REG - Autins Group PLC - Full Year Results
25/01/2022 07:05
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RNS Number : 4500Z Autins Group PLC 25 January 2022
25 January 2022
Autins Group plc
(the "Company" or the "Group")
Full Year Results
Autins Group plc (AIM: AUTG), the UK and European manufacturer of the patented
Neptune melt-blown material and specialist in the design, manufacture and
supply of acoustic and thermal insulation solutions, announces its results for
the year ended 30 September 2021.
Financial Overview
· Revenue increased by 8.9% to £23.4 million (FY20: £21.5
million)
· Adjusted gross profit increased by 5.4% to £6.3 million (FY20:
£6.0 million(1))
· Reported EBITDA maintained at £1.1 million (FY20: EBITDA(1)
£1.1 million)
· Cash flow from operations of £1.0 million (FY20: £1.5
million)
· Operating loss reduced by 46.6% to £0.7 million (FY20: loss of
£1.3 million)
· Reported loss after tax reduced by 37.1% to £1.1 million (FY20:
loss of £1.7 million)
· Loss per share decreased by 37.1% to 2.74 pence (FY20: 4.35
pence)
· Adjusted net debt(2 )increased to £2.7 million (FY20: £1.9
million)
Operational Highlights
· Revenue improvement reflected a marginal automotive recovery,
but mainly growth of £1.7 million in non-automotive revenue, primarily in our
flooring applications.
· Neptune sales increased by 64% to £7.1 million (FY20: £4.3
million) despite pandemic supply chain disruption.
· Flooring sales grew 161% to £4.7 million (FY20: £1.8
million).
· Gross margin reduced to 27.0% (FY20: 28.0%(1)), 1.4% reduction
from cessation of transient sub-contract PPE sales.
· Further operational efficiency improvements and Neptune
manufacturing yield gains bolstered automotive margins against disrupted
volume reductions and related cost increases.
· Further strong performance seen in Germany; sales grew
by 69% to £7.5 million (FY20: £4.6 million) and EBITDA increased to £0.9
million (FY20: £0.4 million).
· Consistent EBITDA of £1.1 million achieved, despite
considerable pandemic and semi-conductor disruption challenges.
· Operating cash inflow was £1.0 million (FY20: inflow of
£1.5 million) despite £0.5 million additional inventory, primarily
reflecting a strategic buffer investment for critical Far East supplies.
· £0.9 million of debt was repaid from the operating cash
inflow.
· Post period end, in December 2021, the Company raised
£3.0 million (£2.8 million net) via the placing of 15 million new ordinary
shares at a price of 20 pence per share with new and existing investors.
1 Adjusted gross profit for FY20 excludes a £0.2 million
exceptional inventory impairment, and a further £0.3 million of exceptional
restructuring costs are excluded from EBITDA. Gross margin without adjustments
in FY20 would be 27.3%. See note 2 for reconciliation.
2 Cash less bank overdrafts, invoice discounting and hire purchase
finance, excluding IFRS16 lease liabilities.
Gareth Kaminski-Cook, Chief Executive, said:
"Despite the ongoing semi conductor challenges facing our UK automotive
market, the Group has grown 9% over the past year, driven by ongoing success
in Germany, in the flooring market and sales of Neptune products. In the short
term, our first priority is to protect the business and ensure that we are in
a strong position to capture the automotive market recovery which will surely
come. Autins has a unique opportunity to establish a leading position in the
development of future Noise Vibration and Harshness needs for EVs and other
alternative fuels."
For further information please contact:
Autins Group plc
Gareth Kaminski-Cook, Chief Executive Via SEC Newgate
Kamran Munir, CFO
Singer Capital Markets Tel: 020 7496 3000
(Nominated Adviser and Broker)
Mark Taylor / Asha Chotai
SEC Newgate Tel: 020 7653 9850
(Financial PR)
Bob Huxford
Max Richardson
About Autins
Autins is a UK and continental Europe based industrial materials technology
business that specialises in the design, manufacture, and supply of acoustic
and thermal products. Its key markets are automotive, flooring, office
furniture and commercial vehicles where it supplies products and services to
more than 160 customer locations across Europe.
Autins is the UK and European manufacturer of the patented Neptune melt-blown
material and specialises in the design, manufacture, and supply of acoustic
and thermal insulation solutions.
Chairman's Statement
Continued strategic progress despite automotive market uncertainty
Despite making progress in key strategic areas and achieving sales growth in
FY21, the performance for the Group has been constrained due to the global
shortage of semi-conductors that limited the ability of our key OEM customers
to manufacture vehicles to meet market demand.
Financial performance
Group sales for the year were up 8.9% to £23.4 million (FY20: £21.5
million).
Sales in our core automotive business declined in the second half of the year
(compared to H1) due to a reduction in vehicle production by OEMs caused by
the global shortage of semi-conductors. However, automotive sales in the
second half were still an improvement on the equivalent period of the prior
year, which was severely impacted by Covid disruptions.
Our German business continued its strong performance, growing sales by 69% to
£7.5 million (FY20: £4.65 million). This reflected strong flooring sales and
some additional automotive revenues compared to FY20.
Adjusted gross margin reduced to 27.0% (FY20: 28.0%) primarily due to
cessation of PPE sales and raw material cost price increases which were only
partially offset by continued operational improvements. EBITDA (after IFRS 16
adjustments) was stable at £1.1m (FY20: £1.1m). The operating loss for the
Group narrowed to £0.7 million for the year (FY20: loss £1.3 million).
Net debt (excluding IFRS 16 debt) increased to £2.7 million (FY20: £1.9
million) and cash equivalents reduced to £1.2 million (FY20: £2.8
million). With the reduced cash headroom and the short-term uncertainty on
the timing of recovery in the automotive market, the Board decided to raise
£3.0 million (gross) via a placing of new shares to ensure the Company is in
a position to capitalise on market recovery. In addition, the Company
renegotiated certain of its banking obligations. These actions were completed
after the year end and are described further below.
Strategy
The business made good progress in key strategic areas in FY21.
We continued to use our noise, vibration and harshness ("NVH") expertise to
diversify into new markets with European sales increasing by 51% to £9.2
million. We also made progress diversifying away from our core automotive
market with non-automotive revenue growing by 53% to £4.8 million. Flooring
sales were a particular highlight and we are also seeing success in the
emerging office pod market.
Neptune, our proprietary melt blown material, continues to be attractive to
both existing and new customers due to its specific acoustic and thermal
performance and its lighter weight. It was pleasing to see Neptune product
sales increase by 64% to £7.1 million in the year. We are undertaking
investment projects to increase the manufacturing capacity and operational
efficiency of our Neptune plant in anticipation of continued sales growth.
We remain committed to becoming a leading NVH specialist to automotive
manufacturers in Europe and continue to focus on positioning Autins as an
electric vehicle NVH solutions provider. We are already supplying key brands
in this space and are concentrating our R&D efforts on increasing our
electric vehicle product solutions while enhancing the environmental
credentials of our Neptune material by increasing recycled content.
In the short term, we have taken steps to protect the Group from the reduced
vehicle production caused by the global shortage of semiconductors. We are
well placed to benefit from the automotive market recovery once these supply
side issues are resolved.
Post year end placing and banking facilities
In December 2021, the Group completed a placing of 15 million new ordinary
shares raising £3.0 million (gross). The Board intends to use these funds
to provide the Group with a working capital buffer while the automotive market
recovers from the semi-conductor supply issues and to fund increased working
capital for growth in Germany and for UK safety stocks. Part of the proceeds
will be allocated to invest in the Neptune manufacturing facilities (to
further increase capacity and profitability) and to accelerate electric
vehicle product development and other commercial activities.
In addition, the Group has negotiated waivers of its banking covenants to
March 2023 and a six month deferral of capital repayments.
The combination of these actions has significantly improved the Group's
liquidity position.
People
In all areas of our operations, the staff of Autins have shown energy,
initiative and loyalty throughout the year. We have had to respond to the
lower than expected demand from our core automotive market by adjusting our
staffing costs appropriately. As furlough payments were phased out, we have
looked at more flexible ways of working and I would like to thank all of our
staff for the support and adaptability that they have shown.
Our people are our greatest asset and we remain committed to providing a safe
and rewarding environment for all of our staff.
Ian Griffiths stepped down from the Board in March 2021 having joined at its
IPO in 2016. I would like to thank Ian for his valuable contributions to our
Board discussions and wish him well for the future.
Environmental, Social and Governance
During the year we strengthened our ESG policy to include commitment targets
to be carbon neutral by 2050 in the UK and to have achieved a 68% improvement
by 2030. We continuously undertake initiatives to improve the efficiency of
our manufacturing equipment so that we use less energy and water, whilst
reducing waste and increasing the proportion of renewable energy used. We
converted all lighting to LED in the UK and Sweden during the year. Key
areas for improvement in the short-term are continuing reduction of our carbon
footprint at our Tamworth Neptune facility and a reduction in staff churn.
We are committed to playing our part in reducing emissions and increasing the
environmental benefits of our products and working practices. Our future is
about sustainable growth and Autins has made ESG a central commitment of the
business to support decarbonisation and a better environment, promote our
social responsibilities and ensure fairness and promote diversity.
The Board remains committed to robust corporate governance and risk management
to ensure the delivery of our strategic ambitions and the financial health of
the Group. We apply the Quoted Companies Alliance Corporate Governance Code
(the "QCA Code"). The Board is currently operating with two independent
non-executive directors. We consider this appropriate in the short term and
in keeping with the cost mitigation measures that have been applied to all
staffing costs in the year. We are committed to increasing the number of
independent non-executive directors on the Board as soon as appropriate in the
recovery cycle.
Dividend
No final dividend is proposed.
The Board will continue to monitor net earnings, debt levels and expected
capital requirements with a view to reinstating a progressive dividend policy
at the appropriate time.
Outlook
In the short term, automotive revenue performance will continue to be
constrained by the global shortage of semiconductors. The Board anticipates
improvement in the supply of semiconductors during the second half of 2022
but, due to our financial year end date, this is likely to have a limited
impact on FY22 automotive sales.
The outlook for our non-automotive sales remains strong in the short-term and
we will continue to focus on diversification of customers and markets.
The medium term outlook remains positive. Retail demand for cars remains
good and this should result in a strong recovery in automotive sales from
current levels once the supply of semiconductors has normalised. In
addition, innovation in flooring and demand for our Neptune technology is
underpinning growth in new markets and driving momentum for expansion in
Europe.
The Board expects these factors to improve the sales growth of the Group in
the medium term.
Adam Attwood
Chairman
Chief Executive Officer's Review
Delivering operational improvements and accelerating diversification
Our materials and solutions contribute to a quieter, safer, cleaner and more
energy-efficient world.
Autins is an industry-leading designer, manufacturer, and supplier of acoustic
and thermal management solutions. We apply our expertise in material
technologies to solve complex and challenging problems to create better and
more comfortable environments in a wide range of industry applications
including automotive, flooring, workspace solutions and commercial vehicles.
We manufacture a range of technical materials, including our own patented
material, Neptune, in our facilities in the UK, Germany and Sweden, making us
a truly European business.
Growth in a challenging year
Modest market recovery at the beginning of the financial year delivered some
improvement in volumes, which, when combined with improved overhead and
operating cost control, led us to finish the half year with a strong EBITDA,
operating cash flow and net debt position. UK automotive sales declined from
April onwards as the semi-conductor crisis deepened and this depressed
financial performance in the second half of the financial year resulting in a
consistent EBITDA for the full year.
Despite these headwinds, it is pleasing to report that we finished the year
with Group sales up 9% year on year at £23.4million. German sales flourished,
growing 69% to £7.6 million and we capitalised on significant project wins
from the previous year to deliver flooring sales growth of 161% to £4.7
million and Neptune based product growth of 64% to £7.1 million.
Delivering the growth strategy
The diversification strategy is progressing well, where dedicated commercial
resource has delivered non-automotive sales growth of 60% which now represents
20% of our sales mix, up from 8% last year (PPE sales excluded). European
sales are now 39% of Group sales, up from 25% last year.
We won 32 projects with 22 different customers during the year, most of which
are blue chip brands. 14 projects were won with Neptune products. The
project enquiry pipeline value for FY22 and beyond remains healthy. Continuing
our progress in diversification, we began supply of Neptune to DAF trucks in
September 2021 and post year end have received our largest purchase order for
the supply of Neptune into the walls and ceilings of office pods to be
delivered to the US market.
Looking forward
In the short term, our first priority is to protect the business during the
ongoing semi-conductor crisis and ensure that we are in a strong position to
capture the automotive market recovery which will surely come in due course.
I would like to thank our shareholders for supporting the recent £3.0 million
equity raise, which enables us to protect the interests of all our
stakeholders and enables the leadership team to focus on driving sales growth
in our core and new markets, whilst improving the profitability of the
operations.
Our Group strategy remains unchanged. We will continue to leverage the
superior properties of Neptune and our acoustic and thermal expertise to win
market share in automotive NVH and accelerate growth in flooring, workspace
solutions and commercial vehicles. We will also continue to evaluate new,
profitable markets and maintain a laser focus on operating costs and margins.
Our core market is undergoing its biggest transformation ever and Autins has a
unique opportunity to establish a leadership position in the development of
future NVH needs for EVs and other alternative fuels. We have extensive
experience in EVs having provided NVH solutions for JLR, AMG, LEVC and
Polestar, but future fully electric platforms will create a set of new NVH
challenges and we intend to be at the forefront of developing the solutions.
Gareth Kaminski-Cook
Chief Executive Officer
Financial Review
Maintaining business fitness and improving resilience against challenging
market fundamentals
In H1, the Group saw partial recovery in automotive volumes and strong growth
in European flooring applications. Combined with prior and continuing
operations and cost structure improvements this yielded an EBITDA of £1.1
million, a narrowly positive profit after taxation, and an operating cash
inflow of £1.0 million. With the Invoice Financing (IF) bank facility also
increasing with sales, cash headroom improved to £6.1 million. This
performance was encouraging (with the estimated UK volume recovery being no
better than 75%) and validated the Group's ability to make significant returns
once volumes recover nearer to normal levels.
In H2, the semi-conductor supply disruption then caused significant and
unexpected continued monthly revenue reductions; as measured against detailed
communicated OEM twelve to sixteen week operational rolling demand schedules.
The mid-month and mid-week reductions could be as high as 50%, with the lowest
revenue points being July and August (which also usually include holiday plant
shutdowns). This was seasonally unusual given that the H2 demand profile is
typically stronger than H1 driven by demand from new car registrations. There
has been steady revenue recovery since the August lows and ongoing improvement
is expected. Overall automotive revenues in H2 were down almost 30% against
H1. This drove EBITDA to become negative in H2, with lower operating cash
flow. Stock buffering against supply chain disruption and repayment of the
£0.75 million CBILS bullet loan also impacted cash headroom.
To strengthen the balance sheet, increase working capital and provide a market
recovery buffer, in December 2021 the Group completed a £3.0 million equity
placing, largely from existing shareholders, and also obtained further bank
support in the form of agreed capital payment deferments and covenant waivers
which are described more fully below.
Revenue
Automotive revenues remained disrupted throughout FY21. UK and Sweden were the
most impacted, with the disruption causing volume reductions in excess of 50%
at certain points in H2. UK Tooling revenues reduced by 76% to £0.3 million
(FY20 £1.3 million) as OEMs also slowed new launch and development
activities. Counter to this, Germany experienced significant automotive
growth overall from additional contract volume wins, with the supply chain
disruption being less acute for the German market until very late in FY21.
Revenues on PPE items in the UK declined from £1.2 million in FY20 to £0.1
million in FY21.The PPE revenues should be considered transient for the FY20
(prior year) peak pandemic period. This was partially offset in the UK with
revenues from initial development and launch volumes demand of non-automotive
office pods and working space solutions. Both of these markets remain target
growth areas for the Group, with sales continuing to increase in the period
since the year end, associated with favourable customer product performance
feedback.
The most significant revenue growth for the Group in FY21 was in flooring
applications from Germany, which grew 161% year on year to £4.6 million.
Neptune sales grew 64% to £7.1 million in FY21 (FY20: £4.3 million),
primarily within automotive end applications.
Gross margin
Automotive margins were largely stable over the year. This was the net result
of a combination of adverse cost push and volume reduction factors, being
offset by improvements from operational efficiency actions, improvements in
Neptune processes and manufacturing methods and the growth of Germany's
non-automotive flooring applications. This is explained further below.
UK Automotive margins had a slightly weaker mix than the prior year, with some
traditionally strong products having come to end of life cycle with the OEMs.
However, Neptune sales grew as noted above by 64%, and this significantly
improved the overall absorption of manufacturing fixed costs in our Tamworth
facility. Despite cost push factors mainly relating to Far East container
shipments costs and scrim materials, other procurement improvements were made
to hold internal Neptune contribution margins steady. The net result is an
improved end to end margin on Neptune products, which should continue to
improve further with expected Neptune volume increases over the longer term,
with some new contract volumes having already been won.
The gross margins on German flooring applications are consistent with our
mainstream automotive margins. However, given that the follow-on costs are
primarily sales commissions with very few additional operational costs to
serve, the net EBITDA margins from flooring are significantly additive, which
is illustrated further below.
Revenue reduction on PPE items as noted above reduced overall gross margin.
Much of the FY20 work for face visors was on a subcontract manufacturing basis
having no materials costs, and face mask revenues were a mix of sales to both
resellers and end users derived from our patented Neptune materials. This
profile naturally yielded above average margins. The PPE impact alone is the
equivalent of 1.4% gross margin reduction for the Group. With total Group
gross margins at 27.0% for FY21, compared with 28.0% (adjusted gross margin)
for FY20, the intrinsic aggregate gross margin across all non PPE products is
an improvement of 0.4%. As automotive volumes recover towards normalised
levels, this should yield further improved absorption of facility fixed costs
and the gross margin percentage would be expected to recover further.
EBITDA and operating profit
FY21 EBITDA was consistent at £1.1 million (FY20: £1.1 million) after
adjusting for exceptional and non-recurring costs as noted below. The reported
statutory operating loss was £0.7 million (FY20: operating loss of £1.3
million), representing an improvement of £0.6m.
Germany sales were £7.6 million (FY20: £4.6 million) and the associated
EBITDA was £0.9 million (FY20: £0.4 million) being 12% of Group sales. This
helped to offset the EBITDA reductions in UK and Sweden. Sweden revenues were
consistent with the prior year at £1.6 million (FY20: £1.6 million) and
yielded an EBITDA of £0.2 million (FY20: £0.3 million). UK Revenues reduced
to £14.3 million (FY20: £15.4 million) given the automotive supply
disruption, and EBITDA reduced to £0.0 million (FY20: £0.4 million). These
stated measures exclude the impact of management recharges into Europe, and
apply Group plc costs entirely against the UK entities. UK EBITDA and
operating profit also benefitted from £0.1 million of release from provisions
for bad and doubtful debts, following an extended focus on debtor collection
improvement over the prior 18 months.
The Directors also note that £0.65 million (FY20: £1.0 million) of
employment costs were met by income from the government job retention scheme,
in the relevant publicised support periods in the UK, and their overseas
equivalents in Sweden and Germany. There were no other financial support
grants during the year (FY20: £0.1 million). In total, government financial
support received was approximately £0.45 million lower in FY21 than the prior
year.
The FY20 EBITDA is stated after excluding items that management considered to
be a result of significant one-off events, including the restructuring costs
associated with the detailed review of operations, which followed the new CFO
appointment in January 2020. These included employee severance costs and the
planned scrapping of inventory to enable improved floor space utilisation with
the aim of reducing premises costs. Exceptional costs relating to
restructuring in FY20 were £0.3 million, and exceptional inventory
impairments were £0.2 million. Management information used in running the
Group is measured with a focus on the underlying operational performance and,
as such, these items were excluded. There are no such adjustments or
exceptional costs recorded in FY21.
The Board acknowledge that these are alternative measures of performance and
are not GAAP (nor are they intended to be) but are used to help illustrate
underlying business performance and are informative to users of the accounts.
Exceptional and adjusting items
There were no exceptional costs charged in FY21. As noted above, in FY20 the
Group incurred an exceptional cost of sales of £0.16 million relating to
inventory rationalisation and exceptional administrative costs of £0.29
million as a result of a change of Chief Financial Officer.
To be consistent with analysts measure of the Group's performance,
amortisation of £0.2 million (FY20: £0.2 million) in relation to acquired
intangible assets recognised as a result of the Group's conversion to IFRS at
IPO (having previously been held as non amortising goodwill) should be
excluded to provide an adjusted operating profit. Accordingly, the adjusted
operating loss, allowing for exceptional costs and amortisation, would be
£0.5 million (FY20: £0.6 million).
Joint venture
The Group's joint venture, Indica Automotive, is an acoustic foam conversion
business based in Northampton that supplies components into the Group's UK
operations (who remain the largest customer) as well as its own automotive
customer base. The joint venture continues to leverage the access to low cost
material and finished component sources provided by its other parent, Indica
Industries PV, based in India.
Indica Automotive's turnover increased by 14% to £2.4 million (FY20: £2.1
million). H1 21 revenues were £1.5 million (H1 20: £1.5 million), and
revenue declined by 40% in H2 as call offs for existing parts were reduced,
given an equivalent impact from the semi-conductor supply constraints. Further
margin and overhead cost control actions were taken by management, and £0.05
million of UK furlough income was received, helping to generate a profit after
tax of £0.1 million (FY20: £0.1 million). Sales overheads were increased, as
the sales organisation was expanded for future growth.
Currency
The Group's overseas operations and certain key raw material suppliers require
the Group to trade in currencies other than Sterling, its base currency.
During the year, operational transactions were conducted in US Dollar, Swedish
Krona and Euro and the retranslation of the results of the German and Swedish
operations were affected by currency fluctuations. The key raw materials for
Neptune production are currently imported from South Korea with transactions
conducted in US Dollars. The Group has taken steps to mitigate this risk by
establishing alternative sources for non-patented product which could then
also be transacted in alternative currencies. The Group also has Euro based
purchases for materials and production, including equipment. As Euro sales are
expected to increase from our German business, this would allow us to manage
relative balances in British Pounds, Euros and US Dollars.
The Group continues to benefit from natural hedging, arising from its
structure and trading balances, which means that the Group's result in both
FY20 and FY21 has only been impacted in a limited way as a result of currency
translations.
The Group held no forward currency contracting arrangements at either
year-end. Transactions of a speculative nature are, and will continue to be,
prohibited. As Neptune grows management will continue to monitor the Group's
US Dollar exposure and its impact on the Group's results. Where the frequency
and quantum of purchases can support active currency management, we may
implement a formal hedging strategy.
Net finance expense
The finance expense remained consistent at £0.5 million (FY20: £0.5 million)
and under IFRS 16 includes £0.3 million of financing charges derived
primarily from property rental expenses. Bank interest at £0.2 million (FY20:
£0.2 million) is derived almost entirely from the CBILS and MEIF term loans.
The Group's MEIF term loan is at a coupon rate of 7.5% and remained fully
drawn during FY21, with no capital repayments having been made under agreed
extension terms. The CBILS short term bullet loan of £0.75 million received
in July 2020, at a net zero cash interest cost for the first 12-month period,
was repaid to agreed terms in August 2021. The CBILS 6 year term loan of £2.0
million remained outstanding at 30 September 2021 (FY20: £2.0 million), and
attracts an interest rate of 3.99% above base rate.
The primary UK invoice financing facility remained undrawn throughout FY21, in
line with our strategy to optimise working capital, with an extended focus on
debtor collections yet maintaining a timely payment cycle to trade creditors.
Inventory continued to be rationalised where possible, however an investment
of up to £0.5 million was made in strategic buffer stocks for flooring
business growth and protection against Far East supply disruption. Modest
short-term overdrafts only prevailed within our Sweden operations and were
reduced over the year to end FY21 at £0.02 million (FY20: £0.15 million).
Our key Far East suppliers continued to extend the Group's direct open credit
throughout FY21, and so the bank trade finance facility was not utilised. Car
and equipment finance leases further reduced in FY21 as some agreements
completed during the year, with no renewals, which reduced interest costs to
£0.02 million (FY20: £0.03 million).
An analysis of the net finance expense is presented in the note below.
Taxation
The effective tax rate in the year was below that expected based on current UK
corporation tax levels. Given the quantum of losses compared to expected
profitability in the next two years, the Group has not recognised the majority
of current year losses as a deferred tax asset. The balance sheet asset has
been reviewed and is considered to be supportable based on the Group's
expected trading.
The Group's technical R&D and applications teams have, as in prior years,
continued to enhance materials applications, improve processes and develop new
products. The pandemic and semi-conductor supply chain disruption to revenues
has meant that significant net losses continue to remain available.
Accordingly, the Group strategy remains to utilise the losses to obtain actual
R&D tax credit cash refunds to maximise liquidity. An R&D tax credit
claim will be submitted for FY21 in the usual course. R&D claims for the
years ended September 2019 and September 2020 were submitted in FY21 with
repayment having subsequently been received. R&D activities continue and
this, together with recognition and use of available brought forward losses
when profitability increases, will mean that the effective tax rate will
remain below the UK statutory level for the short to medium term with an
unrecognised deferred tax asset of £0.95 million in the UK (FY20: £0.77
million).
The Group's German subsidiary is expected to fully utilise its remaining tax
losses in FY21 which will result in a degree of tax at a higher rate on future
profits in Germany whilst brought forward taxable losses available in Sweden
will, in the short term, at least partially offset expected trading profits.
The Group has a further £0.3 million (FY20: £0.03 million) unrecognised tax
asset in respect of Swedish tax losses.
Earnings per share
Loss per share was 2.74 pence (FY20: loss per share 4.35 pence) reflecting the
loss in the year. The weighted average number of shares was 39,600,984 in the
year (FY20: 39,600,984). Calculations of earnings per share and the potential
dilution arising from the senior management share option scheme in future
periods are presented in the note below.
Dividends
The Board are not proposing a final dividend for the current year (FY20:
£nil) and no interim dividend was paid (FY20: £nil).
Net debt and working capital
The Group ended the year with net debt of £2.7 million (FY20: £1.9 million)
excluding the IFRS16 calculated lease liabilities of £5.6 million as
disclosed in the reconciliation of movements in cash and financing
liabilities.
No additional borrowing facilities were obtained or utilised during the year.
In the prior year the Group secured a £1.5 million five-year term loan from
MEIF, and £2.75 million of UK CBILS loan funding. Of the CBILS funding £0.75
million was a one-year bullet loan and was repaid to terms in August, with the
balance of £2 million outstanding as at the year end. Hire Purchase
liabilities were reduced by £0.1m. Total debt was reduced by £0.9m.
The Group has £0.2 million (FY20: £0.3 million) of hire purchase agreements
in the UK. There were no new hire purchase agreements in the year and the
short-term trade import facility was not utilised (FY20: £0.1 million was
utilised).
The Group has continued with working capital optimisation in the year, which
has been partially described above. Trade debtors improved in the year with a
reduction of overdue balances from additional focus and applied resource.
There was a release from the bad debt provision in the year of £0.1 million
(FY20: £0.0 million). Some of the prior year's provision has been retained
against historic overdue invoices which the Group continues to steadily
resolve.
Trade creditors reduced in line with activity levels in the year, with
payments being made to terms, usually on a weekly cycle. The net movement of
debtors and creditors was a £0.2 million inflow. Stocks were increased by
£0.5 million, primarily owing to additional buffers being held, as described
earlier.
Going concern
The Board have concluded, on the basis of current and forecast trading and
related expected cash flows and available sources of finance, that it remains
appropriate to prepare these financial statements on the basis of a going
concern.
The Group completed an equity placing with gross proceeds of £3.0 million
(£2.8 million net) in December 2021, primarily with the participation and
support of its existing shareholders. In addition dual lender support has been
agreed in the form of covenant waivers with testing to resume at the end of
March 2023. In light of the external trading environment the bank has also
indicated a willingness to revise the covenants to better reflect the Group's
forecasted trading levels once there is improved visibility over the
resolution of the semi-conductor disruption, which is anticipated to occur in
advance of the next covenant test date in March 2023. The waivers are coupled
with a minimum 6 month capital deferment holiday on both the outstanding CBILS
and MEIF term loans. As at 14 January 2022, shortly before the reporting date,
the prevailing cash headroom for the Group is in excess of £5.0 million
(FY20: £5.6 million). This includes undrawn balances on the UK invoice
financing facility which has in excess of £2 million available, with its
operational limit currently agreed at £3.5 million against relevant trade
receivables. Despite the Covid trading backdrop, the Group reported positive
operating cash flows of £0.9 million, and £0.75 million of CBILS loans were
repaid during the year.
Whilst the operating cash flows benefit from a combination of improved working
capital and cost management, they are also impacted by significant decreases
in revenues as a result of the pandemic and semiconductor disruption. The
Group has also made further operational and overhead cost improvements,
including significant carefully considered headcount reductions which improve
the cost structure by more than £0.7 million per annum, with continuing
programmes in place to make additional cost and profit improvements.
In undertaking their assessment of the future prospects for the Group, the
Directors have prepared trading and cash flow forecasts for the period to 31
January 2023 for the purpose of assessing the going concern basis of
preparation, with further forecasts going out to 30 September 2027. These take
into consideration the current and expected future impacts of the pandemic and
semiconductor supply recovery timelines, diversification and development of
customer product ranges and also have regard to the committed business and
enquiry levels from existing customers. The Directors have also considered the
impact of current and future demand levels for new vehicles, the migration to
EV's and publicly available forward looking market information regarding
market sizes and dynamics. These forecasts have been compared, together with
considering a range of material but plausible downside sensitivities, to the
available bank facilities and the related covenant requirements.
Notwithstanding the agreed deferments, the loan repayments and interest costs
are expected to be adequately covered by operating cash generation over the
period and the Group has significant liquidity headroom within its facilities
to accommodate all reasonably foreseeable cash flow requirements in the event
of changes to its demand as a result of prevailing supply chain conditions, or
other economic factors, with further flexibility also available to favourably
manage the cost base in respect of operating costs, should the need arise, or
flex other payment structures to increase cash headroom.
The most sensitive factor impacting the forecast period, and the continued
availability of the current facilities, is ensuring that liquidity remains
reliably positive for the Group, albeit the Board has set a minimum target of
£0.5 million. In the next financial year, achievement of this minimum
required UK (and group) liquidity target, without significant further
unplanned cost or efficiency improvements, is predicated on minimum UK revenue
levels of £9.4 million in FY22 and £14.4 million in FY23. These revenue
levels compare with UK revenues of £14.3 million in FY21, £16.8 million in
FY20 and £21.3 million in FY19. This compares with UK revenues of £14.3
million in FY21, £16.8 million in FY20 and £21.3 million in FY19. New
business continues to be won and, accordingly, the Board are confident that
the sales and liquidity targets will be met, especially having regard to
further additional mitigating actions which remain available to the Group.
The Board continues to review the Group's banking and funding arrangements
with a view to ensuring that they remain appropriate for the planned growth
within mainland Europe and to allow for the more volatile demand pattern in
the current economic environment.
Acquisitions, goodwill and intangible assets
There were no acquisitions made in the year, nor any adjustment to fair values
attributed to previous transactions.
The Board, acknowledging that this is a further year of reported losses and
that the Group's current market capitalisation is currently less than the
Group's net assets, has reviewed the carrying value of goodwill and other
intangible assets held at 30 September 2021 (both existing and generated in
the year) by reference to discounted cashflow forecasts for separately
identifiable cash generating units. These forecasts are based on Board
approved budgets, and extended forecasts where appropriate considering an
assessment of likely conversion from pipeline to revenue.
Having considered the assumptions, headroom and a range of reasonably
foreseeable sensitivities indicated by these assessments the Board are able to
conclude that the carrying values are fully recoverable.
Capital expenditure
Additions to tangible fixed assets were £0.4 million (FY20: £0.2 million) in
the year with no significant single items acquired. The Group continues to
benefit from investment in equipment in recent years and therefore has
capacity to address current demand levels. Planning for additional investments
designed to improve operational performance is ongoing and the Board expects
expenditure to be incurred on an ongoing basis in FY22 in support of further
operational gains.
Research and development costs of £0.03 million (FY20: £0.13 million) have
been capitalised in the period as the Board considers they meet the Group's
stated policy for recognition of internally generated assets. The costs are
focused on a range of projects designed to further enhance the Group's current
materials and product ranges and improve production capabilities to derive
volume or cost reduction benefits.
Financial risk management
Details of our financial risk management policies are disclosed in the Annual
Report.
Kamran Munir
Chief Financial Officer
Consolidated income statement
For the year ended 30 September 2021
2021 2020
£000 £000
Note
Revenue 1 23,431 21,517
Cost of sales excluding exceptional costs (17,103) (15,472)
Exceptional cost of sales - (164)
Total cost of sales (17,103) (15,636)
Gross profit 6,328 5,881
Other operating income 649 787
Distribution expenses (604) (650)
Administrative expenses excluding exceptional costs and amortisation
(6,890) (6,780)
Exceptional administrative expenses 2 - (292)
Amortisation of acquired intangible assets 2 (173) (238)
Total administrative expenses (7,063) (7,310)
Operating loss 2 (690) (1,292)
Finance expense 3 (542) (523)
Share of post-tax profit of
equity accounted joint ventures 53 55
Loss before tax (1,179) (1,760)
Tax credit 95 37
(1,084) (1,723)
Loss after tax for the year
Earnings per share for loss attributable to the owners of the parent during
the year
Basic (pence) 4 (2.74)p (4.35)p
Diluted (pence) 4 (2.74)p (4.35)p
All amounts relate to continuing operations.
Consolidated statement of comprehensive income
For the year ended 30 September 2021
2021 2020
£000 £000
Loss after tax for the year (1,084) (1,723)
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Currency translation differences 2 18
Total comprehensive expense for the year (1,082) (1,705)
Consolidated statement of financial position
As at 30 September 2021 2021 2020
£000 £000
Non-current assets
Property, plant and equipment 9,636 10,082
Right-of-use assets 4,876 5,001
Intangible assets 3,059 3,322
Investments in equity-accounted
joint ventures 120 147
Deferred tax asset 95 149
Total non-current assets 17,786 18,701
Current assets
Inventories 2,433 1,938
Trade and other receivables 3,630 4,339
Cash and cash equivalents 1,262 2,974
Total current assets 7,325 9,251
Total assets 25,111 27,952
Current liabilities
Trade and other payables 2,584 3,151
Loans and borrowings 719 1,027
Lease liabilities 842 917
Total current liabilities 4,145 5,095
Non-current liabilities
Trade and other payables 111 117
Loans and borrowings 3,248 3,847
Lease liabilities 4,794 4,970
Deferred tax liability 46 74
Total non-current liabilities 8,199 9,008
Total liabilities 12,344 14,103
Net assets 12,767 13,849
Equity attributable to equity
holders of the company
Share capital 792 792
Share premium account 15,866 15,866
Other reserves 1,886 1,886
Currency differences reserve (125) (127)
Profit and loss account (5,652) (4,568)
Total equity 12,767 13,849
Consolidated statement of changes in equity
For the year ended 30 September 2021
Share capital Share premium account Other reserves Cumulative currency differences reserve Profit and loss account Total equity
£000 £000 £000 £000 £000 £000
At 30 September 2020 792 15,866 1,886 (127) (4,568) 13,849
Comprehensive income for the year
Loss for the year - - - (1,084) (1,084)
Other comprehensive income - - - 2 - 2
Total comprehensive expense for the year - - - 2 (1,084) (1,082)
At 30 September 2021 792 15,866 1,886 (125) (5,652) 12,767
Share capital Share premium account Other reserves Cumulative currency differences reserve Profit and loss account Total equity
£000 £000 £000 £000 £000 £000
At 30 September 2019 792 15,883 1,886 (145) (2,313) 16,103
Effect of adoption of IFRS 16 - - - - (517) (517)
Comprehensive income for the year
Loss for the year - - - - (1,723) (1,723)
Other comprehensive income - - - 18 - 18
Total comprehensive expense for the year - - - 18 (1,723) (1,705)
Contributions by and distributions to owners
Share issue expenses (re August 2019 placing) - (17) - - - (17)
Share based payment - - - - (15) (15)
Total contributions by and distributions to owners - (17) - - (15) (32)
At 30 September 2020 792 15,866 1,886 (127) (4,568) 13,849
Consolidated statement of cash flows
For the year ended 30 September 2021
2021 2020
£000 £000
Operating activities
Loss after tax (1,084) (1,723)
Adjustments for:
Income tax (95) (37)
Finance expense 542 523
Employee share based payment (credit)/charge - (15)
Non-cash element of other income - (109)
Depreciation of property, plant and equipment 788 836
Depreciation of right-of-use assets 825 851
Loss on disposal of tangible fixed assets 25 -
Amortisation and impairment of intangible assets 282 317
Share of post-tax profit of equity accounted joint ventures (53) (55)
1,230 588
Decrease in trade and other receivables 725 2,296
(Increase)/decrease in inventories (515) 23
Decrease in trade and other payables (538) (1,426)
(328) 893
Cash generated from operations 902 1,481
Income taxes received/(paid) 92 (5)
Net cash flows from operating activities 994 1,476
Investing activities
Purchase of property, plant and equipment (405) (154)
Purchase of intangible assets (30) (125)
Proceeds from disposal of tangible fixed assets 8 -
Dividend received from equity-accounted for joint venture 80 125
Net cash used in investing activities (347) (154)
Financing activities
Interest paid (380) (421)
Share issue expenses paid - (17)
Bank loans advanced - 4,523
Loan issue expenses paid - (66)
Bank loans repaid (753) (213)
Principal paid on lease liabilities (951) (549)
Hire purchase and finance leases repaid (108) (168)
Decrease in invoice discounting - (3,716)
Net cash used in financing activities (2,192) (627)
Net (decrease)/increase in cash and cash equivalents (1,545) 695
Cash and cash equivalents at beginning of year 2,820 2,125
Foreign exchange movements (37) -
Cash and cash equivalents at end of year 1,238 2,820
2021 2020
£000 £000
Cash and cash equivalents comprise:
Cash balances 1,262 2,974
Bank overdrafts (24) (154)
1,238 2,820
Reconciliation of movements in net cash/financing liabilities
Year ended 30 September 2021 Opening Cash flows Non-cash movements Closing
£000 £000 £000 £000
Cash and cash equivalents
Cash balances 2,974 (1,675) (37) 1,262
Bank overdrafts (154) 130 - (24)
2,820 (1,545) (37) 1,238
Financing liabilities
Bank loans (4,383) 753 (84) (3,714)
Hire purchase liabilities (337) 108 - (229)
Lease liabilities (5,887) 1,221 (970) (5,636)
(10,607) 2,082 (1,054) (9,579)
(7,787) 267 (821) (8,341)
Year ended 30 September 2020 Opening Cash flows Non-cash movements Closing
£000 £000 £000 £000
Cash and cash equivalents 3,132 (158) - 2,974
Cash balances (1,007) 853 - (154)
Bank overdrafts 2,125 695 - 2,820
Financing liabilities
Invoice discounting (3,716) 3,716 - -
Bank loans (216) (4,244) 77 (4,383)
Hire purchase liabilities (505) 168 - (337)
Lease liabilities - 854 (6,741) (5,887)
(4,437) 494 (6,664) (10,607)
(2,312) 1,189 (6,664) (7,787)
Material non cash transactions
Financing liabilities now include lease liabilities, primarily in respect of
property leases, following the adoption of IFRS 16 from 1 October 2019.
Additions of £705,000 net of foreign exchange movements of £5,000 are shown
in non cash movements together with financing charges of £270,000 (2020:
The discounted liability at the transition date of 1 October 2019 of
£6,422,000 is shown in non-cash movements together with a £14,000 foreign
exchange movement and financing charges of £305,000).
Basis of preparation of financial statements
While the financial information included in this annual financial results
announcement has been prepared in accordance with the recognition and
measurement principles of International Accounting Standards in conformity of
the requirements of the Companies Act 2008, this announcement does not contain
sufficient information to comply therewith.
The financial information set out above does not constitute the Company's
statutory accounts for the years ended 30 September 2021 or 2020 but is
derived from those accounts. Statutory accounts for the year ended 30
September 2020 have been delivered to the Registrar of Companies and those for
the year ended 30 September 2021 will be delivered following the Company's
annual general meeting.
The auditors have reported on those accounts; their reports were unqualified
and did not include references to any matters to which the auditors drew
attention by way of emphasis without qualifying their reports.
Their reports for the year end 30 September 2021 and 30 September 2020 did not
contain statements under s498 (2) or (3) of the Companies Act 2006.
The consolidated financial statements
are drawn up in sterling, the functional currency of Autins Group
plc. The level of rounding for the financial statements is the nearest thousand
pounds.
Changes in accounting policies
These financial statements have been prepared in accordance with International
Accounting Standards in conformity with the requirements of the Companies Act
2006 for periods beginning on or after 1 October 2020 with
no new standards adopted in these financial statements.
New accounting standards applicable to future periods
There are no new standards, interpretations and amendments which are not yet
effective in these financial statements, expected to have a material effect on
the Group's future financial statements. After Brexit, the UK will continue
to apply International Accounting Standards in conformity with the
requirements of the Companies Act 2006.
1. Revenue and segmental information
Revenue analysis
2021 2020
£000 £000
Revenue, recognised at a point in time, arises from:
Sales of components 23,084 20,192
Sales of tooling 347 1,325
23,431 21,517
Segmental information
The Group currently has one main reportable segment in each year, namely
Automotive (NVH) which involves provision of insulation materials to reduce
noise, vibration and harshness to automotive manufacturing. Turnover and
operating profit are disclosed for other segments in aggregate, mainly
flooring sales together with Personal Protective Equipment ('PPE') in the
prior year, as they individually do not have a significant impact on the Group
result. These segments have no material identifiable assets or liabilities.
Factors that management used to identify the Group's reportable segments
The Group's reportable segments are strategic business units that offer
different products and services.
Measurement of operating segment profit or loss
The accounting policies of the operating segments are the same as those
described in the summary of significant accounting policies.
The Group evaluates performance on the basis of operating profit/(loss).
Automotive remained the only significant segment in the year although there
has been investment and costs incurred in the development and commissioning of
equipment which can manufacture both automotive and other products.
The Group's non-automotive revenues, including acoustic flooring and personal
protective equipment in FY20 are included within the others segment.
Segmental analysis for the year ended 30 September 2021
Automotive Others 2021
NVH £000 Total
£000 £000
Group's revenue per consolidated statement of comprehensive income 18,659 4,772 23,431
Depreciation 1,613 -
Amortisation 235 47
Segment operating (loss)/profit (971) 281 (690)
Finance expense (542)
Share of post-tax profit of equity accounted joint ventures 53
Group loss before tax (1,179)
Additions to non-current assets 1,140 - 1,140
Reportable segment assets 24,991 - 24,991
Investment in joint ventures 120
Reportable segment assets/total Group assets 25,111
Reportable segment liabilities/total Group liabilities 12,344 12,344
Segmental analysis for the year ended 30 September 2020
Automotive Others 2020
NVH £000 Total
£000 £000
Group's revenue per consolidated statement of comprehensive income 18,446 3,071 21,517
Depreciation 1,600 -
Amortisation 301 16
Segment operating (loss)/profit (1,504) 212 (1,292)
Finance expense (523)
Share of post-tax profit of equity accounted joint ventures
55
Group loss before tax (1,760)
Additions to non-current assets 279 - 279
Reportable segment assets 27,805 - 27,805
Investment in joint ventures 147
Reportable segment assets/total Group assets - 27,952
Reportable segment liabilities/total Group liabilities 14,103 - 14,103
Revenues from one UK customer in FY21 total £9,991,000 and £2,968,000 of
revenue arose from another European customer (FY20: one UK customer
£10,895,000). This largest customer purchases goods from Autins Limited in
the United Kingdom and there are no other customers which account for more
than 10% of total revenue.
External revenues by location of customers
2021 2020
£000 £000
United Kingdom 13,680 16,063
Sweden 680 322
Germany 6,753 3,197
Other European 2,318 1,913
Rest of the World - 22
23,431 21,517
The only material non-current assets in any location outside of the United
Kingdom are £900,000 (2020: £899,000) of fixed assets and £540,000 (2020:
£551,000) of goodwill in respect of the Swedish subsidiary. £233,000 (2020:
£775,000) of cash balances were held in Germany which has been partly
utilised to repay intercompany debt owed to a UK group company.
2. Loss from operations
The operating loss is stated after charging/(crediting):
2021 2020
£000 £000
Foreign exchange losses 105 11
Depreciation of property, plant and equipment 788 836
Depreciation of right-of-use assets 825 851
Amortisation of intangible assets 282 317
Cost of inventory sold 15,663 14,573
Impairment of trade receivables (83) 17
Government job retention scheme income (649) (672)
Other government assistance and grants - (115)
Employee benefit expenses 6,499 6,822
Lease payments (short term leases only) 109 120
Auditors' remuneration:
Fees for audit of the Group 90 85
Exceptional inventory provisions - 164
Exceptional restructuring costs in respect of:
Restructuring programme, inc severance costs - 132
Change of Chief Financial Officer - 160
- 292
Prior year exceptional costs
Overhead and operational restructuring programme
Following a detailed operational review initiated by the change of Chief
Financial Officer in January 2020 and in preparation for the rationalisation
of the UK premises, the Group reviewed its inventory and identified £164,000,
primarily in respect of materials that were being held for development or
aftermarket service purposes, which are to be scrapped to allow floor space
rationalisation and an associated reduction in future premises costs.
In the prior year, the Group also incurred exceptional administrative costs of
£160,000 in the year in respect of the change of CFO, including recruitment
fees and compensation costs. As part of the operational review initiated by
the new CFO and in response to Covid, which necessitated further operational
changes and cost reductions, the Group incurred a further £132,000 of
severance related costs in FY20.
3. Finance expense
2021 2020
£000 £000
Bank interest 236 180
Amortisation of loan issue costs 14 7
Right-of-use asset financing charges 270 305
Interest element of hire purchase agreements 22 31
` 542 523
4. Earnings per share
2021 2020
£000 £000
Loss used in calculating basic and diluted EPS (1,084) (1,723)
Number of shares
Weighted average number of £0.02 shares for the purpose of basic earnings per 39,601 39,601
share ('000s)
Weighted average number of £0.02 shares for the purpose of diluted earnings 39,601 39,601
per share ('000s)
Earnings per share (pence) (2.74)p (4.35)p
Diluted earnings per share (pence) (2.74)p (4.35)p
Earnings per share have
been calculated based on the share capital of Autins Group
plc and the earnings of the Group for both years. There are options in
place over 2,523,648 (2020: 524,204) shares that were anti-dilutive at the
year end but which may dilute future earnings per share.
5. Annual report and accounts
The annual report and accounts will be posted to shareholders shortly and will
be available to members of the public at the Company's registered office at
Central Point One, Central Park Drive, Rugby, CV23 0WE and on the Company's
website www.autins.co.uk/investors (http://www.autins.co.uk/investors) .
6. Annual General Meeting
The Annual General Meeting of Autins Group plc will be held at the Company's
main offices at Central Point One, Central Park Drive, Rugby, Warwickshire,
CV23 0WE on 17 March 2022 commencing at 11.00am.
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