REG - CT Automotive Group - Interim Results
21/09/2023 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20230921:nRSU1301Na&default-theme=true
RNS Number : 1301N CT Automotive Group PLC 21 September 2023
21 September 2023
CT AUTOMOTIVE GROUP PLC
("CT Automotive" or the "Group")
INTERIM RESULTS
Positive trading, efficiency initiatives delivering margin improvement
CT Automotive, a leading designer, developer and supplier of interior
components to the global automotive industry, today announces its results for
the half year ended 30 June 2023 ("H1 2023").
Simon Phillips, Chief Executive Officer of CT Automotive, commented:
"We are pleased with our first half performance. We drove strong revenue
growth, returned to profitability and strengthened our balance sheet.
Production volumes at the Group's facilities have recovered rapidly and we are
making good progress with our margin enhancement initiatives.
CT Automotive is well-positioned to capitalise on the continued recovery in
global automotive end-markets and our improved operating environment. Whilst
cognisant of the macroeconomic uncertainty, the Board remains confident of
meeting full year expectations."
Financial highlights
Restated
H1 23 H1 22
$m $m
Revenue 68.2 54.2
Gross profit 17.8 10.5
Underlying EBITDA* 6.7 (4.6)
Underlying profit/(loss) before taxation* 2.5 (8.4)
Profit/(loss) before taxation 1.3 (9.0)
Earnings/(loss) per share 1.7c (15.2)c
Net debt 9.0 20.2
* Adjusted for non-underlying items as explained in Notes 4 and 13 of the
condensed consolidated financial statements
Note: H1 2023 and H1 2022 are presented as continuing operations excluding UK
discontinued operations. H1 2022 has been restated for prior period
adjustments as explained in Note 15 of the condensed consolidated financial
statements
· Encouraging trading performance in H1 2023 as global production
volumes recovered and automotive supply chain issues eased
· Revenues for H1 2023 ahead of the Board's expectations up 26% at
$68.2m
· Production revenue up 26% at $65.8m, reflecting the improved trading
environment
· Tooling revenue expected to be second-half weighted reflecting the
timing of customer projects, with strong visibility on projects due to
complete in H2 2023
· Gross profit margins up to 26% (H1 2022: 19%), driven by a
combination of higher revenue, stable production schedules, restructuring and
efficiency initiatives
· Balance sheet strengthened following the fundraising of $9.6m in May
2023
Operational highlights
· Efficiency initiatives in China and Türkiye progressing as planned
and are expected to deliver additional savings in H2 2023, further improving
operating margins
· Impact of hyperinflation in Türkiye partially offset by improved
pricing and cost escalation system implemented with key customers
· Performance of our new facility in Mexico is on track, with the plant
generating $4.8m revenue during H1 2023
· Improvement in Group distribution and logistics recovered as supply
chains and container rates normalised
Current trading and outlook
· We are encouraged by stabilising order volumes, pricing and inventory
patterns since the start of FY23 and entered H2 2023 with good visibility
· Notable increase in customer Requests For Quotes towards the end of
H1 2023, resulting in 5 new production program wins in Q3 to date worth a
total annual production turnover of $9.4m and tooling business awards of $6.9m
· While macroeconomic uncertainty remains, there are continued signs
that customer schedules are strengthening as original equipment manufacturers'
(OEMs) automotive supply chain issues are continuing to improve
· The Board remains confident of underlying margin run rate progression
in H2 2023, supported by continued benefits expected from the Group's
efficiency initiatives
· As a result, the Board is confident in achieving its expectations for
FY23
For further information, please contact:
CT Automotive via MHP
Simon Phillips, Chief Executive Officer
Anna Brown, Chief Financial Officer
MHP (Financial Tel: +44 (0)7834 623 818
PR)
CTAutomotive@mhpgroup.com (mailto:CTAutomotive@mhpgroup.com)
Tim
Rowntree
Charlie Barker
Veronica Farah
Liberum (Nominated Adviser and Broker) Tel: +44 (0)20 3100 2000
Richard Lindley
Benjamin Cryer
Notes to editors
CT Automotive is engaged in the design, development and manufacture of bespoke
automotive interior finishes (for example, dashboard panels and fascia
finishes) and kinematic assemblies (for example, air registers, arm rests,
deployable cup holders and storage systems), as well as their associated
tooling, for the world's leading automotive original equipment suppliers
("OEMs") and global Tier One manufacturers.
The Group is headquartered in the UK with a low cost manufacturing footprint.
Key production facilities are located in Shenzhen and Ganzhou, China
complemented by additional manufacturing facilities in Mexico, Türkiye and
Czechia.
CT Automotive's operating model enables it to pursue a price leadership
strategy, supplying high quality parts to customers at a lower overall landed
cost than competitors. This has helped the Group build a high-quality
portfolio of OEM customers, both directly and via Tier One suppliers including
Forvia and Marelli. End customers include volume manufacturers, such as Nissan
and Ford, and luxury car brands such as Bentley and Lamborghini. In addition,
the Group supplies electric car manufacturers, including Lucid. It is also
working with e.Go Mobile, a German manufacturer which plans to launch a series
of small electric vehicles for the budget end of the market.
The Group currently supplies component part types to over 47 different models
for 19 OEMs. Since its formation, the Group has been the only significant new
entrant into the market, which is characterised by high barriers to entry.
Use of alternative performance measures
The commentary uses alternative performance measures, which are described as
"Underlying". An explanation of the items identified as non-underlying and
that have been adjusted can be found in Notes 4 and 13 of the condensed
consolidated financial statements. Non-underlying items are items which due
to their one-off, non-trading and non-recurring nature, have been separately
classified by the Directors in order to draw them to the attention of the
reader and allow for a greater understanding of the operating performance of
the Group.
Strategic and Operational Review
Positive trading performance
The Group's trading performance in the first half of the year has been
encouraging as global production volumes continued to recover and automotive
supply chain issues eased.
Q1 2023 was characterised by low tendering activity as large OEMs began
re-evaluating their post Covid strategies, in particular regarding their EV
platforms. There was a notable increase in customer Requests For Quotes
towards the end of H1 2023. This resulted in 5 new production program wins
in Q3 to date with a total production annualised turnover of $9.4m and tooling
business awards of $6.9m.
Revenues for H1 2023 were ahead of the Board's expectations at $68.2m, made up
of $65.8m of production revenue (H1 2022: $52.3m) and $2.3m of tooling revenue
(H1 2022: $1.9m). This was up 26% on a continuing basis compared to H1 2022
($54.2m, excluding discontinued UK revenue of $3.0m).
Our tooling revenue is generated from the design and development of new
programs, with 5 projects completing during H1 2023, generating $2.3m of
tooling revenue (H1 2022: $1.9m). Our internal toolroom is fully utilised and
ensures maximum product control and margins. Tooling revenue is expected to be
weighted towards the second half this year reflecting the timing of customers'
product launches and start of production. Currently, 11 projects are underway
and are due to complete in H2 2023 with an expected revenue of c.$8-10m.
Gross margins have continued to improve and reached 26% (H1 2022: 19%) as the
Group's ongoing efficiency initiatives in China and Türkiye progressed as
planned. China represents 70% of our global production volumes and
consequently remains the main focus of our margin improvement initiatives.
These initiatives include the restructuring of tooling operations and
manufacturing footprint, supplier and logistics rationalisation, as well as
automation initiatives which are on track for H2 2023 implementation and will
deliver further savings. As part of restructuring our manufacturing footprint,
we are continuing to gradually consolidate some of our production lines in
China to Ganzhou, benefitting from comparatively lower labour costs. We remain
on track to deliver the margin improvement plan across the second half of
2023, with automation being a key driver.
The economic environment in Türkiye has continued to be impacted by
hyperinflation. An improved pricing and cost escalation system with key
customers, aimed at compensating for local inflation and the devaluation of
the Turkish Lira, has been effective in protecting local operations.
The new production facility in Mexico, which we opened in late 2022 to support
our North American customers, has performed as planned, generating $4.8m
revenue during H1 2023. Further growth is expected as the factory continues to
scale up with new project launches scheduled for Q1 2024.
Strengthened balance sheet to support growth initiatives
On 27 April 2023, we were pleased to announce the result of a placing, which
secured c.$9.6m of gross proceeds from new and existing shareholders.
The net proceeds of the fundraise are being primarily used to strengthen the
balance sheet and to provide the Group with the flexibility to take advantage
of new pipeline opportunities as the business positions itself for further
growth. A small portion of the net proceeds will be used to facilitate further
efficiency savings, including through investment in injection moulding
production processes and robotics.
At the half-year end the net debt reduced to $9.0m (30 June 2022: $20.2m; 31
December 2022: $12.2m).
People
Our performance during this period of recovery and efficiency initiatives
would not have been possible without the dedication, enthusiasm and expertise
of our people. They are critical to the continued evolution of the business.
We continue to invest in our systems and processes to ensure our people are
safe, empowered and have sufficient opportunities to develop their careers
while supporting the Group's long-term goals.
Board changes
A number of important changes to the Board structure and roles were made in H1
2023 to support the business.
We were pleased to appoint Anna Brown as CFO at the end of April 2023. Anna
has substantial listed company and financial experience, and has made an
immediate impact as we continue to improve governance and execute our growth
strategy.
In July 2023 Ray Bench was appointed as Non-Executive Chairman, while Simon
Phillips took on the role of Chief Executive Officer. Scott McKenzie,
previously Chief Executive Officer, stepped down from the Board to a new role
as Chief Operating Officer, Sales and Product Development.
Francesca Ecsery was appointed Senior Independent Non-Executive while Nick
Timberlake joined the Board as a Non-Executive Director.
In August 2023, we also announced the appointment of Geraint Davies as an
independent Non-Executive Director, joining our Board on 18 September 2023 as
a Chair of the Audit & Risk Committee. He brings over 30 years' experience
as a Partner in the "Big Four" accounting firms, working with global
businesses in manufacturing, real estate, mining, distribution and financial
services.
Outlook
The Board anticipates customer schedules to support continued strong demand in
H2 2023, alongside stabilising pricing and inventory patterns. Trading since
30 June 2023 has been in line with the Board's expectations.
We are expecting to recognise c.$8-10m of revenue from the tooling projects
which are due to complete in H2 2023, subject to customer-led timings for the
start of production. H2 2023 gross margins are expected to further improve
in line with the ongoing margin improvement plan.
Looking further ahead, the Board is mindful of the possibility that the
continuing macroeconomic uncertainty with regards to interest rates and
inflation may result in a softening of demand leading into 2024. That said,
whilst volumes and demand remain strong compared to the pandemic period,
automotive sector global production is still at least 7% lower compared to
2019 levels.
The Board remains confident of underlying margin run rate progression in H2
2023 and of achieving its expectations for FY23, supported by the benefit
expected from the Group's efficiency initiatives.
Financial review
Revenue and margins
Total Group revenue for H1 2023 was $68.2m, up 26% on a continuing basis
compared to H1 2022 ($54.2m, excluding discontinued UK revenue of $3.0m), as
customer volumes and production schedules strengthened and automotive supply
chain issues eased. Growth came from both improvement in production revenue
which increased by 26% from $52.3m to $65.8m and an increase in tooling
revenue from $1.9m to $2.3m.
Gross profit increased to $17.8m (H1 2022: $10.5m) and gross margins continued
to improve and reached 26% (H1 2022: 19%) on the back of improved trading
conditions and the Group's ongoing efficiency initiatives in China and
Türkiye which started to deliver savings. These initiatives include the
restructuring of tooling operations and manufacturing footprint, supplier and
logistics rationalisation as well as automation initiatives which are on track
for H2 2023 implementation.
Non-underlying items
During the first half of 2023 the Group recognised non-underlying items of
$1.2m (H1 2022: $0.7m). These items primarily related to costs of $0.9m (H1
2022: nil) in connection with restructuring and margin improvement
initiatives. These costs included redundancies while optimising our
manufacturing footprint in China and Türkiye ($0.1m), a write down of
unviable stock as part of destocking and distribution centre rationalisation
programme ($0.3m) and a $0.5m charge in relation to previously completed
tooling projects.
The Group has been undertaking an exercise to improve reporting and
governance. This has resulted in a change in the method to estimate tooling
overheads and, as a result of applying this new accounting estimate, the Group
is releasing production overheads in relation to tooling projects that were
capitalised in prior periods. The amount for the current financial period is
$0.3m (H1 2022: nil).
This change is expected to result in a non-underlying charge of $1.8m for the
full year as the Group releases the previously capitalised production
overheads as tooling projects are completed in the current year, with the full
amount to be released in FY23. There is no cash impact. Following the full
release in the current year, the change will have no further impact on future
periods.
For further details, see Notes 4 and 13 of the condensed consolidated
financial statements.
EBITDA and operating result
H1 2023 underlying EBITDA was $6.7m (H1 2022: $4.6m loss) while reported
EBITDA was $5.4m (H1 2022: $5.2m loss) as a result of improved gross profit
and after taking account of distribution expenses of $2.7m (H1 2022: $4.0m)
and administrative expenses of $13.0m (H1 2022: $15.0m). A $1.3m reduction in
distribution expenses was due to container rates settling to pre-covid levels.
During H1 2023 the Group benefitted from $0.3m of foreign exchange gains (H1
2022: $2.6m loss) due to favourable exchange rate movements primarily against
the US$. These are included in administrative expenses.
Depreciation and amortisation charges remained at similar levels for the year
at $3.0m (H1 2022: $3.0m). Therefore, the resulting underlying operating
profit was $3.7m (H1 2002: $7.5m loss) and reported operating profit was $2.4m
(H1 2022: $8.2m loss).
Discontinued operations
During FY22, the Group announced the closure of Chinatool Automotive Systems
Limited, a production facility in Newton Aycliffe, UK, which was impacted by
severe labour shortages and inflationary increases in energy costs and wages.
The formal liquidation process is currently underway. Loss for the period
attributable to the discontinued operations was $0.4m (H1 2022: $0.7m loss)
and primarily related to translational foreign exchange losses on the £
denominated balance sheet items.
Prior period restatement
As previously disclosed in the 2022 Annual Report, during the preparation of
FY22 year-end accounts, the Group identified prior period adjustments in
relation to calculating the FY21 year-end inventory and transfer of tooling
assets from the Group balance sheet to cost of sales upon the sale to the
customer. Posting of the adjustments to FY21 year-end balance sheet had a
knock-on effect on previously announced H1 2022 results.
The impact of posting the inventory adjustment resulted in an increase in the
cost of sales in the period to 30 June 2022 by $1.1m and reduced inventories
as at 30 June 2022 by $9.4m. The impact of posting the tooling adjustment
resulted in the value reported in the cost of sales for the period to 30 June
2022 reducing by $0.4m and the value of property, plant and equipment
decreasing by $2.2m. Therefore, the overall impact of prior period
adjustments is an increase in the cost of sales for the period to 30 June 2022
by $0.7m and a reduction in net assets as at 30 June 2022 by $11.6m with a
corresponding reduction in brought forward reserves of $10.9m.
Impact of hyperinflation
Applying the hyperinflation standard (IAS 29) in relation to Turkish
operations resulted in an increase in Group revenue by $0.5m (H1 2022: $0.7m
increase) and nil impact on Group EBITDA (H1 2022: $0.6m loss).
Capital structure, working capital and interest
Since December 2022 year end, the Group saw its net asset value increase to
$11.1m (FY22: $2.6m) supported by the fundraise in May 2023 which generated
net proceeds of $9.1m.
Non-current assets reduced to $16.9m (FY22: $19.9m), mainly reflecting a $3.0m
(H1 2022: $3.0m) depreciation charge in relation to PPE, right of use assets
and intangible assets.
During H1 2023, the Group saw a $6.9m increase in its current assets. This was
primarily driven by an increase in trade debtors as the customer payment terms
reverted back to normal and the proceeds of the fundraise, partially offset by
the decrease in finished goods as the Group undertook a destocking exercise
and distribution centre rationalisation programme. Trade and other payables
reduced by $2.2m during H1 2023 as supplier payments have returned to normal
and a portion of proceeds from the fundraise has been used to pay down
suppliers in China and the UK.
The Group has continued to prudently manage its working capital by utilising
available debt facilities and the proceeds of the fundraise. Cash and cash
equivalents as at 30 June 2023 were $7.6m (FY22: $4.8m). Net debt as at 30
June 2023 was $9.0m (FY22: $12.2m) and included bank overdrafts, amounts drawn
on the Group's trade loans and invoice finance facilities with HSBC. After
taking account of current and non-current IFRS 16 lease liabilities, net debt
as at 30 June was $19.2m (FY22: $24.2m).
The Group uses HSBC post-dispatch trade loans and invoice financing facilities
as an additional working capital lever. As at 30 June 2023 the amounts drawn
on the Group's trade loans and invoice finance facilities were $15.5m (FY22:
$16.7m) against a total facility of c.$22m. Net finance costs increased to
$1.1m (H1 2022: $0.8m) reflecting significantly higher UK interest rates.
On 27 April 2023 the Group announced a placing, raising total gross proceeds
of $9.6m. The net proceeds of the fundraise of $9.1m have predominately been
used to strengthen the balance sheet and to provide the Group with the
flexibility to take advantage of growth opportunities. Additionally, a small
portion of the net proceeds has been deployed to realise further efficiency
savings, including through investment in injection moulding production
processes and robotics.
Risks
The Board considers strategic and external, operational, financial and
compliance risks and monitors them on a regular basis. Key risks and their
mitigations were included on pages 32 to 37 of the 2022 Annual Report
published on 15 June 2023 and there are no material changes since that date.
Consolidated Statement of Profit or Loss and Other Comprehensive Income
Note Unaudited 6 months to 30 June 2023 Unaudited 6 months to 30 June Year to 31 December 2022
2022 (Restated)
$'000 $'000 $'000
Revenue 2,3 68,152 54,195 124,269
Cost of sales (50,307) (43,657) (109,407)
________ ________ ________
Gross profit 17,845 10,538 14,862
Distribution expenses (2,692) (4,007) (5,059)
Other operating income 312 242 650
Administrative expenses (13,022) (14,959) (27,287)
________ ________ ________
EBITDA (before non-underlying items) 6,671 (4,554) (7,129)
Depreciation and amortisation (2,991) (2,973) (5,422)
Non-underlying items 4 (1,237) (659) (4,283)
Operating Profit/(Loss) 2,443 (8,186) (16,834)
Finance income - - 10
Finance expenses (1,138) (824) (1,997)
________ ________ ________
Profit/(Loss) before tax 1,305 (9,010) (18,821)
Taxation (Charge)/Credit (351) 1,260 (3,054)
________ ________ ________
Profit/(Loss) for the period from continuing operations 954 (7,750) (21,875)
________ ________ ________
Discontinued Operations
Profit/(Loss) for the period from discontinued operations 16 (367) (671) (2,789)
________ ________ ________
Profit/(Loss) for the period attributable to equity shareholders
587 (8,421) (24,664)
________ ________ ________
Other comprehensive income
Items that are or may be reclassified subsequently to profit or loss:
Foreign currency translation differences - foreign operations (1,180) (360) (927)
________ ________ ________
Other comprehensive loss for the period, net of income tax (1,180) (360) (927)
________ ________ ________
Total comprehensive loss for the period (593) (8,781) (25,591)
________ ________ ________
From continuing operations:
Basic earnings/(loss) per share 5 1.70c (15.2)c (42.9)c
Diluted earnings/(loss) per share 5 1.70c (15.2)c (42.9)c
From continuing and discontinued operations
Basic earnings/(loss) per share 5 1.00c (16.5)c (48.4)c
Diluted earnings/(loss) per share 5 1.00c (16.5)c (48.4)c
Consolidated Balance Sheet
Note Unaudited as at 30 June 2023 Unaudited as at 30 June 2022 (Restated) As at 31 December 2022
$'000 $'000 $'000
Non-current assets
Goodwill 1,259 2,417 1,259
Intangible assets 392 575 528
Property, Plant and Equipment 6 6,199 7,839 7,302
Right of use assets 9,008 8,603 10,769
Deferred tax assets - 3,508 -
________ ________ ________
16,858 22,942 19,858
________ ________ ________
Current assets
Inventories 7 25,265 34,885 27,342
Tax receivable 344 1,134 227
Trade and other receivables 8 32,971 40,852 26,880
Cash and cash equivalents 14 7,592 5,835 4,829
________ ________ ________
66,172 82,706 59,278
________ ________ ________
Total assets 83,030 105,648 79,136
________ ________ ________
Current liabilities
Other interest-bearing loans and borrowings 9 (16,601) (26,057) (17,058)
Trade and other payables 10 (43,695) (50,262) (45,924)
Derivative financial liabilities (189) (1,008) (671)
Tax payable (1,049) (516) (771)
Lease liabilities 9 (2,311) (2,050) (3,022)
________ ________ ________
(63,845) (79,893) (67,446)
________ ________ ________
Non-current liabilities
Derivative financial liabilities - - (95)
Lease liabilities 9 (7,905) (6,436) (8,900)
Deferred tax liabilities (175) - (118)
________ ________ ________
(8,080) (6,436) (9,113)
________ ________ ________
Total liabilities (71,925) (86,329) (76,559)
________ ________ ________
Net assets 11,105 19,319 2,577
________ ________ ________
Equity attributable to equity holders of the parent
Share capital 17 484 342 342
Share premium 17 63,696 54,717 54,717
Translation reserve (1,527) 220 (347)
Merger reserve (35,812) (35,812) (35,812)
(Deficit)/ Retained earnings (15,736) (148) (16,323)
________ ________ ________
Total equity 11,105 19,319 2,577
________ ________ ________
Consolidated Statement of Changes in Equity
Share Share Translation Retained Merger Total
capital Premium reserve Earnings reserve equity
$'000 $'000 $'000 $'000 $'000 $'000
1 January 2022 342 54,717 580 7,430 (35,812) 27,257
Hyperinflationary monetary adjustment relating to 2021
911 911
Restated at 1 Jan 2022
342 54,717 580 8,341 (35,812) 28,168
Total comprehensive income for the year
Loss for the year - - - (24,664) - (24,664)
Other comprehensive income - - (927) - - (927)
________ ________ ________ ________ ________ ________
Total comprehensive income for the year
- - (927) (24,664) - (25,591)
________ ________ ________ ________ ________ ________
Balance at 31 December 2022 342 54,717 (347) (16,323) (35,812) 2,577
________ ________ ________ ________ ________ ________
Share Share Translation Retained Merger Total
capital Premium reserve earnings reserve equity
$'000 $'000 $'000 $'000 $'000 $'000
1 January 2023 342 54,717 (347) (16,323) (35,812) 2,577
Total comprehensive income for the period
Profit for the period - - - 587 - 587
Other comprehensive income/(loss) - - (1,180) - - (1,180)
________ ________ ________ ________ ________ ________
Total comprehensive income for the period
- - (1,180) 587 - (593)
Share Issue 142 8,979 - - - 9,121
________ ________ ________ ________ ________ ________
Balance at 30 June 2023 484 63,696 (1,527) (15,736) (35,812) 11,105
________ ________ ________ ________ ________ ________
Consolidated statement of cash flows
Unaudited Unaudited Year to 31 December
6 months to 30 6 months to 30 2022
June 2023 June 2022
$'000 $'000 $'000
Cash flows from operating activities
Profit/(Loss) for the period 954 (7,750) (21,875)
Loss from discontinued operations (367) (671) (2,789)
________ ________ ________
Profit/(Loss) for the period after tax 587 (8,421) (24,664)
Adjustments for:
Depreciation and amortisation 2,991 2,972 5,947
Impairment of Goodwill - - 1,158
Finance income - - (10)
Prior period adjustment (See Note 15) - 681 -
Financial expense 942 881 2,090
Net fair value losses recognised in Profit or Loss - - 750
Impairment of lease assets - - 429
Loss on disposal of Property, Plant and Equipment 329 246 825
Gain on renegotiation of lease - - (168)
Taxation refund/ (paid) 353 (1,485) 3,103
Monetary gain from hyperinflationary adjustments (429) 354 665
________ ________ ________
4,773 (4,772) (9,875)
Decrease/(increase) in trade and other receivables (9,178) 4,709 14,786
(Increase)/decrease in inventories 3,212 (54) 1,104
(Decrease)/increase in trade and other payables (968) (7,748) (618)
Tax refund - - 145
________ ________ ________
Net cash generated/(used in) operating activities (2,161) (7,865) 5,542
________ ________ ________
Cash flows from investing activities
Purchase of intangible assets - (364) (633)
Purchase of property, plant and equipment (427) (1,779) (2,864)
Interest received - - 10
________ ________ ________
Net cash from/(used in) investing activities (427) (2,143) (3,487)
________ ________ ________
Cash flows from financing activities
Repayment of loan facilities - (2,500) (2,500)
Share issue (net of transaction costs) 9,120 - -
Principal repayment of lease liabilities (1,018) (1,693) (3,607)
Interest paid (945) (664) (2,090)
Repayment of term loan - - -
Repayment of CLBILs - - -
Receipt/(repayment) of trade loans (1,166) 3,680 4,131
Receipt/(repayment) of invoice finance (41) 2,331 (3,880)
________ ________ ________
Net cash from/(used in) financing activities 5,950 1,154 (7,946)
________ ________ ________
Net (decrease)/increase in cash and cash equivalents 3,362 (8,854) (5,891)
Cash and cash equivalents at beginning of period 4,471 9,807 9,807
Effect of exchange rate fluctuations on cash held (1,350) 1,345 555
________ ________ ________
Cash and cash equivalents at end of period (see Note 14) 6,483 2,298 4,471
________ ________ ________
Notes forming part of the consolidated unaudited financial statements
1 Accounting policies
Introduction
The consolidated condensed interim financial statements have been prepared in
accordance International Financial Reporting Standards currently in force and
in conformity with the requirements of the Companies Act 2006.
These consolidated condensed interim financial statements have been prepared
on the basis of the same accounting policies as per the audited financial
statements for the year ended 31 December 2022. The interim financial
statements, which have been prepared in accordance with International
Accounting Standard 34 (IAS 34), are unaudited and do not constitute statutory
accounts within the meaning of section 434 of the Companies Act 2006.
Statutory accounts for the year ended 31 December 2022, prepared in accordance
with IFRS, have been filed with Companies House. The Auditors' Report on
these accounts was unqualified, did not include any matters to which the
Auditors drew attention by way of emphasis without qualifying their report and
did not contain any statements under section 498 of the Companies Act 2006.
The consolidated condensed interim financial statements are for the six months
to 30 June 2023. The interim consolidated financial information does not
include all the information and disclosures required in the annual financial
statements and should be read in conjunction with the Group's annual financial
statements for the year ended 31 December 2022, which were prepared in
accordance with IFRS's and in conformity with the requirements of the
Companies Act 2006.
The Group's business is not subject to significant seasonal variations.
The unaudited financial statements are prepared on the historical cost basis
except that the derivative financial instruments are stated at their fair
value and the hyperinflationary adjustments are applied to the results of our
Turkish subsidiary.
Going Concern
The Directors have assessed the Group's business activities and the factors
likely to affect future performance in light of the current and anticipated
trading conditions. In making their assessment the Directors have reviewed
the Group's latest budget, current trading, available debt facilities,
proceeds from the recent fundraising and considered reasonably plausible
downside scenarios and mitigating actions.
The Directors are confident that, after taking into account existing cash and
debt facilities available to the Group and the net proceeds of the
fundraising, the Group has adequate resources in place to continue in
operational existence for a period of at least 12 months from the date of
approval of these financial statements being to September 2024. In making
their assessment the Directors have considered the key factors listed below:
Fundraising
On 27 April 2023 the Group announced that it undertook a fundraise and
achieved total gross proceeds of $9.6m (before transaction costs of $0.5m).
The net proceeds of the fundraise of approximately $9.1m were received mid-May
2023 and were used to strengthen the balance sheet and to provide the Group
with flexibility to take advantage of growth opportunities. Additionally, a
small portion of the net proceeds was deployed to realise further efficiency
savings including through investment in injection moulding production
processes and robotics.
HSBC facilities
The Group uses HSBC post-dispatch trade loans and invoice financing facilities
as an additional working capital lever. During H1 23 these facilities were
provided on a rolling 3-months basis. However, in light of the improved
trading, the facilities have been formally renewed for a longer period, until
30 April 2024. The Directors have recently commenced the refinancing process
to secure suitable funding options and believe that should the HSBC facilities
be withdrawn after 30 April 2024, alternative funding options would be
available to the Group.
As at 30 June 2023 the amounts drawn on the Group's trade loans and invoice
finance facilities were $15.5m (FY22: $16.7m) against a total facility of
c.$22m.
Scenario modelling
As a result of losses incurred during FY22, the Group has carefully considered
its future liquidity position. In stress testing the forecast cash flows of
the business, the Directors modelled a base case, several downside scenarios,
a combined downside scenario and a set of mitigating actions to the combined
downside scenario. The base case was modelled on a prudent basis, assuming
flat revenues and using the production schedules and cost estimates.
Positive cash headroom is maintained under the base case scenario.
Taking into account the trading conditions which existed during FY22 and
outlook, the Directors have identified certain specific key risks to the base
case assumptions and have modelled the scenarios as follows:
• Reduction in revenue risk: the entire market is down by 10% due to global
economic recession, reflecting a scenario similar to the 2008-2009 downturn;
• Increased cost of sales risk: reflecting the impact of inflation in cost
of sales by 5% and inability to recover from customers;
• Stockholding risk: reflecting a scenario caused by disruption in customer
schedules and therefore the need to hold more than normal stock levels
required in the distribution centre's;
• Availability of HSBC facilities: reflecting a withdrawal of HSBC
facilities from 30 April 2024 and failure to replace the facilities with
equivalent facilities on similar terms.
In addition, the directors have modelled the first three risks above into a
combined downside scenario and considered several controllable mitigating
actions. The principal mitigating actions have been modelled as managing
buffer stock levels and payment terms with customers and suppliers. Such
mitigating actions are within management's control and the business closely
monitors appropriate lead indicators to implement these actions in sufficient
time to achieve the required cash preservation impact.
Despite the combined impact of the above downside assumptions, the stress
testing model demonstrates that the business is able to maintain a positive
cash headroom.
As a result of the above considerations, the Directors consider that the Group
has adequate resources in place for at least 12 months form the date of the
approval of H1 23 financial statements and have therefore adopted the going
concern basis of accounting in preparing the financial statements.
Revenue
Revenue is measured at the fair value of the consideration received or
receivable. Provided it is probable that the economic benefits will flow to
the Group and the revenue and costs, if applicable, can be measured reliably,
revenue is recognised in profit or loss as follows:
Serial production goods are recognised as sold at a point in time when control
is passed to the customer, which depending on the incoterms (a series of
pre-defined commercial terms published by the International Chamber of
Commerce relating to international commercial law) can be when they are
delivered to the customer site or when the customer collects them.
Revenue from Tooling and the provision of associated services is recognised at
a point in time when the performance obligations in the contract are satisfied
and control is passed to the customer, which is based on the date of issue of
the parts submission warrant (PSW) or a similar approval from customers, or
other evidence of the commencement of serial production. Monies received from
customers in advance of completing the performance obligations are recognised
as contract liabilities as at the balance sheet date and released to revenue
when the related performance obligations are satisfied at a point in time.
Discounts on the serial production contracts are considered as one off and
agreed with the customers as part of the negotiation and as per the terms of
the contract, they are either paid in advance or otherwise. Discounts paid in
advance are recognised as a prepayment and recognised as a debit to revenue in
the period in which the related revenue is recognised. All other discounts are
recognised as a debit to revenue based on the period in which the related
revenues are recognised.
Revenue excludes value added tax or other sales taxes and is after deduction
of any trade discounts.
Property, plant and equipment
Property, plant and equipment is stated at cost less accumulated depreciation
and accumulated impairment losses.
Where parts of an item of property, plant and equipment have different useful
lives, they are accounted for as separate items of property, plant and
equipment.
Depreciation is charged to the profit and loss account on a straight-line
basis over the estimated useful lives of each part of an item of property,
plant and equipment. The estimated useful lives are as follows:
Assets under construction - not depreciated
Plant and equipment - 2-5 years straight line
Furniture, fixtures and equipment - 2-5 years straight line
Motor vehicles - 2-5 years straight line
Depreciation methods, useful lives and residual values are reviewed at each
balance sheet date.
Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is
based on the first-in first-out principle and includes expenditure incurred in
acquiring the inventories, production or conversion costs and other costs in
bringing them to their existing location and condition. In the case of
manufactured inventories and work in progress, cost includes an appropriate
share of overheads based on normal operating capacity.
Net realisable value is the value that would arise on sale of stock in the
normal course of business, minus a reasonable estimation of selling costs.
Foreign currency
Transactions in foreign currencies are translated to the respective functional
currencies of Group entities at the foreign exchange rate ruling at the date
of the transaction. Foreign currency monetary assets and liabilities are
translated at the rates ruling at the reporting date. Exchange differences
arising on the retranslation of unsettled monetary assets and liabilities are
recognised immediately in profit or loss. Exchange differences arising on the
retranslation of the foreign operation are recognised in other comprehensive
income and accumulated in the foreign exchange reserve.
The assets and liabilities of foreign operations, including goodwill and fair
value adjustments arising on consolidation, are translated to the Group's
presentational currency US Dollars at foreign exchange rates ruling at the
balance sheet date. The revenues and expenses of foreign operations are
translated at an average rate for the period where this rate approximates to
the foreign exchange rates ruling at the dates of the transactions.
Exchange differences arising from this translation of foreign operations are
reported as an item of other comprehensive income and accumulated in the
translation reserve. When a foreign operation is disposed of, such that
control is lost, the entire accumulated amount in the foreign currency
translation reserve, is reclassified to profit or loss as part of the gain or
loss on disposal. When the Group disposes of only part of its interest in a
subsidiary that includes a foreign operation while still retaining control,
the relevant proportion of the accumulated amount is reattributed to
non-controlling interests. When the Group disposes of only part of its
investment in an associate that includes a foreign operation while still
retaining significant influence, the relevant proportion of the cumulative
amount is reclassified to profit or loss.
Classification of financial instruments issued by the Group
Financial instruments issued by the Group are treated as equity only to the
extent that they meet the following two conditions:
(a) they include no contractual obligations upon the Company (or Group as the
case may be) to deliver cash or other financial assets or to exchange
financial assets or financial liabilities with another party under conditions
that are potentially unfavourable to the Group; and
(b) where the instrument will or may be settled in the company's own equity
instruments, it is either a non-derivative that includes no obligation to
deliver a variable number of the company's own equity instruments or is a
derivative that will be settled by the company's exchanging a fixed amount of
cash or other financial assets for a fixed number of its own equity
instruments.
To the extent that this definition is not met, the proceeds of any issues are
classified as a financial liability.
Non-derivative financial instruments
Financial assets and liabilities are recognised when the Group becomes party
to the contractual provisions of the instrument.
Non-derivative financial instruments comprise trade and other receivables,
cash and cash equivalents, loans and borrowings, and trade and other payables.
Trade and other receivables
Trade and other receivables are initially measured at their transaction price.
Trade receivables and other receivables are held to collect the contractual
cash flows which are solely payments of principal and interest. Therefore,
these receivables are subsequently measured at amortised cost using the
effective interest rate method.
Trade and other payables
Trade and other payables are recognised initially at fair value. Subsequent to
initial recognition they are measured at amortised cost using the effective
interest method.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits. Bank
overdrafts that are repayable on demand and form an integral part of the
Group's cash management are included as a component of cash and cash
equivalents for the purpose only of the cash flow statement.
Interest-bearing borrowings
Interest-bearing borrowings are recognised initially at fair value less
attributable transaction costs. Subsequent to initial recognition,
interest-bearing borrowings are stated at amortised cost using the effective
interest method. See Note 9 for full details of classes of interest-bearing
borrowings.
Effective interest rate
The 'effective interest' is calculated using the rate that exactly discounts
estimates future cash payments or receipts (considering all contractual terms)
through the expected life of the financial asset or financial liability to its
carrying amount before any loss allowance.
Share based payments
Where share options are awarded to employees, the fair value of the options at
the date of the grant is charged to the income statement over the vesting
period. Non-market vesting conditions are taken into account by adjusting the
number of equity instruments expected to vest at each balance sheet date so
that, ultimately, the cumulative amount recognised over the vesting period is
based on the number of options that eventually vest.
Hyperinflation accounting
The Group has applied IAS 29, Financial Reporting in Hyperinflationary
Economies, for its subsidiary in Türkiye, whose functional currency has
experienced a cumulative inflation rate of more than 100%, over the past three
years. Assets, liabilities, the financial position and results of foreign
operations in hyperinflationary economies are translated to US Dollar at the
exchange rate prevailing at the reporting date. The exchange differences are
recognised directly in other comprehensive income and accumulated in the
translation reserve in equity. Such translation differences are reclassified
to profit or loss only on disposal or partial disposal of the overseas
operation. Prior to translating the financial statements of foreign
operations, the non-monetary assets and liabilities and comprehensive income
(both previously stated at historic cost) are restated to account for changes
in the general purchasing power of the local currencies based on the consumer
price index published by the Turkish Statistical Institute. The consumer price
index for the six months ended 30 June 2023 increased by 12%.
The Group's consolidated financial statements for the period include the
results and financial position of its Turkish operations restated to the
measuring unit current at the end of each period. Comparative amounts
presented in the consolidated financial statements have not been restated.
Hyperinflationary accounting needs to be applied as if Türkiye has always
been a hyperinflationary economy. In the year of initial application, it was
CT Automotive Group's policy choice, to recognise the differences between
equity as reported at 31 December 2021 and the equity after the restatement of
the non-monetary items using the measurement unit current at the reporting
date within retained earnings. The restatement of the non-monetary items
subsequent to this initial application have been recognised in administrative
expenses within the Consolidated Statement of Profit and
Loss.
.
2 Revenue
Unaudited 6 months to 30 June 2023 Unaudited 6 months to 30 June 2022
Year to 31 December 2022
$'000 $'000 $'000
Disaggregation of revenue
An analysis of turnover by type is given below:
Sale of parts 65,811 52,272 117,289
Sale of tooling (including design and development) 2,341 1,923 6,980
________ ________ ________
Total revenues
68,152 54,195 124,269
________ ________ ________
All revenue is derived from goods transferred at a point in time.
An analysis of turnover by geographical market is given within Note 3.
3 Segment information
Operating segments are reported in a manner consistent with internal reporting
provided to the Chief Operating Decision Maker (CODM). The CODM has been
identified as the management team including the Chief Executive Officer and
Chief Financial Officer. The segmental analysis is based on the information
that the management team uses internally for the purpose of evaluating the
performance of operating segments and determining resource allocation between
segments.
The Group has 3 strategic divisions which are its reportable segments.
The Group has the below main divisions:
1) Tooling - Design, development and sale of tooling for the automotive
industry.
2) Production - Manufacturing and distributing serial production kinematic
interior parts for the automotive industry.
3) Head office - Manages group financing and capital management
The Group evaluates segmental performance on the basis of revenue and profit
or loss from operations calculated in accordance with IFRS.
Unaudited 6 months ended 30 June 2023
Tooling Production Head office Total
$'000 $'000 $'000 $'000
Revenue
Total revenue from customers 2,341 65,811 - 68,152
Depreciation and amortisation - (2,991) - (2,991)
Finance expense - (928) - (928)
________ ________ ________ ________
Group and segment Profit/(Loss) before tax and discontinued operations 295 5,088 (4,078) 1,305
________ ________ ________ ________
Unaudited 6 months ended 30 June 2022
Tooling Production Head office Total
$'000 $'000 $'000 $'000
Revenue
Total revenue from customers 1,923 52,272 - 54,195
Depreciation and amortisation - (2,973) - (2,973)
Finance expense - (824) (57) (881)
________ ________ ________ ________
Group and segment (Loss)/profit before tax and discontinued operations (1,035) (2,782) (5,193) (9,010)
________ ________ ________ ________
Year ended 31 December 2022
Tooling Production Head office Total
$'000 $'000 $'000 $'000
Revenue
Total revenue from customers 6,980 117,289 - 124,269
Depreciation and amortisation - (5,422) - (5,422)
Finance expense - (1,939) (58) (1,997)
________ ________ ________ ________
Group and segment (Loss)/profit before tax and discontinued operations 1,601 866 (21,288) (18,821)
________ ________ ________ ________
External revenue by location of customers
Unaudited 6 months to 30 June 2023 Unaudited 6 months to 30 June 2022 Year ended 31 December 2022
$'000 $'000 $'000
UK 11,760 7,119 16,603
US 13,414 14,376 27,640
China 8,071 8,464 18,415
Türkiye 6,627 5,619 12,806
Czechia 14,020 10,767 21,399
Brazil 1,956 2,021 3,567
Spain 1,190 2,708 4,692
Thailand 692 1,023 2,378
Other 10,422 2,098 16,769
__________ __________ __________
68,152 54,195 124,269
__________ __________ __________
4 Non-underlying items
Unaudited 6 months to 30 June 2023 Unaudited 6 months to 30 June 2022 Year ended 31 December 2022
$'000 $'000 $'000
AIM listing fees - 31 31
Release of previously capitalised tooling overheads 345 - -
Restructuring and margin improvement costs 884 - -
Impairment of Goodwill - - 1,158
Impact of applying IAS29 8 563 665
China housing fund contribution - - 453
Start-up costs in Mexico - - 1,738
Irrecoverable excess freight costs - 65 238
_______ _______ _______
Total 1,237 659 4,283
_______ _______ _______
Non-underlying items are items, which, due to their one-off, non-trading and
non-recurring nature, have been separately classified by the Directors in
order to draw them to the attention of the reader and allow for greater
understanding of the operating performance of the Group. Each item has been
identified and explained below:
Non-underlying items of $884,000 were incurred in connection with
restructuring and delivering margin improvement initiatives. These costs
included redundancies while optimising our manufacturing footprint in China
and Türkiye of $71,000, a write down of unviable stock as part of destocking
and distribution centre rationalisation programme of $350,000 and a $462,000
charge in relation to previously completed tooling projects.
The Group has been undertaking an exercise to improve reporting and
governance. This has resulted in a change in the method to estimate tooling
overheads, which will result in the release of previously capitalised
production overheads in relation to tooling projects. The amount for the
current financial period is $345,000.
Effective from 1 January 2022, the Group has applied IAS 29, Financial
Reporting in Hyperinflationary Economies for its subsidiary in Türkiye. The
impact of these adjustments in the period to 30 June 2023 increased reported
revenue by $477,000 (H1 22: $675,000), increased cost of sales by $326,000 (H1
22: $1,039,000), increased administrative expenses by $159,000 (H1 22:
$201,000) and increased other income by $nil (H1 22: $2,000).
5 Earnings/(Loss) per share
Unaudited 6 months to 30 June 2023 Unaudited 6 months to 30 June 2022 Year ended 31 December 2022
(restated)
Number Number Number
Weighted average number of equity shares (Note 17) 56,599,354 50,933,289 50,933,289
$ $ $
Profit/(Loss) for the period from continuing operations 954,000 (7,750,000) (21,875,000)
Cents Cents Cents
Basic and Diluted Profit/(Loss) per share from continuing operations 1.7 (15.2) (42.9)
Basic and Diluted Profit/(Loss) per share from discontinued operations
(0.7) (1.3) (5.5)
There are contingently issuable shares in existence (see Note 12) that can
result in diluted Earnings/(Loss) per share being different from basic
Earnings/(Loss) per share in 2023 and 2022.
The vesting conditions of these contingently issuable shares includes
earnings-based targets for the Group for the financial years ending 31
December 2023, 31 December 2024 and 31 December 2025. For the period ending
30 June 2023, earnings levels are below the threshold required under the share
options vesting conditions. If this level of earnings continued to the years
to which the vesting conditions relate, then the options would not meet their
vesting conditions. IAS 33 requires that the number of contingently issuable
shares included in the calculation of diluted earnings per share is based on
the number of shares issuable if the end of the reporting period were the end
of the contingency period and therefore no adjustments have been made for
these because not all necessary conditions of the contingently issuable shares
have been satisfied.
6 Property, plant and equipment
Plant and Fixtures Motor
equipment and fittings vehicles Total
$'000 $'000 $'000 $'000
Cost
Balance as at 1 January 2022 15,266 3,879 34 19,179
Hyperinflationary adjustment 406 179 - 585
Additions 1,811 1,053 - 2,864
Disposals (2,654) (464) (11) (3,129)
Effect of movements in foreign exchange (1,484) (372) - (1,856)
________ ________ ________ ________
Balance as at 31 December 2022 (audited) 13,345 4,275 23 17,643
Hyperinflationary adjustment on assets b/fwd to June 2023
995 737 - 1,732
________ ________ ________ ________
Balance at 1 January 2023 14,340 5,012 23 19,375
Additions 240 81 106 427
Disposals (546) - - (546)
Re-classifications 1,079 (1,221) 142 -
Reclassifications from ROU assets (834) - - (834)
Hyperinflationary adjustment 2 5 - 7
Effect of movements in foreign exchange (758) (438) (11) (1,207)
________ ________ ________ ________
Balance as at 30 June 2023 (unaudited) 13,523 3,439 260 17,222
________ ________ ________ ________
Depreciation
Balance at 1 January 2022 8,740 2,724 34 11,498
Hyperinflationary adjustment 146 115 - 261
Depreciation charge for the period 367 1,406 - 1,773
Disposals (1,826) (429) (11) (2,266)
Effect of movements in foreign exchange (719) (206) - (925)
________ ________ ________ ________
Balance as at 31 December 2022 (audited) 6,708 3,610 23 10,341
Hyperinflationary adjustment on assets b/fwd to June 2023
756 494 - 1,250
________ ________ ________ ________
Balance as at 1 January 2023 7,464 4,104 23 11,591
Depreciation charge for the period 280 443 95 818
Disposals (435) - - (435)
Reclassifications 743 (850) 107 -
Reclassifications from ROU assets (165) - - (165)
Hyperinflationary adjustment 39 28 - 67
Effect of movements in foreign exchange (558) (286) (9) (853)
________ ________ ________ ________
Balance as at 30 June 2023 (unaudited) 7,368 3,439 216 11,023
________ ________ ________ ________
Net book value
At 31 December 2022 (audited) 6,637 665 - 7,302
________ ________ ________ ________
At 30 June 2023 (unaudited) 6,155 - 44 6,199
________ ________ ________ ________
7 Inventories
Unaudited as at 30 June 2023 Unaudited as at 30 June 2022 As at 31 December 2022
(restated)
$'000 $'000 $'000
Raw materials and consumables 6,277 9,336 6,605
Work in progress 8,773 7,325 7,735
Finished goods 10,215 18,224 13,002
_______ _______ _______
25,265 34,885 27,342
_______ _______ _______
8 Trade and other receivables
Unaudited as at 30 June 2023 Unaudited as at 30 June 2022 As at 31 December 2022
$'000 $'000 $'000
Trade receivables 22,994 26,927 16,167
Other debtors 2,477 566 2,465
Loan receivables - - -
________ ________ ________
25,471 27,493 18,632
Prepayments and accrued income 7,500 13,359 8,248
________ ________ ________
Total trade and other receivables 32,971 40,852 26,880
________ ________ ________
The carrying value of trade and other receivables classified at amortised cost
approximates fair value.
The Group applies the IFRS 9 simplified approach to measuring expected credit
losses using a lifetime expected credit loss provision to trade receivables.
The expected loss rates are based on the Group's historical credit losses. Due
to the nature of the Group's customers no credit loss provision has been made
at the period end.
9 Loans and borrowings
Unaudited as at 30 June 2023 Unaudited as at 30 June 2022 As at 31 December 2022
$'000 $'000 $'000
Non-current liabilities
Non-current portion of finance lease liabilities (7,905) (6,436) (8,900)
________ ________ ________
(7,905) (6,436) (8,900)
________ ________ ________
Current liabilities
Current portion of secured bank loans (8,416) (9,132) (9,583)
Unsecure bank overdraft (1,109) (3,537) (358)
Invoice finance (7,076) (13,388) (7,117)
________ ________ ________
(16,601) (26,057) (17,058)
________ ________ ________
Current portion of finance lease liabilities (2,311) (2,050) (3,022)
________ ________ ________
(18,912) (28,107) (20,080)
________ ________ ________
(26,817) (34,543) (28,980)
________ ________ ________
10 Trade and other payables
Unaudited as at 30 June 2023 Unaudited as at 30 June 2022 As at 31 December 2022
$'000 $'000 $'000
Current
Trade payables 20,484 26,544 21,793
Non-trade payables and accrued expenses 11,077 11,418 10,266
Employee social security and taxes 1,605 661 2,449
Contract liabilities 2,689 7,112 4,118
Other payables 7,840 4,527 7,298
________ ________ ________
43,695 50,262 45,924
________ ________ ________
11 Related parties
Key Management personnel are those persons having authority and responsibility
for planning, directing and controlling the activities of the Group, including
the Directors of the Company.
The compensation of key management personnel (including the directors) is as
follows:
Unaudited 6 months to 30 June 2023 Unaudited 6 months to 30 June 2022 Year ended 31 December 2022
$'000 $'000 $'000
Key management remuneration including social security costs 783 646 1,240
Company contributions to money purchase pension plans 9 5 10
________ ________ ________
792 651 1,250
________ ________ ________
Unaudited 6 months to 30 June 2023 Unaudited 6 months to 30 June 2022 Year ended 31 December 2022
$'000 $'000 $'000
Directors' remuneration 595 646 1,099
Company contributions to money purchase pension plans 4 5 7
________ ________ ________
599 651 1,106
________ ________ ________
12 Share options
During 2022 CT Automotive Group PLC granted share options to 4 individuals.
Subject to vesting conditions, the Directors will have the option to acquire a
total of 3,022,852 Ordinary Shares at an exercise price of £0.005 per share.
The options will vest in 3 equal tranches on 23 December 2024, 23 December
2025 and 23 December 2026 subject to vesting conditions based on
earnings-based targets for the financial years ended 31 December 2023, 31
December 2024 and 31 December 2025.
As David Wilkinson left the Group in April 2023, 1,018,665 options which were
granted to him during 2022 were forfeited in 2023.
As at 30 June 2023 2,004,187 share options are outstanding.
13 Alternative performance measures
Alternative Performance Measures (APMs) are considered by the Directors to
better allow the readers of the accounts to understand the underlying
performance of the Group. The Directors also monitor these APMs to assess
financial performance throughout the period.
The APMs used by the Directors include:
- Underlying EBITDA - calculated as EBITDA adjusted for non-
underlying items
- Underlying EBITDA margin - calculated as underlying EBITDA divided
by revenue in the period
- Underlying operating profit - calculated as Operating profit/(loss)
adjusted for non-underlying items
- Underlying operating profit margin - calculated as underlying
operating profit divided by revenue in the period
- Underlying profit before tax - calculated as Profit before tax
adjusted for non-underlying items
- Underlying profit before tax margin - calculated as underlying
profit before tax divided by revenue in the period
EBITDA is calculated using Operating profit/(loss) before interest, taxes,
depreciation and amortisation.
Detail of each of the non-underlying items is disclosed in Note 4.
Underlying EBITDA and underlying EBITDA margin
Unaudited 6 months to 30 June 2023 Unaudited 6 months to 30 June 2022 Year ended 31 December 2022
$'000 $'000 $'000
Underlying EBITDA 6,671 (4,554) (7,129)
Non- underlying items
- AIM listing fees - (31) (31)
- Release of previously capitalised tooling overheads
(345) - -
- Restructuring and margin improvement costs (884) - -
- Impairment of Goodwill - - (1,158)
- Impact of applying IAS 29 (8) (563) (665)
- China housing fund contribution - - (453)
- Start-up costs in Mexico - - (1,738)
- Irrecoverable excess freight costs - (65) (238)
_______ _______ _______
EBITDA 5,434 (5,213) (11,412)
_______ _______ _______
Underlying EBITDA margin 9.8% (8.4%) (5.8%)
Underlying operating Profit/(Loss) and underlying operating profit margin
Unaudited 6 months to 30 June 2023 Unaudited 6 months to 30 June 2022 Year ended 31 December 2022
$'000 $'000 $'000
Underlying operating Profit/(Loss) 3,680 (7,527) (12,551)
Non-underlying items
- AIM listing fees - (31) (31)
- Release of previously capitalised tooling overheads
(345) - -
- Restructuring and margin improvement costs (884) - -
- Impairment of Goodwill - - (1,158)
- Impact of applying IAS 29 (8) (563) (665)
- China housing fund contribution - - (453)
- Start-up costs in Mexico - - (1,738)
- Irrecoverable excess freight costs - (65) (238)
_______ _______ _______
Operating Profit/(Loss) 2,443 (8,186) (16,834)
_______ _______ _______
Underlying operating Profit/(Loss) margin 5.4% (13.9%) (10.1%)
Underlying operating Profit/(Loss) and underlying operating profit margin
Unaudited 6 months to 30 June 2023
Unaudited 6 months to 30 June 2022
Year ended 31 December 2022
$'000
$'000
$'000
Underlying operating Profit/(Loss)
3,680
(7,527)
(12,551)
Non-underlying items
- AIM listing fees
-
(31)
(31)
- Release of previously capitalised tooling overheads
(345)
-
-
- Restructuring and margin improvement costs
(884)
-
-
- Impairment of Goodwill
-
-
(1,158)
- Impact of applying IAS 29
(8)
(563)
(665)
- China housing fund contribution
-
-
(453)
- Start-up costs in Mexico
-
-
(1,738)
- Irrecoverable excess freight costs
-
(65)
(238)
_______
_______
_______
Operating Profit/(Loss)
2,443
(8,186)
(16,834)
_______
_______
_______
Underlying operating Profit/(Loss) margin
5.4%
(13.9%)
(10.1%)
Underlying Profit/(Loss) before tax and underlying Profit/(Loss) before tax
margin
Unaudited 6 months to 30 June 2023 Unaudited 6 months to 30 June 2022 Year ended 31 December 2022
$'000 $'000 $'000
Underling Profit/(Loss) before tax 2,542 (8,351) (14,538)
Non-underlying items
- AIM listing fees - (31) (31)
- Release of previously capitalised tooling overheads
(345) - -
- Restructuring and margin improvement costs (884) - -
- Impairment of Goodwill - - (1,158)
- Impact of applying IAS 29 (8) (563) (665)
- China housing fund contribution - - (453)
- Start-up costs in Mexico - - (1,738)
- Irrecoverable excess freight costs - (65) (238)
_______ _______ _______
Profit/(Loss) before tax 1,305 (9,010) (18,821)
_______ _______ _______
Underlying Profit/(Loss) before tax margin 3.7% (15.4%) (11.7%)
14 Cash and cash equivalents
Cash and cash equivalents for purposes of the statement of cash flows
comprises:
Unaudited as at 30 June 2023 Unaudited as at 30 June 2022 As at 31 December 2022
$'000 $'000 $'000
Cash and cash equivalents 7,592 5,835 4,829
Unsecured bank overdraft (1,109) (3,537) (358)
________ ________ ________
6,483 2,298 4,471
________ ________ ________
15 Prior period restatement
As part of finalising FY22 year-end accounts, the Group has identified prior
period adjustments in relation to calculating the FY21 year-end inventory and
transfer of tooling assets from the Group balance sheet to cost of sales upon
the sale to the customer. Posting of the adjustments to FY21 year-end
balance sheet had a knock-on effect on previously announced H1 22 results.
The impact of posting the inventory adjustment resulted in an increase in the
cost of sales in the period to 30 June 2022 by $1,111,000 and reduced
inventories as at 30 June 2022 by $9,387,000. The impact of posting the
tooling adjustment resulted in the value reported in the cost of sales for the
period to 30 June 2022 reducing by $431,000 and the value of property, plant
and equipment decreasing by $2,196,000.
Therefore, the overall impact of prior period adjustments is an increase in
the cost of sales for the period to 30 June 2022 by $681,000 and a reduction
in net assets as at 30 June 2022 by $11,583,000 with a corresponding reduction
in brought forward reserves of $10,902,000.
16 Discontinued operations
On 30 September 2022, the Group made a decision to discontinue Chinatool
Automotive Systems Limited.
The results of discontinued operations, which have been included in the profit
for the period, were as follows:
Unaudited as at 30 June 2023 Unaudited as at 30 June 2022 As at 31 December 2022
$'000 $'000 $'000
Revenue - 3,027 3,985
Cost of sales - (3,629) (5,420)
Other income - 1 21
Distribution expenses - - (110)
Administrative expenses (365) (237) (1,276)
Net finance income / expense - (57) (93)
________ ________ ________
Profit before tax (365) (895) (2,739)
Attributable tax (expense)/credit (2) 224 (49)
________ ________ ________
Loss on disposal of discontinued operations (367) (671) (2,789)
________ ________ ________
There were no significant external cash inflows or outflows during the six
months ended 30 June 2023 in relation to discontinued operations.
Assets and liabilities of Chinatool Automotive Systems have not been
classified as held for sale as at 30 June 2023 because all short-term assets
and liabilities are expected to be either settled or transferred to continuing
Group operations. These are included within the respective Group assets and
liabilities and are as follows:
Unaudited as at 30 June 2023 Unaudited as at 30 June 2022 As at 31 December
2022
$'000 $'000s $'000
Assets
Property, plant and equipment - 166 68
Right of use assets - 727 98
Inventories - 1,250 219
Trade and other receivables 23 8,131 171
Deferred tax liability - 173 -
Cash 4 43 34
_______ _______ _______
Total assets 27 10,490 590
Liabilities
Trade and other payables (1,684) (7,786) (810)
Overdraft - (1,497) (153)
Lease liability (333) (616) (494)
Current tax liability - (91) (46)
Deferred tax liability (90) - (37)
________ _______ ________
Total liabilities (2,107) (9,990) (1,540)
________ _______ ________
Net (liabilities)/ assets (2,080) 500 (950)
________ ________ ________
17 Share capital issue
On 27 April 2023 the Group undertook a fundraise and achieved total gross
proceeds of $9,623,000 (before transaction costs of $502,000).
The fundraising was completed through a combination of subscription and
placement of 22,664,259 new ordinary shares at an issue price of 34 pence per
share. The new ordinary shares represent approximately 44% of the existing
issued share capital.
The proceeds of the fund raise have been recognised within Share Capital
($142,000) and Share Premium ($8,979,000), after transaction costs.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END IR FLFSDALIIFIVRecent news on CT Automotive
See all newsREG - CT Automotive Group - Notice of Results and Investor Presentation
AnnouncementREG - CT Automotive Group - Director/PDMR Dealings
AnnouncementREG - CT Automotive Group - Director/PDMR Shareholding
AnnouncementREG - CT Automotive Group - Director/PDMR Shareholding
AnnouncementREG - CT Automotive Group - Trading Statement
Announcement