17 Non-current liabilities
Financial liabilities
Lease liabilities
Group
2020
£000
2019
£000
2,037
2,966
Company
2020
£000
57
2019
£000
59
Lease liabilities are secured against the specific item to which they relate. These leases are repayable by monthly instalments for a
period of upto five (2019: five) years to February 2025. £1,071,000 is repayable in one to two years (2019: £1,052,000) and £966,000
within two to five years (2019: £1,914,000). Interest is payable at a fixed amount that ranges between 3.1% and 9.4%.
Provisions for liabilities
As at 1 April 2019
Charge for the year
As at 31 March 2020
Dilapidations
£000
200
–
200
Dilapidations
The dilapidation provision relates to expected future lease dilapidations and is expected to be utilised within 1-2 years.
48
ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2020chamberlin plc 17 Non-current liabilities continued
Deferred taxation
Group liabilities
Temporary differences relating to share options
Fair value hedges
Temporary differences relating to capital allowances
Deferred tax assets
Temporary differences relating to capital allowances
Temporary differences relating to pension scheme deficit
Temporary differences relating to cash flow hedges
Other temporary differences
Group
Company
2020
£000
39
2019
£000
53
2020
£000
–
2020
£000
–
–
39
39
Group
Company
2020
£000
–
333
61
217
611
2019
£000
119
448
–
339
906
2020
£000
7
333
–
212
552
2019
£000
33
2019
£000
20
33
–
53
2019
£000
15
448
–
354
817
The tax value of Group trading losses carried forward for which a deferred tax asset has not been recognised total £1,345,000 (2019:
£669,000).
Deferred tax assets are recognised only to the extent that it is probable that taxable profits will be available against which the
deductible temporary differences, carried forward tax credits or tax losses can be utilised. The Group has assessed that it is probable
that future profits will fully utilise current tax losses and other deductible temporary differences. Deferred tax assets relating to the
pension scheme deficit are expected to be recovered over the period that contributions are made into the scheme, including the agreed
contributions to April 2032. The deferred tax assets have been assessed as recoverable against forecasts of future taxable profits.
All deferred tax assets are recoverable, and deferred tax liabilities will be settled, in greater than one year.
Of the total deferred tax charge of £282,000 (2019: £681,000 credit), a charge of £309,000 (2019: £745,000 credit) was recognised
within the Consolidated Income Statement, a charge of £6,000 (2019: £38,000 charge) was recognised within other comprehensive
income and a credit of £33,000 (2019: £26,000 charge) recognised within the Consolidated Statement of Changes in Equity.
49
www.chamberlin.co.ukSTOCK CODE: CMHFinancial Statements SECTION 4
CAPITAL STRUCTURE
18 Share capital
Allotted, called up and fully paid
7,958,126 (2019: 7,958,126) ordinary shares of 25p
2020
£000
1,990
2019
£000
1,990
During the year no shares (2019: none) were issued to Directors to satisfy share options at nil (2019: nil) cost.
During the year, no share options were granted (2019: 366,066) and 207,363 (2019: 292,027) were forfeited or lapsed.
On 8 March 2021, a general meeting of the Company approved the sub-division of the existing ordinary shares of 25p into ordinary
shares of 0.1p and deferred shares of 24.9p. The rights attaching to the new ordinary shares of 0.1p are identical to those of the existing
ordinary shares of 25p. Holders of the deferred shares of 24.9p are only entitled to the amount paid up on those shares and have no
other rights to participate in the assets of the Company.
Following the sub-division of the share capital on 8 March 2021, a £200,000 convertible loan received on 19 February 2021 from Mr
Trevor Brown was converted into 3,333,333 ordinary shares of 0.1p at a conversion price of 6p each.
On 26 March 2021, the Company announced that it had raised gross proceeds of £3.5 million by way of a Share Placing and
Subscription. As a result, the Company issued 58,333,333 ordinary shares of 0.1p each at a subscription price of 6p each.
As a result of the above post-balance sheet events, the Company’s issued share capital now comprises 69,624,792 ordinary shares of
0.1p and 7,958,126 deferred shares of 24.9p each, with a total nominal value of £2,051,000.
19 Share-based payments
Details of the equity-settled scheme used to incentivise the Directors of the Group are set out in the Remuneration Committee Report
on page 17.
Under all schemes, options lapse if the employee leaves the Group, subject to certain exceptions set out in the scheme rules.
Due to the small number of individual grants made, each individual option is priced using the Black-Scholes pricing model, rather
than applying the model to weighted average figures for options granted in each year.
Relevant options outstanding during the year were as follows:
At 1 April 2018
Granted
Lapsed
At 1 April 2019
Lapsed
At 31 March 2020
No.
of options
350,000
366,006
(292,027)
423,979
(207,363)
216,616
Weighted average
Exercise
price
(p)
Remaining
contractual life
(years)
25.0
97.5
62.1
62.1
25.0
97.5
7.7
9.3
8.5
8.5
6.5
8.3
No share options were exercised during the current or prior year.
The cost of share options charged to the Consolidated Income Statement was £59,000 (2019: charge of £40,000). The fair value of
options granted in the year was £nil (2019: £128,000).
50
ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2020chamberlin plc 20 Fixed asset investments
Shares in subsidiary undertakings
Cost
At 1 April 2018
Disposal of subsidiary
At 31 March 2019 and 2020
Impairment
At 1 April 2018
Impairment charge
At 31 March 2019
Impairment charge
At 31 March 2020
Net book value
At 31 March 2020
At 31 March 2019
At 1 April 2018
£000
8,159
(2,004)
6,155
-
3,260
3,260
1,079
4,339
1,816
2,895
8,159
Wholly owned operating subsidiaries
Chamberlin & Hill Castings Limited
Russell Ductile Castings Limited
Petrel Limited
Chamberlin Foundry Limited
Principal activity
Manufacture and sale of engineering castings
Manufacture and sale of engineering castings
Manufacture and sale of lighting and electrical installation products
Intermediary holding company
Wholly owned dormant subsidiaries
Chamberlin Group Limited
Chamberlin & Hill Ltd
Ductile Castings Limited
Fred Duncombe Limited
Fitter & Poulton Limited
Webb Lloyd Limited
The Company owns 100% of the issued ordinary share capital of the above companies, all of whom are registered and operate
principally in England and Wales.
As a result of the trading loss for the Group in the year, a review of the carrying value of investments in subsidiaries was undertaken,
leading to an impairment charge of £1,079,000 (2019: £3,260,000) being recognised in the income statement of the Company.
51
www.chamberlin.co.ukSTOCK CODE: CMHFinancial Statements SECTION 5
OTHER SUPPORTING NOTES
21 Pension arrangements
During the year, the Group operated funded defined benefit and defined contribution pension schemes for the majority of its
employees in the UK, 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 2020 was £199,000 (2019: £124,000), with the increase being due to costs
associated with the triennial valuation, together with £58,000 of financing cost (2019: £112,000).
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 £396,000 (2019: £423,000). 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):
Rate of increase in salaries
Rate of increase of pensions in payment – post 1997 accrual only
Discount rate
Inflation assumption – RPI
Inflation assumption – CPI
31 March
2020
31 March
2019
31 March
2018
n/a
2.6%
2.3%
2.6%
1.7%
n/a
3.2%
2.3%
3.3%
2.3%
n/a
3.1%
2.5%
3.2%
2.2%
Demographic assumptions are all based on the S3PA (2019: S2PA) mortality tables with a 1.25% annual increase. The post retirement
mortality assumptions allow for expected increases in longevity. The current disclosures relate to assumptions based on longevity in
years following retirement as of the balance sheet date, with future pensioners relating to an employee retiring in 15 years from the
balance sheet date.
Current pensioners at 65
Male
Female
Future pensioners at 65
Male
Female
2020
years
21.0
23.2
21.9
24.3
2019
years
20.9
23.1
21.8
24.2
The scheme was closed to future accrual with effect from 30 November 2007, after which the Company’s regular contribution rate
reduced to zero (previously the rate had been 9.1% of members’ pensionable salaries).
The triennial valuation as at 31 March 2019 was completed during the year and concluded that Company contributions would
increase to £300,000 for the year ended 31 March 2021, £330,000 for the year ended 31 March 2022 and £360,000 for the year ended
31 March 2023, with the deficit reduction period reducing to 2032. The Company has given security over the Group’s land and
buildings to the pension scheme. There will be a further triennial review with effect from 31 March 2022, which will establish future
deficit payments.
52
ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2020chamberlin plc
21 Pension arrangements continued
The scheme assets are stated at the market values at the respective balance sheet dates. The assets and liabilities of the scheme were:
Equities/diversified growth fund
Bonds
Insured pensioner assets
Cash
Market value of assets
Actuarial value of liabilities
Scheme deficit
Related deferred tax asset
Net pension liability
2020
£000
12,534
1,565
24
415
14,538
(16,497)
(1,959)
333
(1,626)
2019
£000
14,286
1,580
26
173
16,065
(18,705)
(2,640)
448
(2,192)
Due to the nature of the investments held, the scheme is subject to normal market risks that affect the world’s stock markets, and in
particular the UK market.
Net benefit expense recognised in profit and loss
Net interest cost
Net interest expense
Remeasurement losses/(gains) in other comprehensive income
Actuarial (gains)/losses arising from changes in financial assumptions
Actuarial gains arising from changes in demographic assumptions
Experience adjustments
Loss/(return) on assets (excluding interest income)
Total remeasurement gain shown in other comprehensive Income
Actual loss on plan assets
Movement in deficit during the year
Deficit in scheme at beginning of year
Movement in year:
Past service cost
Employer contributions
Net interest expense
Actuarial gain
Deficit in scheme at end of year
2020
£000
(58)
(58)
2020
£000
(593)
(244)
(931)
1,308
(460)
2020
£000
(946)
2020
£000
2019
£000
(112)
(112)
2019
£000
622
(151)
91
(638)
(76)
2019
£000
(976)
2019
£000
(2,640)
(5,080)
–
279
(58)
460
(1,959)
(295)
2,771
(112)
76
(2,640)
53
www.chamberlin.co.ukSTOCK CODE: CMHFinancial Statements SECTION 5 CONTINUED
OTHER SUPPORTING NOTES
21 Pension arrangements continued
Movement in scheme assets
Fair value at beginning of year
Interest income on scheme assets
Return on assets (excluding interest income)
Employer contributions
Benefits paid
Administrative costs
Fair value at end of year
Movement in scheme liabilities
Benefit obligation at start of year
Interest cost
Actuarial (gains)/losses arising from changes in financial assumptions
Actuarial gains arising from changes in demographic assumptions
Experience adjustments
Benefits paid
Past service cost
Benefit obligation at end of year
The weighted average duration of the pension scheme liabilities is 13 years (2019: 13.5 years).
A quantitative sensitivity analysis for significant assumptions as at 31 March 2020 is as shown below:
Present value of scheme liabilities when changing the following assumptions:
Discount rate increased by 1% p.a.
RPI and CPI increased by 1% p.a.
Mortality – members assumed to be their actual age as opposed to one year older
2020
£000
16,065
362
(1,308)
279
(860)
–
2019
£000
13,207
338
638
2,771
(889)
–
14,538
16,065
2020
£000
2019
£000
18,705
18,287
420
(593)
(244)
(931)
(860)
–
450
622
(151)
91
(889)
295
16,497
18,705
2020
£000
14,635
17,340
17,266
The sensitivity analysis above has been determined based on a method that extrapolates the impact on defined benefit obligation as a
result of reasonable changes in key assumptions occurring at the end of the year.
22 Contingent liabilities
Cross guarantees exist between the Company and its subsidiary undertakings in respect of the Group’s bank overdrafts, asset finance
loans and invoice finance facilities. The total borrowings of subsidiaries at 31 March 2020 amounted to £4,970,000 (2019: £4,674,000).
54
ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2020chamberlin plc 23 Financial commitments
Capital expenditure
Contracted for but not provided in the accounts
Capital commitments relate to office equipment replacements.
Group
Company
2020
£000
14
2019
£000
–
2020
£000
–
2019
£000
–
Lease commitments
The Group had total outstanding commitments under operating leases as follows:
Future minimum payments due:
Not later than one year
After one year but not more than five years
After five years
Group
Company
2020
£000
149
60
–
209
2019
£000
77
–
–
77
2020
£000
35
44
–
79
2019
£000
23
–
–
23
Leases on land and buildings comprise the premises of Petrel Limited (£114,000 per annum with an end date of 20 May 2021).
24 Derivatives and financial instruments
The Group considers the use of derivatives to reduce financial risk in a number of areas noted below.
The only area where the use of derivatives is considered appropriate at present is that of currency risk.
The carrying amount of financial assets and financial liabilities are not materially different to their fair value.
The Company is only exposed to interest rate risk.
Currency risk
The Group’s functional currency is Sterling but approximately 63% of revenues are denominated in foreign currencies, principally
Euros in relation to castings exports. In order to reduce the Group’s exposure to currency fluctuations a proportion of forecast
exposures are hedged depending on the level of confidence and hedging is topped up following regular reviews. Hedging is built up
over 18 months up to a 90% hedge; on this basis up to 75% 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. At the year-end it had net monetary assets
denominated in Euros of £1,108,000 (2019: assets of £2,671,000). A proportion of the Group’s financial liabilities are denominated in
Euros, reducing the currency risk of the Group. Because up to 90% of the Euro debtors are hedged, the impact on net monetary assets
of a 5% exchange rate change in the Euro/Sterling would not be material to the profit and loss.
At 31 March 2020, the Group held forward currency hedging contracts designated as hedges of expected future Euro exports for
highly probable forecast sales transactions. The forward currency contracts are being used to hedge the foreign currency risk of highly
probable forecast sales over 18 months.
The terms of the forward currency hedging contracts have been negotiated to match the terms of the commitments and the cash flow
hedges of expected future sales were assessed to be highly effective.
Forward currency contracts for the sale of Euros outstanding at the year end have been recorded at fair value with the movement
being recognised directly in other comprehensive income through the Consolidated Statement of Comprehensive Income. If these
contracts were not in place and the Euro/Sterling exchange rate moved by plus or minus 5% the corresponding gain/loss to equity
would be £936,000 (2019: £440,000).
A risk to the Group relates to ineffective hedges whereby highly probable sales do not occur and the Group is over hedged against
those particular sales.
55
www.chamberlin.co.ukSTOCK CODE: CMHFinancial Statements SECTION 5 CONTINUED
OTHER SUPPORTING NOTES
24 Derivatives and financial instruments continued
The uncertain economic outlook caused by the impact of Covid-19 on the Group’s European markets has resulted in the Group
undertaking a review of future Euro denominated sales. This review has led the Group to conclude that a proportion of the Group’s
expected sales are no longer highly probable and the Group is likely to be over-hedged in the near term. Consequently, a hedge
ineffectiveness loss of £138,000 (2019: nil) has been recognised in the income statement.
At 31 March 2020
At 31 March 2019
Contracted
amount
(€ 000)
21,605
10,030
Weighted
average
contract
rate
1.1543
1,1383
Contracted
amount
£000
18,717
8,812
Contracted
amount at
year-end rate
£000
19,228
8,629
Unrealised
gain/(loss)
£000
(511)
183
Interest rate risk
The Group has asset finance loans and an invoice finance facility. Exposure to interest rate risk is considered to be low and no
derivatives are used to modify the Group’s interest rate risk profile. The impact of a 50 basis point increase in UK interest rates would
be a £10,000 reduction in profit before tax (2019: £8,000). An equivalent decrease in rates would increase profit before tax by £10,000
(2019: £8,000).
An analysis of interest bearing financial assets and liabilities is given below.
Financial liabilities
Bank overdraft (Sterling denominated)
Invoice finance (Sterling denominated)
Invoice finance (Euro denominated)
Lease liabilities (Sterling denominated)
Group
Company
2020
£000
–
(198)
(1,727)
(3,140)
(5,065)
2019
£000
–
(1,099)
(529)
(4,021)
(5,649)
2020
£000
(1,654)
–
–
(95)
(1,749)
2019
£000
(23)
–
–
(93)
(116)
Credit risk
The Group trades only with recognised, creditworthy third parties. It is the Group’s policy that all customers who wish to trade on
credit terms are subject to credit verification procedures. In addition, receivable balances are monitored on an ongoing basis with the
result that the Group’s exposure to bad debts is not significant. The maximum exposure is the carrying amount as disclosed in Note
15. There are no significant concentrations of credit risk within the Group.
With respect to credit risk arising from the other financial assets of the Group, which comprise cash and cash equivalents, the Group’s
exposure to credit risk arises from default of the counterparty, with the maximum exposure equal to the carrying amount of the
instrument.
The bad debt charge for the year was £17,000 (2019: £334,000).
Liquidity risk
The Group aims to mitigate liquidity risk by managing the cash generation of its operating units, and applying cash generation targets
across the Group. Investment is carefully controlled, with authorisation limits operating up to Group Board level and cash payback
periods applied as part of the investment appraisal process. In this way, the Group aims to maintain a good credit rating and operate
within its existing facilities. There are no material differences between the fair values and carrying values of the financial assets and
liabilities.
The Group’s funding strategy is to maintain flexibility in managing its day-to-day working capital needs through the use of an invoice
finance facility, subject to dividend and debtor turn covenants, and to fund acquisitions and significant capital projects through the
use of longer-term funding, including bank loans, hire purchase and equity.
The Group’s £6.0m invoice finance facility is ongoing, as discussed in the Consolidated Cash Flow commentary on page 31.
56
ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2020chamberlin plc 24 Derivatives and financial instruments continued
Fair value hierarchy
The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:
Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities;
Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly
or indirectly.
All derivative financial assets and liabilities are valued by Level 2 techniques. The fair values of short-term receivables, short-term
payables, and the invoice finance facility and overdraft (both of which are repayable on demand) are not disclosed, as permitted by
IFRS 7, where the carrying amount is a reasonable approximation to fair value.
The Group’s finance team performs valuations of financial items for financial reporting purposes. Valuation techniques are selected
based on the characteristics of each instrument, with the overall objective of maximising the use of market-based information. The
finance team reports directly to the Group Finance Director and the Audit Committee. Valuation processes and fair value changes
are discussed among the Audit Committee and the valuation team at least every year, in line with the Group’s reporting dates. The
following valuation techniques are used for instruments categorised in Level 2.
Foreign currency forward contracts (Level 2) – the Group’s foreign currency forward contracts are not traded in active markets.
These contracts have been fair valued using observable forward exchange rates and interest rates corresponding to the maturity of the
contract. The effects of non-observable inputs are not significant for foreign currency forward contracts.
The table below summarises the maturity profile of the Group’s financial assets and liabilities, which are all classified as Level 2, at 31
March 2020 and 31 March 2019.
The carrying value of the Group’s financial assets and liabilities is considered to be the same as the fair value.
At 31 March 2020
Financial assets
Trade receivables
Non-derivative financial liabilities
Invoice finance
Lease liabilities, including interest
Trade payables
At 31 March 2019
Financial assets
Trade receivables
Non-derivative financial liabilities
Invoice finance
Lease liabilities, including interest
Trade payables
On demand
Less than
one year One to two years
Two to five years
Greater than five
years
5,222
1,925
–
–
1,925
5,189
1,628
–
–
1,628
–
–
1,244
3,730
4,974
–
–
1,200
–
1,200
–
–
1,080
–
1,080
–
–
–
–
1,055
2,665
3,720
–
1,055
–
1,055
–
1,911
–
1,911
–
–
–
–
–
–
–
–
–
–
Total
5,222
1,925
3,524
3,730
9,179
5,189
1,628
4,021
2,665
8,314
57
www.chamberlin.co.ukSTOCK CODE: CMHFinancial Statements SECTION 5 CONTINUED
OTHER SUPPORTING NOTES
24 Derivatives and financial instruments continued
The gross undiscounted future cashflows are analysed as follows:
At 31 March 2020
Foreign exchange forward contracts
On demand
Less than
one year One to two years
Two to five years
Total
–
–
13,445
13,445
5,226
5,226
–
–
18,671
18,671
The outflows above relate to the settlement of the derivative contracts which are a fair value liability at the year-end as disclosed in
Note 16.
At 31 March 2019
Foreign exchange forward contracts
On demand
Less than
one year One to two years
Two to five years
Total
–
–
7,682
7,682
946
946
–
–
8,628
8,628
The Company’s financial liabilities comprise the bank overdraft of £1,654,000 (2019: £23,000) and is payable on demand, and lease
liabilities of £95,000 (2019: £93,000).
Capital management
The Group defines capital as the total equity of the Group, which at the year-end is £2,545,000 (2019: £4,868,000). The Group
objective for managing capital is to deliver competitive, secure and sustainable returns to maximise long-term Shareholder value.
The Group is subject to net worth covenants and debtor turn covenants on its invoice finance facility. There are no financial covenant
restrictions on the Group’s overdraft facility or asset loans.
25 Related party transactions
Group
All transactions between the parent Company and subsidiary companies and between subsidiary companies have been eliminated on
preparation of the consolidated accounts. The Group has not entered into any other related party transactions.
Company
The Company provides certain management services to subsidiary companies.
Certain payments in relation to items settled or provided on a central basis, principally corporation tax and insurance payments, are
made by the Company and are then recharged to subsidiaries at cost.
Compensation of key management personnel (including Directors)
Short-term employee benefits (including employer's NI)
Termination costs (including employer's NI)
Share-based payments
Pension contributions
Group
Company
2020
£000
1,100
141
59
65
1,365
2019
£000
1,320
–
40
64
1,424
2020
£000
538
–
59
36
633
2019
£000
638
–
40
37
715
Key management, other than Directors of the Company, comprise the Managing Directors and Finance Directors of the main
operating subsidiaries, and are included in Group figures above.
Details of key management share options are disclosed in Note 19.
58
ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2020chamberlin plc 26 Net debt
At 1 April 2018
Cashflow
Interest
At 1 April 2019
Cashflow
New leases in the year
Impact of foreign exchange rates
At 31 March 2020
Balances comprise:
Current assets
Current liabilities
Non-current liabilities
Net overdraft/
(cash at bank)
£000
485
(971)
195
(291)
(154)
–
(12)
(457)
(457)
–
–
(457)
Invoice
finance
£000
4,740
(3,218)
106
1,628
279
–
18
1,925
–
1,925
–
1,925
Lease liabilities
£000
3,267
668
86
4,021
(1,066)
185
–
3,140
–
1,103
2,037
3,140
Import
loan
£000
1,137
(1,137)
–
–
–
–
–
–
–
–
–
–
Total
9,629
(4,658)
387
5,358
(941)
185
6
4,608
(457)
3,028
2,037
4,608
27 Restatement of comparatives
During the year, a change has been made to the presentation of administration costs and interest costs associated with the Company’s
defined benefit pension scheme. Previously, these costs were shown as non-underlying items. Management is now of the view that
such costs should be reported as part of underlying results reflecting the ongoing recurring nature of these costs. As a result of this
presentational change, the underlying results in the comparative periods have been restated. There is no change to statutory results as
a consequence of this presentational change.
Impact on underlying loss for the year ended 31 March 2019
Income statement
Underlying operating loss
Underlying finance costs
Underlying loss before taxation
Taxation
Underlying loss from continuing operations
As reported
£000
Reclassification
£000
As restated
£000
(886)
(387)
(1,273)
(63)
(1,336)
(124)
(112)
(236)
24
(212)
(1,010)
(499)
(1,509)
(39)
(1,548)
28 Subsequent events
On 16 December 2020, the Company announced that it had received notice from its major customer, BorgWarner Turbo
Systems Worldwide Headquarters GmbH, of its intention to cancel all contracts with effect from 22 January 2021. Following this
announcement, it became evident that the Company was not in a position to publish its 2020 Accounts by 31 December 2020 in
accordance with AIM rules. Consequently, the Company’s shares were suspended from trading on AIM with effect from 4 January
2021.
The Board and its advisers immediately implemented measures to reduce costs and preserve cash whilst exploring options to
strengthen the balance sheet in order to safeguard the Company’s future. After evaluating a number of alternative options with its
advisers, the Company issued a £200,000 unsecured convertible loan note to Mr Trevor Brown in February 2021 to provide immediate
short-term working capital, which was converted into 3,333,333 Ordinary Shares following Shareholder approval at the General
Meeting held on 8 March 2021. On that same date, Mr Trevor Brown was appointed to the Board of Chamberlin as a Non-Executive
Director.
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The Board continued to explore further funding possibilities and on 26 March 2021 announced that the Company had raised net
proceeds of £3.3 million by way of a Share Placing and Subscription. The primary purpose of the Share Placing and Subscription was
to fund working capital and to meet the restructuring costs associated with reducing the cost base to a level appropriate to the lower
ongoing revenue of the Group. Following the publication and filing of the annual audited accounts for the year end 31 March 2020
and the publication of the interim results for the six months ended 30 September 2020, the Company will immediately apply for the
suspension of trading of the Company’s Ordinary Shares on AIM to be lifted by the London Stock Exchange.
29 Summary of significant accounting policies
Basis of preparation
The consolidated financial statements have been prepared on a historical cost basis and 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.
Subsidiaries are entities which are controlled by the Group. Control is achieved when the Group has power over the investee, has the
right to variable returns from the investee and has the power to affects its returns. The Group obtains and exercises control through
voting rights and control is reassessed if there are indications that the status of any of the three elements have changed.
Going concern
The Group’s activities together with the factors likely to affect its future development, performance and financial position, including its
cash flows, liquidity position and borrowing facilities, are described in the Strategic Report on pages 4 to 9. In addition, Note 24 to the
Group financial statements includes the Group’s objectives and policies for managing capital and financial risks in relation to currency,
interest rates, credit and liquidity.
The Group’s detailed budget for the year ending 31 March 2022 and extended forecast for the six months to 30 September 2022 take
into account the £3.3m raised from the Share Placing and Subscription announced on 26 March 2021 and the Director’s view of
most likely trading conditions. These forecasts and projections indicate that existing bank facilities are expected to remain adequate.
The budget and extended forecast provides for significant revenue growth in the second half of the year to 31 March 2022 and the
six months to 30 September 2022, which is needed to replace the lost BorgWarner contracts. The budget includes the significant
but necessary benefits and costs of the restructuring that will be required to right-size the cost-base to the lower level of revenue.
As the implementation and delivery of the restructuring benefits and costs are within the control of the Directors, no downside
sensitivities have been applied in relation to these. The Directors have, however, applied reasonably foreseeable downside sensitivities
to the budget and forecast, which assumes that sales growth from October 2021 onwards is only 3% above the first half average
and the machine shop has no sales output. In the detailed budget, extended forecast and sensitised scenario, the possible receipt of
compensation from BorgWarner has been entirely discounted, as has any sales of no-longer required machinery.
As a consequence, after making enquiries, the Directors have an expectation that, in the circumstances of a reasonably foreseeable
downside scenario as described above, the Group and the Company have adequate resources to continue in operational existence for
the foreseeable future.
However, the rate at which new work can be secured to replace the lost BorgWarner activity is difficult to predict resulting in material
uncertainty, which may cast significant doubt over the ability of the Group and the Company to realise its assets and discharge its
liabilities in the normal course of business and hence continue as a going concern.
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The Directors continue to adopt the going concern basis, whilst recognising there is material uncertainty relating to the
above matter.
Presentation of the Consolidated Income Statement
The Consolidated Income Statement is allocated between underlying items that relate to the trading activities of the business,
and non-underlying items that are either non-trading, non-recurring or are valued using market-derived data, which is outside of
management’s control. As per the non-underlying items accounting policy note, the Directors believe that this format sets out
the performance of the Group more clearly.
Business combinations and goodwill
Business combinations from 1 April 2010
Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the
consideration transferred, measured at acquisition date fair value and the amount of any non-controlling interest in the acquiree. The
choice of measurement of non-controlling interest, either at fair value or at the proportionate share of the acquiree’s identifiable net
assets,is determined on a transaction by transaction basis. Acquisition costs incurred are expensed and included in administrative
expenses.
When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and
designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date.
Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Subsequent
changes to the fair value of the contingent consideration which is deemed to be an asset or liability will be recognised in accordance
with IAS 39, either in profit or loss or in other comprehensive income. If the contingent consideration is classified as equity, it is not
remeasured until it is finally settled within equity.
Goodwill is initially measured at cost, being the excess of the aggregate of the acquisition date fair value of the consideration
transferred and the amount recognised for the non-controlling interest (and where the business combination is achieved in stages,
the acquisition date fair value of the acquirer’s previously held equity interest in the accquiree) over the net identifiable amounts of
the assets acquired and the liabilities assumed in exchange for the business combination. Assets acquired and liabilities assumed
in transactions separate to the business combinations, such as the settlement of pre-existing relationships or post-acquisition
remuneration arrangements, are accounted for separately from the business combination in accordance with their nature and
applicable IFRSs.
After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing,
goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group’s cash-generating units that
are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those
units. Each unit or group of units to which goodwill is allocated shall represent the lowest level within the entity at which goodwill is
monitored for internal management purposes and will not be larger than an operating segment before aggregation. Goodwill is tested
for impairment when indicators of impairment are identified.
Where goodwill forms part of an operation that is disposed of, the goodwill associated with that operation is included in the carrying
amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is
measured based on the relative values of the operation disposed of and the portion of the cash-generating unit retained.
Business combinations prior to 1 April 2010
Business combinations are accounted for using the purchase method. The cost of an acquisition is measured as the cash paid,
and the fair value of other assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus
costs directly attributable to the acquisition. The acquired identifiable assets, liabilities and contingent liabilities are measured at
their fair value at the date of acquisition.
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Business combinations prior to 1 April 2010 continued
Any excess of the cost of acquisition over the fair values of the identifiable net assets acquired is recognised as goodwill. Any
deficiency of the cost of acquisition below the fair values of the identifiable net assets acquired (i.e. discount on acquisition) is
credited to the Consolidated Income Statement in the period of acquisition.
Goodwill on acquisition is initially measured at cost, being the excess of the cost of the business combination over the acquirer’s
interest in the net fair value of the identifiable assets, liabilities and contingent liabilities. Following initial recognition, goodwill
is measured at cost less any accumulated impairment losses. Goodwill is reviewed for impairment annually or more frequently
if events or changes in circumstances indicate that the carrying value may be impaired.As at the acquisition date, any goodwill
acquired is allocated to each of the cash-generating units acquired. Impairment is determined by assessing the recoverable amount
of the cash-generating unit to which the goodwill relates. Where the recoverable amount of the cash-generating unit is less than the
carrying amount, an impairment loss is recognised. When there is a partial disposal of a cash-generating unit, goodwill relating to
the operation disposed of is taken into account in determining the gain or loss on disposal of that operation. The amount of goodwill
allocated to a partial disposal is measured on the basis of the relative values of the operation disposed of and the operation retained.
Property, plant and equipment
All classes of property, plant and equipment are stated at cost less accumulated depreciation and any impairment in value. The
initial cost of an asset comprises its purchase price or construction cost, and any costs directly attributable to bringing the asset into
operation. The purchase price or construction cost is the aggregate amount paid and the fair value of any other consideration given
to acquire the asset. For property, where appropriate, the deemed cost as at the date of transition to IFRS is the fair value at the date of
the last valuation of these assets.
With the exception of freehold land, depreciation is calculated on a straight-line basis over the estimated useful life of the asset as
follows:
Freehold buildings and long leasehold property – over expected useful life (not exceeding 50 years)
Short leasehold property – over the term of the lease
Plant and other equipment – two to ten years
Motor vehicles – four years
The estimated useful lives of property, plant and equipment are reviewed on an annual basis and, if necessary, changes in useful lives
are accounted for prospectively.
The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances
indicate the carrying value may not be recoverable. If any such indication exists and where the carrying values exceed the estimated
recoverable amount, the assets or cash-generating units are written down to their recoverable amount.
The recoverable amount of property, plant and equipment is the greater of net selling price (fair value less costs to sell) and value in
use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that
reflects current market assessments of the time value of money and the risks specific to the asset.
For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating
unit to which the asset belongs. Impairment losses are recognised in the Consolidated Income Statement in the cost of sales line item
or in the other operating expenses line item depending on the asset concerned.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise
from the continued use of the asset. Any gain or loss arising on derecognition of the asset (calculated as the difference between the
net disposal proceeds and the carrying amount of the item) is included in the Consolidated Income Statement in the year the item is
derecognised.
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Intangible assets
Intangible assets are stated at cost less accumulated amortisation and accumulated impairment losses. Computer software, intellectual
property rights and other intangible assets are initially recorded at cost. Where these assets have been acquired through a business
combination, this will be the fair value allocated in the acquisition accounting. Where these have been acquired other than through a
business combination, the initial cost is the aggregate amount paid and the fair value of any other consideration given to acquire the
asset. Computer software and other intangible assets, such as capitalised development expenditure under IAS 38, are amortised over
their useful lives on a straight-line basis with the amortisation charge included within other operating expenses. Estimated useful life
is the shorter of legal duration and economic useful life, which represents the Directors’ best estimate of the period over which the
asset may be used to generate significant economic benefits to the Group. Software has an estimated useful life of between three years
for normal software and ten years for ERP systems. Intangible assets in the course of development are tested for impairment annually
or more frequently whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Impairment
losses are measured on a similar basis to property, plant and equipment. Useful lives are also examined on an annual basis and
adjustments, where applicable, are made on a prospective basis.
Research and development costs
Research costs are expensed as incurred.
Clearly defined and identifiable development projects in which the technical degree of exploitation, adequacy of resources and
potential market or development possibility in the undertaking can be clearly demonstrated, and where it is the intention to produce,
market or execute the project, are capitalised when a correlation exists between the costs incurred and future benefits. Costs not
meeting such criteria are expensed as incurred. Amortisation is applied as set out for intangible assets above, the useful life being
determined for individual development projects. For projects capitalised to date, a useful life of five years was considered appropriate.
The Company’s investments in subsidiaries
Investments in subsidiaries are stated at cost, less impairment and dividends from subsidiaries, are taken to profit or loss when the
right to receive payment is established.
Inventories
Inventories are valued at the lower of cost and net realisable value, which is arrived at as follows:
Æ Raw materials – purchase cost on a first-in, first-out basis or weighted average cost basis;
Æ Finished goods and work in progress – where detailed individual product costing information is available, actual cost of direct
materials and labour and a proportion of manufacturing overheads based on normal operating capacity but excluding borrowing
costs.
Previously, the engineering division included inventory valued at selling price less the calculated margin on certain finished goods
in the absence of more detailed individual product costing information. During the year, a change in estimate was made to value all
finished goods using the method described above to be consistent with the rest of the Group. Management has evaluated the effect of
this change in estimate and does not believe it to be material.
Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the
estimated costs necessary to make the sale.
Maintenance items are held in inventory and expensed on use unless they exceed a minimum level, where they are capitalised under
plant and equipment and depreciated over the remaining useful economic life of the item of plant or equipment to which they relate.
Trade and other receivables
Trade receivables, which generally have 30-60 day terms, are recognised and carried at original invoice amount less any provision
for bad debts. Expected credit losses in respect of trade receivables are recognised when there is objective evidence (such as the
probable insolvency or significant financial difficulties of the debtor) that the Group will not be able to collect all of the amount
due under the original terms of the invoice. The carrying amount of receivables is reduced by expected credit losses and are
derecognised when they are assessed as uncollectible.
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Cash and cash equivalents
Cash and cash equivalents in the balance sheet comprise cash in hand and current balances with banks and similar institutions and
short-term deposits with an original maturity of three months or less, which are subject to insignificant risks of changes in value.
For the purpose of the Consolidated Cash Flow Statement, cash and cash equivalents consist of cash and cash equivalents as defined
above, net of outstanding bank overdrafts.
Leases
IFRS 16 introduces new or amended requirements with respect to lease accounting. It introduces significant changes to the
lessee accounting by removing the distinction between operating and finance leases and requiring the recognition of a right-of-
use asset and lease liability at commencement for all leases, except for short-term leases and low value assets. In contrast to
lessee accounting, the requirements for the lessor accounting have remained largely unchanged.
Applying IFRS 16, for all leases the Group:
a. Recognises right-of-use assets and lease liabilities in the consolidated balance sheet, initially measured at present value of future
lease payments;
b. Recognises depreciation of right-of-use assets and interest on lease liabilities in the Consolidated Income Statement; and
c. Separates the amount of cash paid into principal portion (presented within financing activities) and interest (presented within
operating activities) in the consolidated cash flow statement.
Under IFRS 16, right-of-use assets are tested for impairment in accordance with IAS 36 Impairment of Assets. This replaces the
previous requirement to recognise a provision for onerous lease contracts.
For short-term leases (lease terms of 12 months or less) and leases of low-value assets (such as personal computers and office
furniture), the Group has opted to recognise a lease expense on a straight-line basis as permitted by IFRS 16. This expense is presented
within other expenses in the Consolidated Income Statement.
Foreign currency translation, derivative financial instruments and hedging
The functional and presentation currency of Chamberlin Plc and its subsidiary undertakings is Sterling (£). Transactions in foreign
currencies are recorded in the functional currency at the rate of exchange ruling at the date of the transaction. Monetary assets and
liabilities denominated in foreign currencies are retranslated at the functional currency rate of exchange ruling at the balance sheet
date. Any resulting exchange differences are taken to the Consolidated Income Statement.
The Group is exposed to foreign exchange risk on income streams denominated in foreign currencies. In order to reduce the Group’s
exposure to currency fluctuations, the Group sells a proportion of expected Euro revenues on forward contracts.
With effect from 1 April 2010 the Group adopted hedge accounting in respect of certain sales denominated in foreign currencies.
Foreign currency forward contracts are being used to hedge the foreign currency risks on highly-probable forecast sales transactions.
The fair value of forward currency contracts is calculated by reference to current market prices for contracts with similar maturity
profiles. The proportion of the gain or loss on the hedging instrument that is determined as an effective hedge is recognised in other
comprehensive income and the gain or loss on any ineffective component of a hedging instrument is recognised in profit and loss.
Amounts initially recognised in equity are transferred to the Consolidated Income Statement within sales when the forecast hedged
transaction occurs.
At 31 March 2020 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 forecast transactions.
Hedges are valued by reference to an external marked to market valuation. Group management performs an assessment to confirm
the reasonableness of this valuation.
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Employee benefits
Wages, salaries, bonuses, social security contributions, paid annual leave and sick leave are accrued in the year in which the associated
services are rendered by employees of the Group.
Pensions and other post-employment benefits
The Group operates a number of defined contribution schemes, which require contributions to be made to administered funds
separate from the Group.
The Group also has a defined benefit pension scheme, which is closed to future accrual. The scheme assets are measured at fair value
and plan liabilities are measured on an actuarial basis, using the projected unit credit method. As the scheme is closed to future
accrual, no service cost of providing pension to employees is charged to the Consolidated Income Statement. The cost of making
improvements to past pension and other post-retirement benefits is recognised in the Consolidated Income Statement immediately as
an expense.
Net interest is calculated by applying the discount rate to the net defined benefit liability or asset. The Group recognises the following
changes in the net defined benefit obligation under non-underlying operating costs in the Consolidated Income Statement: Defined
benefit pension scheme administration costs.
Remeasurement gains and losses may result from: changes in financial assumptions, changes in demographic assumptions, experience
adjustments and differences between the expected return and the actual return on plan assets. Remeasurements are recognised in full
in the period in which they occur, in other comprehensive income.
For defined contribution plans, contributions payable for the year are charged to the Consolidated Income Statement as an operating
expense.
Income taxes
Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities, based
on tax rates and laws that are enacted or substantively enacted by the balance sheet date.
Deferred income tax is recognised on all temporary differences arising between the tax bases of assets and liabilities and their carrying
amounts in the financial statements, with the following exceptions:
Æ where the temporary difference arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not
a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss;
Æ in respect of taxable temporary differences associated with investments in subsidiaries, associates and joint ventures, where the
timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not
reverse in the foreseeable future; and
Æ deferred income tax assets are recognised only to the extent that it is probable that taxable profit will be available against which the
deductible temporary differences, carried forward tax credits or tax losses can be utilised within the foreseeable future.
Deferred income tax assets and liabilities are measured on an undiscounted basis at the tax rates that are expected to apply when the
related asset is realised or liability is settled, based on tax rates and laws enacted or substantively enacted at the balance sheet date.
Income tax is charged or credited directly to other comprehensive income or equity if it relates to items that are credited or charged to
other comprehensive income or to equity respectively. Otherwise income tax is recognised in the Consolidated Income Statement.
Revenue
Revenue is recognised when the significant risks and rewards of ownership of the goods, in line with the International Commercial
terms as defined by the International Chamber of Commerce, have passed to the buyer and can be reliably measured. Revenue is
measured at the fair value of the consideration received or receivable and represents amounts receivable for goods provided in the
normal course of business, net of discounts, customs duties and sales taxes.
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29 Summary of significant accounting policies continued
Revenue from the sale of goods is recognised when all of the following conditions are satisfied:
Æ the significant risks and rewards of ownership are transferred to the buyer;
Æ the Group retains neither continuing managerial involvement to the degree usually associated;
Æ with ownership nor effective control over the goods sold;
Æ the amount of revenue can be measured reliably;
Æ it is probable that the Group will receive the consideration due under the transaction; and
Æ the costs incurred or to be incurred in respect of the transaction can be measured reliably.
Dividends
Dividend payments are recognised in the period in which they become a binding obligation on the Company, which, for interim
dividends, is when they are paid and for final dividends is when they are approved at the AGM.
Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of an asset, that necessarily takes a substantial
period of time to get ready for its intended use or sale, are capitalised as part of the cost of the respective asset. All other borrowing
costs are expensed as interest payable in the Consolidated Income Statement in the period in which they are incurred. Borrowing costs
consist of interest and other costs incurred in connection with the borrowing of funds.
Share-based payments
The Group grants equity-settled and cash-settled share-based payments to certain Directors and employees in the form of share
options. Equity-settled share-based payments are measured at fair value at the date of grant using a Black-Scholes model. Cash-settled
share-based payments are measured at fair value at the balance sheet date using a Black-Scholes model. The fair value is then charged
to the Consolidated Income Statement over the vesting period of the options. In valuing equity-settled payments, no account is taken
of any service and performance conditions (vesting conditions) other than performance conditions linked to the price of the shares
of the Company (market conditions). Any other conditions which are required to be met in order for an employee to become fully
entitled to an award are considered to be non-vesting conditions. Like market performance conditions, non-vesting conditions are
taken into account in determining the grant date fair value.
No expense is recognised for awards that do not ultimately vest except for awards where vesting is conditional upon a market vesting
condition or a non-vesting condition, which are treated as vesting irrespective of whether or not the market vesting condition or non-
vesting condition is satisfied, provided all non-market vesting conditions are satisfied.
At each balance sheet date before vesting the cumulative expense is calculated taking into account the extent to which the vesting
period has expired and management’s best estimate of the achievement or otherwise of non-market vesting conditions and of the
number of equity instruments that will ultimately vest or, in the case of an instrument subject to a market condition or a non-vesting
condition, be treated as vesting above. The movement since the previous balance sheet date is recognised in the Consolidated Income
Statement, with a corresponding entry in equity.
The values for the expected life of the options and the expected volatility of the share price used in the calculation model are based on
the Directors’ best estimates, taking into account conditions for exercise, historic data and behavioural considerations. Management
has assessed the impact of market conditions on the valuation and has determined them not be material.
Non-underlying items
The Group presents as non-underlying items on the face of the Consolidated Income Statement, those items of income and
expenditure which, because they are either non-trading related, non-recurring or are valued using market-derived data which is
outside management’s control, merit separate presentation to allow Shareholders to better understand the elements of financial
performance in the year, so as to facilitate comparison with prior periods and to allow assessment of trends in financial performance.
Non-underlying items in the current year include share-based payment costs, reorganisation costs, foreign currency hedge
ineffectiveness and the associated tax impact on these items.
Non-underlying items in the prior year include share-based payment costs, reorganisation costs, onerous leases and impairment of
fixed assets, GMP equalisation and the associated tax impact on these items.
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Use of judgements and accounting estimates
The preparation of financial statements in conformity with generally accepted accounting practice requires management to make
estimates and judgements that affect the reported amount of assets and liabilities as well as the disclosure of contingent assets and
liabilities at the balance sheet date and the reported amounts of revenues and expenses during the reporting period. Actual outcomes
could differ from those estimates and judgements. Where appropriate, details of estimates and assumptions used are set out in the
relevant notes to the accounts.
The key figures in the accounts that are most sensitive to such judgements and estimates are:
Judgements
Æ Impairment of property, plant and equipment – the Group performs an impairment review when indications of impairment exist.
Following the recognition of an impairment charge in the prior year, the loss before taxation incurred in the current year and the
economic impact of COVID-19, the Directors undertook a detailed impairment review of the foundry businesses. Impairment
testing requires an estimate of future cash flows and the application of a suitable discount rate. Note 12 provides details of the
impairment review undertaken during the period.
Æ Impairment of business incentives – the Group classifies business incentive payments made upfront for the award of contracts
within prepayments. These business incentives are amortised to the Income Statement through sales over a five year period.
The Group undertakes an impairment review at each reporting period to ensure each contract relating to the business incentive
payment still has an economic benefit to the Group. Business incentive payments are included within other receivables within
Note 15.
Æ Going concern - a 18 month forecast has been prepared to assess the Group’s ability to continue to operate as a going concern.
This forecast includes assumptions on the future level of trading activity, profitability and cash flow expected during this period
and downside sensitivities to reflect scenarios where revenue growth targets are not met. The Directors’ Report on pages 20 and 21
provide further details on the going concern assumption.
Accounting estimates
Æ Defined benefit scheme pension liabilities: the cost of the closed defined benefit pension plan is determined using actuarial
valuations. The actuarial valuation, which is undertaken by external experts, involves making assumptions about discount rates,
future salary increases, mortality rates and future pension increases. Note 21 provides details of the defined pension scheme
liabilities and valuation assumptions.
Æ Recoverability of deferred tax assets: deferred income tax assets are recognised only to the extent that it is probable that taxable
profits will be available against which the deductible temporary differences, carried forward tax credits or tax losses can be
utilised. The Group has assessed that it is probable that future profits will fully utilise current tax losses and other deductible
temporary differences. Deferred tax assets relating to the pension scheme deficit are expected to be recovered over the period
that contributions are made into the scheme, including the agreed contributions to April 2028. The deferred tax assets have been
assessed as recoverable against forecasts of future taxable profits. Note 17 provides details of the deferred tax assets.
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TO THE MEMBERS OF CHAMBERLIN PLC
Opinion
Our opinion on the financial statements is unmodified
We have audited the financial statements of Chamberlin Plc (the ‘parent company’) and its subsidiaries (the ‘group’) for the year
ended 31 March 2020, which comprise the consolidated income statement, the consolidated statement of comprehensive
income, consolidated and parent company balance sheets, the consolidated and parent company cash flow statements, the
consolidated and parent company statements of changes in equity and notes to the financial statements, including a summary
of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law
and and international accounting standards in conformity with the requirements of the Companies Act 2006 and, as regards the
parent company financial statements, as applied in accordance with the provisions of the Companies Act 2006.
In our opinion:
Æ the financial statements give a true and fair view of the state of the group’s and of the parent company’s affairs as at 31 March
2020 and of the group’s loss for the year then ended;
Æ the group financial statements have been properly prepared in accordance with international accounting standards in
conformity with the requirements of the Companies Act 2006;
Æ the parent company financial statements have been properly prepared in accordance with international accounting standards
in conformity with the requirements of the Companies Act 2006 and as applied in accordance with the provisions of the
Companies Act 2006; and
Æ the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the ‘Auditor’s responsibilities for the audit of the financial
statements’ section of our report. We are independent of the group and the parent company in accordance with the ethical
requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied
to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the
audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
The impact of macro-economic uncertainties on our audit
Our audit of the financial statements requires us to obtain an understanding of all relevant uncertainties, including those arising
as a consequence of the effects of macro-economic uncertainties such as Covid-19 and Brexit. All audits assess and challenge
the reasonableness of estimates made by the directors and the related disclosures and the appropriateness of the going concern
basis of preparation of the financial statements. All of these depend on assessments of the future economic environment and
the Group’s future prospects and performance.
Covid-19 and Brexit are amongst the most significant economic events currently faced by the UK, and at the date of this report
their effects are subject to unprecedented levels of uncertainty, with the full range of possible outcomes and their impacts
unknown. We applied a standardised firm-wide approach in response to these uncertainties when assessing the Group’s future
prospects and performance. However, no audit should be expected to predict the unknowable factors or all possible future
implications for a Group associated with these particular events.
68
ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2020chamberlin plc Material uncertainty related to going concern
We draw attention to note 28 in the financial statements, which indicates that the Group and company is exposed to material
uncertainty related to going concern over the rate at which new work can be secured to replace the lost Borg Warner activity
which is difficult to predict. As stated in note 28, these events or conditions, indicate that a material uncertainty exists that may
cast significant doubt on the group and company’s ability to continue as a going concern. Our opinion is not modified in respect of
this matter.
In concluding that there is a material uncertainty, we performed the following procedures:
Æ Obtained management’s base case forecasts covering the period from 1 April 2020 to 30 September 2022. We assessed
how these forecasts were compiled, including assessing the appropriateness of management’s forecasts and sensitivities to
the underlying assumptions;
Æ Assessed the reliability of management’s forecasting by comparing the actual financial performance in the prior period to
prior period forecasts;
Æ Obtained management’s reasonable downside scenario to assess the potential impact of sales assumptions not being
achieved by the business. We evaluated the assumptions applied, including the reduction in revenue and the resulting effect
on working capital, for reasonableness and determined whether they had been applied accurately. We also considered
whether the assumptions are consistent with our understanding of the business;
Æ Assessed management’s determination of the impact of the mitigating factors available to them to restrict the cash impact
arising from the loss of Borg Warner. This assessment included the corroboration of mitigating actions taken by management
to relevant documentation and the review of the application in the forecasts for accuracy;
Æ Obtained evidence in form of bank statements to ensure £3.3m raised from the share placing and subscription has been
received;
Æ Obtained management’s consultation form to evidence the restructuring process has commenced;
Æ Performed sensitivity analysis on management’s reasonable downside scenarios to determine the reduction in revenue that
would lead to elimination of the headroom in their original cash flow forecasts; and
Æ Assessed the adequacy of the going concern disclosures included within the annual report.
Overview of our audit approach
Æ Our group materiality was determined at £450k, being 1.7% of the group’s total revenues.
Æ Key audit matters were identified as material uncertainty related to going concern, revenue recognition
and valuation of defined benefit pension scheme liabilities for the group.
Æ We have performed full-scope audit procedures on the financial statements of Chamberlin Plc and on
the financial information of all subsidiaries of Chamberlin Plc.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant assessed risks of material misstatement (whether or not due
to fraud) that we identified. These matters included those that had the greatest effect on: the overall audit strategy; the allocation
of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of
our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion
on these matters. In addition to the matter described in the ‘Material uncertainty related to going concern section’, we have
determined the matters described below to be the key audit matters to be communicated in our report.
69
www.chamberlin.co.ukSTOCK CODE: CMHFinancial Statements INDEPENDENT AUDITOR’S REPORT CONTINUED
TO THE MEMBERS OF CHAMBERLIN PLC
Key Audit Matter – Group
How the matter was addressed in the audit – Group
Revenue recognition
Revenue is recognised when the performance
obligation to the customer has been achieved, being
the sale of manufactured products. ‘Revenue from
contracts with customers’. Revenue from the sale of
goods is recognised at a point in time when promised
goods have been transferred to a customer at which
point the performance obligation is considered to have
been satisfied. The customer is considered to obtain
control of the promised goods at the point of delivery.
Revenue is the key driver of the business and used as
an important benchmark by analysts for assessing the
health of the Group. We deemed the significant risk to
be in respect of uncollected revenue as this is the area
considered to be most susceptible to manipulation by
management in close proximity to the year end where
there is an incentive to meet performance targets.
We therefore identified revenue recognition as a
significant risk, which was one of the most significant
assessed risks of material misstatement.
Valuation of defined benefit pension
scheme liabilities
The group operates a defined benefit pension scheme
that provides benefits to a number of current and
former employees. At 31 March 2020, the defined
benefit pension schemes’ net liability was £2.0 million.
The gross value of pension scheme liabilities amounted
to £16.5 million.
The valuation of the pension liabilities in accordance
with IAS 19 ‘Employee Benefits’ involves significant
judgement and is subject to complex actuarial
assumptions. Small variations in those actuarial
assumptions can lead to a materially different defined
benefit pension scheme liability being recognised
within the group financial statements.
Therefore, we identified the valuation of the defined
benefit pension scheme liabilities as a significant risk,
which was one of the most significant assessed risks of
material misstatement.
Our audit work included, but was not restricted to:
Æ evaluating the revenue recognition accounting policies for
appropriateness in accordance with the requirements of
International Financial Reporting Standard 15 ‘Revenue from
Contracts with Customers’ and executing audit procedures to
provide evidence that revenue was accounted for in accordance
with these policies;
Æ assessing the design effectiveness of the relevant controls in
place associated with revenue recognition;
Æ testing a sample of revenue transactions across the Group
to ensure revenue recognition was appropriate by agreeing
amounts to contracted amounts, cash receipts and/or proof of
delivery where applicable;
Æ assessing revenue analytically by comparing revenue
recognised during the year to prior years; and
Æ reviewing post year end credit notes to ensure there were no
significant reversals of revenue recorded relating to pre year end
The group’s accounting policy on revenue recognition is shown
in note 29 to the financial statements and related disclosures are
included in note 3.
Key observations
Based on our audit work, we did not identify any evidence of
material misstatement in the revenue recognised during the year
ended 31 March 2020.
Our audit work included, but was not restricted to:
Æ performing a walkthrough of management’s process for valuing
the defined benefit pension scheme and assessing the design
effectiveness of key controls;
Æ Utilising an auditor expert to test the methodology applied in
assessing compliance with IAS 19 ‘Employee Benefits’, including
whether the liabilities arising from the defined benefit scheme
were being evaluated in accordance with the accounting policy;
Æ utilising the work of an auditors expert to evaluate and challenge
the assumptions used in the calculation, including discount rates,
price inflation, pension rate increases, mortality rates and the
methods employed in the calculation of the pension liability; and
The group’s accounting policy on defined benefit pension schemes
is shown in note 29 to the financial statements and related
disclosures are included in note 21.
Key observations
Based on our audit work, the movements in the key assumptions
used are in line with our expectations. . We found no material errors
in calculations or in the valuation of the defined benefit pension
scheme liability at 31 March 2020.
70
ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2020chamberlin plc Our application of materiality
We define materiality as the magnitude of misstatement in the financial statements that makes it probable that the economic
decisions of a reasonably knowledgeable person would be changed or influenced. We use materiality in determining the nature,
timing and extent of our audit work and in evaluating the results of that work.
Materiality was determined as follows:
Materiality measure
Group
Company
Financial statements
as a whole
Performance
materiality used to
drive the extent of our
testing
Specific materiality
Determined at £450k, being 1.7%
of the group’s total revenues. This
benchmark is considered the most
appropriate because this is a key
performance measure used by
the Board of Directors to report to
investors on the financial performance
and financial position of the group.
Materiality for the current year is lower
than the level that we determined for
the year ended 31 March 2019 as a
result of the decrease in performance
of the group during the year.
We determined a performance
materiality of 75% of the financial
statement materiality. This is consistent
with performance materiality
percentage in the previous year.
We determined a lower level of specific
materiality for certain areas such as
non-underlying costs and related party
transactions.
£115k, which was determined based on 1.5% of the
company’s total assets. This benchmark is considered
the most appropriate because this is a key performance
measure used by the Board of Directors to report to
investors on the financial performance and financial
position of the company, whose principal activity is that
of an investment holding company.
Materiality for the current year is lower than the level that
we determined for the year ended 31 March 2019 as a
result of a decrease in total assets.
We determined a performance materiality of 75% of the
financial statement materiality. This is consistent with
performance materiality percentage in the previous year.
We determined a lower level of specific materiality for
certain areas such as non-underlying costs and related
party transactions.
Communication of
misstatements to the
audit committee
£22.5k and misstatements below that
threshold that, in our view, warrant
reporting on qualitative grounds.
£5.8k and misstatements below that threshold that, in
our view, warrant reporting on qualitative grounds.
An overview of the scope of our audit
Our audit approach was a risk-based approach founded on a thorough understanding of the group’s business, its environment
and risk profile and included performing walkthroughs of management’s processes and assessing the design effectiveness of key
controls. The subsidiaries of the group were evaluated by the audit team based on a measure of materiality considering each as
a percentage of total group assets, liabilities, revenues and profit before taxes to determine the planned audit response. In order
to address the audit risks described above as identified during our planning procedures, we performed a full-scope audit of the
financial statements of the parent company, Chamberlin Plc, and on the financial information of the group’s subsidiaries. The
operations that were subject to full-scope audit procedures made up 100 per cent of consolidated revenues and 100 per cent of
total profit before tax for continuing operations.
71
www.chamberlin.co.ukSTOCK CODE: CMHFinancial Statements INDEPENDENT AUDITOR’S REPORT CONTINUED
TO THE MEMBERS OF CHAMBERLIN PLC
Other information
The directors are responsible for the other information. The other information comprises the information included in the
annual report and accounts, other than the financial statements and our auditor’s report thereon. Our opinion on the financial
statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not
express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained
in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material
misstatements, we are required to determine whether there is a material misstatement in the financial statements or a
material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Our opinions on other matters prescribed by the Companies Act 2006 are unmodified
In our opinion, based on the work undertaken in the course of the audit:
Æ the information given in the strategic report and the directors’ report for the financial year for which the financial statements
are prepared is consistent with the financial statements; and
Æ the strategic report and the directors’ report have been prepared in accordance with applicable legal requirements. Matters on
which we are required to report under the Companies Act 2006
Matters on which we are required to report under the Companies Act 2006
In the light of the knowledge and understanding of the group and the parent company and its environment obtained in the course
of the audit, we have not identified material misstatements in the strategic report or the directors’ report.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to
you if, in our opinion:
Æ adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been
received from branches not visited by us; or
Æ the company financial statements are not in agreement with the accounting records and returns; or
Æ certain disclosures of directors’ remuneration specified by law are not made; or
Æ we have not received all the information and explanations we require for our audit.
Responsibilities of directors for the financial statements
As explained more fully in the directors’ responsibilities statement set out on page 20, the directors are responsible for the
preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as
the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the group’s and the parent company’s ability
to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the group or the parent company or to cease operations, or have no
realistic alternative but to do so.
72
ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2020chamberlin plc Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will
always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the
basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s
website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act
2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to
state to them in an auditor’s 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 and the company’s members as a body, for our audit work, for this report, or for
the opinions we have formed.
MATTHEW BUCKINGHAM
SENIOR STATUTORY AUDITOR
for and on behalf of Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
Birmingham
15 April 2021
73
www.chamberlin.co.ukSTOCK CODE: CMHFinancial Statements AUDIT COMMITTEE REPORT
Key objective
The Audit Committee acts on behalf of the Board and the
Shareholders to ensure the integrity of the Company’s financial
reporting, evaluate its systems of risk management and
internal control and oversee the relationship and performance
of the external auditors.
Membership, meetings and attendance
The composition of the Audit Committee during the year was:
David Flowerday (Chairman)
Keith Butler-Wheelhouse
David Flowerday became Chairman of the Audit Committee
following the departure of Keith Jackson in July 2019. The
Audit Committee meets at least twice during the year and
details of the attendance at meetings are shown on page 15.
Responsibilities
The Audit Committee’s main functions include, inter alia,
reviewing and monitoring internal financial control systems
and risk management systems, considering the annual
report, interim accounts and auditor’s reports, and making
recommendations to the Board in relation to the appointment
and remuneration of the auditors .
The main responsibilities of the Committee are:
Æ to review accounting policies and the integrity and content
of the financial statements;
Æ to monitor disclosure controls and procedures and the
Company’s internal controls;
Æ to monitor the integrity of the financial statements of
the Company and to assist the Board in ensuring that the
Annual Report and Accounts, when taken as a whole, are
fair, balanced and understandable;
Æ to review and approve preliminary results announcements;
Æ to consider the adequacy and scope of external audits;
Æ to review and approve the statements to be included in the
Annual Report on internal control and risk management;
and
Æ to review and report on the significant issues considered
in relation to the financial statements and how they are
addressed.
Key activities during the year
The key activities and areas covered by the Audit Committee
during the year were as follows:
Annual and Interim Results
At the request of the Board, the Committee reviewed the
presentation of the Company’s audited results for the year to
31 March 2020, and the unaudited results for the six months
to 30 September 2019, to ensure that they were fair, balanced
and understandable and provide sufficient information
necessary for Shareholders and other users of the accounts
to assess the Company’s position and performance, business
model and strategy.
The most significant areas of focus in relation to the results for
the year ended 31 March 2020 were as follows:
Æ impairment of fixed assets. Following the recognition of
an impairment charge in the prior year, the loss before
taxation incurred in the current year and the economic
impact of COVID-19, the Directors undertook a detailed
impairment review of the foundry businesses. The review
concluded that no impairment was required in the current
year. The Audit Committee discussed the assumptions
made in the value-in-use assessment concerning the
future performance of the businesses, including the
downside sensitivity analysis used to reflect the current
Covid-19 induced uncertainties, and the discount rate
applied to future cash flows and found them to be
reasonable;
Æ pension scheme valuation. The closed defined benefit
pension scheme liability of £2.0m is a significant liability
on the Group’s balance sheet. Consequently the Audit
Committee reviewed the appropriateness of the
assumptions used by the external actuary in deriving the
IAS 19 liability and found them to be reasonable.
Æ going concern. The Audit Committee reviewed the
appropriateness of the 18 month forecasts used to
assess the Group’s ability to continue to operate as a
going concern. This review included discussion of the
assumptions used in the forecasts, including the downside
sensitivity analysis used to reflect the uncertainties
regarding revenue growth and found them to be
reasonable in the light of the current information available.
Management override of internal controls
The Audit Committee considered the inherent risk of
management override of internal controls as defined by Auditing
Standards. In doing so the Audit Committee continues to review
the overall robustness of the control environment.
74
ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2020chamberlin plc PARENT COMPANY BALANCE SHEET
AT 31 MARCH 2020
Non-current assets
Property, plant and equipment
Intangible assets
Investments
Deferred tax asset
Current assets
Trade and other receivables
Income taxes receivable
Amounts due from subsidiary undertakings
Total assets
Current liabilities
Financial liabilities
Trade and other payables
Non-current liabilities
Financial liabilities
Deferred tax
Defined benefit pension scheme deficit
Total liabilities
Capital and reserves
Share capital
Share premium
Capital redemption reserve
Retained earnings
Total equity
Total equity and liabilities
31 March
2020
£000
31 March
2019
£000
Notes
12
13
20
17
15
15
15
16
16
17
17
21
18
751
22
1,816
552
3,141
160
–
3,696
3,856
6,997
1,692
996
2,688
57
–
1,959
2,016
4,704
1,990
1,269
109
(1,075)
2,293
6,997
779
2
2,895
817
4,493
165
132
3,761
4,058
8,551
57
1,300
1,357
59
33
2,640
2,732
4,089
1,990
1,269
109
1,094
4,462
8,551
The loss dealt with in the accounts of the parent Company was £2,634,000 (2019: profit of £1,621,000).
KEVIN NOLAN
NEIL DAVIES
DIRECTORS
The accounts were approved by the Board of Directors on 15 April 2021.
75
www.chamberlin.co.ukSTOCK CODE: CMHFinancial Statements PARENT COMPANY
CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 MARCH 2020
Operating activities
(Loss)/profit for the year before tax
Adjustments to reconcile (loss)/ profit for the year to net cash outflow from operating
activities:
Net finance costs
Impairment of investments
Depreciation of property, plant and equipment
Amortisation of software
Profit on sale of Exidor
Share-based payments
Difference between pension contributions paid and
amounts recognised in the Income Statement
Decrease/(increase) in receivables
(Decrease)/increase in payables
Corporation tax received
Net cash outflow from operating activities
Investing activities
Purchase of property, plant and equipment
Purchase of software
Proceeds from sale of subsidiary
Net cash (outflow)/inflow from investing activities
Financing activities
Interest paid
Principal element of lease payments
Net cash outflow from financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at the start of the year
Cash and cash equivalents at the end of the year
Cash and cash equivalents comprise:
Bank overdraft
Notes
2020
£000
2019
£000
(2,355)
1,562
12
13
19
12
128
1,079
60
5
–
59
(279)
69
(299)
31
(1,502)
(17)
(7)
–
(24)
(70)
(35)
(105)
(1,631)
(23)
(1,654)
(1,654)
(1,654)
210
3,260
112
1
(6,515)
40
(2,475)
(3,671)
879
–
(6,597)
(76)
–
8,520
8,444
(98)
–
(98)
1,749
(1,772)
(23)
(23)
(23)
76
ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2020chamberlin plc PARENT COMPANY
STATEMENT OF CHANGES IN EQUITY
Balance at 1 April 2018
Profit for the year
Other comprehensive income for the year net of tax
Total comprehensive income
Share-based payment
Deferred tax on employee share options
Total of transactions with Shareholders
Balance at 1 April 2019
Loss for the year
Other comprehensive income for the year net of tax
Total comprehensive expense
Share-based payment
Deferred tax on employee share options
Total of transactions with Shareholders
Balance at 31 March 2020
Share
capital
£000
1,990
–
–
–
–
–
–
1,990
–
–
–
–
–
–
1,990
Share
premium
account
£000
Capital
redemption
reserve
£000
Retained
earnings
£000
Attributable to
equity holders
of the parent
£000
1,269
–
–
–
–
–
1,269
–
–
–
–
–
–
1,269
109
–
–
–
–
–
109
–
–
–
–
–
–
109
(602)
1,621
61
1,682
40
(26)
14
1,094
(2,634)
373
(2,261)
59
33
92
(1,075)
2,766
1,621
61
1,682
40
(26)
14
4,462
(2,634)
373
(2,261)
59
33
92
2,293
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.
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.
Retained earnings
Retained earnings include the accumulated profits and losses arising from the Company Income Statement and items from
the Company Statement of Comprehensive Income attributable to equity Shareholders, less distributions to Shareholders and
share-based compensation expense.
77
www.chamberlin.co.ukSTOCK CODE: CMHFinancial Statements FIVE YEAR
FINANCIAL SUMMARY
Revenue (£m)
Underlying loss before tax (£’000)
Statutory loss before tax (£’000)
Underlying diluted earnings per share (pence)
Cash generated from operations (£’000)
2020
26.1
(1,434)
(2,343)
(18.7)
1,546
2019*
33.0
(1,509)
(4,957)
(19.5)
(3,379)
2018*
30.2
(1,006)
(1,112)
(15.8)
791
2017*
24.9
(299)
(516)
(4.5)
(454)
2016*
22.7
(713)
(854)
(7.7)
1,037
*Restated for change in presentation of pension administration and pension interest costs.
REVENUE (£m)
UNDERLYING LOSS BEFORE TAX (£000)
2020
2019
2018
2017
2016
26.1
33.0
30.2
24.9
22.7
2020
2019
2018
2017
2016
(1,434)
(1,509)
(1,006)
(299)
(713)
STATUTORY LOSS BEFORE TAX (£000)
UNDERLYING DILUTED EARNINGS PER SHARE (p)
(18.7)
(19.5)
(15.8)
(4.5)
(7.7)
2020
2019
2018
2017
2016
(2,343)
(4,957)
(1,112)
(516)
(854)
2020
2019
2018
2017
2016
CASH GENERATED FROM OPERATIONS (£000)
2020
2019
2018
2017
2016
1,546
791
1,037
(454)
(3,379)
78
ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2020chamberlin plc NOTICE OF
ANNUAL GENERAL MEETING
Notice is hereby given that the Annual General Meeting of the
Company will be held on Tuesday 8 June 2021 at
the Registered Office, Chuckery Road, Walsall, WS1 2DU at
11 a.m. Due to the current restrictions arising from the
COVID-19 pandemic, in-person attendance at the meeting
this year is not permitted. Therefore, it is requested that
Shareholders exercise their right to vote by proxy.
The meeting is convened for the following purposes:
To consider and, if thought fit, to pass the following
resolutions as ordinary resolutions:
1. To receive and adopt the Report of the Directors, Annual
Accounts and Report of the Auditors for the year ended 31
March 2020 (Resolution 1).
2. To re-elect as a Director Keith Butler-Wheelhouse
(Resolution 2).
3. To re-elect as a Director Kevin Nolan (Resolution 3).
4. To re-elect as a Director Neil Davies (Resolution 4).
5. To re-elect as a Director David Flowerday (Resolution 5).
6. To elect as a Director Trevor Brown (Resolution 6)
7. To approve the Directors’ Remuneration Report for the
year ended 31 March 2020 (Resolution 7).
8. To reappoint Grant Thornton UK LLP as Auditors of the
Company until the conclusion of the next annual general
meeting of the Company (Resolution 8).
9. To authorise the Directors to determine the remuneration
of the Auditors (Resolution 9).
10. That the Directors be and are hereby generally and
unconditionally authorised in accordance with Section 551
of the Companies Act 2006 (in substitution for alll existing
authorities under section 551 of the Companies Act 2006
which, to the extent unused at the date of this resolution,
are revoked with immediate effect) to exercise all the
powers of the Company to allot shares in the Company or
to grant rights to subscribe for or to convert any security
into shares in the Company up to an aggregate nominal
amount of £23,208 provided that (unless previously
revoked, varied or renewed) such authority shall expire at
the earlier of the conclusion of the next Annual General
Meeting of the Company or 8 September 2022, but so that
this authority shall allow the Company to make, before the
expiry of this authority, offers or agreements which would
or might require shares to be allotted or rights to subscribe
for or to convert any security into shares to be granted
after such expiry and notwithstanding such expiry the
Directors may allot shares or grant such rights in pursuance
to such offers or agreements as if this authority had not
expired (Resolution 10).
To consider and, if thought fit, to pass the following
resolutions as special resolutions:
11. That, subject to the passing of resolution 10 and
pursuant to section 570 of the Companies Act 2006 the
Directors be and are hereby generally empowered (in
substitution for all existing powers under section 570 of
the Companies Act 2006 which, to the extent unused at
the date of this resolution, are revoked with immediate
effect) to allot equity securities (as defined in Section
560 of the Companies Act 2006) for cash pursuant to the
authority granted by resolution 10 as if Section 561(1) of
the Companies Act 2006 did not apply to such allotment,
provided that this power shall be limited to the allotment of
equity securities
a.
in connection with an offer of equity securities
(whether by way of a rights issue, open offer or
otherwise):
i.
ii.
to holders of ordinary shares in the capital of the
Company in proportion (as nearly as practicable) to
the respective numbers of ordinary shares held by
them; and
to holders of other equity securities in the capital
of the Company, as required by the rights of those
securities or, subject to such rights, as the directors
otherwise consider necessary,
but subject to such exclusions or other arrangements as the
directors may deem necessary or expedient in relation to
treasury shares, fractional entitlements, record dates or any
legal or practical problems under the laws of any territory or the
requirements of any regulatory body or stock exchange; and
b. otherwise than pursuant to paragraph 11(a) of this
resolution, up to an aggregate nominal amount of
£13,924 (representing 20% of the current issued
ordinary share capital of the Company),
and (unless previously revoked, varied or renewed) this power
shall expire at the earlier of the conclusion of the next Annual
General Meeting, of the Company or 8 September 2022, but
so that this authority shall allow the Company to make, before
the expiry of this authority, offers or agreements which would
or might require shares to be allotted or rights to subscribe
for or to convert any security into shares to be granted after
such expiry and notwithstanding such expiry the Directors may
allot shares or grant such rights in pursuance of such offers or
agreements as if this authority had not expired (Resolution 11)
79
www.chamberlin.co.ukSTOCK CODE: CMHFinancial Statements NOTICE OF
ANNUAL GENERAL MEETING CONTINUED
12. That, subject to the passing of resolution 10 and pursuant
to section 570 of the Companies Act 2006 the Directors
be and are hereby generally empowered (in addition to
any authority granted under resolution 11) to allot equity
securities (as defined in Section 560 of the Companies
Act 2006) for cash pursuant to the authority granted by
resolution 10 as if Section 561(1) of the Companies Act
2006 did not apply to such allotment, provided that this
power shall be limited to the allotment of equity securities:
authority shall expire at the earlier of the conclusion
of the next Annual General Meeting of the Company
or 8 September 2022, save that the Company may
enter into a contract to purchase Shares before this
authority expires under which such purchase will or may
be completed or executed wholly or partly after this
authority expires and may make a purchase of Shares
pursuant to any such contract as if this authority had
not expired (Resolution 13).
a. up to an aggregate nominal amount of £13,924
By order of the Board
(representing 20% of the current issued share capital
of the Company); and
b. used only for the purpose of financing (or refinancing,
if the authority is to be used within 6 months after the
original transaction) a transaction which the Directors
determine to be an acquisition or other capital
investment of a kind contemplated by the Statement
of Principles on Disapplying Pre-Emption Rights most
recently published by the Pre-Emption Group prior to
the date of this notice,
and (unless previously revoked, varied or renewed) this power
shall expire at the earlier of the conclusion of the next Annual
General Meeting, of the Company or 8 September 2022, but
so that this authority shall allow the Company to make, before
the expiry of this authority, offers or agreements which would
or might require shares to be allotted or rights to subscribe
for or to convert any security into shares to be granted after
such expiry and notwithstanding such expiry the Directors may
allot shares or grant such rights in pursuance of such offers or
agreements as if this authority had not expired (Resolution 12)
13. That the Company be and hereby is generally and
unconditionally authorised pursuant to section 701 of the
Companies Act 2006 to make market purchases (within the
meaning of section 693(4) of the Companies Act 2006) of
Ordinary Shares on such terms and in such manner as the
Directors may from time to time determine provided that:
a. the maximum aggregate number of Ordinary Shares
which may be purchased is 6,962,478;
b. the minimum price (exclusive of expenses) which may
be paid for each Ordinary Share is 0.1 pence;
c. the maximum price which may be paid for each
Ordinary Share is an amount equivalent to 105 per
cent. of the average of the middle market quotations
for an Ordinary Share as derived from the Daily Official
List of the London Stock Exchange Plc for the five
business days immediately preceding the day on
which the Ordinary Share in question is purchased,
and (unless previously revoked, varied or renewed) this
NEIL DAVIES
COMPANY SECRETARY
15 April 2021
Chuckery Road
Walsall
WS1 2DU
General Information
1. A member entitled to attend and vote at the Meeting is
entitled to appoint a proxy or proxies to attend and vote,
on a poll, instead of him. However, in light of the ongoing
COVID-19 pandemic, Shareholders, proxies (other than
the Chairman of the meeting), advisers and other guests
will not be allowed to attend the Meeting in person and
anyone seeking to attend the Meeting will be refused entry.
The Company will arrange for the minimum quorum of
two Shareholders present in person or by proxy necessary
to conduct the business of the Meeting to attend the
Meeting and social distancing guidelines will be observed.
Any other Shareholders attempting to attend the Meeting
in person will be refused admission. Shareholders are
strongly encouraged to therefore submit their votes on
the Resolutions as early as possible. Shareholders should
appoint the ‘Chairman of the meeting’ as their proxy. If a
Shareholder appoints someone else as their proxy, that
proxy will not be able to attend the Meeting in person and
cast the Shareholder’s vote.
2. A Form of Proxy is enclosed for your use if desired. Please
carefully read the instructions on how to complete the
Form of Proxy. For a Form of Proxy to be effective, the
instrument appointing a proxy together with the power
of attorney or such other authority (if any) under which
it is signed or a notarially certified copy of such power of
attorney or other authority must reach the Registrars,
Neville Registrars Limited, Neville House, Steelpark Road,
Halesowen B62 8HD not less than 48 hours before the
time of holding of the Meeting. The Form of Proxy should
therefore be completed and deposited with the Company’s
Registrars by 11 a.m. on 4 June 2021.
80
ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2020chamberlin plc 3. Pursuant to Regulation 41 of the Uncertificated Securities
Regulations 2001, the Company specifies that only those
Shareholders on the register of members at close of
business on 4 June 2021, or in the event that the above
General Meeting is adjourned, on such register at 6.00
p.m. on the date two days before the adjourned Meeting
(excluding any part of a day that is not a business day), shall
be entitled to attend or vote at the Meeting in respect of
the number of Shares registered in their name at the time.
Changes to the register of members after that time will
be disregarded in determining the rights of any person to
attend or vote at the Meeting.
4. You may only appoint Chairman of the meeting as your
proxy.
5. To appoint Chairman of the meeting as your proxy or
to give an instruction to your proxy (whether previously
appointed or otherwise) via the CREST system, CREST
messages must be received by the issuer’s agent (ID
number 7RA11) not later than 48 hours before the time
appointed for holding the meeting. For this purpose, the
time of receipt will be taken to be the time (as determined
by the timestamp generated by the CREST system) from
which the issuer’s agent is able to retrieve the message.
The Company may treat as invalid a proxy appointment
sent by CREST in the circumstances set out in Regulation
35(5)(a) of the Uncertificated Securities Regulations 2001.
6. As at the date of this document, the Company’s issued
share capital comprised 69,624,792 ordinary shares of
0.1 pence each. Each Share carries the right to vote at a
shareholder meeting of the Company and, therefore, the
total number of voting rights in the Company as at the date
of this document is 69,624,792.
7. A vote withheld is not a vote in law, which means that the
vote will not be counted in the calculation of votes for or
against the resolution. If no voting indication is given, your
proxy will vote or abstain from voting at his or her decision.
As you will only be permitted to appoint the Chairman of
the meeting as your proxy, he will vote in favour of all of the
resolutions at the Meeting unless you direct him otherwise.
8.
In order to revoke a proxy instruction you will need to
inform the Company by sending a signed hard copy
notice clearly stating your intention to revoke your
proxy appointment to the Registrars, Neville Registrars
Limited, Neville House, Steelpark Road, Halesowen B62
8HD and in the case of a member which is a corporation,
the revocation notice must be executed in accordance
with note (9) below. Any power of attorney or any other
authority under which the revocation notice is signed (or
a duly certified copy of such power or authority) must
be included with the revocation notice and must be
received by the Registrars not less than 48 hours before
the time fixed for the holding of the General Meeting or
any adjourned meeting (or in the case of a poll before the
time appointed for taking the poll) at which the proxy is to
attend, speak and to vote provided that in calculating such
periods no account shall be taken of any part of a day that
is not a working day. If you attempt to revoke your proxy
appointment but the revocation is received after the time
specified then, subject to the paragraph directly below,
your proxy appointment will remain valid.
9. A corporation’s Form of Proxy must be executed pursuant
to the terms of section 44 of the Companies Act 2006 or
under the hand of a duly authorised officer or attorney.
10. Any power of attorney or any other authority under which
the Form of Proxy is signed (or duly certified copy of such
power of authority) must be included with the Form of
Proxy.
11. A shareholder which is a corporation may authorise one
or more persons to act as its representative(s) at the
meeting. Each such representative may exercise (on behalf
of the corporation) the same powers as the corporation
could exercise if it were an individual shareholder, provided
that (where there is more than one representative and the
vote is otherwise than on a show of hands) they do not do
so in relation to the same shares.
12. There will be available for inspection at the Registered
Office of the Company during normal business hours
(Weekends and Public Holidays excepted) from the date
of this notice until the conclusion of the Annual General
Meeting copies of contracts of service of Directors
(including letters of appointment of non-executive
Directors) with the Company or with any of its subsidiary
undertakings.
13. Biographical details of all directors who are offering
themselves for election and re election at the meeting
are set out on page 11 of the enclosed annual report and
accounts.
14. An explanation of Resolutions 10 to 13 is set out in the
Report of the Directors on page 19.
15. Members should notify the Registrars without delay of any
change of address.
81
www.chamberlin.co.ukSTOCK CODE: CMHFinancial Statements SHAREHOLDER
INFORMATION
Directors
Keith Butler-Wheelhouse (Non-Executive Chairman)
Kevin Nolan (Chief Executive)
Neil Davies (Finance Director)
David Flowerday (Non-Executive Director)
Trevor Brown (Non-Executive Director)
Company Secretary
Neil Davies
Registered Office
Auditor
Solicitors
Chuckery Road
Walsall
WS1 2DU
Registered in England No. 00076928
Grant Thornton UK LLP
Birmingham
DLA Piper
Birmingham
Nominated Advisers and Joint
Brokers
Cenkos Securities plc
London
Bankers
Registrars
Peterhouse Securities Limited
London
HSBC Bank plc
Birmingham
Neville Registrars Limited
Neville House
Steelpark Road
Halesowen
West Midlands
B62 8HD
82
ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2020chamberlin plc Small complex grey iron castings, principally for the
automotive sector and hydraulic applications.
Products associated with cable management, lighting
design and manufacture for hazardous area and industrial
applications.
Large grey, ductile and alloyed iron castings for a range
of applications including power generation, bearing
housings, steelworks, construction and compressors.
Chamberlin & Hill Castings
Limited
Chuckery Road
Walsall, WS1 2DU
Tel: 01922 721411
Fax: 01922 614610
www.chcastings.co.uk
Petrel Limited
22 Fortnum Close
Kitts Green
Birmingham, B33 0LB
Tel: 0121 783 7161
Fax: 0121 783 5717
www.petrel-ex.co.uk
Russell Ductile Castings Limited
Trent Foundry
Dawes Lane
Scunthorpe, DN15 6UW
Tel: 01724 862152
Fax: 01724 280461
www.russellcastings.co.uk
83
www.chamberlin.co.ukSTOCK CODE: CMHFinancial Statements Visit us online
For more information on
Chamberlin Group operations
please visit our website at:
www.chamberlin.co.uk
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Chuckery Road, Walsall, West Midlands, WS1 2DU
T: 01922 707100 F: 01922 638370
E: plc@chamberlin.co.uk