Final Results

RNS Number : 4354F

Renold PLC

16 July 2021

 

Renold plc

Final results for the year ended 31 March 2021

("Renold", the "Company" or, together with its subsidiaries, the "Group")

Resilient performance, strong cash generation and significant net debt reduction

Renold (AIM: RNO), a leading international supplier of industrial chains and related power transmission products, announces its results for the year ended 31 March 2021.

Financial highlights

Adjusted results at constant exchange rates1	2021	2020
Revenue at constant exchange rates	£165.3m	£187.6m
Adjusted operating profit at constant exchange rates	£11.2m	£13.1m
Return on sales2 at constant exchange rates	6.8%	7.0%
Adjusted earnings per share	2.0p	2.9p
Net debt3	£18.4m	£36.6m
Results at actual exchange rates
Revenue	£165.3m	£189.4m
Adjusted operating profit	£11.2m	£13.4m
Return on sales2	6.8%	7.1%
Operating profit	£10.5m	£10.1m
Profit before tax	£5.9m	£4.9m
Basic earnings per share from continuing operations	1.7p	1.5p

•	Strong cash generation, with net debt reducing by c.50% to £18.4m (2020: £36.6m)
•	Resilient return on sales 6.8% (2020: 7.1%) despite a reduction in revenues
•	Adjusted operating profit of £11.2m (2020: £13.4m); operating profit of £10.5m (2020: £10.1m)
•	Order intake improving, with closing order book c.10% ahead of 31 March 2020
•	Adjusted EPS of 2.0p (2020: 2.9p); Basic EPS from continuing operations 1.7p (2020: 1.5p)
•	Revenue down 12.7% (11.9% at constant exchange rates), impacted by Covid-19 pandemic

Business highlights

•	An effective strategy and responsible management have created an increasingly flexible Group, able to deliver a resilient performance through the pandemic and positioned to capitalise on the anticipated economic recovery
•	Covid-19 situation mixed; Europe, Americas and China recovering strongly, whilst India and SE Asia impacted by new variants in H2
•	Swift decision making and cost discipline mitigated sales reduction, despite significant material cost pressures and supply chain disruption
•	New Chinese factory continuing to progress well
•	Leverage remains low, increased cash generation facilitates bolt-on acquisitions and strategic capital investment
•	Major restructuring complete and with the reduction in leverage, together with increased cash generation, acquisitions and strategic growth investment opportunities are now being actively explored
•	Post year end, on 8 April 2021, Renold completed the bolt-on acquisition of the conveyor chain business of Brooks Ltd

¹ See below for reconciliation of actual rate, constant exchange rate and adjusted figures

² Adjusted operating profit divided by revenue

³ See Note 13 for a reconciliation of net debt which excludes lease liabilities

Robert Purcell, Chief Executive, commented:

"I am pleased with the Group's robust performance through the pandemic which reflected the benefits of the strategic development completed over prior years. In particular, our employees around the world have responded excellently to the challenges we have faced and I thank them for their dedication and commitment to the Company and our customers.

"Throughout the year the business performance has been on an improving trend and I am pleased to report that our order books have continued to grow in the early part of the new financial year. Whilst there remain considerable Covid-19-related challenges in some parts of the world, with supply chain issues and rising costs, we are well placed to deal with these and our performance over the last 12 months gives me confidence that we will return to growth in the new financial year."

Meeting for analysts and institutional investors

A virtual meeting for institutional investors and analysts will be held today at 9.00am BST. If you wish to attend this meeting please contact [e-mail] or call Tim Metcalfe of IFC Advisory Limited (020 3934 6632) before 8.45am to be provided with access details.

Retail Investor presentation and Q&A session

Renold management will be hosting an online presentation and Q&A session at 5.30pm BST on Monday 19 July 2021. This session is open to all existing and prospective shareholders. Those who wish to attend should email [e-mail] and they will be provided with access details. Participants will have the opportunity to submit questions during the session, but questions are welcomed in advance and may be submitted to: [e-mail].

Reconciliation of reported and adjusted results

	Revenue		Operating profit		Earnings per share
	2021 £m	2020 £m	2021 £m	2020 £m	2021 pence	2020 pence
From continuing operations	165.3	189.4	10.5	10.1	1.7	1.5
Restructuring costs and other adjusting items	-	-	-	2.4	-	1.1
Amortisation of acquired intangible assets	-	-	0.7	0.9	0.3	0.3
Continuing adjusted	165.3	189.4	11.2	13.4	2.0	2.9
Exchange impact	-	(1.8)	-	(0.3)	-	-
Continuing adjusted at constant exchange rates	165.3	187.6	11.2	13.1	2.0	2.9

 Enquiries:

Renold plc	Peel Hunt LLP	IFC Advisory Limited
Robert Purcell, Chief Executive	Mike Bell	Tim Metcalfe
Jim Haughey, Group Finance Director	Ed Allsopp	Graham Herring
		[e-mail]
0161 498 4500	020 7418 8900	020 3934 6630

Cautionary statement regarding forward-looking statements

Some of the information in this document may contain projections or other forward-looking statements regarding future events or the future financial performance of Renold plc and its subsidiaries (the Group). You can identify forward-looking statements by terms such as "expect", "believe", "anticipate", "estimate", "intend", "will", "could", "may" or "might", the negative of such terms or other similar expressions. Renold plc (the Company) wishes to caution you that these statements are only predictions and that actual events or results may differ materially. The Company does not intend to update these statements to reflect events and circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events. Many factors could cause the actual results to differ materially from those contained in projections or forward-looking statements of the Group, including among others, general economic conditions, the competitive environment as well as many other risks specifically related to the Group and its operations. Past performance of the Group cannot be relied on as a guide to future performance.

NOTES FOR EDITORS

Renold is a global leader in the manufacture of industrial chains and also manufactures a range of torque transmission products which are sold throughout the world to a broad range of original equipment manufacturers and distributors. The Company has a reputation for quality that is recognised worldwide. Its products are used in a wide variety of industries including manufacturing, transportation, energy, metals and mining.

Further information about Renold can be found on our website at: www.renold.com

 

Chairman's Statement

This will be my final Annual Report as Chairman of Renold as, at the end of this year's Annual General Meeting, I intend to step down from the Board and hand over the reins to my successor, David Landless. Accordingly, it is probably a good time to reflect on some of the strategic progress and changes that have been made over the last nine years whilst I have been Chairman.

The business back then was faced with many challenges including an inflexible cost base, where both the costs and the breakeven point were too high, the lack of a service ethos and a significantly underinvested manufacturing base. Despite possessing a portfolio of market leading products, these fundamental weaknesses led to a lack of both profitability and cash generation. Over the period of my tenure as Chairman, the Board has committed total expenditure of £31.5m in restructuring costs and £58.6m in capital expenditure which has contributed to addressing these weaknesses.

Due to the diligence of the executive team, our employees around the world, and the Board, the business is in a much better place than when I arrived as clearly illustrated by this year's results; delivered in an economic and social environment, unparalleled in living memory, due to the Covid-19 pandemic. The Group is now capable of generating higher profits at much lower volumes, has strong cash generation, a comfortable level of liquidity, and again as this year demonstrates, has a much more flexible workforce who are service orientated. Over my tenure difficult decisions had to be made, especially concerning the closure of production facilities in the UK, the opening of a new factory in China and a complete shift in the Group's IT strategy. Now that the period of substantial restructuring has come to a close, the Group will be able to commit higher levels of resources to develop at a faster rate, both organically and via strategically sound acquisitions.

It is pleasing to see the strategic progress that has been made over the past years, deliver a business which has the resilience to weather these storms, and any future economic shocks. This is true, both in terms of financial performance but also true for the flexibility and adaptability of our people across the world, who have continued to deliver an outstanding result for the Group in this unprecedented and difficult global environment.

Reaction to the Covid-19 pandemic

In the Chief Executive's Review, Robert outlines the impact of the Covid-19 pandemic on Renold and the actions we have delivered to ensure the safety of our employees and continuity of supply to customers plus the cost and cash measures implemented to protect the financial strength of the Group.

With our manufacturing facilities in China, we gained early exposure to the operational changes required to ensure the safety of our employees in a Covid-19 environment. As Covid-19 spread across the world, particularly to Europe and America, we were well-placed to share best-practice and quickly implemented safe working environments in our other locations. Consequently, the temporary closure of a number of facilities, in particular in India, which has once again been closed in the new financial year due to the impact of the new variant, caused limited disruption to trading in the year. The welfare and safety of our employees have remained of paramount importance throughout the current crisis.

One of the key strengths of Renold is the significant geographic, customer and sector diversification, together with a broad spread of end-use applications for our products. Throughout the various geographic lockdowns across the world, we have sought, where appropriate and safe to do so, to keep our manufacturing operations open in support of various industries that are essential to the functioning of the global economy. Whether the end application is in agriculture, food processing, energy or a myriad of other essential industries (including internet-based and technology industries' use of automated warehousing), Renold plays its part in ensuring our customers can continue to operate.

The Covid-19-related changes that we have implemented can only be successful with the support of our employees across the world. Their willingness to adapt and adopt new working practices, including where these incur personal hardships, has highlighted their commitment and loyalty to Renold. Whether that is changing shift patterns, reducing working hours or accepting temporary pay reductions, all of our employees have stepped forward to support us in addressing the current challenges.

Our markets and trading performance

At the half year we reported a pandemic related 17% reduction in revenue compared to the equivalent prior year period, highlighting the tougher market conditions, particularly in the European and US chain markets. As expected, these conditions continued but were less extreme in the second half of the year, where revenue was 8.1% lower compared to the prior year. The speed of recovery of revenue in the second half was constrained by the global supply chain difficulties emerging from the pandemic, and, to a lesser extent, the short-term impact of Brexit related import delays.

Over the year as a whole, Group revenue from continuing operations declined by 12.7% and adjusted operating profit reduced by 16.4%, reflecting the weakened market conditions. Encouragingly, Group order intake in Q4 was 10.0% ahead of the equivalent prior year period, and the order book at 31 March 2021 of £53.6m was 3.6% ahead of the prior year figure (9.2% at constant exchange rates).

The Chain division's revenue from continuing operations declined by 12.8% (12.0% at constant exchange rates) as the Covid-19 pandemic-related demand reduction impacted the division. Adjusted return on sales increased in the year to 10.2% (2020: 9.3%) reflecting the impact of significant productivity gains achieved in the New Chinese Chain factory, which offset the negative margin impact of lower sales seen in other geographic regions.

The volatile market conditions impacted most acutely on the Torque Transmission (TT) division which experienced a revenue decline of 15.2% (14.3% at constant exchange rates) over the full year. In the second half of the year, a reduction in activity was expected and planned due to variation in demand for a significant long-term defence supply contract. Unsurprisingly, this revenue decline reduced profitability, but a strong improvement in returns from the Gears unit, and increased government support in terms of US PPP loan forgiveness, bolstered adjusted return on sales for the division to 12.8% (2020: 11.5%). TT is generally considered to be a later cycle business than the Chain division, which together with the lengthier order book means that we should see a continued strengthening of the division's performance as the new financial year progresses.

During the year, cash generation outperformed initial expectations, as a strong focus on cash management resulted in a c.50% reduction of net debt to £18.4m (31 March 2020: £36.6m).

Strategic Developments

During the year, Renold made good progress in continuing to deliver strategic change across the Group.

The recently completed Chinese factory continued to make significant progress in terms of increased efficiency and productivity. This is clearly illustrated by a c.24% reduction in head count, from when the plant was originally opened back in March 2019, which has resulted in a step change in profitability of the Chinese business year-on-year.

A review of manufacturing capabilities is currently underway, which has identified opportunities for the upgrade of existing manufacturing processes in India and China to create higher specification, higher quality products. This review of supply chain optimisation will facilitate the incorporation of standardised manufacturing capabilities across all product lines and sizes which, in turn, will enable us to benefit from significant efficiencies and economies of scale. Furthermore, geographic diversification will allow flexibility between manufacturing locations, especially in light of customer supply chain diversification, and a changing tariff environment.

The completion of the major restructuring initiatives, together with the low level of financial leverage, puts the Group in an ideal position to capitalise on meaningful bolt-on acquisitions that augment our existing operations. This will allow us to accelerate the growth in revenue, including for our existing products into adjacent sectors, allow entry into new under-represented sectors and geographies and, most importantly, allow us to benefit from significant production synergies from acquired businesses.

On the 8 April 2021, the Group acquired the conveyor chain business of Brooks Limited, headquartered in Manchester, UK. This small bolt-on acquisition will augment our existing UK business.

Finally, I am pleased to announce that the Group is embracing a sustainability strategy, whereby Renold will make Sustainability one of its guiding principles. Over a period of time our new leader for Sustainability will help the Board to develop policies and strategies in this area.

The Board

Consistent with the cost actions being delivered across the Group, the Board elected to take a temporary reduction in fees/salary of 20% for Non-Executive Directors and 25% for Executive Directors during the year. These pay reductions lasted for a period of four months and commenced on 1 April 2020.

I would like to welcome Jim Haughey to the Board as Group Finance Director. Jim joined us in October 2020 and brings with him extensive experience in the engineering sector, having been Group Finance Director at Mpac Group plc, and holding senior finance roles at Bodycote plc, FKI plc and Bridon Group. I would also like to take this opportunity to thank Ian Scapens, who left the Board in June 2020 for the contributions made during his tenure.

In addition, I would like to welcome Andrew Magson to the Board as a Non-Executive Director. Andrew has career-long experience working in international industrial and manufacturing businesses and was previously Group Finance Director of The Alumasc Group plc, and prior to that he held senior finance roles at BPB plc.

As previously reported, at the conclusion of this year's Annual General Meeting I will step down from the Board, retire as Chairman of the Company and as Chairman of the Nominations Committee, and David Landless will take over these responsibilities. Accordingly, David Landless will retire as Audit Committee Chairman and Senior Independent Director, with Andrew Magson taking on the responsibilities as Audit Committee Chairman and Tim Cooper, the Chair of the Remuneration Committee, taking on the responsibilities of Senior Independent Director.

We continually monitor the composition of the Board with the objective of maintaining, and broadening the range of expertise, experience and diversity. The Board continues to ensure that effective succession plans are in place.

Pensions

The latest triennial actuarial valuation of the UK pension scheme, with an effective date of 5 April 2019, was agreed in March 2020, and reported to The Pensions Regulator in June 2020, with no change to the contribution arrangements. This valuation assessed the deficit at 5 April 2019 to be £9.1m, with the shortfall to be recovered from expected asset outperformance.

The Group's net retirement benefit obligations as determined by IAS 19R increased in the year to £102.4m (31 March 2020: £97.6m) due primarily to a reduction in bond yields offset by the recovery in asset prices during the year. At the last triennial pension valuation the technical provisions deficit of the UK scheme, which is how the trustees and regulator view the scheme, was only £9.1m. This compares to the IAS 19R deficit for the UK pension fund of £77.5m. The difference represents the valuation of the capital asset reserve (CAR), currently £50.8m, being a guaranteed set of future discounted cash contributions to the scheme for a fixed period of 25 years commencing in 2013. Cashflows under the CAR provide for long-term, predictable and sustainable funding to the UK scheme. The Group remains committed to progressively de-risking this position over time through a combination of agreed contributions to the schemes, the benefit of investment returns over time and other actions as they become viable.

At the start of the financial year, and due to the uncertainty in short-term outlook caused by the Covid-19 pandemic, Renold approached the Trustees of the Pension scheme with a request to defer £2.8m of contributions to the UK scheme for a 12 month period to 31 March 2021. The Trustees supported this proposal and it was agreed that the deferred contributions will be repaid over a five-year period commencing on 1 April 2022.

Dividend

The Board fully recognises the importance of dividends to shareholders. However, given the volatile operating environment created by the Covid-19 pandemic and with the corresponding impact on market demand, the Board has decided not to recommend the payment of a dividend on ordinary shares for the year ended 31 March 2021. This approach will remain under active review for future periods.

Summary

The Group has performed well in the face of the unprecedented economic and social turmoil created by the Covid-19 pandemic. Both divisions have performed with great credit in light of the demand reductions. Rapid management action to contain costs, governmental support and the benefits of previous restructuring, combined to substantially mitigate the impact of the revenue decline. Supply chain disruption and cost inflation will undoubtedly be key challenges in the new financial year but the strong financial performance this year, combined with the end of our strategic restructuring programme, has generated the financial freedom to exploit future organic and acquisition-related growth opportunities. I would like to thank all our employees around the world for their diligence and commitment in supporting the delivery of resilient results in the face of unprecedented adversity.

MARK HARPER

CHAIRMAN

16 July 2021

Chief Executive's Review

The year ended 31 March 2021 proved to be a challenging one, with the impact of the Covid-19 pandemic seeing Group revenue reduce by some £24.1m (12.7%) year-on-year. However, the strategic efforts undertaken over many years to make the cost base of the Company more flexible, together with various short term cost actions, and government support initiatives, has resulted in a resilient adjusted operating profit performance of £11.2m, a £2.2m (16.4%) reduction on the prior year level. The operating profit gearing¹ on the reduced sales being a creditable 9%. Statutory operating profit of £10.5m (2020: £10.1m) was £0.4m ahead of the prior year, reflecting the significant reduction in restructuring costs, with all major restructuring projects complete.

More challenging market conditions, particularly in our key European and US markets, adversely impacted demand. However, the more streamlined and flexible operating model developed through many years of strategic change has proved robust and has been reflected in the overall resilience of the operating margin.

Group order intake in the year fell to £170.0m, down 7.4% compared to the prior year. At constant exchange rates the reduction was 6.5%. Encouragingly, Group order intake recovered strongly and consistently through the second half with the final quarter 10.0% ahead of the equivalent prior year period. The order book at 31 March 2021 of £53.6m was 3.6% ahead of the prior year figure (9.2% ahead at constant exchange rates).

During the year, cash generation outperformed initial expectations, as a strong focus on cash management resulted in a c.50% reduction of net debt to £18.4m (31 March 2020: £36.6m).

This year, Renold advanced its roadmap for a more sustainable future, preparing to build the foundations upon which a sustainability strategy can be developed. Moving forward Renold will make Sustainability a guiding principle. We will strive to act responsibly, balancing the expectations of all our stakeholders whilst reducing our impact on the environment and increasing our contribution to the communities we operate within. Over the coming months and years, we plan to formulate specific plans and deliver outcomes which will ensure that Renold plays its part in creating a sustainable future for all.

Activity within the Chain division recovered more quickly as the year progressed with the second half of the year showing a rebound in revenue, with growth of £3.4m (5.4%) recorded over the levels seen in the first half. The disciplined action on costs led to a creditable £1.9m sequential increase in adjusted operating profit, from H1 to H2, with operating profit gearing¹ on the increased sales of 56%. Overall, year-on-year operating margins within the Chain division increased 90 basis points to 10.2%, aided by a significant increase in productivity and resultant profitability within the Chinese Chain business.

The TT division is generally a longer lead time, later cycle business. The relatively larger order book on hand at the start of the year supported revenue in the first half, while slower order intake during the first half of the year led to revenue levels in the second half of the year being some £2.1m lower than the first half. Adjusted operating profit remained flat from H1 to H2, due in part to a £0.8m reduction in underlying trading operating profit, being offset by an increase in the level of US government PPP support utilised by the business. The closing order book in the TT division finished the year £1.3m (7.2%) below the prior year level at constant exchange rates. On a positive note, order intake in the final quarter was ahead of the levels seen in Q2 and Q3, indicating that the recovery in this later cycle, business has commenced.

Looking forward the Group is well positioned to capitalise on the recovery from the Covid-19 pandemic.

¹ Operating profit gearing is defined as the year on year change in adjusted operating profit, divided by the year-on-year change in revenue

Covid-19 - Impact on operations and Renold's response

The first impact of the Covid-19 pandemic occurred at the end of the last financial year, affecting the Group's Chinese operations. The government enforced lockdown resulted in approximately four weeks of additional shut down following the Chinese New Year. Activity in China recovered fairly quickly so that business returned to more normal levels as the current financial year commenced.

Disrupted Chinese supply chains have continued to be an issue at various times during the current financial year, due in part to the availability of shipping containers, which has disrupted supply of product both to external customers and also to Group companies in Australasia, Europe and the US.

As the Covid-19 pandemic spread around the world, governments took different approaches resulting in inconsistent impacts in different parts of the world. New Zealand, Malaysia and India were subject to a complete lockdown, including the requirement for complete closure of factories, especially earlier on in the year.

Across Europe, our manufacturing sites remained open but with increased levels of absence due to the follow-on impacts of school closures and strict self-isolation procedures being observed.

Our US sites followed local requirements, which again were inconsistent between states. Our Chain factory in Tennessee remained open, while our Torque Transmission manufacturing site in New York state closed temporarily. Both facilities were ultimately designated essential businesses and subsequently remained open for the duration of the financial year.

As the year closed, the emergence of a new strain of the virus in India has caused a significant increase in cases, leading to another temporary enforced closure of our production facilities in the new financial year. Supply chain disruption, shortage of materials, and significant material price inflation have been a constant challenge to our Indian factory management over more recent months.

Throughout this year, our highest priority has been the safety and welfare of our employees. Each location has established a Covid-19 operational planning team with best practice and learning being shared across the different geographic teams. The solutions implemented differ by location, but include working from home for employees not required in our factories, changes to shift patterns to reduce the number of individuals on site at any point in time, changes to operational processes to ensure social distancing is enforced and strict approaches to self-isolation for individuals who are at risk of having been exposed to anybody showing symptoms or having been diagnosed as having the virus.

In anticipation of falling demand, at the start of the year, a number of actions were implemented to reduce costs and preserve cash flow, these actions were gradually eased as the year progressed. These included:

•	suspending all discretionary spend and restricting non-committed capital expenditure;
•	flexing working hours or operational headcount to match labour to demand;
•	rephasing or renegotiating payments on leased properties, direct and indirect tax payments and recovery of over-estimated corporate taxes where paid on account;
•	agreeing with the scheme Trustee a deferral of contributions to the UK pension fund for 12 months;
•	implementing temporary pay reductions for indirect employees, including a 25% reduction for the Executive Directors and 20% for the Non-Executive Directors;
•	re-negotiation of the Group borrowing facilities, and a precautionary, temporary relaxation of the Group's borrowing covenants; and
•	utilising government support packages in order to reduce potential redundancies and maintain the significant industry knowledge and high skill base that our employees offer.

As a result of the above actions, combined with the resilient trading performance of the business the Group's net debt position of £18.4m at the year end, (31 March 2020: £36.6m) was considerably improved and we retain significant headroom of £27.7m under the Group's £61.5m revised committed banking facilities. Throughout the year, the Group operated comfortably within both the original and revised banking covenants and delivered a significantly stronger result than modelled in the plausible downside scenarios as prepared for the 2020 Annual Report and Accounts.

All sites around the Group are currently open but, at the end of the year, a surge of cases within India and continued high levels of infection within parts of Europe, mean that the risk of further lockdowns and temporary site closures cannot be eliminated. Disruption to supply chains is causing shortages of materials and significant inflationary pressure on the price of those materials which are available. The Group has implemented a series of price increases throughout the business aimed at fully recovering inflationary cost increases.

Chain performance review

The impact of the Covid-19 pandemic resulted in revenue at constant exchange rates 12.0% below the prior year. Despite the drop in revenues, adjusted operating margins increased by 90 basis points during the year to 10.2% (2020: 9.3%). The operational gearing¹ on the reduced activity was a creditable 3%, as the impact of significant operational efficiency gains, especially in the Group's Chinese operations, were realised which, together with cost cutting measures and government support packages, mitigated the volume related shortfalls. Statutory operating profit was £12.6m (2020: £11.0m), £1.6m higher than the prior year, following the completion of all major restructuring programs and the significant reduction in restructuring costs.

	2021 £m	2020 (re-presented2) £m
External revenue	128.9	147.9
Inter-segment revenue	1.1	1.1
Total revenue	130.0	149.0
Foreign exchange	-	(1.3)
Revenue at constant exchange rates	130.0	147.7
Adjusted operating profit	13.3	13.8
Foreign exchange	-	(0.2)
Adjusted operating profit at constant exchange rates	13.3	13.6
Statutory operating profit	12.6	11.0

² The results for the year ended 31 March 2020 have been re-presented following the reclassification of one business unit from the Chain division to the TT division

Across the Chain division order intake for the year dropped 8.7% to £136.6m (2020: £148.3m), or 7.9% at constant exchange rates, as the impact of the Covid-19 pandemic spread through the global economy. The most significant reduction in order intake was experienced within the first quarter of the year, where constant exchange rate order intake was some 34.6% below the 2020 comparative. Since that point, order intake has recovered sequentially quarter on quarter, with quarter four order intake being some 16.9% ahead of the equivalent prior year period, with the closing order book at £39.2m some 19.4% ahead of last year at constant exchange rates.

Revenue was similarly reduced due to the pandemic and at constant exchange rates reduced by 12.0%, to £130.0m (2020: £147.7m). On a statutory basis, revenue decreased 12.8%. The first quarter of the year, was supported by the opening order book but quarter two revenue was 19.4% below the prior year comparator at constant exchange rates. Since the half year, the strengthening order intake has generated sequential increases in revenue, despite short-term constraints in global supply chains subduing activity in the final quarter of the year.

Chain Europe, which represents our largest Chain business, saw the steepest decline in constant exchange rate revenues of 16.6%. Revenue strengthened significantly in the final quarter, but continued to trail the prior year average by 7.8%, as the recovery in activity was curtailed by short term logistics problems, resulting from the global shortage of containers and the impact of the third lockdown in mainland Europe which caused a temporary shortfall in book and ship orders.

In the Americas, the market decline experienced in the first three quarters of the year was more pronounced with the shortfall, especially in large OEM orders, resulting in a decline in constant exchange rate revenue of 13.9%. Activity in the final quarter recovered sharply, being 22.2% ahead of the average over the first three quarters, as both the results of the US presidential election and the strong roll out of the US vaccine program saw confidence in the US economy grow significantly.

In Australasia, activity was mixed, but broadly positive across the region. Revenue at constant exchange rates grew by 4.6% year-on-year. Australia itself had a good year with revenue at constant exchange rates 12.8% higher than the prior year, due in part to customers changing buying patterns to source more domestically produced goods as a result of continued supply chain disruption of imported materials. Malaysia, Thailand, and New Zealand encountered reductions in activity in excess of 10%. The highlight of the region was Indonesia where activity bucked the global trend and grew 38%, albeit from a low base.

Domestic revenues in India also suffered in the year with constant exchange rate revenue 15.3% lower driven by a government enforced shutdown and subdued activity in the first half of the year. This was followed by a significant recovery in demand being curtailed by short term material supply issues as domestic steel production was reduced or didn't recover sufficiently quickly. The more recent spread of the new Covid-19 variant saw a further temporary cessation of production in May 2021.

Chinese revenues, which were the first to be impacted by the global pandemic in the final quarter of 2020, remained subdued throughout the year. Significant productivity improvements occurred as the previous year's c.20% reduction in head count was followed by a further 6% reduction in the current year, which along with many additional operational projects improved the profitability of the business substantially.

Despite the drop in revenues, the adjusted operating profit margin for Chain increased by 90 basis points during the year to 10.2% (2020: 9.3%), which places the Group in a strong position to capitalise as the global economy recovers.

¹ Operating profit gearing is defined as the year-on-year change in adjusted operating profit, divided by the year-on-year change in revenue

Torque Transmission performance review

Torque Transmission also experienced challenging market conditions due to the Covid-19 pandemic. This, combined with the expected fall in revenue from a major Couplings defence project, resulted in constant exchange rate revenues declining by 14.3%. On a statutory basis, revenue decreased 15.2%. The adjusted operating profit margin from continuing operations increased by 130 basis points during the year to 12.8% (2020: 11.5%) with the impact of the declining revenue being more than offset by efficiency gains, cost reductions and a one off £0.8m receipt of US government support. Statutory operating profit was £5.0m (2020: £4.9m).

	2021 £m	2020 (re-presented1) £m
External revenue from continuing operations	36.4	41.5
Inter-segment revenue	2.7	4.6
Total revenue from continuing operations	39.1	46.1
Foreign exchange	-	(0.5)
Revenue from continuing operations at constant exchange rates	39.1	45.6
Adjusted operating profit	5.0	5.3
Foreign exchange	-	(0.1)
Adjusted operating profit from continuing operations at constant exchange rates	5.0	5.2
Statutory operating profit from continuing operations	5.0	4.9

¹ The results for the year ended 31 March 2020 have been re-presented following the reclassification of one business unit from the Chain division to the TT division

In a similar pattern to the Chain division, order intake for the year dropped 4.6% to £37.4m (2020: £39.2m), 3.4% at constant exchange rates, again as the impact of the Covid-19 pandemic became widespread through the global economy. Due to the longer lead times within the Torque Transmission division, the most significant reduction in order intake was experienced within the second quarter of the year when order intake at constant exchange rates was some 18.7% below the 2020 comparative. Since that point order intake has recovered such that, by quarter four, order intake was marginally ahead of the prior year average. The Torque Transmission division has a longer sales cycle than Chain and therefore the full recovery from Covid-19 is likely to take place in the coming months.

The Torque Transmission division experienced more challenging market conditions as the year progressed. The longer sales cycle and order book initially sheltered the division from some of the impact of Covid-19 in the first quarter. Most of the individual business units saw a decline in revenue as a result of the pandemic. Demand in many geographic markets declined during the year, although this was partially offset by growth of 25% in China. The Chinese growth was in part due to the pandemic hitting China in the latter part of the previous year, so the economy was further along the path to recovery, but also due to the demand from our largest customer for air preheaters continuing to grow. Within the Couplings business, the challenging market conditions combined with the revenue phasing of the large multi-year defence contract resulted in an overall revenue decline.

The Gears business continued to make good progress both in terms of margin improvements and cost reductions. Despite the difficult market conditions, the Gears unit delivered an increased operating profit margin at constant exchange rates. Order intake in the Gears business unit was £1.8m (26.5%) higher than sales for the year primarily as a result of a large order to supply escalator gear units for the Budapest metro upgrade which will predominantly be delivered in the next financial year. Demand from the OEM sector, particularly for larger projects within the US and UK our key geographic markets, reduced during the second quarter and took until the final quarter to fully recover.

Although order intake and revenues were subdued within the Couplings business, demand has started to return particularly as a result of improved customer service levels. Targeted marketing campaigns have so far proved successful with an increased interest from customers in the RBI product which offers users a number of advantages over other products available in the market. The business expects to be awarded an additional large major contract as a follow on to the current defence projects that are currently being manufactured. Terms are likely to be agreed during the next financial year and an announcement will be made if appropriate.

With the exception of our manufacturing site in New York state, which closed temporarily, all Torque Transmission factories have remained open throughout the pandemic with individual sites being quick to implement safe working practices. Working patterns were initially changed to keep teams segregated and ensure continuity of production at all times.

As a result of the largest two manufacturing sites being based in the UK, the division as a whole experienced some initial disruption from Brexit both in terms of inbound and outbound transport. The initial disruption appears to have largely subsided and to date the division has not suffered any adverse financial impact from Brexit.

Despite order intake and revenues being adversely impacted by the pandemic, the division as a whole has seen a pick-up in activity during the last quarter of the financial year. The Torque Transmission division has a longer sales cycle than Chain and therefore, the full recovery from Covid-19 is likely to be delivered over the coming months.

Strategic Plan - update on progress

Renold is committed to initiatives towards a sustainable future, building the foundations upon which a long-term sustainability strategy can be developed. Moving forward Renold will make Sustainability a guiding principle. We will strive to act responsibly balancing the expectations of all our stakeholders whilst reducing our impact on the environment and increasing our contribution to the communities we operate within. Over the coming months and years, we plan to formulate specific plans and deliver outcomes which will ensure that Renold plays its part in creating a sustainable future for all.

We have appointed a Sustainability program leader, who, working with the Board, has commenced the formulation of a sustainability strategy. The strategy will embrace the Group's future actions in terms of:

•	Environment. Reducing the use of energy, carbon emissions, waste, consumption and use of hazardous materials, travel and transportation, and the optimisation of supply chains.
•	Workforce. Addressing engagement and wellbeing, workplace culture, talent attraction, succession planning, together with existing work concerning health and safety, diversity and equality, training learning and development.
•	Communities. Encouraging greater links with the communities in which we operate, charitable activities, CSR policy and practice, and supporting employee involvement.
•	Governance. Continuing to develop transparent and compliant reporting, risk management , certification, policies and procedures, and embedding our values behaviours and ethics.
•	Customers. Supporting our customers in achieving their own sustainability goals through the development and supply of high specification, durable, environmentally responsible products which use less lubrication, reduce customers' energy usage and need replacement less frequently, and therefore minimise the impact on the environment.
•	Economics. Enabling a predictable and sustainable financial performance from the Group, benefiting from our sustainability focus and balancing this with the need to deliver stakeholder expectations and financial prudence.

As previously outlined, the relocation of the Chinese factory was a major project, upgrading the infrastructure and capability of our business there. Having opened the new Jintan factory and completed the transfer from the old factory by 31 March 2019, operational productivity took some time to return to historical levels during the year ended 31 March 2020. This was as expected following the recruitment and training of an almost completely new workforce. During the 2021 financial year significant productivity improvements have been realised, including a further 6% reduction in headcount, following the 20% reduction achieved during the prior year. Adjusted operating profit for the Jintan factory in the year improved significantly, despite the Chinese business overall seeing a pandemic related £2.8m reduction in revenue. Whilst the factory move has attracted most of the attention within this project, the facility also benefitted from installation of our new ERP system. Our new capabilities to run the site and business are substantially better than before and the insight and analysis available underpins our belief that the Chinese business can continue to improve further.

Following the decision taken last year to acquire 100% ownership of our Indian business, efforts continue to fully integrate the business into the Group supply chain. Investments in production capabilities, including improvements in the product quality and uniformity, are both underway. India offers a very attractive market in its own right and an interesting and effective alternative to our Chinese Chain manufacturing site. India provides the Group with an alternate supply base as customers' supply chains flex, driven by an awakening of concern about tariffs and the concentration of supply from a single region.

These projects highlight an intentional trend within our capital allocation decisions for the Group. With the large infrastructure projects complete, capital allocation decisions are now less frequently limited purely by a site's domestic requirements but are focused on customer service and optimising profitability for the Group. For the Chain division especially, this allows us to access economies of scale and offer a truly global service with increasing relevance to large OEM customers. Renold is increasingly being seen as an integrated international supplier and less as a series of regional businesses.

Having created a stronger operational platform for the Group and with the significant strengthening of our financial position, we have increased our focus on how we can accelerate performance through value-enhancing acquisitions. As a result, we have begun developing a pipeline of acquisition opportunities which we believe have the ability to meet our strict financial and operational criteria. In line with this approach, the Group completed the acquisition of the conveyor chain business of Brooks Limited, in Manchester, UK on 8 April 2021. The business operates within the conveyor chain market and is expected to generate additional sales for the Group of c.£1.0m and add c.£0.2m to Group operating profit for the year ending 31 March 2022. The business is currently being integrated into the Renold UK Service Centre. Whilst this acquisition is only small it will hopefully be the first of a number of bolt-on acquisitions for the Group which will allow us to expand our product offering and customer base, further expand our already diverse product portfolio into adjacent market sectors and allow us to capitalise on our ability to provide customers with extremely high specification products with real benefit to their own business performance.

The strategic progress made by the Group over recent years has been significant. Investments in both our production capabilities and our IT environment have resulted in significant benefits with:

•	improvements in productivity and operational efficiency as evidenced (pre-Covid) by growing sales per employee;
•	improvements in levels of customer service being delivered through the Group's, Step 2 Service, programme; and
•	greater flexibility in the cost base as we start to reduce the correlation between revenue and direct labour.

While revenue needs to recover to fully realise the financial benefits of these improvements, the significant investment in infrastructure and cost to change is largely at an end. As markets recover, cash generated from trading will no longer be required to support investment in substantial change programmes creating more flexibility in capital allocation decisions.

In the near-term, market demand will continue to improve as the world recovers from the impact of the Covid-19 pandemic. The benefits of the strategic programme already delivered have left Renold well positioned to capitalise on this recovery in the years ahead.

Macroeconomic landscape and business positioning

With the Covid-19 pandemic resulting in continuing short-term uncertainty, it is necessary to look at the underlying fundamentals of the Group and the markets we serve to understand why Renold continues to develop as a business. Many of these intrinsic values have remained consistent over time but are continually being enhanced and increased. They include:

•	Valued and recognised brand with considerable engineering expertise
	The Renold brand has been built up over our 150-year history and is trusted by customers to deliver exceptional products.
•	Global market position and unique geographical manufacturing capability
	The global market position of Renold has existed for many years but following significant strategic restructuring in the Chain division, the geographic manufacturing footprint is unique permitting us to service customer demand with increasing levels of flexibility - a critical factor in a rapidly changing market environment.
•	Relatively low cost, but business critical products
	Chain and Torque Transmission products are fundamental elements of systems into which they are incorporated. Our products are often a small proportion of the cost of the entire system, but are critical to its operation.
•	Broad base of customers and end-user markets
	Renold products are used in an extremely diverse range of end applications and geographies resulting in a huge spread of customers and markets served. Markets and applications will change and vary in the current dynamically changing environment but with its wide spread of products, geographies , applications and customers, Renold is well positioned to cope.
•	High specification products delivering environmental benefits for our customers
	Renold products have always been high specification, premium products which deliver exceptional benefits to customers. Whether through greater efficiency than competitors' products leading to lower power usage, longer life providing lower lifetime usage of materials and energy in their manufacture, or lower lubrication requirements, Renold products are well placed for an increasingly environmentally aware marketplace. Our products are capable of helping our customers meet their sustainability objectives whilst saving them money.

Outlook

I am pleased with the Group's robust performance through the pandemic, which reflected the benefits of the strategic development completed over prior years. Our employees around the world have responded excellently to the challenges we have faced and I thank them for their dedication and commitment to the Company and our customers.

Throughout the year, the business performance has been on an improving trend and I am pleased to report that our order books have continued to grow in the early part of the new financial year. Whilst there remains considerable Covid-19-related challenges in some parts of the world, with supply chain issues and rising costs, we are well placed to deal with these and our performance over the last 12 months gives me confidence that we will return to growth in the new financial year.

Robert Purcell

Chief Executive

16 July 2021

Finance Director's Review

Renold delivered a resilient performance during the year, even though the Group's markets were significantly impacted by the Covid-19 pandemic. Despite the reduction in revenue, the business produced an adjusted operating margin of 6.8% (2020: 7.1%) and achieved a significant reduction in net debt of £18.2m to £18.4m (31 March 2020: 36.6m).

Orders and revenue

	2021			2020
	Order intake £m	Revenue £m	Operating profit £m	Order intake £m	Revenue £m	Operating profit £m
Continuing operations	170.0	165.3	10.5	183.6	189.4	10.1
Restructuring costs	-	-	-	-	-	2.4
Amortisation of acquired intangible assets	-	-	0.7	-	-	0.9
Adjusted	170.0	165.3	11.2	183.6	189.4	13.4
Impact of foreign exchange	-	-	-	(1.8)	(1.8)	(0.3)
Adjusted revenue at constant exchange rates	170.0	165.3	11.2	181.8	187.6	13.1

Across the Group, order intake for the year dropped 7.4% to £170.0m (2020: £183.6m), or 6.5% at constant exchange rates, as the impact of the Covid-19 pandemic was reflected through the wider economy.

Group revenue from continuing operations reduced by £24.1m (12.7%) to £165.3m. Revenue at constant exchange rates decreased similarly by £22.3m (11.9%). Activity throughout the first three quarters of the year was remarkably consistent, as the production plants trimmed production and operating expenditure in line with the lower order intake levels. Activity in quarter four started to recover, increasing by c.10% in response to the increased order book, with activity held back in the short term by constraints on global supply chains emerging from the pandemic.

On a divisional basis, the Chain division saw revenue from continuing operations and at constant exchange rates decrease by 12.0% while Torque Transmission decreased by 14.3%.

Operating profit

The Group generated an adjusted operating profit from continuing operations for the year of £11.2m (2020: £13.4m). Reported operating profit from continuing operations after adjusting items was £10.5m (2020: £10.1m).

Despite a 12.7% reduction in revenue from continuing operations, adjusted operating margins fell by only 30 basis points during the year to 6.8% (2020: 7.1%). The operating profit gearing¹ on the reduced activity was a creditable 9%, as the impact of the Group's ongoing focus on lowering the cost base, and £4.0m utilisation of government support programs, together with short term operational efficiency and productivity improvements were realised.

¹ Operating profit gearing is defined as the year-on-year change in adjusted operating profit, divided by the year-on-year change in revenue

Foreign exchange rates

Foreign exchange rates have remained volatile during the year, with an overall strengthening of Sterling against a number of currencies through the year. The most significant movement for Renold has been the 11% depreciation of the US Dollar against Sterling between March 2020 and March 2021. The Sterling to Euro rate has experienced similar volatility, with Sterling ending the year 4% stronger at 31 March 2021 when compared to 31 March 2020.

Phasing of movements over the current and prior year mean the weighted average exchange rate used to translate the Euro and US Dollar trading results is less volatile. The impact on the weighted average exchange rate used to translate US Dollar reflected only a 3% depreciation of the US Dollar based on a weighted average rate of 1.31 for the year ended 31 March 2021 (2020: 1.27). The Euro strengthened by 2% based on a rate of 1.12 for the year ended 31 March 2021 (2020: 1.14).

FX Rates (% of Group sales)	31 Mar 20 FX rate	31 Mar 21 FX rate	31 Mar 21 Var %	2020 Average FX rate	2021 Average FX rate	2021 Var %
£GBP/Euro (28%)	1.13	1.17	4%	1.14	1.12	-2%
£GBP/US$ (35%)	1.24	1.38	11%	1.27	1.31	3%
£GBP/C$ (5%)	1.77	1.73	-2%	1.69	1.73	2%
£GBP/A$ (7%)	2.03	1.81	-11%	1.87	1.82	-3%

If the year-end exchange rates had applied throughout the year, there would be an estimated decrease of £5.5m to revenue and £0.5m to operating profit.

Adjusting items

Adjusting items for the year ended 31 March 2021 comprise acquisition related intangible asset amortisation costs of £0.7m (2020: £0.9m). No restructuring or adjusting charges were incurred in the year ended 31 March 2021, representing an improvement in the underlying quality of earnings of the Group.

In the prior year, restructuring costs of £2.4m were incurred primarily as part of the Strategic Plan, including redundancy costs associated with headcount reductions and various other smaller costs associated with restructuring.

In the prior year costs of £1.5m, disclosed as a loss from discontinued operations, related to the disposal of the South African Torque Transmission business unit.

Financing costs

Total interest costs in the year were £4.6m (2020: £5.2m).

Total loan financing costs include external interest on bank loans and overdrafts of £1.6m (2020: £2.1m), amortisation of arrangement fees and costs of refinancing, including the additional costs from the refinancing completed in March 2019, of £0.2m (2020: £0.2m) and £0.5m (2020: £0.5m) of interest expense on lease liabilities. The reduction in interest payable on external bank loans and overdrafts was driven by the significant repayments of borrowings made during the year ended 31 March 2021.

The net IAS 19R finance charge (which is a non-cash item) was consistent with the prior year at £2.2m (2020: £2.2m).

Financing costs also include £0.1m (2020: £0.2m) resulting from the unwinding of discounts on the deferred build costs of the Chinese factory, classified as non-current trade and other payables.

Profit before tax

Profit before tax was £5.9m (2020: £4.9m), 20% higher than the prior year, driven by the increased operating profit and reduction in net financing costs.

Taxation

The current year tax charge of £2.1m (2020: £1.5m) is made up of a current tax charge of £2.2m (2020: £0.6m) and a deferred tax credit of £0.1m (2020: £0.9m charge). The increase in the current tax charge is driven by an increase in the provision for open tax matters which are yet to be agreed with the relevant tax authorities across the Group's geographies, reflecting the best estimate of amounts expected to be paid in settling these inquiries, for further details see Note 4.

The effective tax rate for the year was 36% (2020: 31%).

EARNINGS PER SHARE

A profit after tax of £3.8m was achieved for the financial year ended 31 March 2021 (2020: £3.4m). Adjusted earnings per share were 2.0p (2020: 2.9p).

The quality of the Group's earnings improved during the year, driven by the significant reduction in restructuring costs, resulting in basic earnings per share from continuing operations of 1.7p compared to 1.5p for the year ended 31 March 2020.

	2021 £m	2020 £m
Adjusted profit after taxation from continuing operations	4.5	6.7
Effect of adjusting items, after tax:
- Amortisation of acquired intangible assets	(0.7)	(0.9)
- Restructuring costs	-	(2.4)
Profit after taxation from continuing operations	3.8	3.4
Attributable to:
- Owners of the parent	3.8	3.3
- Non-controlling interest	-	0.1
Basic adjusted earnings per share	2.0p	2.9p
Basic earnings per share from continuing operations	1.7p	1.5p

Balance sheet

Net liabilities at 31 March 2021 were £6.1m (31 March 2020: net liabilities £0.4m). Although net profit of £3.8m was delivered for the year, the impact of the valuation of the Group's pension liabilities and the retranslation of overseas operations resulted in an increase in net liabilities.

The pension deficit, on an IAS 19R basis, increased to £102.4m (31 March 2020: £97.6m). The net liability for pension benefit obligations was £84.0m (2020: £80.2m) after allowing for a net deferred tax asset of £18.4m (31 March 2020: £17.4m). At the last triennial pension valuation the technical provisions deficit of the UK scheme, which is how the trustees and regulator view the scheme, was only £9.1m. This compares to the IAS 19R deficit for the UK pension fund of £77.5m. The difference represents the valuation of the capital asset reserve (CAR), currently £50.8m, being a guaranteed set of future discounted cash contributions to the scheme for a fixed period of 25 years commencing in 2013.

Overseas schemes now account for £24.9m (24%) of the net pension deficits and £22.9m of this is in respect of the German scheme which is unfunded.

As part of its long-term financial planning the Company is reorganising its balance sheet and reserves through the cancellation of the entire amount of its share premium account and capital redemption reserve. The share premium account and capital redemption reserve are non-distributable reserves and accordingly, the purposes for which they can be used are restricted. The reduction of capital creates sufficient distributable reserves to provide the Board with greater flexibility with regard to how it manages its capital resources. An order of the High Court confirming the above described capital reduction became effective on 27 May 2021, increasing distributable reserves by £45.5m and, if applied to the Group consolidated balance sheet at 31 March 2021, would decrease the consolidated retained earnings deficit from £69.3m to £23.8m.

Cash flow and NET DEBT

	2021 £m	2020 £m
Adjusted operating profit	11.2	13.4
Add back depreciation and amortisation	10.2	10.5
Adjusted EBITDA1	21.4	23.9
Movement in working capital	6.4	(5.3)
Net capital expenditure	(2.9)	(9.1)
Operating cash flow1	24.9	9.5
Income taxes	0.7	(1.6)
Pensions cash costs	(2.1)	(4.4)
Restructuring spend	(0.2)	(0.9)
Repayment of principal under lease liabilities	(3.2)	(3.3)
Financing costs paid	(2.2)	(2.9)
Purchase of minority interest	-	(1.8)
Other movements including share-based payments	0.3	(0.9)
Change in net debt	18.2	(6.3)
Closing net debt	(18.4)	(36.6)

¹ Adjusted EBITDA and operating cash flow are alternative performance measures as defined in Note 19.

Cash generation in the year was very strong, with net debt reducing by £18.2m from the position at 31 March 2020, to £18.4m. Net debt at 31 March 2021 comprised cash and cash equivalents of £19.9m (31 March 2020: £15.6m) and borrowings of £38.3m (31 March 2020: £52.2m).

Most of the £6.4m improvement in working capital was delivered in inventory, where measures were taken to improve the cash position in the short term. Specific and measured increases in inventory are planned for the new financial year in order to maintain customer service levels as demand returns. Receivables and payables moved broadly in line with activity levels in the period.

Net capital expenditure at £2.9m was tightly controlled and reduced by £6.2m compared to the prior period. The reduction in spend to maintenance levels was possible due to initiatives in recent years to invest in the production capabilities of our plants. Strategic investments in improved heat treatment facilities and the standardised IT system for the Group continued, but at a slower pace. Looking ahead, the Group continues to invest in its manufacturing operations and IT/IS systems and it is the intention now to increase capital expenditure again to more normal levels.

Pension cash costs of £2.1m were lower than the prior year equivalent of £4.4m. The decrease in contributions is due to an agreement reached with the UK Pension Trustee in April 2020, whereby £2.8m of contributions due to be paid to the UK scheme in FY 2021, were deferred to be paid over a five year period commencing 1 April 2022, in light of the potential impact of the Covid-19 pandemic. This agreement demonstrates the strong alignment between the Group and the Pension Trustee.

Corporation tax cash received was £0.7m (2020: £1.6m paid). The net inflow for the current year is driven by a review of payments on account across the Group, with revised payment profiles leading to a recovery of £1.3m of prior year contributions.

On a statutory basis, net cash flow from operating activities increased to £26.7m (2020: £10.9m).

Debt facility and capital structure

The Group's committed multi-currency revolving credit facility (MRCF) totals £61.5m, with an additional £20.5m accordion facility providing a route to additional funding if required, although this element is not committed. The facility matures in March 2024.

At 31 March 2021, the Group had unused credit facilities totalling £28.7m and cash balances of £19.9m. Total Group credit facilities amounted to £67.0m, all of which were committed.

The Group has operated well within the revised and original covenant levels throughout the year ended 31 March 2021 (see further detail in the Going Concern section below) and expects to continue to operate comfortably within covenant limits going forward.

The net debt/adjusted EBITDA ratio as at 31 March 2020 was 1.0 times (covenant: up to 3.5 times; 31 March 2020: 1.7 times), calculated in accordance with the banking agreement. The adjusted EBITDA/interest cover as at 31 March 2021 was 10.9 times (covenant: greater than 3.0 times; 2020: 9.0 times), again calculated in accordance with the banking agreement.

Going concern

The financial statements have been prepared on a going concern basis. In determining the appropriate basis of preparation of the financial statements, the Directors are required to consider whether the Group can continue in operational existence for the foreseeable future.

Further information in relation to the Group's business activities, together with the factors likely to affect its future development, performance and financial position, liquidity, cash balances and borrowing facilities is set out in the Chairman's Statement, the Chief Executive's Review, the Finance Director's Review and the Principal Risks and Uncertainties. Additional details of the Group's cash balances and borrowings and facility are included in Notes 13, 14 and 17. 

The key covenants attached to the Group's £61.5m multi-currency revolving credit facility relate to leverage (net debt to EBITDA) and interest cover, which are measured on a pre-IFRS 16 basis. While liquidity remained sufficient under the bank facility, the economic uncertainty arising from the Covid-19 pandemic resulted in the Group negotiating, in May 2020, to amend the covenant structure over the period to September 2021. The revised structure replaced the net debt to EBITDA and EBITDA to net financing charge tests with minimum rolling 12-month EBITDA and minimum available liquidity tests at quarterly test dates, creating additional flexibility in uncertain operating conditions. The Group has achieved a significant reduction in net debt during the current financial year, with net debt reducing by £18.2m to £18.4m (31 March 2020: £36.6m). Accordingly, the Group has remained within the revised and original borrowing covenant levels throughout the year ended 31 March 2021.

The Directors have assessed the future funding requirements of the Group and the Company and compared them to the level of available borrowing facilities. The Directors have also considered the actual impact that the pandemic has had on the business since the beginning of the outbreak and the related decline in revenues, and the plausible future impact of Covid-19 on the Group's activities and performance, in preparing their going concern assessment.

Whilst the situation remains uncertain the impact on trading was significantly less severe than the downside scenario modelled in the prior year. Going forward the Group has modelled further potential severe but plausible impacts on revenues, profits and cash flows. In the severe but plausible downside scenario (Group revenue being more than 25% below revenues for the year ended 31 March 2019; the last period which was not impacted by the Covid-19 pandemic), the Group continues to maintain sufficient liquidity and meets its leverage and interest cover covenants (which revert to the original covenant tests from September 2021) without using the full extent of mitigating actions that would be available in the event of such a severe and extended decline.

Following this assessment, the Directors have formed a judgement, at the time of approving the financial statements, that there are no material uncertainties that cast doubt on the Group's going concern status and that it is a reasonable expectation that the Group has adequate resources to continue in operational existence for at least the next 12 months. For this reason, the Directors continue to adopt the going concern basis in preparing the consolidated financial statements.

Treasury and financial instruments

The Group's treasury policy, approved by the Board, is to manage its funding requirements and treasury risks without undertaking any speculative risks. Treasury and financing matters are assessed further in the section on Principal Risks and Uncertainties.

To manage foreign currency exchange risk on the translation of net investments, certain US Dollar denominated borrowings taken out in the UK to finance US acquisitions are designated as a hedge of the net investment in US subsidiaries. At 31 March 2021 this hedge was fully effective. The carrying value of these borrowings at 31 March 2021 was £6.5m (31 March 2020: £7.3m).

At 31 March 2021, the Group had 1% (31 March 2020: 1%) of its gross debt at fixed interest rates. Cash deposits are placed short-term with banks where security and liquidity are the primary objectives. The Group has no significant concentrations of credit risk with sales made to a wide spread of customers, industries and geographies. Policies are in place to ensure that credit risk on individual customers is kept to a minimum.

Pension assets and liabilities

The Group has a mix of UK (84% of gross liabilities) and overseas (16%) defined benefit pension obligations as shown below.

	2021			2020
	Assets £m	Liabilities £m	Deficit £m	Assets £m	Liabilities £m	Deficit £m
Defined benefit schemes
UK scheme	136.3	(213.8)	(77.5)	128.9	(196.9)	(68.0)
Overseas schemes	14.9	(39.8)	(24.9)	12.8	(42.4)	(29.6)
	151.2	(253.6)	(102.4)	141.7	(239.3)	(97.6)
Deferred tax asset			18.4			17.4
Net deficit			(84.0)			(80.2)

The Group's retirement benefit obligations increased from £97.6m (£80.2m net of deferred tax) at 31 March 2020 to £102.4m (£84.0m net of deferred tax) at 31 March 2021. The largest element of the increase relates to the UK scheme where the deficit increased from £68.0m to £77.5m due to a reduction in AA corporate bond yields, which increases the present value of gross liabilities under IAS 19R . The deficit of the overseas schemes decreased by £4.7m to £24.9m reflecting changes in assumptions for discount and inflation rates. All defined benefit schemes, with the exception of one scheme for blue-collar workers in the US, are closed for future accrual.

UK funded scheme

The deficit of the UK scheme increased in the year to £77.5m (31 March 2020: £68.0m) reflecting a number of changes in assumptions and factors.

The increase in gross liabilities of £16.9m arose primarily from a combination of an increase in the inflation assumption (CPI of 2.7% compared with 2.0% in the prior year) and a decrease in the rate used to discount the scheme's liabilities (discount rate of 2.0% compared with 2.4% in the prior year).

Partially offsetting the increase in liabilities was an increase in the value of the scheme's assets, which recovered strongly following the impact on equity markets of the Covid-19 pandemic in the prior year.

The latest triennial actuarial valuation of the UK Scheme, with an effective date of 5 April 2019, was agreed in March 2020 and identified a deficit of £9.1m. This is significantly lower than the IAS 19R deficit, largely as the triennial valuation places a value on the Group's future cash payments to the scheme under the central asset reserve structure established in June 2013. It is expected that the triennial valuation deficit of £9.1m can be recovered through asset outperformance, above the prudent levels assumed in the valuation, over the remaining life of the scheme. As a result, there are no changes to the long-term contribution arrangements.

Contributions in the year ended 31 March 2021 were £0.6m (2020: £3.1m). The decrease in contributions compared to the prior year follows an agreement reached with the Trustee in April 2020 such that £2.8m of contributions due to the UK scheme were deferred for the 12-month period to 31 March 2021 in light of the potential impact of the Covid-19 pandemic. The deferred contributions will be repaid over the five-year period commencing on 1 April 2022. The underlying level of contributions to the UK scheme continue to increase annually by RPI plus 1.5% (capped at 5%).

Additional contributions will be due to the scheme in future based on 50% of any dividend paid (until such time that the deferred £2.8m of contributions is repaid; returning to 25% thereafter) or £1.0m per annum if the Group delivers adjusted operating profit of over £16.0m. The next triennial valuation date will be as at 5 April 2022.

Overseas schemes

The largest element of the overseas schemes is the German unfunded scheme, with a total deficit of £22.9m (31 March 2020: £23.9m). Other overseas funded schemes comprise a number of smaller schemes around the world, with a combined deficit of £2.0m (31 March 2020: £5.7m). The combined deficits of all the overseas schemes decreased by £4.7m. These changes were most significantly a reduction in the liability of the funded US schemes due to strong increases in the schemes' asset values.

For overseas pension schemes, the Company contributions in the year were £1.5m (2020: £1.3m).

JIM HAUGHEY

GROUP Finance Director

16 July 2021

Principal Risks and Uncertainties

Risk is inherent in our business activities. We take steps at both a Group and subsidiary level to understand and evaluate potential risks and uncertainties which could have a material impact on our performance in order to mitigate them. Accordingly, a risk aware environment is promoted and encouraged throughout the Group. Details of the principal risks and uncertainties are summarised below and set out in more detail in the Annual Report.

In addition to the principal risks and uncertainties below, the risk review process has highlighted an emerging risk posed by the wider effects of climate change on the Group's business. Continued environmental activism around climate change has started to influence some consumers to reduce their carbon footprints. There is the potential that this could start to impact some of the sectors we operate in. The risks associated with climate change are not considered principal risks at this time, particularly as Renold supports customers in achieving their own sustainability goals through the development and supply of high specification, durable, environmentally responsible products which ultimately minimise the impact on the environment. We will, however, continue to monitor this emerging situation.

1 MACROECONOMIC AND POLITICAL VOLATILITY
DETAILED RISK Material changes in prevailing macroeconomic or geopolitical conditions could have a detrimental impact on business performance. We operate in 17 countries and sell to customers in over 100 and therefore we are necessarily exposed to economic and geopolitical risks in these territories.	POTENTIAL IMPACT Potential touchpoints include: · Commodity prices which have a negative impact on demand in the whole supply chain. · Changes to tariffs and import duties which can distort customer buying decisions. · Foreign exchange volatility can impact customer buying patterns, leading to lower demand or the need to rapidly switch supply chains.
EXISTING MITIGATION CONTROLS · Our diversified geographic footprint inherently exposes us to more countries where risks arise but conversely provides some degree of resilience and flexibility. · Actions to lower the Group's overall breakeven point also serve to reduce the impact of any global economic slowdown. · A focus on 'predict and respond', e.g. sales forecasting and raw material price monitoring, leading to operational change such as sales price increases or cost reductions. · Strong core banking group with multi-currency debt facility. FY21 risk trend impacted by continued geopolitical risk and restrictions around free movement of goods, especially as a result of changes arising as a result of the UK's exit from the EU. The macroeconomic risk arising from the after-effects of the Covid-19 pandemic are beginning to stabilise. Significant management actions have been implemented in mitigation of the additional risks posed by these factors.

2 STRATEGY EXECUTION
DETAILED RISK The Group's ongoing strategy requires the co-ordinated delivery of a number of complex projects.	POTENTIAL IMPACT While these projects are designed to deliver targeted benefits, they have the potential to negatively impact the Group's operations if not appropriately managed.
EXISTING MITIGATION CONTROLS · The Strategic Plan has been developed to deliver a turnaround in performance and to make that performance more stable and less exposed to revenue volatility. · The Board reviews progress against the different strategic projects in each of its meetings. This is based on a regularly updated report from the CEO which groups the individual projects into themes linked directly to our Strategic Objectives. · Major projects are all managed in accordance with best practice project management techniques with at least one member of the Executive team on the relevant Steering Committees. FY21 risk trend continues to decrease as major infrastructure changes are complete. To support the execution of the Groups strategic objectives, activity in the year incorporates supply chain rationalisation, including the determination of optimal product production locations and optimising business processes.

3 CORPORATE TRANSACTIONS/BUSINESS DEVELOPMENT
DETAILED RISK Part of the Group's strategy is to grow through selective acquisitions. Performance of acquired businesses may not reach expectations, impacting Group profitability and cash flows. Similarly, poorly managed asset sales may result in under-achievement of value.	POTENTIAL IMPACT · Any corporate transaction involves risks at various stages of the project life cycle. · During the acquisitions phase, value can be lost through over-paying, missing key issues in due diligence or potential value leakage through poor contract negotiation. Value can also be lost through a poorly planned or executed integration phase. Finally, failure to deliver anticipated benefits during the 'business as usual' phase can also lead to a loss of value. · A poorly managed asset sale or corporate disposal may realise a lower value.
EXISTING MITIGATION CONTROLS · Monitoring of specific acquisition targets: Business acquisition process incorporating concept evaluation, business case, indicative offer/heads of terms, due diligence (covering a range of criteria), integration planning and execution and post integration appraisal which in turn feeds back to the business acquisition process. · Use of third-party specialists to address risks specific to each corporate transaction. · Formation of top-down cross-functional project teams and plans. These specifically address any issues or risks identified during the planning and due diligence processes. · Deployment of detailed benefits realisation plans. FY21 risk trend unchanged.

4 HEALTH AND SAFETY IN THE WORKPLACE
DETAILED RISK The risk of death or serious injury to employees or third parties associated with Renold's worldwide operations. We are proud of the progress we have made in recent years, but recognise that we have more to do.	POTENTIAL IMPACT Accidents caused by a lack of robust safety procedures could result in life-changing impacts for employees, visitors or contractors. This will always be unacceptable. In addition, accidents could result in civil or criminal liability for both the Group and the Directors and officers of the Group and Group companies, leading to financial loss or reputational damage.
EXISTING MITIGATION CONTROLS · Group policies and a Group-wide management system known as the Framework, to set control expectations, with a support training programme for all managers. · The Group operates a rolling programme of health and safety audits to assess compliance against the Framework. These audits have continued, despite travel restrictions imposed during the year, through the utilisation of alternative working methods. · Continual hazard assessments to ensure awareness of risks. · Live tracking of accident rates and root cause analysis via the IRMS plus monthly Board reporting focused on a range of KPIs. · Specific initiatives include the BAT (Be safe; Act safe, Think safe) safety logo and the Annual Health and Safety Awards Scheme to recognise success. · Proactive identification and management of emerging risks, for example the additional measures implemented across all operating locations in order to mitigate the increase in risk presented by Covid-19. FY21 risk trend unchanged. No matter what mitigating actions are undertaken, there remains a risk of death or serious injury. We therefore continue to assess the risk as the highest possible impact, but through the mitigation actions seek to reduce the likelihood. Significantly improving our health and safety performance continues to be our number one strategic objective.

5 EFFECTIVE DEPLOYMENT AND UTILISATION OF INFORMATION TECHNOLOGY SYSTEMS
DETAILED RISK We seek to leverage the use of IT to achieve competitive advantage. The Group continues to implement a global ERP system to replace numerous legacy systems which inherently brings with it the risks associated with a large-scale change programme.	POTENTIAL IMPACT · Interruption or failure of IT systems (including the impact of a cyber-attack) would negatively impact or prevent some business activities from occurring. If the interruption was long lasting, significant damage could be done to the business · It is essential that we are able to rely on the data derived from our business system to feed routine but fundamental business performance monitoring. · An unsuccessful implementation of the global ERP system has the potential to materially impact that site's, and possibly the Group's, performance.
EXISTING MITIGATION CONTROLS · Short-term stabilisation of existing hardware and legacy software platforms. · Governance and control arrangement operating over the Group's ERP implementation programme. · New ERP systems are successfully implemented at four locations. · Use of specialist external consultants and recruitment of experienced personnel. · Phased implementation rather than 'big bang', along with project assurance and 'lessons learned' reviews to continuously improve the quality of successive rollouts. · Steering Committee in operation with cascading project management disciplines. · A range of preventative and detective controls to manage the risk of a cyber-attack, including technical solutions in addition to employee training programmes. · Regular system maintenance and upgrades, including patching, to ensure known vulnerabilities are protected. The overall risk for FY21 is unchanged. The increasing likelihood of cyber-crime and cyber-fraud, particularly as businesses continue to evolve their ways of working during the pandemic, are mitigated by enhanced employee training, and increased detective and preventative security controls. During the year we have effectively utilised a number of information technology systems in order to ensure continuity of business processes whilst remote working has increased due to the Covid-19 pandemic.

6 PROLONGED LOSS OF A MANUFACTURING SITE
DETAILED RISK A catastrophic loss of the use of all or a significant portion of a strategic production facility. This could result from an accident, a strike by employees, a significant disease outbreak, major disruption to supply chains, fire, severe weather or other cause outside of management control.	POTENTIAL IMPACT · In the short or long term, a related risk event could adversely affect the Group's ability to meet the demands of its customers. · Specifically, this could entail significant repair costs or costs of alternate supply. A significant proportion of the Group's revenue is on relatively short lead times and a break in our supply chain could result in loss of revenue. All of this translates into lower sales and profits and reduced cash flow.
EXISTING MITIGATION CONTROLS · Preventative maintenance programmes and new investments to reduce risk of interruption of manufacturing. · A Group Fire Safety Policy mandating preventative, detective and containment controls. · Alternate manufacturing capacity exists for a growing portion of the Group's product range, with this manufacturing capability spread across geographic territories. · Inventory maintained to absorb and flatten out shorter-term raw material supply and production volatility risks. · The Group has comprehensive insurance policies to mitigate the impact of a number of these risks, albeit subject to carve out of cover for specific risks (e.g. SARS and related disease outbreak) and claim limits. · Amendments to operational processes to permit social distancing along with other Covid-19-related disease transmission procedures implemented at all operational sites. The risk trend for FY21 is categorised as unchanged, largely as a result of already being classified at maximum risk levels. The Covid-19 pandemic has crystallised this risk at certain locations during the year, however, this is now stabilising. We believe that the risk of prolonged loss of a manufacturing site due to the Covid-19 pandemic is now reducing, however, it is recognised that the Covid-19 situation is constantly evolving and management are particularly aware of the Covid-19 challenges currently unfolding in India. To add to this, changes to our operating procedures and other health and safety actions have been effectively implemented during the period in order to respond to the pandemic.

7 PEOPLE AND CHANGE
DETAILED RISK The Group's operations are dependent upon the ability to attract and retain the right people with an appropriate range of skills and experience. Succession planning and the ability to swiftly replace staff retiring or leaving is also critical.	POTENTIAL IMPACT Failure to retain, attract or motivate the required calibre of employees will negatively impact business performance. The delivery of the Strategic Plan and our strategic goals may also be delayed.
EXISTING MITIGATION CONTROLS · Competitive reward programmes, focused training and development, and a talent retention programme. · Ongoing reviews of succession plans based on business needs. · Performance management and personal development programmes introduced alongside training initiatives. · Management team strengthened with new capability from external hires and internal promotions. · The Renold Values, launched in 2015, continue to be embedded and are linked to recruitment processes for new employees. FY21 risk trend decreasing as key appointments in the year have demonstrated our ability to attract high quality individuals. This is coupled with falling employment rates which further increases the availability of people across our operating locations

8 LIQUIDITY, FOREIGN EXCHANGE AND BANKING ARRANGEMENTS
DETAILED RISK A lack of sufficient liquidity and flexibility in banking arrangements could inhibit the Group's ability to invest for the future or, in extremes, restrict day-to-day operations.	POTENTIAL IMPACT · Potentially cause under-investment and sub-optimal short-term decision making. · Limiting investment could prevent efficiency savings and reduce competitiveness. · In an extreme situation, the Group's ability to operate as a going concern could also be jeopardised.
EXISTING MITIGATION CONTROLS · The Group's primary banking facility expires in March 2024 and is fully available given current levels of profitability. · The facility includes additional drawdown capability, accessible as long as financial covenants are complied with. · Covenants amended through to 30 September 2021 in response to uncertainty arising from the Covid-19 pandemic and its global macroeconomic impact. · Rolling foreign exchange forward contracts covering expected future cash flows. FY21 risk trend decrease reflects strong cash generation across the Group during the year, despite Covid-19 related disruption. This is coupled with the Group remaining within our original and amended banking covenants throughout the year, and the significant reduction in net debt which the Group has achieved.

9 PENSIONS DEFICIT VOLATILITY
DETAILED RISK The principal pensions risk is that short-term cash funding requirements of legacy pension schemes diverts much needed investment away from the Group's operations. Secondly, the size of the reported balance sheet deficit can operate as a disincentive to potential investors or other stakeholders limiting the Group's ability to raise financing on capital markets. Thirdly, balance sheet deficits can fluctuate based on market conditions outside the control of management.	POTENTIAL IMPACT · Given the Group's cash needs to invest in the business, the pace of performance improvement could be slowed if cash has to be diverted to the pension schemes. · The balance sheet pension deficit and its volatility could act as a disincentive to potential investors and could reduce the Group's ability to raise new equity or debt financing, limiting the strategic options open to the Group.
EXISTING MITIGATION CONTROLS · The UK triennial funding review has been updated to March 2022. · The major UK pension cash flows (over 50% of all defined benefit pension cash costs) are stable under the 25-year asset-backed funding scheme put in place during 2013. A further 25% of the annual cash flows are pensions in payment in Germany in a mature scheme that has passed its peak funding requirement FY21 risk trend is unchanged as underlying factors have not significantly changed from the prior year.

10 REGULATORY AND LEGAL COMPLIANCE
DETAILED RISK The risk of censure, fine or business prohibition as a result of any part of the Group failing to comply with regulatory or legal obligations. Risks related to regulatory and legislative changes include the inability of the Group to comply with current, changing or new requirements. Many of the Group's business activities are subject to increasing regulation and enforcement by relevant authorities.	POTENTIAL IMPACT Failure by the Group or its representatives to abide by applicable laws and regulations could result in: · Administrative, civil or criminal liability. · Significant fines and penalties. · Suspension of the Group from trading. · Reputational damage.
EXISTING MITIGATION CONTROLS · Communication of a clear compliance culture. · Risk assessments and ongoing compliance reviews at least annually at all major locations. · Published up-to-date policies and procedures with clear guidance and training issued to all employees. · Monitoring of compliance with nominated accountable managers in each business unit. FY21 risk trend unchanged.

Consolidated Income Statement

for the year ended 31 March 2021

	Note	2021 £m	2020 £m
Revenue	1	165.3	189.4
Operating costs before adjusting items		(154.1)	(176.0)
Adjusted1 operating profit		11.2	13.4
Adjusting items	2
Restructuring costs		-	(2.4)
Amortisation of acquired intangible assets		(0.7)	(0.9)
Operating profit		10.5	10.1
Net financing costs	3	(4.6)	(5.2)
Profit before tax		5.9	4.9
Taxation	4	(2.1)	(1.5)
Profit for the period from continuing operations		3.8	3.4
Discontinued operations		-	(1.5)
Profit for the period		3.8	1.9
Attributable to:
Owners of the parent		3.8	1.8
Non-controlling interests		-	0.1
		3.8	1.9
Earnings per share from continuing operations	5
Basic		1.7p	1.5p
Diluted		1.6p	1.5p
Basic adjusted earnings per share		2.0p	2.9p
Diluted adjusted earnings per share		1.9p	2.9p
Earnings per share from continuing and discontinued operations	5
Basic		1.7p	0.8p
Diluted		1.6p	0.8p

¹ Adjusted: In addition to statutory reporting, the Group reports certain financial metrics on an adjusted basis. Definitions of adjusted measures, and information about the differences to statutory metrics are provided in Note 19

Consolidated Statement of Comprehensive Income

for the year ended 31 March 2021

	2021	2020
	£m	£m
Profit for the financial year	3.8	1.9
Other comprehensive (expense)/income:
Items that may be reclassified to the income statement in subsequent periods:
Exchange differences on translation of foreign operations	(5.8)	1.8
Loss on hedges of the net investment in foreign operations	0.7	(0.4)
Cash flow hedges:
Loss arising on cash flow hedges during the period	(0.1)	(0.3)
Less: Cumulative gain arising on cash flow hedges reclassified to profit and loss	0.3	0.4
Income tax relating to items that may be reclassified subsequently to profit or loss	-	0.1
	(4.9)	1.6
Items not to be reclassified to the income statement in subsequent periods:
Remeasurement gains/(losses) on retirement benefit obligations	(5.6)	3.1
Tax on remeasurement gains/losses on retirement benefit obligations - excluding impact of statutory rate change	1.0	(0.7)
Effect of changes in statutory tax rate on deferred tax assets	-	1.3
	(4.6)	3.7
Other comprehensive (expense)/income for the year, net of tax	(9.5)	5.3
Total comprehensive (expense)/income for the year, net of tax	(5.7)	7.2
Attributable to:
Owners of the parent	(5.7)	7.1
Non-controlling interest	-	0.1
	(5.7)	7.2

Consolidated Balance Sheet

as at 31 March 2021

		2021	2020
	Note	£m	£m
ASSETS
Non-current assets
Goodwill	7	21.7	24.0
Other intangible assets	8	6.1	8.0
Property, plant and equipment	9	47.8	53.3
Right-of-use assets	10	10.1	11.3
Deferred tax assets		21.0	20.4
		106.7	117.0
Current assets
Inventories	11	37.7	46.1
Trade and other receivables	12	30.3	35.8
Current tax		0.2	1.5
Derivative financial instruments		-	-
Cash and cash equivalents	13	19.9	15.6
		88.1	99.0
TOTAL ASSETS		194.8	216.0
LIABILITIES
Current liabilities
Borrowings	14	(2.3)	(0.3)
Trade and other payables	15	(31.5)	(42.1)
Lease liabilities	10	(2.5)	(0.3)
Current tax		(2.3)	(1.0)
Derivative financial instruments		(0.1)	(0.3)
Provisions	16	(1.4)	(0.7)
		(40.1)	(42.9)
NET CURRENT ASSETS		48.0	56.1
Non-current liabilities
Borrowings	14	(35.5)	(51.4)
Preference stock	14	(0.5)	(0.5)
Trade and other payables	15	(5.4)	(5.3)
Lease liabilities	10	(12.9)	(14.1)
Deferred tax liabilities		(4.1)	(4.6)
Retirement benefit obligations		(102.4)	(97.6)
Provisions		-	-
		(160.8)	(173.5)
TOTAL LIABILITIES		(200.9)	(216.4)
NET LIABILITIES		(6.1)	(0.4)
EQUITY
Issued share capital		11.3	11.3
Share premium account		30.1	30.1
Capital redemption reserve		15.4	15.4
Currency translation reserve		6.8	11.9
Other reserves		(0.1)	(0.3)
Retained earnings		(69.6)	(68.8)
TOTAL SHAREHOLDERS' DEFICIT		(6.1)	(0.4)

Approved by the Board on 16 July 2021 and signed on its behalf by:

Robert Purcell	Jim Haughey
CHIEF EXECUTIVE	FINANCE DIRECTOR

Consolidated Statement of Changes in Equity

for the year ended 31 March 2021

	Share capital	Share premium account	Retained earnings	Currency translation reserve	Capital redemption reserve	Other reserves	Attributable to owners of parent	Non- controlling interests	Total equity
	£m	£m	£m	£m	£m	£m	£m	£m	£m
At 31 March 2019	11.3	30.1	(69.9)	10.4	15.4	(0.4)	(3.1)	2.2	(0.9)
Impact of adoption
of IFRS 16	-	-	(4.3)	-	-	-	(4.3)	-	(4.3)
At 1 April 2019	11.3	30.1	(74.2)	10.4	15.4	(0.4)	(7.4)	2.2	(5.2)
Profit for the year	-	-	1.8	-	-	-	1.8	0.1	1.9
Other Comprehensive Income	-	-	3.7	1.5	-	0.1	5.3	-	5.3
Total comprehensive income for the year	-	-	5.5	1.5	-	0.1	7.1	0.1	7.2
Acquisition of non-controlling interest	-	-	0.5	-	-	-	0.5	(2.3)	(1.8)
Share-based payments	-	-	(0.6)	-	-	-	(0.6)	-	(0.6)
At 31 March 2020	11.3	30.1	(68.8)	11.9	15.4	(0.3)	(0.4)	-	(0.4)
Profit for the year	-	-	3.8	-	-	-	3.8	-	3.8
Other comprehensive income	-	-	(4.6)	(5.1)	-	0.2	(9.5)	-	(9.5)
Total comprehensive income for the year	-	-	(0.8)	(5.1)	-	0.2	(5.7)	-	(5.7)
Share based payments	-	-	-	-	-	-	-	-	-
At 31 March 2021	11.3	30.1	(69.6)	6.8	15.4	(0.1)	(6.1)	-	(6.1)

Included in retained earnings is £0.8m (31 March 2020: £0.8m) relating to a share option reserve.

Consolidated Statement of Cash Flows

for the year ended 31 March 2021

	2021	2020
	£m	£m
Cash flows from operating activities (Note 17)
Cash generated from operations	26.0	12.5
Income tax receipts/(payments)	0.7	(1.6)
Net cash flow from operating activities	26.7	10.9
Cash flows from investing activities
Proceeds from property disposals	0.2	0.1
Purchase of property, plant and equipment	(2.3)	(6.7)
Purchase of intangible assets	(0.8)	(2.5)
Disposal of business	-	(0.1)
Consideration paid for acquisition of minority interest	-	(1.8)
Net cash flow from investing activities	(2.9)	(11.0)
Cash flows from financing activities
Repayment of principal under lease liabilities	(3.2)	(3.3)
Financing costs paid	(2.0)	(2.7)
Proceeds from borrowings	2.8	7.5
Repayment of borrowings	(19.9)	(4.2)
Net cash flow from financing activities	(22.3)	(2.7)
Net (decrease)/increase in cash and cash equivalents	1.5	(2.8)
Net cash and cash equivalents at beginning of year	15.1	17.4
Effects of exchange rate changes	0.7	0.5
Net cash and cash equivalents at end of year (Note 13)	17.3	15.1

Accounting Policies

Basis of preparation

The financial information for the year ended 31 March 2021 and the year ended 31 March 2020 does not constitute the company's statutory accounts for those years. Statutory accounts for the year ended 31 March 2020 have been delivered to the Registrar of Companies. The auditor's report on those accounts was unqualified but contained a material uncertainty paragraph in relation to going concern (see page 101 of the consolidated financial statements for the year ended 31 March 2020 for further detail). The auditor's report did not contain any statement under Section 498(2) or Section 498(3) of the Companies Act 2006

The auditor's report on the accounts for the years ended 31 March 2021 was unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006. The statutory accounts for the year ended 31 March 2021 will be delivered to the Registrar of Companies following the Company's Annual General Meeting.

The Annual Report and Accounts for the year ended 31 March 2021 are expected to be published on or before 30 July 2021.

Going concern

The financial statements have been prepared on a going concern basis. In determining the appropriate basis of preparation of the financial statements, the Directors are required to consider whether the Group can continue in operational existence for the foreseeable future.

Further information in relation to the Group's business activities, together with the factors likely to affect its future development, performance and financial position, liquidity, cash balances and borrowing facilities is set out in the Chairman's Statement, the Chief Executive's Review, the Finance Director's Review and the Principal Risks and Uncertainties. Additional details of the Group's cash balances and borrowings and facility are included in Notes 13, 14 and 17.

The key covenants attached to the Group's £61.5m multi-currency revolving credit facility relate to leverage (net debt to EBITDA) and interest cover, which are measured on a pre-IFRS 16 basis. While liquidity remained sufficient under the bank facility, the economic uncertainty arising from the Covid-19 pandemic resulted in the Group negotiating, in May 2020, to amend the covenant structure over the period to September 2021. The revised structure replaced the net debt to EBITDA and EBITDA to net financing charge tests with minimum rolling 12-month EBITDA and minimum available liquidity tests at quarterly test dates, creating additional flexibility in uncertain operating conditions. The Group has achieved a significant reduction in net debt during the current financial year, with net debt reducing by £18.2m to £18.4m (31 March 2020: £36.6m). Accordingly, the Group has remained within the revised and original borrowing covenant levels throughout the year ended 31 March 2021.

The Directors have assessed the future funding requirements of the Group and the Company and compared them to the level of available borrowing facilities. The Directors have also considered the actual impact that the pandemic has had on the business since the beginning of the outbreak and the related decline in revenues, and the plausible future impact of Covid-19 on the Group's activities and performance, in preparing their going concern assessment.

Whilst the situation remains uncertain the impact on trading was significantly less severe than the downside scenario modelled in the prior year. Going forward the Group has modelled further potential severe but plausible impacts on revenues, profits and cash flows. In the severe but plausible downside scenario (Group revenue being more than 25% below revenues for the year ended 31 March 2019; the last period which was not impacted by the Covid-19 pandemic), the Group continues to maintain sufficient liquidity and meets its leverage and interest cover covenants (which revert to the original covenant tests from September 2021) without using the full extent of mitigating actions that would be available in the event of such a severe and extended decline.

Following this assessment, the Directors have formed a judgement, at the time of approving the financial statements, that there are no material uncertainties that cast doubt on the Group's going concern status and that it is a reasonable expectation that the Group has adequate resources to continue in operational existence for at least the next 12 months. For this reason, the Directors continue to adopt the going concern basis in preparing the consolidated financial statements.

Notes to the Consolidated Financial Statements

1.  Segmental information

For management purposes, the Group is organised into two operating segments according to the nature of their products and services and these are considered by the Directors to be the reportable operating segments of Renold plc as shown below:

• The Chain segment manufactures and sells power transmission and conveyor chain and also includes sales of torque transmission products through Chain National Sales Companies (NSCs); and

• The Torque Transmission segment manufactures and sells torque transmission products, such as gearboxes and couplings.

No operating segments have been aggregated to form the above reportable segments.

The Chief Operating Decision Maker (CODM) for the purposes of IFRS 8 'Operating Segments' is considered to be the Board of Directors of Renold plc. Management monitor the results of the separate reportable operating segments based on operating profit and loss which is measured consistently with operating profit and loss in the consolidated financial statements. The same segmental basis applies to decisions about resource allocation. Disclosure has not been included in respect of the operating assets of each segment as they are not reported to the CODM on a regular basis. However, Group net financing costs, retirement benefit obligations and income taxes are managed on a Group basis and therefore are not allocated to operating segments. Transfer prices between operating segments are on an arm's length basis in a manner similar to transactions with third parties.

	Chain 2	Torque Transmission	Head office costs and eliminations		Consolidated
Year ended 31 March 2021	£m	£m	£m		£m
Revenue
External customer	128.9	36.4	-		165.3
Inter-segment1	1.1	2.7	(3.8)		-
Total revenue	130.0	39.1	(3.8)		165.3
Adjusted operating profit/(loss)	13.3	5.0	(7.1)		11.2
Restructuring costs	-	-	-		-
Amortisation of acquired intangible assets	(0.7)	-	-		(0.7)
Operating profit/(loss)	12.6	5.0	(7.1)		10.5
Net financing costs					(4.6)
Profit before tax from continuing operations					5.9
Taxation					(2.1)
Profit after tax and discontinued operations					3.8
Other disclosures
Working capital3	29.5	7.8	(0.8)		36.5
Capital expenditure4	1.7	0.7	0.6		3.0
Depreciation and amortisation included in adjusted operating profit/loss	6.5	1.9	1.8		10.2
Amortisation of acquired intangibles	0.7	-	-		0.7
Total depreciation and amortisation	7.2	1.9	1.8	10.9

1.  Segmental information (continued)

		Chain2	Torque Transmission	Head office costs and eliminations	Consolidated
Year ended 31 March 2020 (represented5)		£m	£m	£m	£m
Revenue
External customer		147.9	41.5	-	189.4
Inter-segment1		1.1	4.6	(5.7)	-
Total revenue		149.0	46.1	(5.7)	189.4
Adjusted operating profit/(loss)		13.8	5.3	(5.7)	13.4
Restructuring costs		(1.9)	(0.4)	(0.1)	(2.4)
Amortisation of acquired intangible assets		(0.9)	-	-	(0.9)
Operating profit/(loss)		11.0	4.9	(5.8)	10.1
Net financing costs					(5.2)
Profit before tax from continuing operations					4.9
Taxation					(1.5)
Discontinued operations					(1.5)
Profit after tax and discontinued operations					1.9
Other disclosures
Working capital3		33.1	10.7	0.5	44.3
Capital expenditure4		6.8	1.0	1.3	9.1
Depreciation and amortisation included in adjusted operating profit/loss		6.8	2.0	1.7	10.5
Amortisation of acquired intangibles		0.9	-	-	0.9
Total depreciation and amortisation		7.7	2.0	1.7	11.4
1	Inter-segment revenues are eliminated on consolidation.
2	Included in Chain external sales is £3.6m (20205: £3.6m) of Torque Transmission product sold through the Chain NSCs, usually in countries where Torque Transmission does not have its own presence.
3	The measure of segment assets reviewed by the CODM is total working capital, defined as inventories and trade and other receivables, less trade and other payables. Working capital is also measured as a ratio of rolling annual sales.
4	Capital expenditure consists of additions to property, plant and equipment and intangible assets.
5	The segmental analysis for the year ended 31 March 2020 has been re-presented due to the reclassification of one business unit from Chain to Torque Transmission, resulting in £3.5m of revenue and £0.2m of operating profit being transferred from Chain to Torque Transmission.

In addition to statutory reporting, the Group reports certain financial metrics on an adjusted basis (alternative performance measures, APMs). Definitions of adjusted measures, and information about the differences to statutory metrics are provided in Note 19.

Constant exchange rate results are retranslated to current year exchange rates and therefore only prior year comparatives would be deemed an alternative performance measure. A reconciliation is provided below and in Note 19.

		Chain	Torque Transmission	Head office costs and eliminations	Consolidated
Year ended 31 March 2020 (re-presented1)		£m	£m	£m	£m
Revenue
External revenue from continuing operations (re-presented1)		147.9	41.5	-	189.4
Inter-segment		1.1	4.6	(5.7)	-
Foreign exchange retranslation		(1.3)	(0.5)	-	(1.8)
Total revenue from continuing operations at constant exchange rates		147.7	45.6	(5.7)	187.6
Adjusted operating profit/(loss) from continuing operations (re-presented1)		13.8	5.3	(5.7)	13.4
Foreign exchange retranslation		(0.2)	(0.1)	-	(0.3)
Adjusted operating profit/(loss) from continuing operations at constant exchange rates		13.6	5.2	(5.7)	13.1
1	The segmental analysis for the year ended 31 March 2020 has been re-presented due to the reclassification of one business unit from Chain to Torque Transmission, resulting in £3.5m of revenue and £0.2m of operating profit being transferred from Chain to Torque Transmission.

Geographical analysis of external sales by destination, non-current asset location and average employee numbers

The UK is the home country of the parent company, Renold plc. The principal operating territories, the proportions of Group external revenue generated in each (customer location), external revenues, non-current assets (asset location) and average employee numbers in each are as follows:

	Revenue ratio from continuing operations		External revenues from continuing operations		Non-current assets (excluding deferred tax)		Employee numbers
	2021	2020	2021	2020	2021	2020	2021	2020
	%	%	£m	£m	£m	£m
United Kingdom	7.4	8.1	12.3	15.3	16.5	18.6	288	297
Rest of Europe	30.6	29.4	50.6	55.7	18.2	22.0	504	510
Americas	39.9	42.3	65.8	80.1	28.7	32.0	271	315
Australasia	11.7	9.6	19.4	18.1	4.3	3.9	127	135
China	4.9	4.5	8.1	8.6	13.5	14.9	229	278
India	3.5	4.3	5.8	8.1	4.5	5.2	297	372
Other countries	2.0	1.8	3.3	3.5	-	-	-	-
	100.0	100.0	165.3	189.4	85.7	96.6	1,716	1,907

All revenue relates to the sale of goods and services. No individual customer, or group of customers, represents more than 10% of Group revenue (2020: None).

Non-current assets consist of goodwill, other intangible assets, property, plant and equipment and investment property. Other non-current assets and deferred tax assets are not included above.

2.  Adjusting items

In addition to statutory reporting, the Group reports certain financial metrics on an adjusted basis (alternative performance measures, APMs). Definitions of adjusted measures, and information about the differences to statutory metrics are provided in Note 27 to the financial statements.

	2021	2020
	£m	£m
Included in operating costs
Strategic Plan restructuring costs	-	2.0
Other	-	0.4
Restructuring costs	-	2.4
Amortisation of acquired intangible assets (Note 8)	0.7	0.9
Adjusting items in operating profit	0.7	3.3

Restructuring costs

In the prior year restructuring costs were incurred as part of the Strategic Plan, including redundancy costs associated with headcount reductions and various other smaller costs associated with restructuring. A further £0.4m of other costs were incurred in the prior year in relation to the investigation of the historical overstatement of profit in the Gears business unit and the purchase of the non-controlling interest in the Group's Indian operations. 

Restructuring costs are recognised as adjusting items because they are considered material and non-recurring.

Amortisation of acquired intangible assets

Acquisition related intangible asset amortisation costs of £0.7m (2020: £0.9m) were recognised in the current year. This is considered to be an adjusting item on the basis that these charges result from acquisition accounting, are non-cash and non-recurring (there is no replacement cost upon the intangible becoming fully amortised).

3.  Net financing costs

	2021	2020
	£m	£m
Financing costs:
Interest payable on bank loans and overdrafts*	(1.6)	(2.1)
Interest expense on lease liabilities*	(0.5)	(0.5)
Amortised financing costs*	(0.2)	(0.2)
Loan financing costs	(2.3)	(2.8)
Net IAS 19R financing costs	(2.2)	(2.2)
Discount unwind on non-current trade and other payables	(0.1)	(0.2)
Net financing costs	(4.6)	(5.2)

* Amounts arising on financial liabilities measured at amortised cost.

4.  Taxation

Analysis of tax charge in the year

	2021	2020
	£m	£m
United Kingdom
UK corporation tax at 19% (2020: 19%)	-	-
Overseas taxes
Corporation taxes	0.6	0.9
Movement in uncertain tax positions	1.3	-
Adjustments in respect of prior periods	(0.1)	(0.5)
Withholding taxes	0.4	0.2
Current income tax charge	2.2	0.6
Deferred tax
UK - origination and reversal of temporary differences	(0.2)	0.2
Overseas - origination and reversal of temporary differences	0.1	1.9
Effect of changes in corporate tax rates	-	(0.1)
Adjustments in respect of prior periods	-	(1.1)
Total deferred tax (credit)/charge (Note 17)	(0.1)	0.9
Tax charge on profit on ordinary activities	2.1	1.5

	2021	2020
	£m	£m
Tax on items taken to other comprehensive income
Deferred tax on changes in net pension deficits	(1.0)	0.7
Effect of changes in statutory tax rate on deferred tax assets	-	(1.3)
Tax on fair value of derivatives direct to reserves	-	(0.1)
Tax credit in the statement of other comprehensive income	(1.0)	(0.7)

Factors affecting the Group tax charge for the year

The increase in the current tax charge is driven by an increase in the provision for open tax matters which are yet to be agreed with the relevant tax authorities across the Group's geographies, reflecting the best estimate of amounts expected to be paid in settling these inquiries. At 31 March 2021 the provision for open tax matters totalled £2.3m (31 March 2020: £1.0m). In the prior year the overseas deferred tax charge related to the derecognition of certain deferred tax assets.

The Group's tax charge in future years will be affected by the profit mix, effective tax rates in the different countries where the Group operates and utilisation of tax losses. No deferred tax is recognised on the unremitted earnings of overseas subsidiaries in accordance with IAS 12.39.

4.  Taxation (continued)

The actual tax on the Group's profit before tax differs from the theoretical amount using the UK corporation tax rate as follows:

	2021	2020
	£m	£m
Profit on ordinary activities before tax	5.9	4.9
Theoretical tax charge at 19% (2020: 19%)	1.1	0.9
Effects of:
Permanent differences	(1.8)	0.3
Movement in uncertain tax positions	1.3
Overseas tax rate differences	0.4	0.3
Effect of changes in corporate tax rates	-	(0.1)
Adjustments in respect of prior periods	-	(1.8)
Movement in unrecognised deferred tax	0.7	1.7
Withholding taxes	0.4	0.2
Total tax charge	2.1	1.5
Comprising:
Total tax charge on adjusted profit before tax	2.1	1.5
Taxation charge on adjusting items and discontinued operations	-	-
Total tax charge	2.1	1.5

On 3 March 2021 the Chancellor announced an increase in the UK corporation tax rate from 19% to 25% with effect from 1 April 2023. As the rate change was not substantively enacted at the balance sheet date, all deferred tax at 31 March 2021 is recognised at the prevailing 19% rate.

Effective tax rate

The effective tax rate of 36% (2020: 31%) is higher than the UK tax rate of 19% (2020: 19%) due to the following factors:

· Losses in jurisdictions where, due to uncertain future profitability, deferred tax assets are not recognised;

· Permanent differences including items that are disallowed from a tax perspective such as entertaining and certain employee costs;

· Differences in overseas tax rates, typically being higher than the rates in the UK; offset by

· Prior year adjustments arising as tax submissions are finalised and agreed in specific jurisdictions.

Tax payments

Cash tax received in the year was £0.7m (2020: £1.6m paid). The net inflow for the current year is driven by a review of payments on account across the Group, with revised payment profiles leading to a recovery of £1.3m of prior year contributions.

5.  Earnings per share

Earnings per share (EPS) is calculated by reference to the earnings for the year and the weighted average number of shares in issue during the year as follows:

	2021			2020
	Earnings	Shares	Per share amount	Earnings	Shares	Per share amount
	£m	(thousands)	(pence)	£m	(thousands)	(pence)
Basic EPS from continuing and discontinued operations
Profit attributed to ordinary shareholders	3.8	225,418	1.7	1.8	225,418	0.8
Loss for the period from discontinued operations	-		-	1.5		0.7
Basic EPS from continuing operations	3.8	225,418	1.7	3.3	225,418	1.5

	2021			2020
	Earnings	Shares	Per share amount	Earnings	Shares	Per share amount
	£m	(thousands)	(pence)	£m	(thousands)	(pence)
Adjusted EPS
Basic EPS from continuing operations	3.8	225,418	1.7	3.3	225,418	1.5
Effect of adjusting items, after tax:
Restructuring costs in operating costs	-		-	2.4		1.1
Amortisation of acquired intangible assets	0.7		0.3	0.9		0.3
Adjusted EPS	4.5	225,418	2.0	6.6	225,418	2.9

1.  Adjusted: In addition to statutory reporting, the Group reports certain financial metrics on an adjusted basis. Definitions of adjusted measures, and information about the differences to statutory metrics are provided in Note 19.

Inclusion of the dilutive securities, comprising 7,292,980 (2019: 1,944,433) additional shares due to share options, in the calculation of basic, basic continuing and adjusted EPS changes the amounts shown above to 1.6p, 1.6p and 1.9p respectively (2020: basic EPS 0.8p, basic continuing EPS 1.5p, adjusted EPS 2.9p).

The adjusted EPS numbers have been provided in order to give a useful indication of underlying performance by the exclusion of adjusting items. Due to the existence of unrecognised deferred tax assets there were no associated tax credits on some of the adjusting items and in these instances adjusting items are added back in full.

6.  Dividends

No ordinary dividend payments were paid or proposed in either the current or prior year.

7.  Goodwill

	2021	2020
	£m	£m
Cost
At 1 April	27.6	26.6
Exchange adjustment	(2.5)	1.0
At 31 March	25.1	27.6
Accumulated amortisation and impairment
At 1 April	3.6	3.5
Exchange adjustment	(0.2)	0.1
At 31 March	3.4	3.6
Carrying amount	21.7	24.0

Impairment testing

The Group performed its annual impairment test of goodwill at 31 March 2021 which compares the current book value to the recoverable amount from the continued use or sale of the related business.

The recoverable amount of each Cash Generating Unit (CGU) has been determined on a value-in-use basis, calculated as the net present value of cash flows derived from detailed financial plans. All business units in the Group have submitted a budget for the financial year ending 31 March 2022 and strategic plan forecasts for the two financial years ending 31 March 2024. The budget and strategic forecasts, which are subject to detailed review and challenge, were approved by the Board in February 2021. The Group prepares cash flow forecasts based on these projections for the first three years, with years four and five extrapolated based on long-term growth rates, known future events, recently observable trends and management expectations. A terminal value calculation is used to estimate the cash flows after year five. Sensitivity analysis has been performed including a zero revenue growth scenario (with current year revenue modelled for all future periods of the forecast) and an increase in the discount rates used of 100 basis points (to reflect the increased level of uncertainty). The forecasts used for the impairment review are consistent with those used in the Going Concern review.

The key assumptions used in the value-in-use calculations are:

•	Sales: Forecast sales are built up with reference to expected sales prices and volumes from individual markets and product categories based on past performance, projections of developments in key markets and management's judgement;
•	Margins: Forecast margins reflect historical performance and management's experience of each CGUs profitability at the forecast level of sales including the impact of all completed restructuring projects. The projections do not include the impact of future restructuring projects to which the Group is not yet committed;
•	Discount rate: Pre-tax discount rates have been calculated based on the Group's weighted average cost of capital and risks specific to the CGU being tested; and
•	Long-term growth rates: As required by IAS 36, cash flows beyond the period of projections are extrapolated using long-term growth rates published by the Organisation for Economic Co-operation and Development for the territory in which the CGU is based. The discount rates applied to the cash flows of each of the CGUs are based on the risk-free rate for long-term bonds issued by the government in the respective market. This is then adjusted to reflect both the increased risk of investing in equities and the systematic risk of the specific CGU (using an average of the betas of comparable companies). These rates do not reflect the long-term assumptions used by the Group for investment planning.

Whilst the Covid-19 pandemic and its impact on the economy is unprecedented the Directors do not consider that any reasonably possible changes to the key assumptions would reduce the recoverable amount to its carrying value for the Ace Chains (Australia) and Renold Tooth Chain (Germany) CGUs. No impairment charge has been recognised in the period for any CGU.

	Long-term growth rate		Discount rate  (pre-tax)		Carrying value
	2021	2020	2021	2020	2021	2020
	%	%	%	%	£m	£m
Jeffrey Chain, USA	1.9	1.6	12.1	10.1	19.0	21.2
Ace Chains, Australia	2.6	2.6	12.3	10.1	0.5	0.4
Renold Chain, India	7.4	7.3	19.6	21.0	1.7	1.9
Renold Tooth Chain, Germany	1.3	1.2	15.7	13.1	0.5	0.5
					21.7	24.0

8.  Intangibles

	Customer orderbook	Customer lists	Technical know-how	Computer software	Total
	£m	£m	£m	£m	£m
Cost
At 1 April 2019	0.3	4.2	0.2	17.2	21.9
Exchange adjustment	-	0.2	-	-	0.2
Additions	-	-	-	2.5	2.5
Recategorisation (Note 9)	-	-	-	1.3	1.3
Disposals	-	-	-	(0.1)	(0.1)
Disposal of subsidiary	-	-	-	(0.1)	(0.1)
At 31 March 2020	0.3	4.4	0.2	20.8	25.7
Exchange adjustment	-	(0.2)	-	(0.2)	(0.4)
Additions	-	-	-	0.8	0.8
At 31 March 2021	0.3	4.2	0.2	21.4	26.1
Accumulated amortisation and impairment
At 1 April 2019	0.3	2.7	0.2	12.1	15.3
Exchange adjustment	-	0.1	-	-	0.1
Amortisation charge	-	0.9	-	1.9	2.8
Recategorisation (Note 9)	-	-	-	(0.3)	(0.3)
Disposals	-	-	-	(0.1)	(0.1)
Disposal of subsidiary	-	-	-	(0.1)	3.1
At 31 March 2020	0.3	3.7	0.2	13.5	17.7
Exchange adjustment	-	(0.2)	-	(0.1)	(0.3)
Amortisation charge	-	0.7	-	1.9	2.6
At 31 March 2021	0.3	4.2	0.2	15.3	20.0
Net book amount
At 31 March 2021	-	-	-	6.1	6.1
At 31 March 2020	-	0.7	-	7.3	8.0

The acquisition of the Tooth Chain business in January 2016 brought significant benefit to the Group in terms of new customers, relationships and technical 'know-how'. These benefits have been valued under IFRS 3 using estimates of useful lives and discounted cash flows of expected income. The values are being amortised as follows:

Customer orderbook

Customer orderbook is amortised when the orderbook at the date of acquisition has been fulfilled. This is now fully amortised.

Customer lists and technical know-how

Customer lists and technical know-how is being amortised over five years as the benefits are likely to crystallise over a longer period. No brand names were acquired as part of the acquisition.

9.  Property, plant and equipment

	Land and buildings	Plant and equipment	Total
	£m	£m	£m
Cost
At 1 April 2019	25.2	119.9	145.1
Exchange adjustment	0.3	2.1	2.4
Additions	0.3	6.3	6.6
Disposals	-	(1.3)	(1.3)
Recategorisation (Note 8)	0.1	(1.4)	(1.3)
Adoption of IFRS 16 - Transfer (Note 10)	(0.7)	(0.3)	(1.0)
Disposal of subsidiary	(0.5)	(1.3)	(1.8)
At 31 March 2020	24.7	124.0	148.7
Exchange adjustment	(0.9)	(5.3)	(6.2)
Additions	(0.1)	2.3	2.2
Disposals	-	(2.2)	(2.2)
At 31 March 2021	23.9	118.6	142.5
Accumulated depreciation and impairment
At 1 April 2019	4.6	85.0	89.6
Exchange adjustment	0.1	1.7	1.8
Charge for the year	0.7	5.4	6.1
Disposals	-	(1.2)	(1.2)
Recategorisation (Note 8)	1.8	(1.5)	0.3
Adoption of IFRS 16 - Transfer (Note 10)	-	(0.1)	(0.1)
Disposal of subsidiary	(0.1)	(1.0)	(1.1)
At 31 March 2020	7.1	88.3	95.4
Exchange adjustment	(0.3)	(4.0)	(4.3)
Charge for the year	0.5	5.0	5.5
Disposals	-	(1.9)	(1.9)
At 31 March 2021	7.3	87.4	94.7
Net book amount
At 31 March 2021	16.6	31.2	47.8
At 31 March 2020	17.6	35.7	53.3

Property, plant and equipment pledged as security for liabilities amounted to £31.6m (2020: £36.6m).

Future capital expenditure

At 31 March 2021 capital expenditure contracted for but not provided for in these accounts amounted to £0.2m (2020: £3.3m).

10. Leasing and right-of-use assets

Right-of-use assets

	Land and buildings	Plant and equipment	Total
	£m	£m	£m
Cost
At 1 April 2019	-	-	-
Adoption of IFRS 16	7.0	2.5	9.5
Adoption of IFRS 16 - Transfer	0.7	0.3	1.0
Exchange adjustment	-	-	-
Additions	2.6	0.8	3.4
Disposals	(0.1)	(0.2)	(0.3)
At 31 March 2020	10.2	3.4	13.6
Exchange adjustment	(0.1)	(0.0)	(0.1)
Additions	1.4	0.2	1.6
Disposals	(0.3)	(0.3)	(0.6)
At 31 March 2021	11.2	3.3	14.5
Accumulated depreciation and impairment
At 1 April 2020	-	-	-
Adoption of IFRS 16 - Transfer	-	0.1	0.1
Exchange adjustment	-	-	-
Charge for the year	1.3	1.2	2.5
Disposals	(0.1)	(0.2)	(0.3)
At 31 March 2020	1.2	1.1	2.3
Exchange adjustment	-	(0.1)	(0.1)
Charge for the year	1.7	1.1	2.8
Disposals	(0.3)	(0.3)	(0.6)
At 31 March 2021	2.6	1.8	4.4
Net book amount
At 31 March 2021	8.6	1.5	10.1
At 31 March 2020	9.0	2.3	11.3

An onerous lease provision of £2.7m, initially established in 2014 following the closure of the Bredbury manufacturing facility, was derecognised on 1 April 2019 following the adoption of IFRS 16. The £2.7m was recorded as a reduction to the opening carrying value of the Bredbury right-of-use property. The lease expires in May 2030 at a rental cost of £0.8m per annum; a significant proportion of this site is sublet for a term of five years to 2021 for a rent of £0.6m per annum. While a range of possible outcomes exist for the continuation of subletting the property, the extent of this range is a reduction in right-of-use assets of up to £2.7m (the future net book value of the Bredbury property at the end of the existing sublet agreement). 

Lease liabilities

	2021	2020
	£m	£m
Maturity analysis - contractual undiscounted cash flows
Less than one year	2.8	3.0
One to two years	1.5	2.6
Two to five years	5.5	5.3
More than five years	8.9	10.6
Total undiscounted lease liabilities at 31 March	18.7	21.5
Less: Interest allocated to future periods	(3.3)	(4.4)
Lease liabilities included in the Consolidated Balance Sheet	15.4	17.1
Current	2.5	3.0
Non-current	12.9	14.1

10. Leasing and right-of-use assets (continued)

Amounts recognised in profit or loss

	2021	2020
	£m	£m
Interest on lease liabilities	(0.5)	(0.5)
Variable lease payments not included in the measurement of lease liabilities	-	-
Income from sub-leasing right-of-use assets	0.6	0.6
Expenses relating to short-term leases and leases of low-value assets	(0.1)	(0.2)

Amounts recognised in the Consolidated Statement of Cash Flows

	2021	2020
	£m	£m
Repayment of principal under lease liabilities	3.2	3.3
Repayment of interest on lease liabilities	0.5	0.5
Cash outflows in relation to short-term leases and leases of low-value assets	0.1	0.2
Total cash outflows for leases	3.8	4.0

11. Inventories

	2021	2020
	£m	£m
Raw materials	5.4	6.4
Work in progress	4.0	4.6
Finished products and production tooling	28.3	35.1
	37.7	46.1

Inventories pledged as security for liabilities amounted to £28.1m (2020: £40.5m).

The Group expensed £54.8m (2020: £70.0m) of inventories during the period. In the year to 31 March 2021, £3.1m (2020: £0.9m) was charged for the write-down of inventory and £0.1m (2020: £0.9m) was released from inventory provisions no longer required.

12. Trade and other receivables

	2021	2020
	£m	£m
Trade receivables1	27.1	31.0
Less: Loss allowance	(0.4)	(0.5)
Trade receivables: net	26.7	30.5
Other receivables1	2.5	3.4
Prepayments	1.1	1.9
	30.3	35.8

1.  Financial assets carried at amortised cost.

The Group has no significant concentration of credit risk but does have a concentration of translational and transactional foreign exchange risk in both US Dollars and Euros; however, the Group hedges against these risks. The carrying amount of trade and other receivables approximates their fair value.

Trade receivables are non-interest bearing and are generally on 30-90 days terms. The average credit period on sales of goods is 62 days (2020: 59 days).

12. Trade and other receivables (continued)

The following table details the risk profile of trade receivables based on the Group's provision matrix. As the Group's historical credit loss experience does not show significantly different loss patterns for different customer segments, the provision for loss allowance based on past due status is not further analysed:

	Trade receivables - days past due
	Not past due	<30 days	30-60 days	60-90 days	>90 days	Total
At 31 March 2021
Expected credit loss rate, %	0.2%	0.1%	0.0%	0.2%	28.7%	1.3%
Estimated gross carrying amount at default, £m	0.1	-	-	-	0.3
Lifetime expected credit loss, £m						0.4

	Trade receivables - days past due
	Not past due	<30 days	30-60 days	60-90 days	>90 days	Total
At 31 March 2020
Expected credit loss rate, %	0.0%	0.3%	0.0%	4.6%	35.2%	1.5%
Estimated gross carrying amount at default, £m	-	-	-	-	0.4
Lifetime expected credit loss, £m						0.5

The following table shows the movement in the lifetime expected credit losses; there has been no change in the estimation techniques or significant assumptions made during the current reporting period:

	2021	2020
Loss allowance	£m	£m
At 1 April	0.5	0.5
Net remeasurement of loss allowance	-	-
Amounts written off as uncollectable	(0.1)	-
At 31 March	0.4	0.5

13. Cash and cash equivalents

In the Group cash flow statement, net cash and cash equivalents are shown after deducting bank overdrafts as follows:

	2021	2020
	£m	£m
Cash and cash equivalents	19.9	15.6
Less: Overdrafts (Note 14)	(2.6)	(0.5)
Net cash and cash equivalents	17.3	15.1

14. Borrowings

	2021	2020
	£m	£m
Amounts falling due within one year:
Overdrafts1 (Note 13)	2.6	0.5
Capitalised costs	(0.3)	(0.2)
Current borrowings	2.3	0.3
Amounts falling due after more than one year:
Bank loans1	35.7	51.9
Capitalised costs	(0.2)	(0.5)
Non-current borrowings	35.5	51.4
Preference stock1	0.5	0.5
	36.0	51.9
Total borrowings	38.3	52.2

1.  Gross borrowings before deducting capitalised costs

All financial liabilities above are carried at amortised cost.

14. Borrowings (continued)

Core banking facilities

On 29 March 2019 the Group renewed its £61.5m Multi-Currency Revolving Facility banking facilities with HSBC UK, Allied Irish Bank (GB), and Citibank. The facility matures in March 2024 and is fully committed and available until maturity. 

At the year end, the undrawn core banking facility was £27.7m (2020: £9.7m). The Group also benefits from a UK overdraft and a number of overseas facilities totalling £5.5m (2020: £4.0m) with availability at year end of £1.0m. The Group pays interest at LIBOR plus a variable margin in respect of the core banking facility. The average rate of interest paid in the year was LIBOR plus 1.85% for Sterling, Euro and US Dollar denominated facilities (2020: LIBOR plus 1.95% for Sterling, Euro and US Dollar denominated facilities)

The core banking facility has been subject to two covenants, which are tested semi-annually: net debt to EBITDA (leverage) and EBITDA to net finance charges. In recognition of the current macroeconomic uncertainty, the Group's banks have amended covenant test structure, replacing the existing tests with minimum rolling 12-month EBITDA, tested on a quarterly basis for the period to March 2021, and minimum available liquidity tests. From March 2021, the tests revert to the previous net debt to EBITDA and EBITDA to net finance charges, but with greater flexibility (i.e. 3.5 times net debt to EBITDA versus original 2.5 times) until September 2021 when the original covenant tests resume. 

Secured borrowings

Included in Group borrowings are secured borrowings of £38.3m (2020: £52.4m). Security is provided by fixed and floating charges over assets (including certain property, plant and equipment and inventory) primarily in the UK, USA, Germany and Australia. Certain Group companies have provided cross-guarantees in respect of these borrowings. 

Preference stock

At 31 March 2020, there were 580,482 units of preference stock in issue (2020: 580,482). 

All payments of dividends on the preference stock have been paid on the due dates. The preference stock has the following rights:

i. a fixed cumulative preferential dividend at the rate of 6% per annum payable half yearly on 1 January and 1 July in each year;

ii. rank both with regard to dividend (including any arrears on the commencement of a winding up) and return of capital in priority to all other stock or shares in the Company, but with no further right to participate in profits or assets;

iii. no right to attend or vote, either in person or by proxy, at any general meeting of the Company or to have notice of any such meeting, unless the dividend on the preference stock is in arrears for six calendar months; and

iv. no redemption entitlement and no fixed repayment date.

There is no significant difference between the carrying value of financial liabilities and their equivalent fair value.

15. Trade and other payables

	2021		2020
	Current	Non-current	Current	Non-current
	£m	£m	£m	£m
Trade payables1	13.2	-	18.1	-
Other tax and social security1	1.9	-	2.3	-
Other payables1	1.4	5.4	1.4	5.3
Accruals	15.0	-	15.8	-
	31.5	5.4	37.6	5.3

1.  Financial liabilities carried at amortised cost.

Trade payables are non-interest bearing and are normally settled within 60-day terms. The Group does have a concentration of translational foreign exchange risk in both US Dollars and Euros; however, the Group hedges against this risk. The non-current other payable is the deferred element of the construction costs for the new Chinese factory in Jintan.

The Group did not operate supplier financing or reverse factoring programmes during the current or prior financial year.

The Directors consider that the carrying amount of trade payables approximates to their fair value.

16. Provisions

	Business restructuring	Total provisions
	£m	£m
At 1 April 2020	0.7	0.7
Arising during the year	0.9	0.9
Utilised in the year	(0.2)	(0.2)
At 31 March 2021	1.4	1.4

	2021	2020
Allocated as:	£m	£m
Current provisions	1.4	0.7
Non-current provisions	-	-
	1.4	0.7

Business restructuring

During the year ended 31 March 2021, provisions were recognised in relation to business reorganisation and redundancies in Switzerland and site environmental costs in France.   

All restructuring provisions are expected to be utilised within 12 months. 

17. Additional cash flow information

Reconciliation of operating profit to net cash flows from operations:

	2021	2020
	£m	£m
Cash generated from operations:
Operating profit from continuing and discontinued operations	10.5	9.8
Depreciation of property, plant and equipment - owned assets	5.5	6.1
Depreciation of property, plant and equipment - right-of-use assets	2.8	2.5
Amortisation of intangible assets	2.6	2.8
Loss on disposals of plant and equipment	0.1	-
Equity share plans	-	(0.6)
Decrease/(increase) in inventories	6.3	(1.7)
Decrease in receivables	4.2	1.6
Decrease in payables	(5.0)	(4.4)
Increase in provisions	0.7	0.6
Cash contribution to pension schemes	(2.1)	(4.4)
Pension current service cost (non-cash)	0.1	0.2
Pension past service credit (non-cash)	0.3	-
Cash generated from operations	26.0	12.5

Reconciliation of net change in cash and cash equivalents to movement in net debt:

	2021	2020
	£m	£m
Increase/(decrease) in cash and cash equivalents (Consolidated Statement of Cash Flows)	1.5	(2.8)
Change in net debt resulting from cash flows
- Proceeds from borrowings	(2.8)	(7.5)
- Repayment of borrowings	19.9	4.2
Foreign currency translation differences	(0.2)	-
Non-cash movement on capitalised finance costs	(0.2)	(0.2)
Change in net debt during the period	18.2	(6.3)
Net debt at start of year	(36.6)	(30.3)
Net debt at end of year	(18.4)	(36.6)
Net debt comprises:
Cash and cash equivalents (Note 13)	19.9	15.6
Total borrowings (Note 14)	(38.3)	(52.2)
	(18.4)	(36.6)

17. Additional cash flow information (continued)

The table below details changes in the Group's liabilities arising from financing activities, including both cash and non-cash changes. Liabilities arising from financing activities are those for which cash flows were, or future cash flows will be, classified in the Group's consolidated cash flow statement as cash flows from financing activities.

	Opening balance	Accrued interest	Financing cash flows	New leases	Non-cash changes1	Closing balance
2021	£m	£m	£m	£m	£m	£m
Bank loans (Note 14)	51.9	1.6	(18.6)	-	0.8	35.7
Capitalised costs (Note 14)	(0.7)	-	-	-	0.2	(0.5)
Preference stock (Note 14)	0.5	-	-	-	-	0.5
Lease liabilities (Note 10)	17.1	0.4	(3.7)	1.6	-	15.4
Total liabilities from financing activities	68.8	2.0	(22.3)	1.6	1.0	51.1
Overdrafts (Note 14)	0.5					2.6
Less: Lease liabilities (Note 10)	(17.1)					(15.4)
Total borrowings (note 14)	52.2					38.3
Add: Cash and cash equivalents (Note 14)	(15.6)					(19.9)
Net debt	36.6					18.4

	Opening balance	Adoption of IFRS 16	Accrued interest	Financing cash flows	New leases	Non-cash changes1	Closing balance
2020	£m	£m	£m	£m	£m	£m	£m
Bank loans (Note 14)	48.1	-	2.1	1.1	-	0.6	51.9
Capitalised costs (Note 14)	(0.9)	-	-	-	-	0.2	(0.7)
Preference stock (Note 14)	0.5	-	-	-	-	-	0.5
Lease liabilities (Note 10)	-	17.0	0.5	(3.8)	3.4	-	17.1
Total liabilities from financing activities	47.7	17.0	2.6	(2.7)	3.4	0.8	68.8
Overdrafts (Note 14)	0.2						0.5
Less: Lease liabilities (Note 10)	-						(17.1)
Total borrowings (note 14)	47.9						52.2
Add: Cash and cash equivalents (Note 14)	(17.6)						(15.6)
Net debt	30.3						36.6

1.  Non-cash changes includes the amortisation of capitalised finance costs and foreign exchange translation.

18. Post balance sheet events

On the 8 April 2021 Renold completed the acquisition of the conveyor chain business of Brooks Ltd in Manchester, UK, for a total consideration of £0.6m, including £0.3m of deferred consideration. In the current year the business is expected to generate additional sales for the Group of c.£1.0m, and add c.£0.2m to Group operating profit. The business will be integrated into the Renold UK Service centre in Manchester.

As part of its long term financial planning the Company is reorganising its balance sheet and reserves through the cancellation of the entire amount of its share premium account and capital redemption reserve. The share premium account and capital redemption reserve are non-distributable reserves and accordingly, the purposes for which the Company can use these are extremely restricted. The reduction of capital creates sufficient distributable reserves to provide the Board with greater flexibility with regard to how it manages its capital resources. This provides flexibility in such matters as making payments to the holders of Preference Stock, commencing a share buy-back programme consistent with the authority granted by Shareholders at the last annual general meeting, in order to, inter alia, fund employee share schemes, thereby avoiding dilution for existing Shareholders or, should the Board determine it appropriate to do so in the future, make dividend distributions to Shareholders.

The order of the High Court confirming the above described capital reduction became effective on 27 May 2021, increasing distributable reserves by £45.5m and, if applied to the Group consolidated balance sheet at 31 March 2021, would reduce the consolidated retained earnings deficit from £69.3m to £23.8m.

19. Alternative performance measures

In order to provide users of the accounts with a clear and consistent presentation of the performance of the Group's ongoing trading activity, the Group uses various alternative performance measures (APMs), including presenting 'Adjusted' measures separately from statutory items on the face of the consolidated income statement. Amortisation of acquired intangibles, restructuring costs, discontinued operations and material one-off items or remeasurements are included in a separate row as management seek to present a measure of performance which is not impacted by material non-recurring items or items considered non-operational. See Note 2 for a breakdown and explanation of the items excluded from adjusted profit. Performance measures for the Group's ongoing trading activity are described as 'Adjusted' and are used to measure and monitor performance as management believe these measures enable users of the financial statements to better assess the trading performance of the business. In addition, the Group reports sales and profit measures at constant exchange rates. Constant exchange rate metrics exclude the impact of foreign exchange translation, by retranslating the comparative to current year exchange rates.

The APMs used by the Group include:

APM	Reference	Explanation of APM
• adjusted operating profit	A	Adjusted measures are used by the Group as a measure of underlying business performance, adding back items that do not relate to underlying performance
• adjusted profit before taxation	B
• adjusted EPS	C
• return on sales	D
• operating profit gearing	D
• revenue at constant exchange rates	E	Constant exchange rate metrics adjust for constant foreign exchange translation and are used by the Group to better understand year-on-year changes in performance
• adjusted operating profit at constant exchange rates	F
• adjusted operating profit margin at constant exchange rates	G
• EBITDA	H H	EBITDA is a widely utilised measure of profitability, adjusting to remove non-cash depreciation and amortisation charges
• adjusted EBITDA	H
• operating cash flow	H
• net debt	I	Net debt, leverage and gearing are used to assess the level of borrowings within the Group and are widely used in capital markets analysis
• leverage ratio	J
• gearing ratio	K
• legacy pension cash costs	L	The cost of legacy pensions is used by the Group as a measure of the cash cost of servicing legacy pension schemes

APMs are defined and reconciled to the IFRS statutory measure as follows:

(A) Adjusted operating profit

	2021	2020
	£m	£m
Statutory operating profit from continuing operations	10.5	10.1
Add back:
Restructuring costs	-	2.4
Amortisation of acquired intangible assets	0.7	0.9
Adjusted operating profit	11.2	13.4

(B) Adjusted profit before taxation

	2021	2020
	£m	£m
Statutory profit before taxation from continuing operations	5.9	4.9
Add back:
Restructuring costs	-	2.4
Amortisation of acquired intangible assets	0.7	0.9
Adjusted profit before taxation	6.6	8.2

19. Alternative performance measures (continued)

(C) Adjusted earnings per share

Adjusted EPS is reconciled to statutory EPS in Note 5.

(D) Return on sales and operating profit gearing

	2021	2020
	£m	£m
Adjusted operating profit	11.2	13.4
Revenue	165.3	189.4
Return on sales %	6.8%	7.1%

	Year ended 31 March 2021
	Chain	Torque Transmission	Head office costs and eliminations	Consolidated
	£m	£m	£m	£m
Adjusted operating profit	13.3	5.0	(7.1)	11.2
Total revenue (including inter-segment sales)	130.0	39.1	(3.8)	165.3
Adjusted operating profit margin %	10.2%	12.8%	-	6.8%

	Year ended 31 March 2020
	Chain	Torque Transmission	Head office costs and eliminations	Consolidated
	£m	£m	£m	£m
Adjusted operating profit	13.8	5.3	(5.7)	13.4
Total revenue (including inter-segment sales)	149.0	46.1	(5.7)	189.4
Adjusted operating profit margin %	9.3%	11.5%	-	7.1%

	Year ended 31 March 2021
	Chain	Torque Transmission	Head office costs and eliminations	Consolidated
	£m	£m	£m	£m
Year-on-year change in adjusted operating profit	(0.5)	(0.3)	(1.4)	(2.2)
Year-on-year change in total revenue (including inter-segment sales)	(19.0)	(7.0)	1.9	(24.1)
Operating profit gearing %	3%	4%	-	9%

(E), (F) & (G) Revenue, adjusted operating profit and adjusted operating profit margin at constant exchange rates

	Year ended 31 March 2020
	Chain	Torque Transmission	Head office costs and eliminations	Consolidated
	£m	£m	£m	£m
External revenue from continuing operations	147.9	41.5	-	189.4
Inter-segment	1.1	4.6	(5.7)	-
Foreign exchange retranslation	(1.3)	(0.5)	-	(1.8)
Revenue at constant exchange rates	147.7	45.6	(5.7)	187.6
Adjusted operating profit	13.8	5.3	(5.7)	13.4
Foreign exchange retranslation	(0.2)	(0.1)	-	(0.3)
Adjusted operating profit at constant exchange rates	13.6	5.2	(5.7)	13.1
Adjusted operating profit margin at constant exchange rates %	9.2%	11.4%	-	7.0%

19. Alternative performance measures (continued)

(H) EBITDA, adjusted EBITDA (earnings before interest, taxation, depreciation and amortisation) and operating cash flow

	2021	2020
	£m	£m
Statutory operating profit from continuing operations	10.5	10.1
Depreciation and amortisation - owned assets	10.9	11.4
EBITDA	21.4	21.5
Add back:
Restructuring costs	-	2.4
Adjusted EBITDA	21.4	23.9
Inventories (see Note 17)	6.3	(1.7)
Trade and other receivables (see Note 17)	4.2	1.6
Trade and other payables (see Note 17)	(5.0)	(4.4)
Provisions (see Note 17)	0.7	0.6
Less: Restructuring cash spend (Note 16 - utilisation of restructuring provisions)	0.2	(0.9)
Movement in working capital	6.4	(5.3)
Purchase of property, plant and equipment (Consolidated Statement of Cash Flows)	(2.3)	(6.7)
Purchase of intangible assets (Consolidated Statement of Cash Flows)	(0.8)	(2.5)
Proceeds from property disposals	0.2	0.1
Net capital expenditure	(2.9)	(9.1)
Operating cash flow	24.9	9.5

(I) Net debt

Net debt is reconciled to the statutory balance sheet in Note 17.

(J) Leverage ratio

	2021	2020
	£m	£m
Net debt (see Note 17)	18.4	36.6
Adjusted EBITDA	21.4	23.9
Leverage ratio	0.9x	1.5x

(K) Gearing ratio

	2021		2020
	£m	£m	£m	£m
Net debt (see Note 17)		18.4		36.6
Equity attributable to equity holders of the parent	(6.1)		(0.4)
Net debt (see Note 17)	18.4		36.6
Total capital plus net debt		12.3		36.2
Gearing ratio %		150%		101%

(L) Legacy pension cash costs

	2021	2020
	£m	£m
Cash contributions to pension schemes	0.8	3.2
Pension payments in respect of unfunded schemes	1.3	1.2
Scheme administration costs	0.5	0.8
	2.6	5.2

 

END

 

 

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