Final Results

RNS Number : 9458R

Autins Group PLC

06 March 2019

 

6 March 2019

Autins Group plc

(the "Company" or the "Group")

Audited Final Results for the year ended 30 September 2018

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 2018.

Financial Highlights

·      Revenue increased to £29.2 million (FY17: £26.4 million)

·      Gross profit decreased to £7.2 million (FY17: £9.0 million)

·      Adjusted EBITDA¹ fell to a loss of £0.3 million (FY17: profit of £2.0 million)

·      Adjusted operating loss¹ of £1.0 million (FY17: profit of £1.5 million)

·      Adjusted loss before tax¹ of £0.9 million (FY17: profit of £1.6 million)

·      Loss after tax of £1.4 million (FY17: profit of £0.4 million)

·      Net debt² of £4.2 million (FY17: £2.0 million)

·      Loss per share of 6.14 pence per share (FY17: earnings per share 1.82 pence per share)

·      Proposed final dividend of nil per share (FY17: 0.8 pence per share)

1:     Adjusted EBITDA excludes exceptional costs of £0.2 million (FY17: £0.5 million), additional IPO related costs of £Nil (FY17: £0.1 million) and £0.4 million (FY17: £0.6 million) of non recurring Neptune start up costs. Adjusted operating profit and adjusted loss before tax additionally excludes £0.2 million of amortisation in both years.

2:     Cash less bank overdrafts, invoice discounting and hire purchase finance.

Operational Highlights

·      Solid top line growth with new Automotive OEM and Tier customer wins, expanding European sales and strong growth in new segments, particularly flooring

·      Neptune technology continuing to be approved and adopted with significant sales pipeline growth and the start of production volumes

·      Revenue in Germany increased by 67% to £3.4 million (2017: £2.1 million) with delivery and increased share of a multiplatform part for a major European OEM and continued growth of acoustic flooring products

·      New business wins from new and existing customers including Aston Martin, Auria, Bentley, BMW, Dr Schneider, Grupo Antolin, Jaguar Land Rover, Magna, Porsche, Seat, Skoda, Toyota, Volvo, VW, and Webasto

·      Good progress from our Swedish business. Growing 38% in the year and securing additional work for future periods to reduce reliance on the UK

·      Non-automotive sales continued strong growth trend with flooring and building and industrial application sales up by 46% and 66% respectively.

·      Increased availability of working capital funding, within existing overall banking limits, secured after the year-end.

Gareth Kaminski-Cook, Chief Executive, said:

"2018 was a year of significant progress for the Autins Group. Whilst the financial performance was unsatisfactory, the strategic progress was very positive. Group sales have grown 45% in the last 2 years. The customer base has diversified, expansion into Europe has accelerated, and sales into new markets continued to grow. Our unique Neptune technology has been approved by all target customers and generated a large fast-growing sales pipeline. With renewed focus on cost control and sales conversion we are confident 2019 will deliver positive results."

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: [phone]
Newgate Communications (Financial PR) Adam Lloyd Tom Carnegie	Tel: [phone]

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 and Chief Executive's statement

Sales in FY18 were £29.2 million (FY17: £26.4 million), representing an increase of 10.9%. However, this overall sales figure masks contrasting fortunes in the two halves of the financial year. 

FY18 started positively, with sales up 29% to £15.9 million in the first half of the year compared to the same period in the prior year. 

Historically, sales in the second half of the year exceed those in the first half. However, the automotive market continued to experience increasing downward pressure in demand, through a combination of consumer uncertainty related to the sustainability of diesel engines and a global slowdown in demand (particularly in China). Furthermore, the uncertainty surrounding Brexit did little to increase confidence. As a result of these market drivers, our customers significantly lowered their initial forecasted requirements, resulting in sales in the second half of the year of £13.3 million. This was 5% down on the comparative prior year period.

This made FY18 a challenging year operationally. Based on our customers' forecasts, we invested in people and overheads to deliver strong sales growth. Actual sales in 2018 did not support this investment, significantly reducing our profitability in the period. We have subsequently taken remedial action to rationalise our costs to limit this impact, whilst also maintaining a platform able to support a growing and increasingly diversified customer base.

Nevertheless, in 2018 we demonstrated that the Group has an attractive range of performance materials, products and expertise and can win new business in the UK and Europe with automotive OEM's and Tier suppliers. In addition to the automotive sector we currently supply material for flooring and building and industrial applications, where we believe there are very good opportunities for further growth.

2018 also saw the continuing trend to increase the level of NVH treatment in vehicles and significantly more commitment from almost all car manufacturers to electric and hybrid fuel options. Both of these trends create new acoustic challenges for OEM's that will require specialist NVH expertise and solutions for which Autins is especially well placed to provide.

Despite its challenges, there were several positive highlights in 2018:

·      Full scale production of our patented Neptune material began and the sales opportunity pipeline grew significantly throughout the year. This will be transformational for Autins as we convert this to sales wins in the coming years

·      After two years of evaluation, BMW designated Neptune as a superior acoustic material, creating a technical specification to recognise its higher performance

·      We have won new business in Europe with VW, Porsche, Skoda and Seat (either directly or through Tier 1 suppliers)

·      Our commitment to diversification of automotive sales in the UK resulted in 70% of new business wins across the Group coming from new customers including Aston Martin, Auria, Bentley, Grupo Antolin and Toyota

·      Sales in Germany grew by 67%. Since 2014, the German team have grown their sales from zero to over €4 million, in aggregate, with strong traction in both their automotive and flooring sales and operations are no longer reliant on inter-company sales

·      The flooring business in Europe grew by 46% to £1.4 million with customers including global manufacturers such as Gerflor, IVC and Tarkett

·      Sales to building and industrial applications grew by 66% to £0.8 million

Key actions taken for recovery

Gareth Kaminski-Cook joined the Group on 1 October 2018 as Chief Executive. Given the challenges we have taken immediate steps to reduce costs to a level more suited to likely short-term demand and a continuous forecasting process has been established. Annualised Group labour costs were reduced by £0.85 million and changes to the operational management structure of the Group were made. A plan to deliver further significant working capital benefits was also put in place. 

We have rigorously reviewed market and customer forecasts, evaluated the Group's long-term growth strategy and refocused our priorities for 2019. Organisational effectiveness has been addressed and increased focus has been brought on profitability, working capital, cash generation and debt levels. In order to improve control, we will focus on the basics, keep processes simple and use rigorous daily management.  Finally, these priorities will be underpinned by establishing a culture with a common sense of purpose and alignment.

Values and Culture to sustain long-term success

Since the IPO there has been a lot of change within the Group and there is now a need to create stability and consistent, more efficient, processes across the business.

Given the size of the Autins business, it is important that we manage the on-going changes well. We will do this by establishing alignment throughout the Group to our stated Vision and Goals, building strong teamwork and maintaining supportive processes and communication. We need to do the basics well and keep things as simple as possible.

Creating true alignment across a Group of international businesses can be a defining difference between success and failure. A shared culture or values and common behaviours are the key to better internal alignment that will drive better employee engagement and higher levels of motivation, which we firmly believe lead to better customer service.

As a first step we engaged with our employees and jointly agreed on a set of values which we see as either part of our heritage or part of our aspiration to help us defend and develop our market share and become the preferred supplier of technical solutions to our customers. The Autins Values were launched across the Group in November 2018.

·      Teamwork - We believe that the best teams win

·      Accountability - We will empower our people, do what we say and do what is needed

·      Expertise - We will provide outstanding acoustic and thermal technical knowledge

·      Creativity - We solve problems, we use our initiative

·      Agility - We will be responsive, adaptable and be easy to do business with

·      Passion - We will do whatever it takes to help our customers create quieter, more efficient and more comfortable spaces, because we want to make a positive difference

The Market Opportunity for Autins

As a Group, we consider the following characteristics to be our key drivers for growth:

·      Recognised NVH specialist in automotive

·      Market leading performance materials

·      Established European manufacturing and technical support footprint

·      Track record of winning new OEM and Tier 1 customers across Europe

·      Growth of sales in new markets

Our Vision is to be the preferred European supplier of acoustic and thermal solutions to our customers in the automotive industry and other segments where we believe we can deliver value.

Our strategy to deliver the Vision has three pillars:

1.   Leverage our NVH expertise in automotive to win new customers

2.   Leverage our Neptune technology and technical expertise to open up new markets

3.   Build the Autins brand reputation as an NVH solution provider of choice to generate pull through demand

The directly addressable market in Europe for automotive NVH products and solutions which Autins can currently supply is in excess of £700 million.

During the last two years we have seen our  strategy succeed as we have delivered 45% sales growth. We have a unique product offering, due to the range of materials, products and processes and a highly responsive technical support service, which is valued by customers.

 

Our People

Our people make the difference. Our employees are highly committed to the business and the Board would like to thank them all for their effort and support in what has been a very challenging period.

Michael Jennings left the business on 31^st August 2018 and we would like to thank him for the work he did during his time as Chief Executive. We would also like to thank Ian Griffiths, our Non-Executive Director, for taking on the role of interim Chief Executive for the month of September 2018 prior to the arrival of Gareth Kaminski-Cook. With Gareth's arrival and following the operational changes we have made, we can now look forward to a sustained period of senior management stability, with all the benefits that this will bring.

We have increased the quality of internal communication and established more efficient cascading of information throughout the organisation. Twice a week the Chief Executive holds small cross-functional meetings with employees and we are using an employee "Autins App" to increase engagement, by sharing employee stories of sales success or examples of living the Autins Values. Employee Satisfaction Surveys have also been initiated.

With the newly agreed Values we intend to strengthen the alignment throughout the company towards one common Vision and to create an exceptional place to work. We recognise that our employees can choose where they work and we want them to feel that they have an exciting future with Autins.

Governance

The Board is committed to promoting the highest standards of corporate governance and ensuring effective communication with shareholders. The Board has adopted the new Quoted Companies Alliance (QCA) Corporate Governance Code in the year. The Group's corporate governance approach and procedures are more fully described in the Corporate Governance Statement which can be found in the annual report and accounts.

Dividend

The Board are not proposing a final dividend for the current year. An interim dividend of 0.4 pence per share was paid on 4 August 2018.  

Outlook

In 2019 we aim to establish a sustainable cost base, focus on profit and drive cash generation whilst accelerating delivery of our strategic growth plan. This means winning new customers, continuing our growth in Europe, and entering new markets, all supported by our unique Neptune technology. The Board is confident that 2019 will be a year where we build positive momentum.

Adam Attwood	Gareth Kaminski-Cook
Chairman	Chief Executive

6 March 2019
 

Financial Review

Revenue

During 2018, total Group revenue grew by 11% to £29.2 million (FY17: £26.4m), with increased component sales partly offset by a reduction in tooling revenue. 

Component sales increased 14% to £28.3 million (FY17: £24.8 million). We continue to expand our customer base, and direct component sales to the Group's largest customer accounted for 58% of Group revenue (FY17: 64%). The Board expects dependence on this customer to reduce further in FY19 as new diversified contracts achieve volume production.

Revenue from acoustic flooring products grew 46% to £1.4 million (FY17: £0.9 million). This growth was achieved by the German business which launched a new product and widened its customer base in the year. Sales to building and industrial applications increased £0.3 million to £0.8 million.

Tooling sales were £0.9 million (FY17: £1.5 million) with £0.2 million of tooling held for resale at the year-end (FY17: £nil). The Group's broad equipment and process capability means that the value for individual tools can vary significantly and is not directly linked to the future component revenue that they will generate.  Overall tooling revenues are therefore as much affected by the type of new product secured as the quantity of tools required. 

UK automotive component sales grew at a slower rate than anticipated over the full year, with sales increasing by only 5% to £23.0 million (FY17: £22.0 million). Sales to our largest customer were below expectations compared to their own and external forecasts. In contrast to previous periods, turnover was lower in the second half year than the first. This was as a result of reduced call offs against existing contracts by customers who also initiated longer and additional customer shutdowns during the year than originally planned. Whilst contracts with new and existing customers have been secured during 2018, the full benefit will be felt in FY19 onwards.

The German business continued the growth trend indicated in the last financial review with external revenues increasing by 67% on the prior year to £3.4 million. New work with a major European OEM has performed well and the Board would expect further revenue growth with this OEM in the current year. Flooring sales in Germany increased to £1.3 million.

Swedish automotive revenues increased by 37.5% to £1.1 million (FY17: £0.8 million) with full year volumes on OEM platforms launched in the second half of FY17. The site continues to support the UK with the manufacture of specialist foam products and, having widened its product range through R&D activity in both periods, has secured new contracts whose benefit will be felt in FY19. 

Gross Margin

Component gross margins fell to 25.5% (FY17: 34.6%). Significant changes in customer schedules, often at short notice, produced an adverse change in product mix and affected our operational efficiency in terms of economic batch quantities, as well as supply chain and labour planning. Competitive pressures in the UK led to additional discounting on mature platforms.

Management have continued to pursue opportunities to introduce Neptune product into component revenues as well as increasing focus on operational efficiency, standardisation and flexibility to allow a more agile response to customer demand fluctuations and reduce overall costs to serve. We continuously work with our supply chain to review material costs and take steps to optimise spend.

EBITDA and operating profit

Adjusted EBITDA was a loss of £0.3 million (FY17: profit of £2.0 million) with an adjusted operating loss of £1.0 million (FY17: profit of £1.5 million) after excluding exceptional and non-recurring costs as noted below. Management acknowledge that these measures of performance are not GAAP, nor are they intended to be, but continue to believe these adjusted measures are more indicative of the performance of the underlying business.  The costs that are excluded in arriving at an adjusted measure include those that management consider to be a result of significant one-off events, start-up costs in relation to the Group's Neptune facility and differences in accounting treatments that arose on the Group's conversion to IFRS at the time of listing.  Management's own performance measures are focussed on the underlying business and are reported excluding these items.

Reported EBITDA was a loss of £0.9 million (FY17: profit of £0.9 million) after charging £0.23 million (FY17: £0.55 million) of exceptional costs, and £0.4 million (FY17: £0.6 million) of non-recurring incremental start-up costs for the Neptune facility. 

Exceptional and adjusting items

The Group incurred exceptional remuneration and associated costs of £0.15 million (FY17: £0.2 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. Costs in FY17 related to the resignation of James (Jim) Griffin on 1 February 2017 and the appointment of Michael Jennings.

As a result of the change in Chief Executive and as part of overall cost reduction programmes, the Group negotiated an early termination for leased management offices at MIRA Technology park that were no longer required, incurring £0.1 million of onerous lease costs.

In FY17, further legal and professional costs of £0.1 million were settled in relation to the Group's IPO in FY16, £0.1 million of staff restructuring costs following Jim Griffin's resignation incurred and £0.2 million of costs performing critical repairs to production presses in the Group's Rugby facility. Having reviewed relevant documentation, it was ultimately decided to not pursue a claim against the original equipment manufacturer to recover the costs of these repairs.

There was a slight delay in bringing the Group's Neptune asset into full use, with further enhancements and investments required before the production facility achieved full operational status in June 2018. Having confirmed that the line was capable of operating in the manner intended and to the specification set by management at the time of order, depreciation (using the unit of production method as detailed in our accounting policies), commenced in July 2018. As a result, in concluding the commissioning process, non-recurring start-up costs of £0.4 million (FY17: £0.6 million) were incurred in the period.

Amortisation of £0.2 million (FY17: £0.2 million) in relation to acquired intangible assets has been excluded from adjusted operating profit.

Joint Ventures

As in FY17, the Group's share of joint venture activities relates solely to Indica Automotive, an acoustic foam conversion business based in Northampton. 

Indica Automotive continued to be a key supplier to the Group, who remain its largest customer, but Indica Automotive has now secured external revenue streams that it expects to expand in FY19.  Turnover increased by 29% to £3.3 million (FY17: £2.6 million) with a profit before tax of £0.7 million (FY17: £0.5 million). There were no exceptional costs in the year (FY17: £0.05 million). 

Currency

As a result of the Group's overseas operations and certain key raw material suppliers the Group trades in currencies other than Sterling, its base currency. The Group had operational transactions conducted in US Dollar, Swedish Kronor and Euro and was also subject to currency variation in the retranslation of the results of the German and Swedish operations. With the commissioning of the Neptune line complete, the value of US Dollar transactions will increase with key raw materials imported from South Korea at an agreed US Dollar denominated unit price.

The Group's structure and trading balance are such that net currency exposure is naturally reduced and the Group's FY18 result has only been impacted in a limited way as a result of currency translations. The Neptune capital purchase stage payments of $2.2 million in FY17 meant that the US Dollar was the currency with the greatest impact on Group results in that year. 

The Group held no forward currency contracting arrangements at either year-end. Transactions of a speculative nature are, and will continue to be, prohibited. We will, as part of the Neptune production ramp-up, continue to monitor the Group's exposure to the US Dollar and its impact on the Group's results and may consider a formal hedging strategy once the frequency and quantum of those purchases make such currency contracting appropriate.

Net finance expense

The Group's continued investment in the Neptune facility and processing equipment, funding for working capital and requirement to fund losses has meant an increased level of net debt over the year. As a result of this increased gearing, net finance expense increased slightly in the year despite FY17 having a non-recurring charge in relation to £1.1 million of loan notes settled for cash in November 2017.

Taxation

The effective tax rate in the year was in line with that expected based on current UK corporation tax levels. Whilst some benefit from enhanced Research and Development ('R&D') tax relief was taken, this was offset by disallowable costs, impact of different tax rates and adjustments to prior years.

The Group's technical R&D and applications teams have continued to enhance materials and processes in the year. A defined multi-horizon development plan exists which management believe will deliver value to the Group but also keep the effective tax rate below the UK statutory level for the short to medium term.

Losses incurred in the UK in the year have been recognised as a deferred tax asset as management expect to utilise them in future periods.

As noted in FY17, the Group's overseas subsidiaries 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. The Group recognised a tax asset of £0.2 million in FY17 in relation to these losses. Having reviewed current and expected trading recognition of these assets remains appropriate. The Group has a further £0.1 million (FY17: £0.1 million) unrecognised tax asset in respect of losses in the German subsidiary.

Earnings per share

Loss per share was 6.14 pence (FY17: earnings per share 1.82 pence) reflecting the loss in the year. The weighted average number of shares was unchanged at 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. An interim dividend of 0.4 pence per share was paid on 4 August 2018.  

Net Debt and working capital

The Group ended the year with net debt of £4.2 million (FY17: £2.0 million). 

The Group has £0.9 million (FY17: £0.9 million) of Hire Purchase agreements in the UK and £0.2 million (FY17: £0.4 million) of long-term asset backed bank loans in Sweden. There were £0.5 million (FY17: £nil) new hire purchase agreements and £nil (FY17: £0.1 million) of new asset backed loans in the year.

During FY17 cash was used to settle loan notes of £1.1 million and make the final capital stage payments on the Neptune line of US$2.2 million. 

Trade debtors decreased in the year despite the Group's growth, a reflection of the reduced component turnover in the final quarter compared to FY17. A provision of £0.2 million (FY17: Nil) has been made against overdue invoices which the Group continue to pursue. 

Inventory was £0.6 million higher than FY17, with £0.2 million of tooling held for resale (FY17: Nil) and a £0.4 million increase in components stock. Whilst the Group was able to reduce finished components stock in response to fluctuating and reduced volume in the final quarter it was unable to adjust the inbound supply chain.

Going Concern

The Board have concluded, on the basis of trading and cash flow forecasts and available sources of finance, that it remains appropriate to prepare the Group's results on the basis of a Going Concern.

Forecasts, supported by management's detailed budgets and taking account of the cost reduction exercise completed in Q1 of FY19, have been prepared for a period to September 2020 including what the Board consider to be reasonably foreseeable contingencies, risks and opportunities. These forecasts were used as the basis for confirming future funding requirements

After the year-end the Group's primary bankers, HSBC, agreed to the Group's request to make an increased proportion of our existing funding limits available as working capital facilities in the form of an overdraft facility which will be due for review in February 2020.  The Board believes that this form of funding, being fixed value in nature, is more suited to the current period of variable automotive market demand.  Our existing invoice discounting facility of up to £6m is unaffected by this change.  The banking facilities remain free of covenants.

Based on the detailed forecasts and having considered the Group's revised funding capacity and expected requirements over the short and medium term, the Board have concluded that there remains sufficient funding available for the Group to continue preparing its results on a Going Concern basis. 

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 has formally considered the carrying value of Goodwill, other Intangibles (both existing and generated in the year) and the Neptune asset at 30 September 2018 using a discounted cash flow assessment..  This assessment provided sufficient headroom for the Board to conclude that the carrying value was fully recoverable.

Capital Expenditure

Additions to tangible fixed assets were £1.1 million (FY17: £2.6 million) in the year. Investment continued to be focussed on production capacity in support of projected growth and included the installation of additional cut and seal equipment in both the UK and Germany as well as cutting capacity designed for Neptune's specific roll dimensions. 

A further £0.3 million was invested in the Neptune production facility to bring it to full operational capacity in June. This investment represented automated process control systems and an enhanced raw material input method which supports consistency in the finished product. 

Financial risk management 

Details of our financial risk management policies are outlined within the Annual Report and Accounts.

James Larner

Chief Financial Officer

6 March 2019

 

Consolidated income statement

For the year ended 30 September 2018	Note			2018 £000	2017 £000
Revenue	2			29,243	26,357
Cost of sales				(21,996)	(17,327)
Gross profit				7,247	9,030
Other operating income				39	121
Distribution expenses				(846)	(871)
Administrative expenses excluding exceptional costs and amortisation				(7,804)	(7,384)
Exceptional IPO related administrative expenses (net)				-	(92)
Amortisation of acquired intangible assets				(237)	(237)
Other exceptional operating costs				(234)	(458)
Total administrative expenses				(8,275)	(8,171)
Operating (loss)/profit	3			(1,835)	109
Finance expense	4			(118)	(92)
Share of post-tax profit of  joimjoint
equity accounted joint ventures				219	190
(Loss)/profit before tax				(1,734)	207
Tax credit				376	196
(Loss)/profit after tax for the year				(1,358)	403
Earnings per share for (loss)/profit attributable to the owners of the parent during the year
Basic (pence)	5			(6.14)p	1.82p
Diluted (pence)	5			(6.14)p	1.82p

All amounts relate to continuing operations.

 

Consolidated statement of comprehensive income

For the year ended 30 September 2018				2018 £000	2017 £000
(Loss)/profit after tax for the year				(1,358)	403
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Currency translation differences on foreign operations				(27)	(15)
Total comprehensive (expense)/income for the year				(1,385)	388

 

Consolidated statement of financial position

As at 30 September 2018			2018 £000	2017 £000
Non-current assets
Property, plant and equipment			11,282	10,869
Intangible assets			3,767	3,837
Investments in equity-accounted
joint ventures			204	243
Deferred tax asset			371	159
Total non-current assets			15,624	15,108
Current assets
Inventories			2,553	1,967
Trade and other receivables			6,763	7,378
Cash in hand and at bank			91	1,625
Total current assets			9,407	10,970
Total assets			25,031	26,078
Current liabilities
Trade and other payables			5,910	5,851
Loans and borrowings			3,713	2,947
Total current liabilities			9,623	8,798
Non-current liabilities
Trade and other payables			115	123
Loans and borrowings			602	718
Deferred tax liability			379	496
Total non-current liabilities			1,096	1,337
Total liabilities			10,719	10,135
Net assets			14,312	15,943
Equity attributable to equity
holders of the company
Share capital			442	442
Share premium account			12,938	12,938
Other reserves			1,886	1,886
Currency differences reserve			(130)	(103)
Profit and loss account			(824)	780
Total equity			14,312	15,943

 

Consolidated statement of cash flows

For the year ended 30 September 2018	2018 £000	2017 £000
Operating activities
(Loss)/profit after tax	(1,358)	403
Adjustments for:
Income tax credit	(376)	(196)
Finance expense	118	92
Employee share based payment charge	19	15
Depreciation of property, plant and equipment	649	528
Amortisation of intangible assets	264	237
Loss on sale of fixed assets	-	38
Share of post-tax profit of equity accounted joint ventures	(219)	(190)
	(903)	927
Decrease/(increase) in trade and other receivables	479	(2,357)
Increase in inventories	(586)	(402)
Increase in trade and other payables	53	930
	(54)	(1,829)
Cash used in operations	(957)	(902)
Income taxes received/(paid)	182	(92)
Net cash flows from operating activities	(775)	(994)
Investing activities
Purchase of property, plant and equipment	(890)	(3,903)
Purchase of intangible assets	(221)	(363)
Dividend received from equity-accounted for joint venture	258	153
Net cash used in investing activities	(853)	(4,113)
Financing activities
Interest paid	(118)	(81)
Loan notes repaid	-	(1,175)
Bank loans repaid	(165)	(219)
Finance lease advances	355	-
Hire purchase repaid	(472)	(400)
Increase in invoice discounting	781	2,199
Bank loans drawn	-	105
Dividends paid	(265)	(177)
Net cash from financing activities	116	252
Net decrease in cash and cash equivalents	(1,512)	(4,855)
Cash and cash equivalents at beginning of year	1,445	6,300
Cash and cash equivalents at end of year	(67)	1,445

 

	2018 £000	2017 £000
Cash and cash equivalents comprise:
Cash balances	91	1,625
Bank overdrafts	(158)	(180)
	(67)	1,445

Non cash transactions

The Group acquired plant and equipment at a cost of £528,000 (2017: £nil) under hire purchase agreements and at 30 September 2016 there was a capital accrual of £1,410,000 paid and included in the cash flow for the year ended 30 September 2017. These transactions have been shown net in the consolidated statement of cash flows.

Reconciliation of movements in net cash/financing liabilities

 

Year ended 30 September 2018	Opening £000	Cash flows £000	Non-cash movements £000	Closing £000
Cash balances	1,625	(1,534)	-	91
Bank overdrafts	(180)	22	-	(158)
	1,445	(1,512)	-	(67)
Invoice discounting	(2,199)	(781)	-	(2,980)
Bank loans	(405)	165	-	(240)
Hire purchase liabilities	(881)	472	(528)	(937)
	(2,040)	(1,656)	(528)	(4,224)
Year ended 30 September 2017
Cash balances	6,449	(4,824)	-	1,625
Bank overdrafts	(149)	(31)	-	(180)
	6,300	(4,855)	-	1,445
Invoice discounting	-	(2,199)	-	(2,199)
Bank loans	(519)	114	-	(405)
Hire purchase liabilities	(1,281)	400	-	(881)
Loan notes	(1,164)	1,175	(11)	-
	3,336	(5,365)	(11)	(2,040)

 

Consolidated statement of changes in equity

For the year ended 30 September 2018

		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 2017	442	12,938	1,886	(103)	780	15,943
Comprehensive expense for the year
Loss for the year	-	-	-	-	(1,358)	(1,358)
Other comprehensive expense	-	-	-	(27)	-	(27)
Total comprehensive expense for the year	-	-	-	(27)	(1,358)	(1,385)
Contributions by and distributions to owners
Share based payment	-	-	-	-	19	19
Dividends	-	-	-	-	(265)	(265)
Total contributions by and distributions to owners	-	-	-	-	(246)	(246)
At 30 September 2018	442	12,938	1,886	(130)	(824)	14,312

The cumulative currency differences reserve may be reclassified subsequently to profit and loss.

 

1.     Basis of preparation of financial statements

 

While the financial information included in this annual financial results announcement has been prepared in accordance with the recognition and measurement principles of International 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 2018 or 2017 but is derived from those accounts. Statutory accounts for the year ended 30 September 2017 have been delivered to the Registrar of Companies and those for the year ended 30 September 2018 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 2018 and 30 September 2017 did not contain statements under s498 (2) or (3) of the Companies Act 2006.

1.1        Basis of consolidation

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.

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.

 

2.     Revenue and segmental information

 

Revenue analysis

	2018 £000	2017 £000
Revenue arises from:
Sales of components	28,322	24,844
Sales of tooling	921	1,513
	29,243	26,357

Segmental information

The Group currently has one main reportable segment in each year, namely Automotive (NVH) which involves provision of insulation materials to reduce noise, vibration and harshness to automotive manufacturing. Turnover and operating profit are disclosed for other segments in aggregate, mainly flooring sales, 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 office equipment products, are included within the others segment. Neither element is considered significant.

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

 

Segmental analysis for the year ended 30 September 2017

 

	Automotive NVH £000	Others £000	2017 Total £000
Group's revenue per consolidated statement of comprehensive income	24,925	1,432	26,357
Depreciation	528	-	528
Amortisation	237	-	237
Segment operating profit	19	90	109
Finance expense			(92)
Share of post-tax profit of equity accounted joint ventures			190
Group profit before tax			207
Additions to non-current assets	3,001	-	3,001
Reportable segment assets	25,835	-	25,835
Investment in joint ventures	243	-	243
Reportable segment assets/total Group assets	26,078	-	26,078
Reportable segment liabilities/total Group liabilities	10,135	-	10,135

Revenues from one customer in 2018 total £17,182,000 (2017: £16,960,000). This major customer purchases goods from Automotive Insulations Limited in the United Kingdom and there are no other customers which account for more than 10% of revenue.

External revenues by location of customers

			2018 £000	2017 £000
United Kingdom			24,171	23,044
Sweden			1,111	1,002
Germany			3,932	2,260
Rest of the World			29	51
			29,243	26,357

The only material non-current assets in any location outside of the United Kingdom are £1,035,000 (2017: £1,157,000) of fixed assets and £596,000 (2017: £629,000) of goodwill in respect of the Swedish subsidiary.

 

3.     (Loss)/profit from operations

The operating (loss)/profit is stated after charging:

		2018 £000	2017 £000
Foreign exchange losses		88	3
Depreciation		649	528
Amortisation of intangible assets		264	237
Loss on disposal of fixed assets		-	38
Cost of inventory sold		20,571	15,551
Impairment of trade receivables		218	-
Research and development		90	256
Revenue grant income		(39)	(121)
Employee benefit expenses		7,588	7,063
Lease payments		1,434	1,426
Auditors' remuneration:
Fees for audit of the Group		60	43
Fees for taxation compliance taxationccomplianceservices		-	3
Fees for taxation advisory services		25	5
Fees for other services		3	6
Exceptional costs in respect of:
IPO related expenses (net)		-	92
Other exceptional costs:
Change of Chief Executive and senior management restructuring		159	274
Onerous leases		75
Critical press repair costs		-	184
		234	458
Solar Nonwovens operating loss during the commissioning phase		364	590

IPO related expenses

IPO costs spanned the prior year end as a result of the timing of the IPO. Exceptional costs in the prior year therefore include a further £92,000 of IPO related administrative expenses. 

Other exceptional costs

During the year Michael Jennings resigned as Chief Executive generating £159,000 of exceptional costs (2017: £158,000 relating to the resignation of Jim Griffin and £116,000 to a review of group staffing). Other exceptional costs of £75,000 related to the exit costs of withdrawing from office facilities at MIRA (2017: £184,000 of critical press repairs that arose following the identification of structural cracks in the head of three new presses within the UK).

Solar Nonwovens operating loss

The start up process and commissioning of the major plant for the Neptune line resulted in an operating loss of £364,000 (2017: loss of £590,000) from the incremental costs of the operation and the specific premises taken on for the plant.

Research and development costs

The Group strategically invested in research and development work as disclosed above and as required to deliver growth in future periods. Revenue grants of £39,000 (2017: £121,000) are in relation to government assistance on research projects.

 

4.     Finance expense

                            

	2018 £000	2017 £000
Interest on bank loans and invoice discounting	59	27
Loan note interest	-	11
Interest element of hire purchase agreements	59	54
`	118	92

5.          Earnings per share           

	2018 £000	2017 £000
(Loss)/profit used in calculating basic and diluted EPS	(1,358)	403
Number of shares
Weighted average number of £0.02 shares for the purpose of basic earnings per share ('000s)	22,101	22,101
Weighted average number of £0.02 shares for the purpose of diluted earnings per share ('000s)	22,101	22,101
Earnings per share (pence)	(6.14)p	1.82p
Diluted earnings per share (pence)	(6.14)p	1.82p

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 563,690 (2017: 309,076) shares that were anti-dilutive at the year end but which may dilute future earnings per share.

 

6.     Annual report and accounts

The annual report and accounts will be posted to shareholders shortly and will be available to members of the public at the Company's registered office at Central Point One, Central Park Drive, Rugby, Warwickshire, CV23 0WE and on the Company's website www.autins.co.uk/investors.

7.     Annual General Meeting

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 29 March 2019 commencing at 4pm.

 

END

 

 

FR EAPDSEFANEFF