Earnings Release • Dec 11, 2019
Earnings Release
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Autins Group PLC
11 December 2019
11 December 2019
Autins Group plc
(the "Company" or the "Group")
Audited Final Results for the year ended 30 September 2019
Autins Group plc (AIM: AUTG), a leading designer, manufacturer and supplier of acoustic and thermal insulation solutions for the automotive sector, is pleased to announce its audited results for the year ended 30 September 2019.
Financial Overview
· Revenue decreased to £26.9 million (FY18: £29.2 million)
· Gross profit increased to £7.5 million (FY18: £7.2 million)
· Adjusted EBITDA1 improved to breakeven (FY18: loss of £0.3 million)
· Adjusted operating loss1 of £0.8 million (FY18: loss of £1.0 million)
· Reported loss after tax1 of £1.5 million (FY18: loss of £1.4 million)
· Net debt2 of £2.3 million (FY18: £4.2 million)
· Reported loss per share of 6.25 pence per share (FY18: loss per share 6.14 pence per share)
1 Adjusted EBITDA excludes exceptional costs of £0.4 million (FY18: £0.2 million), and £nil (FY18: £0.4 million) of non-recurring Neptune start-up costs. Adjusted operating profit and loss before tax additionally excludes £0.2 million of amortisation in both years and an impairment of £0.1m in FY19
2 Cash less bank overdrafts, invoice discounting and hire purchase finance.
Operational Highlights
· Positive EBITDA in H2 19 as a result of improved margin and lower overheads
· Gross margin increased to 27.8% (FY18: 24.8%) arising from labour control measures and material savings
· Cost reduction exercise completed in full with c£1.0m of overhead cost removed from the business
· Neptune pipeline increased to £35m with £5.0m (annualised) of Neptune parts in production and £1.5m p.a. won but not yet in production
· Revenue in Germany increased by 23% to £4.3 million (FY18: £3.4 million) with further share growth of a multiplatform part for a major European OEM and continued growth of acoustic flooring products
Gareth Kaminski-Cook, Chief Executive, said:
"Despite the considerable challenges faced by the automotive industry, decisive management action ensured that 2019 was a year of recovery, repositioning and new business wins. We were successful in securing 22 new customers, achieving 14% growth in Europe and delivering a significant increase in sales of the Neptune technology. This positive momentum is encouraging and provides grounds for optimism for the future"
For further information please contact:
| Autins Group plc Adam Attwood, Non-Executive Chairman Gareth Kaminski-Cook, Chief Executive James Larner, Chief Financial Officer |
Via Newgate |
| N+1 Singer (Nominated Adviser and Broker) Mark Taylor / Lauren Kettle (Corporate Finance) Mia Gardner (Corporate Broking) |
Tel: 020 7496 3000 |
| Newgate Communications (Financial PR) Adam Lloyd Tom Carnegie |
Tel: 020 7653 9850 |
About Autins
Autins specialises in the design, manufacture and supply of acoustic and thermal insulation solutions primarily in the automotive sector but with an increasing focus on other sectors, including, flooring, building and wider industrial applications.
The Group is one of the leading suppliers of noise and heat management products in the automotive market, producing and supplying a broad range of support to some of the world's leading vehicle manufacturers.
Chairman's Statement
Financial Performance
Group sales for the year were £26.9m, 8.1% down on 2018 and strongly influenced by the challenging trading conditions in the automotive industry. In particular, we have seen additional OEM factory shutdowns and demand affected by uncertainty over the future of diesel vehicles. Against this backdrop, it is pleasing to note that sales at our German subsidiary increased by 23% to £4.3m.
Roll sales of our proprietary Neptune material and components more than doubled in the year. Neptune is enabling the Group to develop sales opportunities with new OEMs and their Tier 1 suppliers that over time will see us to grow our market share in the European automotive NVH market.
Our focus on operational improvement continued with gross margin increasing to 27.8% in 2019 compared to 24.8% in 2018. The second half of 2019 produced a gross margin of 29.1% compared to 22.2% in the same period in 2018. This operational improvement significantly supports and accelerates our progress to a return to profitability across the Group, as it did at EBITDA level in the second half.
Following a successful placing of new shares in August, raising net proceeds of £3.3 million, our net debt improved in 2019 to £2.3m from £4.2m. The additional funding enables us to support organic growth in mainland Europe, drive operational efficiency through investment in automation and support the Group's enhanced working capital commitments due to Brexit planning.
Strategy
In June 2019, the Board conducted its annual review of the Group's strategy and the key drivers in our markets. Although the automotive market is undergoing a period of significant change, this also represents a significant opportunity for the Group. Electric vehicles have significant noise, vibration and harshness (NVH) challenges and the Group is committed to being at the forefront of providing creative, high performance and financially compelling solutions for our key OEM clients across Europe.
We are committed to becoming one of the leading European specialists in NVH solutions for electric vehicle manufacturers. Our specialist knowledge of acoustic and thermal management within the vehicle enables us to design and develop new NVH solutions specific to electric vehicles in collaboration with vehicle manufacturers and their Tier 1 suppliers. Our proprietary Neptune material is ideally suited for these applications due to its specific acoustic and thermal performance and its significantly lighter weight.
Now more than ever, automotive OEMs demand their suppliers to be flexible and deliver high levels of operational efficiency. Autins' operational focus has always been to deliver highly responsive automated manufacturing and we will continue to ensure that our products remain attractive to our customers by offering the highest levels of product performance, quality and cost effectiveness.
We are also committed to improving further the environmental impact of our product range by increasing recycled content, recycling waste more efficiently and developing ways to eliminate certain products from our production process.
People
Our staff are our most important asset. It is their energy, experience and creativity that drives the Group forward. Under the leadership of our Chief Executive, Gareth Kaminski-Cook, who joined on 1 October 2018, there is a renewed energy throughout the business, galvanized through our core values. I would like to thank all staff for their commitment and enthusiasm throughout the year.
We have strengthened our manufacturing operations leadership team during the year, and this investment has brought new focus and expertise and is translating into improved operating and financial performance.
In July, we welcomed Neil MacDonald to the Board as Non-Executive Director and Chairman of the Audit Committee. Neil replaces Terry Garthwaite, who sadly died in April and was a much respected member of the Board since the Group's listing on AIM in 2016.
Corporate Governance
The Board strongly believes that robust corporate governance and risk management improves the strategic delivery and financial health of the Group. We apply the Quoted Companies Alliance Corporate Governance Code (the "QCA Code").
Further details on how the Group complies with the principles of the QCA Code can be found in the annual report.
Dividend
The Board continues to believe that a suspension of dividend payments remains appropriate. Accordingly, no final dividend payment is proposed.
The Board will continue to monitor net earnings, gearing levels, expected capital requirements and growth opportunities with a view to reinstating its progressive dividend policy at the appropriate time.
Outlook
The Group is well positioned. We will continue to focus on operational improvement, sales growth and new market development. Despite market and political uncertainties, the Board anticipates that the Group will maintain positive momentum and continue its financial recovery in 2020.
| Adam Attwood | |
| Chairman |
11 December 2019
Chief Executive's statement
Autins is a specialist materials technology company, supplying acoustic and thermal solutions primarily for the automotive market. We also supply solutions for a variety of specialist niche applications including flooring and industrial. Controlling noise pollution and thermal waste is a fast growing and attractive market for which Autins' technical expertise, broad range of materials knowledge and conversion capability is perfectly suited and highly regarded.
Our strategic objectives were further refined in 2019. The Group's priorities are to optimise our
technical capability, grow market share in the automotive NVH market and to leverage our unique
Neptune technology to secure new customers, target new markets and build our reputation across
Europe. In very challenging market conditions, the financial performance of the Group has improved
throughout the year and very positive momentum is being achieved with new customer wins and
growth in the Neptune business.
Margin improvement
The Board's primary focus for 2019 was to turnaround a declining financial performance by
reducing overheads and improving operating margins. Despite some reduction in demand for our
products, driven by uncertain market conditions, the business has managed to significantly improve
margins throughout the year and deliver a small positive adjusted EBITDA for the period. Importantly,
this has been achieved whilst maintaining our world class levels of quality and customer service
There are significant opportunities to further improve profitability. The new and highly motivated operational team has a well organised and targeted plan to further improve operational efficiencies and reduce costs which is already underway and delivering results. With a strengthened culture of teamwork and accountability we expect to deliver improving results throughout the coming year.
Growing the customer base
Our principal strategic focus has been to secure new customers and new markets across Europe
and we have continued to make excellent progress. During 2019, we successfully secured
22 new customers in several different markets, such as automotive, with both OEMs and Tier 1
suppliers, as well as in flooring and industrial applications. These new customer wins include
global OEM brands and large Tier 1 suppliers.
Although the challenges faced by our major customer had a negative impact on sales, our overall share of wallet across all UK customers grew during the period. Our success in delivering increased market penetration was a direct result of the Board's long-term strategic commitment to our unique Neptune technology offering and the increasing reputation of our technical commercial team, all backed up by world class customer service and product quality.
Sales in Europe have continued to grow, up 14% year on year, with Germany forging ahead by 23%. European sales now represent 19% of the Groups revenue, compared to 17% last year. The enquiry pipeline is very strong and continues to expand, having grown 26% to c.£45m in the year. This combined with our strong track record of converting the pipeline into sales, underpins our European growth strategy going forward.
Leverage Neptune Technology
Our Neptune based products provide the same acoustic absorption capability as existing alternative solutions but with material and weight savings of up to 40%. The enthusiastic response we received when introducing Neptune to customers a year ago has now been translated into sales and production, whilst the enquiry pipeline value continues to grow by more than 60% year on year. The technical superiority of Neptune and the solutions it offers has strengthened our relationship with existing customers as well as opening the doors to new significant opportunities in the markets we
have targeted.
The exceptional performance and lightweight properties combined with our consultative design and development capability is particularly relevant to the emerging EV market. This has resulted in Autins supplying or being specified on numerous vehicles including Jaguar Land Rover's I-Pace, Volvo's Polestar, the London Taxi made by LEVC, AMG's Project One and BMW's i8 Spyder.
Optimism for the future
We have strong, specialist capabilities and an agile business model with which to serve the fast growing automotive NVH market and other important areas where noise and thermal energy
control are becoming more important.
As the automotive industry increasingly focuses on passenger experience and comfort, we are perfectly placed to help solve the new technical challenges facing designers, by offering new, innovative and green solutions to control noise and improve thermal efficiency. The Group's technical capability, broad product offering, and materials expertise means we are strongly positioned to create further value for our shareholders through continuous margin improvement, organic growth and leveraging our unique Neptune technology.
This has been a challenging year both for the group and the industries we serve. It has also been a year of repositioning, recovery and new business wins. We are in a strong position to make the most of the opportunities ahead. The positive momentum we have already generated is encouraging and provides grounds for optimism for the future.
| Gareth Kaminski-Cook |
| Chief Executive |
11 December 2019
Financial Review
The Group's primary focus in the year was to reduce costs and working capital usage whilst retaining core skills and operational capability to allow for future growth as demand in the automotive sector normalised.
Progress was made in many areas which resulted in the Group's successful equity raise in August which provided net proceeds of £3.3 million (net of £0.2 million costs) to support future working capital and investments to facilitate growth and operational efficiency. In the near term, this funding allows for reduced utilisation of the Group's banking facilities with associated savings in interest costs.
Revenue
During 2019, reduced general automotive sector demand, combined with specific pressures and model changes at the Group's largest customer, meant that total revenue decreased by 8.1% to £26.9 million (FY18: £29.2 million).
Component sales decreased 9.9% to £25.5 million (FY18: £28.3 million). We continued, in line with our overall diversification strategy, to expand our customer base, with new contracts secured for future periods. Direct component sales to the Group's largest customer accounted for 57% of Group revenue (FY18: 58%).
Revenue from acoustic flooring products grew 8% to £1.5 million (FY18: £1.4 million). As in FY18, this growth was achieved by the German business with continued development of the customer base and product range. Following a fundamental design change by a customer in the building and industrial applications sector sales fell £0.3m to £0.5m and are expected to discontinue in FY20.
UK automotive component sales fell 15% to £19.5 million (FY18: £23.0 million) with a reduced revenue in H2 compared to H1 as a result of extended shutdowns following the original Brexit date of 29 March, certain platforms ceasing production and reductions due to facelifts and relaunches of certain other vehicles. Sales to our largest customer were again below expectations compared to initial forecasts.
The German business continued to grow with revenues increasing by 23% on the prior year to £4.3 million. We continue to target large German OEMs with Neptune being a key differentiator which has secured new work for future periods with central European Tiers who support a range of OEMs.
Swedish automotive revenues were adversely affected by reduced export sales and a significant delay to the start of production for the new contracts noted in last year's report. Revenues therefore decreased 11% to £1.0 million (FY18: £1.1 million) in the year. Management remain confident of the site's strategic importance and expect that new parts with Volvo will be in production during FY20.
Tooling sales increased to £1.4 million (FY18: £0.9 million) reflecting the strong order intake within the year. The Group had £0.3 million (FY18: £0.2 million) of tooling held for resale at the year-end which will be converted into revenue during Q1 of FY20.
Gross Margin
Component gross margins recovered to 27.8% (FY18: 24.8%) as a result of significant focus on operational efficiencies.
Management's continued focus on operational efficiency, standardisation and flexibility has allowed for an improved response to customer demand fluctuations and reduced overall costs to serve. Future improvements from automation and improved site layouts are expected to deliver savings during FY20.
The Group continues to pursue opportunities to secure component contracts using Neptune materials (either solely or in composite with other materials) which will increase utilisation of the production line and thus reduced unit costs. The Group saw significant benefits from working with its supply chain on material costs, design and utilisation in the year and continues to work with suppliers to take further steps to optimise existing and future component requirements.
EBITDA and operating profit
Adjusted EBITDA was breakeven (FY18: Loss of £0.3 million) with an adjusted operating loss of £0.8 million (FY18: £1.0 million) after allowing for exceptional and non-recurring costs as noted below. Reported operating loss was £1.55 million (FY18: £1.84 million)
The adjusted measures are stated after excluding items that management consider to be a result of significant one-off events, start-up costs in relation to the Group's Neptune facility, performance of the joint venture business and differences in accounting treatments that arose on the Group's conversion to IFRS at the time of listing. Management information used in running the Group is measured with a focus on the underlying performance and, as such, these items are excluded.
The Board acknowledge that these are alternative measures of performance and are not GAAP (nor are they intended to be) but believe these adjusted measures are more indicative of the performance of the underlying business and informative to users of the accounts.
Reported EBITDA was a loss of £0.4 million (FY18: loss of £0.9 million) after charging £0.43 million (FY18: £0.23 million) of exceptional costs, and £nil (FY18: £0.4 million) of non-recurring incremental start-up costs for the Neptune facility.
Exceptional and adjusting items
The Group incurred exceptional remuneration, redundancy and associated costs of £0.43m (FY18: £nil) as a result of the overhead cost reduction programme announced in October 2018 and completed in the year, and subsequent work with the Group's banks to rebalance existing facilities into a form that was more suited for the period of variable demand expected, and subsequently experienced, during the second half of the year.
In FY18, the Group incurred exceptional remuneration and associated costs of £0.15 million as a result of the resignation of the former Chief Executive Officer, Michael Jennings, on 15 March 2018, and subsequent appointment of Gareth Kaminski-Cook as well as £0.1m in early termination charges on leased management offices that were no longer in use and considered onerous.
In FY18, the Group concluded the commissioning process for the Neptune production facility after incurring £0.36 million (FY19: £nil) of non-recurring start-up costs. These costs were excluded from adjusted EBITDA and operating profit in the year.
To be consistent with analysts' measure of the group's performance amortisation of £0.2 million (FY18: £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) and an impairment of previously recognised development costs of £0.1m (FY18: £nil) have been excluded from adjusted operating profit.
Joint Ventures
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 access to low cost material and finished component sources provided by its other parent Indica Industries PV based in India.
Indica Automotive's turnover decreased by 13% to £2.9m (FY18: £3.3m) as call offs for existing parts were reduced but with strong margin and overhead cost control delivered a profit after tax of £0.4m (FY18: £0.4m).
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 Kronor 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. Whilst the Group has taken steps to mitigate this risk by establishing alternative sources for non-patented product (which would be transacted in Euro), the quantum of US dollar transactions is expected to increase in the near term.
The Group continues to benefit from a natural hedging arising from its structure and trading balance which mean that the Group's result in both years 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 part of the Neptune production ramp-up, 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
Costs were increased in the year as the Group increased its utilisation of bank facilities following the losses in H2 18 and through the cost reduction programme in H1 19. In addition, contingency inventory was held in preparation for the anticipated Brexit deadline of March 2019 to ensure continuity of supply which further increased working capital borrowing.
The interest element of hire purchase agreements was stable in the year but should decrease in FY20 as a number of agreements become fully repaid.
An analysis of the net finance expense is presented in note 4.
Taxation
The effective tax rate in the year was below that expected based on current UK corporation tax levels. Given the quantum of prior year losses recognised and expected profitability in the next two years, the Group has chosen to not recognise current year losses as a deferred taxation asset. The asset created in the prior year has been reviewed and 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 and processes. Following the Group's cost reduction programme in October 2018, the multi-horizon development plan developed in FY18 was refocussed on items that could bring more immediate benefit to the Group with less resource applied. However, sufficient R&D has continued for management to maintain their belief that the enhanced reliefs, combined with available brought forward losses, will mean that the effective tax rate will remain below the UK statutory level for the short to medium term.
As reported previously, the Group's overseas subsidiaries continue to have significant taxable losses available which will, in the short term, offset expected trading profits in Sweden and Germany that are higher relative corporation tax territories than the UK. Having reviewed recent trading performance for the European entities, the Group has increased the tax asset recognised by £0.05m in relation to these losses. The Group has a further £0.13 million (FY18: £0.1 million) unrecognised tax asset in respect of European losses
Earnings per share
Loss per share was 6.25 pence (FY18: Loss per share 6.14 pence) reflecting the loss in the year. The weighted average number of shares increased to 23,971,000 in the year reflecting the effect of the placing of 17,500,000 new shares on 22 August 2019 (FY18: 22,100,984). Calculations of earnings per share, including the potential dilution arising from the senior management share option scheme in future periods, are presented in note 5.
Dividends
The Board are not proposing a final dividend for the current year (FY18: £nil) and no interim dividend (FY18: £0.004 per share) was paid.
Net Cash/(Debt) and working capital
The Group ended the year with net debt of £2.3 million (FY18: £4.2 million) as disclosed in the reconciliation of movements in cash and financing liabilities after a net £3.3m cash injection following the equity placing in August 2019
The Group has £0.5 million (FY18: £0.9 million) of Hire Purchase agreements in the UK and £0.1 million (FY18: £0.2 million) of long-term asset backed bank loans in Sweden - these loans will be fully repaid in FY20. There were £nil (FY18: £0.5 million) of new hire purchase agreements in the year and £0.1m of new short-term trade import facility was utilised at the year-end in support of Neptune purchases.
The Group has focused on working capital optimisation in the year and management of materials through the entire supply chain has therefore improved. This can be clearly seen with inventory being £0.4 million lower than FY18 supporting similar revenue in the final quarter. Tooling contract balances remained unchanged at £0.2 million and represent projects that will be invoiced in early FY20.
Collection of trade debtors improved in the year with a reduction of overdue balances from additional focus and applied resource. A provision of £0.2 million (FY18: £0.2 million) has been retained against overdue invoices which the Group continues to pursue.
Trade creditors have reduced significantly in the year with the Group removing stretch agreed with suppliers ahead of the benefits arising from the cost reduction programme combined with a change in balance between employed and temporary production labour reducing amounts outstanding to temporary staff agencies at year-end.
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 the Group's results on the basis of a Going Concern.
The Group received a net cash injection of £3.3m in August 2019 as a result of an equity placing and this, combined with continued support from the Group's primary and supporting banks mean that the Group has significant headroom within its facilities to allow for reasonably foreseeable cash flow requirements in the event of changes to its demand or cost base.
The Board continues to review the structure of the Group's banking arrangements with a view to ensuring that it remains appropriate for the planned growth within mainland Europe and to allow for the more variable demand that has become a feature of the automotive market in the last 18 months. The Group's current banking remains without covenant.
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 the second 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 2019 (both existing and generated in the year) by reference to discounted cash flow forecasts for separately identifiable cash generating units. These forecasts are based on Board approved budgets and 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 £0.2 million (FY18: £1.1 million) in the year with no significant single item 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 efficiency is ongoing and the Board expects expenditure to be incurred in the second half of FY20 in support of such operational gains.
Research and development costs of £0.15m (FY18: £0.2m) 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 focussed on targeted projects designed to enhance the Group's current material range and capability after changes to the in-house technical team required a review of the overall Research and Product Development plan developed in FY18. As noted in the exceptional and adjusting items section above, during the year previously capitalised costs of £0.1m were impaired when it became clear that, due to a change in customer design, the development was no longer commercially viable and so would fail the Group's recognition criteria.
Financial risk management
Details of our financial risk management policies will be outlined within the Annual Report and Accounts.
James Larner
Chief Financial Officer
11 December 2019
| ## For the year ended 30 September 2019 | Note | 2019 £000 |
2018 £000 |
||
| Revenue | 2 | 26,860 | 29,243 | ||
| Cost of sales | (19,403) | (21,996) | |||
| Gross profit | 7,457 | 7,247 | |||
| Other operating income | - | 39 | |||
| Distribution expenses | (734) | (846) | |||
| Administrative expenses excluding exceptional costs and amortisation | (7,608) | (7,804) | |||
| Amortisation of acquired intangible assets | (237) | (237) | |||
| Other exceptional operating costs | (433) | (234) | |||
| Total administrative expenses | (8,278) | (8,275) | |||
| Operating loss | 3 | (1,555) | (1,835) | ||
| Finance expense | 4 | (192) | (118) | ||
| Share of post-tax profit of joimjoint |
|||||
| equity accounted joint ventures | 203 | 219 | |||
| Loss before tax | (1,544) | (1,734) | |||
| Tax credit | 45 | 376 | |||
| Loss after tax for the year | (1,499) | (1,358) | |||
| Earnings per share for loss attributable to the owners of the parent during the year | |||||
| Basic (pence) | 5 | (6.25)p | (6.14)p | ||
| Diluted (pence) | 5 | (6.25)p | (6.14)p |
All amounts relate to continuing operations.
| ## For the year ended 30 September 2019 | 2019 £000 |
2018 £000 |
|||
| Loss after tax for the year | (1,499) | (1,358) | |||
| Other comprehensive income | |||||
| Items that may be reclassified subsequently to profit or loss | |||||
| Currency translation differences on foreign operations | (15) | (27) | |||
| Total comprehensive expense for the year | (1,514) | (1,385) | |||
| As at 30 September 2019 | 2019 £000 |
2018 £000 (restated) |
||
| Non-current assets | ||||
| Property, plant and equipment | 10,727 | 11,282 | ||
| Intangible assets | 3,493 | 3,767 | ||
| Investments in equity-accounted | ||||
| joint ventures | 217 | 204 | ||
| Deferred tax asset | 223 | 371 | ||
| Total non-current assets | 14,660 | 15,624 | ||
| Current assets | ||||
| Inventories | 1,961 | 2,322 | ||
| Trade and other receivables | 6,729 | 6,994 | ||
| Cash in hand and at bank | 3,132 | 91 | ||
| Total current assets | 11,822 | 9,407 | ||
| Total assets | 26,482 | 25,031 | ||
| Current liabilities | ||||
| Trade and other payables | 4,635 | 5,910 | ||
| Loans and borrowings | 5,143 | 3,713 | ||
| Total current liabilities | 9,778 | 9,623 | ||
| Non-current liabilities | ||||
| Trade and other payables | 115 | 115 | ||
| Loans and borrowings | 301 | 602 | ||
| Deferred tax liability | 185 | 379 | ||
| Total non-current liabilities | 601 | 1,096 | ||
| Total liabilities | 10,379 | 10,719 | ||
| Net assets | 16,103 | 14,312 | ||
| Equity attributable to equity | ||||
| holders of the company | ||||
| Share capital | 792 | 442 | ||
| Share premium account | 15,883 | 12,938 | ||
| Other reserves | 1,886 | 1,886 | ||
| Currency differences reserve | (145) | (130) | ||
| Profit and loss account | (2,313) | (824) | ||
| Total equity | 16,103 | 14,312 | ||
| 2019 £000 |
2018 £000 (restated) |
|
| Operating activities | ||
| Loss after tax | (1,499) | (1,358) |
| Adjustments for: | ||
| Income tax | (45) | (376) |
| Finance expense | 192 | 118 |
| Employee share based payment charge | 10 | 19 |
| Depreciation of property, plant and equipment | 800 | 649 |
| Amortisation and impairment of intangible assets | 352 | 264 |
| Share of post-tax profit of equity accounted joint ventures | (203) | (219) |
| (393) | (903) | |
| Decrease in trade and other receivables | 249 | 352 |
| Decrease/(increase) in inventories | 361 | (459) |
| (Decrease)/increase in trade and other payables | (1,229) | 53 |
| (619) | (54) | |
| Cash used in operations | (1,012) | (957) |
| Income taxes received | 15 | 182 |
| Net cash flows from operating activities | (997) | (775) |
| Investing activities | ||
| Purchase of property, plant and equipment | (232) | (890) |
| Purchase of intangible assets | (152) | (221) |
| Dividend received from equity-accounted for joint venture | 190 | 258 |
| Net cash used in investing activities | (194) | (853) |
| Financing activities | ||
| Interest paid | (192) | (118) |
| Issue of shares | 3,500 | - |
| Share issue expenses paid | (205) | - |
| Bank loans advanced | 127 | - |
| Bank loans repaid | (151) | (165) |
| Finance lease advances | - | 355 |
| Hire purchase and finance leases repaid | (432) | (472) |
| Increase in invoice discounting | 736 | 781 |
| Dividends paid | - | (265) |
| Net cash from financing activities | 3,383 | 116 |
| Net increase/(decrease) in cash and cash equivalents | 2,192 | (1,512) |
| Cash and cash equivalents at beginning of year | (67) | 1,445 |
| Cash and cash equivalents at end of year | 2,125 | (67) |
| 2019 £000 |
2018 £000 |
|
| Cash and cash equivalents comprise: | ||
| Cash balances | 3,132 | 91 |
| Bank overdrafts | (1,007) | (158) |
| 2,125 | (67) | |
Non cash transactions
The Group acquired plant and equipment at a cost of £nil (2018: £528,000) under hire purchase arrangements which has been shown net in the consolidated statement of cash flows.
| Year ended 30 September 2019 | Opening £000 |
Cash flows £000 |
Non-cash movements £000 |
Closing £000 |
| Cash and cash equivalents | ||||
| Cash balances | 91 | 3,041 | - | 3,132 |
| Bank overdrafts | (158) | (849) | - | (1,007) |
| (67) | 2,192 | - | 2,125 | |
| Financing liabilities | ||||
| Invoice discounting | (2,980) | (736) | - | (3,716) |
| Bank loans | (240) | 24 | - | (216) |
| Hire purchase liabilities | (937) | 432 | - | (505) |
| Financing | (4,157) | (280) | - | (4,437) |
| (4,224) | 1,912 | - | (2,312) | |
| Year ended 30 September 2018 | Opening £000 |
Cash flows £000 |
Non-cash movements £000 |
Closing £000 |
| Cash and cash equivalents | ||||
| Cash balances | 1,625 | (1,534) | - | 91 |
| Bank overdrafts | (180) | 22 | - | (158) |
| 1,445 | (1,512) | - | (67) | |
| Financing liabilities | ||||
| Invoice discounting | (2,199) | (781) | - | (2,980) |
| Bank loans | (405) | 165 | - | (240) |
| Hire purchase liabilities | (881) | 472 | (528) | (937) |
| Financing | (3,485) | (144) | (528) | (4,157) |
| (2,040) | (1,656) | (528) | (4,224) |
| Share | Cumulative currency | |||||
| Share | premium | Other | differences | Retained | Total | |
| capital | account capital |
reserves | reserve | earnings | equity | |
| £000 | £000 | £000 | £000 | £000 | £000 | |
| Equi | ||||||
| At 1 October 2018 | 442 | 12,938 | 1,886 | (130) | (824) | 14,312 |
| Comprehensive expense for the year | ||||||
| Loss for the year | - | - | - | - | (1,499) | (1,499) |
| Other comprehensive expense | - | - | - | (15) | - | (15) |
| Total comprehensive expense for the year | - | - | - | (15) | (1,499) | (1,514) |
| Contributions by and distributions to owners | ||||||
| Shares issued | 350 | 3,150 | - | - | - | 3,500 |
| Share issue expenses | - | (205) | - | - | - | (205) |
| Share based payment | - | - | - | - | 10 | 10 |
| Total contributions by and distributions to owners | 350 | 2,945 | - | - | 10 | 3,305 |
| At 30 September 2019 | 792 | 15,883 | 1,886 | (145) | (2,313) | 16,103 |
The cumulative currency differences reserve may be reclassified subsequently to profit and loss.
While the financial information included in this annual financial results announcement has been prepared in accordance with the recognition and measurement principles of International Financial Reporting Standards as endorsed for use in the European Union (IFRSs), this announcement does not contain sufficient information to comply fully with IFRSs.
The financial information set out above does not constitute the Company's statutory accounts for the years ended 30 September 2019 or 2018 but is derived from those accounts. Statutory accounts for the year ended 30 September 2018 have been delivered to the Registrar of Companies and those for the year ended 30 September 2019 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 2019 and 30 September 2018 did not contain statements under s498 (2) or (3) of the Companies Act 2006.
The consolidated financial statements incorporate the results of business combinations using the acquisition method. In the statement of financial position, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date.
The consolidated financial statements present the results of the Company and its subsidiaries ("the Group") as if they formed a single entity. Intercompany transactions and balances between Group companies are therefore eliminated in full.
The following new standards have been adopted in these financial results.
IFRS 15 Revenue from Contracts with Customers
There has been no effect in the recognition or reporting of the Group's revenue with the point when the customer obtains control judged to be at the same point as that arising from the previous standard's principles in respect of the risks and rewards of ownership passing to the customer. However, the classification of tooling balances, which were previously reported in inventories, has changed within the statement of financial position.
IFRS 9 Financial instruments
The Board has considered the potential impact of the introduction of IFRS9 applied retrospectively with the simplified approach adopted in respect of expected credit losses on trade receivables. The Board has determined that historic collection levels for trade debt do not suggest an expectation of loss and there is therefore no significant impact on numbers reported in the financial statements for the year ended 30 September 2019 or as previously presented.
Subsidiaries are all entities over which the Group has control. The Group controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group and cease to be consolidated from the date on which control is transferred out of the Group. Any non-controlling interest in a subsidiary entity is recognised at a proportionate share of the subsidiary's net assets or liabilities. On acquisition of a non-controlling interest, the difference between the consideration paid and the non-controlling interest at that date is taken to equity reserves.
| 2019 £000 |
2018 £000 |
|
| Revenue, recognised at a point in time, arises from: | ||
| Sales of components | 25,411 | 28,322 |
| Sales of tooling | 1,449 | 921 |
| 26,860 | 29,243 |
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 as they individually do not have a significant impact on the Group result. These segments have no significant 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 Group evaluates performance on the basis of operating profit/(loss). Automotive NVH 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 building products are included within the others segment. Neither element is considered significant.
Segmental analysis for the year ended 30 September 2019
| Automotive NVH £000 |
Others £000 |
2019 Total £000 |
|
| Group's revenue per consolidated statement of comprehensive income | 24,841 | 2,019 | 26,860 |
| Depreciation | 800 | - | 800 |
| Amortisation and impairment | 280 | 72 | 352 |
| Segment operating (loss)/profit | (1,584) | 29 | (1,555) |
| Finance expense | (192) | ||
| Share of post-tax profit of equity accounted joint ventures | 203 | ||
| Group loss before tax | (1,544) | ||
| Additions to non-current assets | 384 | - | 384 |
| Reportable segment assets | 26,265 | - | 26,265 |
| Investment in joint ventures | 217 | - | 217 |
| Reportable segment assets/total Group assets | 26,482 | - | 26,482 |
| Reportable segment liabilities/total Group liabilities | 10,379 | - | 10,379 |
Segmental analysis for the year ended 30 September 2018
| Automotive NVH £000 |
Others £000 |
2018 Total £000 |
|
| Group's revenue per consolidated statement of comprehensive income | 27,057 | 2,186 | 29,243 |
| Depreciation | 649 | - | 649 |
| Amortisation | 264 | - | 264 |
| Segment operating (loss)/profit | (1,944) | 109 | (1,835) |
| Finance expense | (118) | ||
| Share of post-tax profit of equity accounted joint ventures | 219 | ||
| Group loss before tax | (1,734) | ||
| Additions to non-current assets | 1,704 | - | 1,704 |
| Reportable segment assets | 24,827 | - | 24,827 |
| Investment in joint ventures | 204 | - | 204 |
| Reportable segment assets/total Group assets | |||
| 25,031 | - | 25,031 | |
| Reportable segment liabilities/total Group liabilities | |||
| (10,719) | - | (10,719) |
Revenues from one customer in 2019 total £15,187,000 (2018: £17,182,000). This major 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
| 2019 £000 |
2018 £000 |
|||
| restated | ||||
| United Kingdom | 20,826 | 24,171 | ||
| Sweden | 989 | 1,111 | ||
| Germany | 3,707 | 3,069 | ||
| Other European | 1,291 | 863 | ||
| Rest of the World | 47 | 29 | ||
| 26,860 | 29,243 | |||
The 2018 analysis has been restated to show £863,000 of sales made by the German subsidiary and previously included in Germany as other European revenue.
The only material non-current assets in any location outside of the United Kingdom are £937,000 (2018: £1,035,000) of fixed assets and £581,000 (2018: £596,000) of goodwill in respect of the Swedish subsidiary.
The operating loss is stated after charging:
| 2019 £000 |
2018 £000 |
||
| Foreign exchange losses | 57 | 88 | |
| Depreciation | 800 | 649 | |
| Amortisation of intangible assets | 280 | 264 | |
| Impairment of intangible assets | 72 | - | |
| Cost of inventory sold | 18,454 | 20,571 | |
| Impairment of trade receivables | - | 218 | |
| Research and development | - | 90 | |
| Revenue grant income | - | (39) | |
| Employee benefit expenses (see note 6) | 7,479 | 7,588 | |
| Lease payments | 1,338 | 1,434 | |
| Auditors' remuneration: | |||
| Fees for audit of the Group | 60 | 60 | |
| Additional fees in respect of prior year audit | 40 | - | |
| Fees for taxation advisory services | - | 25 | |
| Fees for other services | - | 3 | |
| Exceptional costs in respect of: | |||
| Change of Chief Executive and senior management restructuring | - | 159 | |
| Restructuring programme | 433 | - | |
| Onerous leases | - | 75 | |
| 433 | 234 | ||
| Solar Nonwovens operating loss during the commissioning phase | - | 364 |
Current year exceptional costs
Overhead and financing restructuring programme
In response to the challenging trading conditions affecting the automotive industry the Group completed a significant overhead cost out programme in the period and sought to adjust its funding arrangements to suit a period of uncertainty. This programme required a number of redundancies (with associated costs of £364,000 and additional legal and professional expenses of £69,000 associated with a review of the Group's overall banking facilities and structure resulting in exceptional charges of £433,000)
Prior year exceptional costs
During the prior year Michael Jennings resigned as CEO generating £159,000 of exceptional costs. Other exceptional costs of £75,000 related to the exit costs of withdrawing from office facilities at MIRA following a strategic review undertaken by the new CEO.
The start-up process and commissioning of the major plant for the Neptune line, completed in the year ended 30 September 2018, resulted in an operating loss of £364,000 from the incremental costs of the operation and the specific premises taken on for the plant.
Research and development costs
The Group focus for research and development work in the year was on ongoing projects where costs are capitalised and as required to deliver growth in future periods. Revenue grants of £nil (2018: £39,000) are in relation to government assistance on research projects.
| 2019 £000 |
2018 £000 |
|
| Interest on bank loans and invoice discounting | 128 | 59 |
| Interest element of hire purchase agreements | 64 | 59 |
| ` | 192 | 118 |
| 2019 £000 |
2018 £000 |
|
| ## Loss used in calculating basic and diluted EPS | (1,499) | (1,358) |
| ## Number of shares | ||
| ## Weighted average number of £0.02 shares for the purpose of basic earnings per share ('000s) | 23,971 | 22,101 |
| ## Weighted average number of £0.02 shares for the purpose of diluted earnings per share ('000s) | 23,971 | 22,101 |
| ## Earnings per share (pence) | (6.25)p | (6.14)p |
| ## Diluted earnings per share (pence) | (6.25)p | (6.14)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 633,657 (FY18: 563,690) shares that were anti-dilutive at the year-end, but which may dilute future earnings per share.
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.
The Annual General Meeting of Autins Group plc will be held at the offices of Freeths LLP, 3rd Floor, The Colmore Row Building, Colmore Circus, Queensway, Birmingham, B4 6AT on 7 February 2020 commencing at 12pm.
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 [email protected] or visit www.rns.com.
END
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