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Investing for
growth
Annual report and accounts 2016
Welcome to our
2016
annual report
Autins specialises in the design, manufacture and supply of
acoustic and thermal insulation solutions primarily in the
automotive sector but with an increasing focus on other
sectors, including marine, rail, commercial vehicles and
industrial sectors.
The Group produce and supply over two million parts per
month to customers including some of the world’s leading
vehicle manufacturers.
Strategic Report
2016 Highlights
At a glance
Chairman’s and Chief Executive’s
statement
Finance review
Key performance indicators
Principal risks and uncertainties
Milestones
Market overview
Our business model
Our strategy
Strategy in action
01
02
04
06
09
10
12
14
16
18
20
Governance
Board of directors
Directors’ report
Statement of directors’
responsibilities
Financial Statements
Independent auditor’s report
Consolidated income statement
Consolidated statement of
comprehensive income
Consolidated statement of
financial position
Parent company statement of
financial position
Consolidated statement of
changes in equity
Parent company statement of
changes in equity
Consolidated statement of
cash flows
Parent company statement
of cash flows
Notes to the financial statements
22
24
28
29
30
31
32
33
34
35
36
37
38
01
2016 highlights
Financial
Revenue
Operational
Component revenue
> Component revenue, which excludes
£20.4m
(FY 2015: £19.8m)
£19.5m
(FY 2015: £17.3m)
tooling sales, increased by 13%
> Successful completion of IPO in
August 2016 raising £13.1m for
the Group
> Good progress with Neptune – now
approved by several automotive OEMs
> Successful integration of Swedish
and German divisions
> Neptune facility achieved full production
capability in September 2016
Post year end
> Autins Technical Centre secured first
automotive customer
> Secured new and improved 3-year
banking facility with HSBC
> Neptune received a further OEM
approval
> Senior management hires include
appointment of Group Sales Director
and Group Quality Director
> Appointment of Michael Jennings
as interim Chief Executive after
resignation of Jim Griffin
> Reduced schedule projections
lowering revenue and profit
expectations
Gross profit
£6.5m
(FY 2015: £6.0m)
Operating profit
£0.3m
(FY 2015: £1.2m)
Profit before tax
£0.2m
(FY 2015: £0.9m)
Earnings per share
2.03p
(FY 2015: 5.56p)
Component gross profit
£6.5m
(FY 2015: £5.5m)
EBITDA
£0.9m
(FY 2015: £1.8m)
Net cash/(debt)
£3.3m
(FY 2015: (£5.5m))
Proposed dividend
0.4pence per share
“The Board is pleased to present Autins’ first
published results following the successful IPO in
August 2016. The IPO was a defining event for the
period but we also saw encouraging operational
growth and progress in the business with new
products, new facilities and new customers
adding to the success of the Group.”
Adam Attwood — Chairman
See the joint CEO & Chairman’s statement on p.04
Strategic ReportGovernanceFinancial Statements 02
Autins at a glance
Noise & heat
management
specialists
Overview
We are one of the leading suppliers of acoustic and
thermal management products in the automotive
market. Our customers include leading automotive
manufacturers, Tier One suppliers to the automotive
industry and an emerging customer base in the
commercial vehicle, marine, rail, and industrial sectors.
Neptune
The Group’s new lightweight, ultra-fine fibre, high
performance, acoustic absorbing material.
Ozone
A lightweight, trilaminate, acoustic barrier.
“My extensive experience from working
at major Tier 1 automotive suppliers
was invaluable when setting up our
new Solar Nonwovens facility to
produce Neptune.”
David Hobday —
Group Manufacturing
Engineering Manager
Autins Group plc Annual report and accounts 2016 03
Parts delivered per month
2 million
Innovation & technology
Experts
Through our business model built on competitive
advantages that differentiate us in our marketplace,
including patented technology and a highly skilled
workforce; Autins Group plc is well-positioned
for growth.
With extensive experience in acoustic and thermal
materials the Autins Technical Centre will provide
research and innovation support for the Autins
Group and their customers. This high quality and
specialist service will support continuous
improvement and innovation.
See business model on p.16
See innovation on p.20
Our locations
Tamworth, UK
European manufacturer and sales
outlet for the high performance
Neptune material.
Rugby, UK
Production of acoustic and thermal
products for the automotive industry.
Gothenberg, Sweden
Scandins AB - Production of
acoustic and thermal products for
the automotive industry.
DBX Acoustics AB
rheinland insulations GmbH
SOUND & HE AT SOLUTIONS
P A R T O F T H E A U T I N S G R O U P
Hilden, Germany
RI Rheinland Insulations GmbH –
Production of acoustic and thermal
products for the automotive industry,
and acoustic flooring products.
Nuneaton, UK
HORIBA MIRA Technology Park –
Testing and research on new
lightweight materials with thermal
and acoustic properties.
Northampton, UK
Indica Automotive Limited –
A JV with Indica Industries Ltd,
manufacturing a range of acoustic
and thermal foam products
supplying AI and facilitating the
Group’s expansion into new market
sectors.
Autins Group plc Annual report and accounts 2016Strategic ReportGovernanceFinancial Statements 04
Chairman’s and Chief Executive’s statement
Building momentum
across the group
greenfield facility, established to produce the
patented Neptune material, is now operational and
opens up a whole range of exciting opportunities in
both automotive and non-automotive applications.
Other achievements have been the successful
integration and continued growth of our
investments in Sweden and Germany, which
became wholly-owned subsidiaries of the Group at
the time of the IPO.
The Group has held initial discussions with IkSung
on future Ozone strategy and will continue to
explore the timing, location and supply route of
equipment through the year.
Market review
The key external drivers of growth have been
the trend among UK car manufacturers towards
premium vehicles that have a greater need for
our products in order to minimise noise. We have
also benefitted from the continuing move to take
weight out of vehicles.
Aside from trends within the automotive industry
itself, we cannot fail to mention the potential impact
on our business of the UK leaving the EU. We tend to
source raw materials in Euros or Dollars, so may face
inflationary pressures in relation to the depreciation
of Sterling. Conversely, we are growing our
international business where we generate sales in
Euros. We believe the Group is well placed to meet
these uncertainties and we are alert to both the
risks and opportunities, and monitor the costs and
sources of supply of raw materials to protect
margins. We will assess our deployment of
investment capital across our production facilities
in the UK and Europe, as the trading impact of Brexit
becomes clearer to maintain and maximise the
Group’s competitive advantage.
We are pleased to present the first
full year report on the results of
Autins for the year-ended 30
September 2016. It was a year of
progress for Autins, with the IPO in
late August representing the next
stage in the development and
growth of the Group. Certain of the
funds raised at IPO are being used to
invest in existing capabilities and in
opportunities to implement and
accelerate our growth strategy.
Performance
We are pleased to report a year of continued
progress for the Group with encouraging
operational development and growth in the
business with total revenue up by 3% to £20.4
million (FY 2015: £19.8 million). In line with our core
strategy, as outlined at the time of the IPO,
component manufacturing sales grew by 13% to
£19.5m and gross profit increased by 8.1% to £6.5m
(FY 2015: £6.0 million) driven by an improvement in
component manufacturing margins (including
flooring), which were up by 1.5%.
Since becoming a public company, the Group’s
corporate profile has increased and we have seen
an increased recognition of Autins with both
customers and suppliers, and a growing pipeline of
opportunities across the automotive and
non-automotive sectors.
During the year, the Group invested in a new drape
moulding capability in Rugby, which has allowed us
to offer a new product suite to our customers. Our
Investment for growth
Capital expenditure
£5.0m
£0.6m
Revenue expense
Autins Group plc Annual report and accounts 2016
Strategy
Our strategy comprises three key strands, outlined
on page 19:
> Broaden customer and sector base by
diversifying within and beyond automotive.
> Expand geographically by building on our
established footprint.
> Improve gross margins by focusing on innovation
and operational performance.
This strategy is built upon our three pillars of
expertise: specialist component manufacturing,
specialist material manufacturing, and innovation
and research.
Our Materials division is now at the stage of
beginning to sell its Neptune products into the
automotive market. Neptune has been specified by
a number of OEMs, so will be sold to component
suppliers across the industry, as well as becoming a
‘material of choice’ for our own specialist
manufacturing operations.
Board, senior management and employees
Since the year end, we sadly had to accept the
resignation of Jim Griffin from his role as CEO of the
Group for personal reasons. The Board would like
to thank Jim for his immense contribution to the
Group’s development over the last 27 years.
We were delighted to appoint Michael Jennings as
interim Chief Executive of the Group in February.
The Board looks forward to working with Michael
to continue the strategy and growth of the Group.
In March 2016 we added strength and depth to the
Board through the appointment of two Non-
Executive Directors, Ian Griffiths and Terry
Garthwaite. Ian is the former Managing Director of
GKN Automotive. He brings significant automotive
and Non-Executive experience. Terry is a former
Group Finance Director of Senior plc, and, again,
brings a wealth of financial knowledge from quoted
groups, as well as extensive experience as a
Non-Executive Director.
Alongside delivering on the strategic plan, the
principal focus of the Board has been investment in
the senior management team to further support our
growth and international ambitions. We have
appointed a Group Sales Director who has already
started and a Group Quality Director starting in April
2017, and will continue to strengthen and develop
our organisation.
05
Michael Jennings — Chief Executive
Adam Attwood — Chairman
With the acquisition of the joint venture partner in
our Swedish business, the minority interest in our
German business and the trade and assets of a
flooring company in Sweden, we now have a strong
foundation upon which to grow. Now that formerly
independent businesses are part of one Group, we
continue to develop our ‘one company’ culture to
enhance the sharing of our collective expertise for
the benefit of the whole Group, across all aspects of
the business. We wish to thank our colleagues for
their continued work in driving the development of
the Group.
Dividend
The Group remains in a growth phase and has many
strong investment opportunities, each of which is
assessed using a disciplined approach to capital
allocation and risk. Taking into account the short
space of time between the IPO and the year end, the
Board has taken the decision to pay a second
interim dividend of 0.4 pence per share that will be
paid on 4 April 2017 to shareholders on the register
on 17 March 2017. The Board intends to adopt a
progressive dividend policy alongside continuing
investment in the business.
Outlook
In the near term the profile of our results will be
significantly weighted to the second half of the year
and is dependent on successful deliveries of
Neptune product into the market. We expect solid
growth for the full year, however, as already
announced, this will fall significantly short of
previously anticipated levels due to the timing and
rate of growth in our automotive business not being
as strong as we had expected. The Board remains
confident of the importance of our diversification
strategy and we are committed to realising the full
potential of the Autins Group.
Adam Attwood
Chairman
Michael Jennings
Chief Executive
Autins Group plc Annual report and accounts 2016Strategic ReportGovernanceFinancial Statements 06
James Larner — Chief Financial Officer
Finance review
Positioning
for growth
Revenue
The financial year progressed as expected
with total revenue up 3% at £20.4 million
(FY 2015: £19.8 million). Importantly, component
manufacturing sales, which excludes tooling, grew
by 13% to £19.5 million (FY 2015: £17.3 million)
primarily through the additional volumes secured
with the Group’s largest customer.
The core Automotive Insulations business
continued to be a major driver in terms of organic
growth, with sales increasing by 7% to £18.4 million
(FY 2015: £17.2 million).
Within component manufacturing, flooring revenue
more than doubled in the year to £0.6 million and
currently represents over 60% of the external sales
within RI Rheinland Insulations. The Group has
secured new customer relationships with a number
of leading pan European flooring manufacturers in
both the domestic and industrial markets and
expects further growth in the coming year.
Revenues from non-automotive component work
in the UK added £0.3m to turnover in the year and
the Board expects to build substantially on this
early success with an increase anticipated for
2016/7. The Board continues to be committed
to diversifying Group sales by customer,
region and product offering and particularly
in non-automotive markets.
Sales of tooling reduced to £0.6 million
(2015: £2.5 million), as forecast at the time of the
IPO. Tooling is a revenue stream for the Group that
arises as a function of new programme sales and
will fluctuate year on year. The Group anticipates
an increased level of tooling sales in 2017, as
confirmed new contract platforms are launched.
Gross margin
The Group’s component gross margin increased
to 33.1% (FY 2015: 31.6%) as a result of three key
factors: the investment in value-added processes
introduced in 2015; higher flooring volumes which
deliver better margins than the Group average;
and the inclusion of the post-acquisition Scandins
business, where in-house material manufacture
allows for improved returns.
Autins Group plc Annual report and accounts 2016 07
The Board will continue the drive to improve
margins by focusing on higher added value
products and materials, generating growth in
non-automotive markets and investing to improve
both operational efficiency and develop new
product and materials.
EBITDA and operating profit
Reported operating profit was £0.3m (2015: £1.2m)
with EBITDA of £0.9m (2015: £1.8m) after charging
costs of £0.9m comprising £0.2m of exceptional
costs, £0.2m start-up costs, £0.3m investment in
staff and facilities to support ongoing growth and
£0.2m of additional costs for plc governance.
The acquisition of Scandins and DBX AB added
£0.35m of recurring cost to the total Group
administrative expense in the period from
acquisition and will have a further £0.35m impact
in the next full year.
Investing for growth
To develop growth and diversification and in
support of product launches the commercial and
projects teams were reinforced at a cost of £0.2m in
the current year (full year 2016/7: £0.3m).
The development of an in-house specialist technical
research and testing facility has increased
administrative costs by £0.1m in the year (full year
2016/7: £0.35m) with additional leasehold
properties and dedicated technical staff recruited.
Once the capex programme of £0.3m has been
completed in 2016/7 the Group expects external
income to be generated from this enterprise which
will support savings from in-sourcing the Group’s
current testing requirements.
Exceptional items and non recurring costs
The Group had non-capitalised start-up costs for
Neptune of £0.2m in the year. New production
facility premises were occupied from February 2016
with operational staff employed from July 2016.
After recognising recharged costs of £0.47m from
selling shareholders, the Group has incurred £0.18m
of exceptional external fees in relation to the IPO.
Joint ventures
The Group’s share of joint venture activities
represents a small pre-acquisition loss of Scandins
and the profitable growth in Indica Automotive.
Indica Automotive’s turnover increased 60% to
£1.8m (2015: £1.1m) with a profit after tax of £0.33m
(2015: £0.13m). Investment in additional
management and capital equipment has
positioned the joint venture for further growth and
diversification away from the Group which is the
current largest customer.
Currency
The Group is subject to currency variation in
both re-translation of overseas operations and
transactional differences from trading and
investment activities.
Given the significant capital purchase made from
IkSung (and ongoing material supply agreement)
the currency with the greatest potential
transactional impact on our results is the US Dollar.
The Group also trades in currencies outside of
its base currency, Sterling, and has a level of
operational transactions conducted in Swedish
Kronor and Euros.
At the year-end, and during the year, the Group had
no forward currency contracting arrangements. We
will use derivatives to manage our foreign currency
risks in future periods arising from underlying
operational business and significant capital
expenditure. Transactions of a speculative nature
are and will continue to be prohibited.
Net finance expense
Net finance expense for the year was £0.56m (2015:
£0.39m) which includes £0.23m of interest on loan
notes issued to complete the buyout of minority
shareholders in 2014. The charge includes an
accelerated element of £0.12m arising from the
Board’s decision to commit to early repayment of
these debts. An analysis of the net finance expense
is presented in note 8 on page 49.
The Group’s ongoing investment for growth
required increased use of mezzanine, tooling
finance and invoice discounting facilities causing an
increase of 33% in bank interest in the year. The
repayment of these facilities as a result of the IPO
will materially reduce financing costs in the next
financial year.
Taxation
The effective tax rate was reduced due to a
proportion of non-taxable gains arising from an
acquisition, enhanced R&D claims for the current
year and a revision to the prior year R&D credit
arising from a further review of allowable costs.
In the short term the effective tax rate is expected
to remain below the UK statutory level. The
establishment of a dedicated technical Research
and Development facility will increase the Group’s
ability to access enhance R&D tax credits within
the UK.
The Group also has taxable losses available within
its overseas subsidiaries which will offset trading
profits in higher corporation tax territories of
Sweden and Germany in the short term. The Group
has an £0.18m (2015: £0.18m) unrecognised tax
asset in respect of losses in the German subsidiary.
We continue to work with our advisors to improve
compliance and disclosure standards across the
Group for all aspects of corporation and social
taxes. We currently seek to group relieve losses
around the UK entities, but are conducting an
assessment of the risk and required documentation
that arises from transfer pricing between
international entities.
Earnings per share
Reduced profitability due to the planned
investment for growth, the exceptional costs
of the IPO and the new costs of being a plc
(as detailed above) have resulted in a decrease
in our earnings per share to 2.03p per share
(2015: 5.56p per share).
In calculating EPS for the coming year the Board is
aware that the weighted average shares in issue
will increase as a result of the issue of 8.33m new
shares on 22 August 2016 as part of the IPO.
Autins Group plc Annual report and accounts 2016Strategic ReportGovernanceFinancial Statements 08
Finance review continued
Capital expenditure
The Group spent £5.0m in the year, with £4.0m being
the establishment of the Solar Nonwovens’ Neptune
operation which had not been brought into use by
the year-end. Leasehold improvements of £0.8m
were made at the Group’s new Tamworth based
Neptune facility to both support the first Neptune
production line and allow sufficient power and
other building services for subsequent expansion.
The Group continued to invest in plant for core
component manufacture with additional press,
drape moulding and water jet capability added to
meet customer demand.
Financial risk management
Details of our financial risk management policies are
disclosed in notes 2 and 3 on page 44 to 46.
Dividends
The Board is proposing a second interim dividend
of 0.4p per share for the current year. Our dividend
policy is to grow returns progressively whilst
balancing investment into the business to support
the growth strategy. The dividend will be paid
on 4 April 2017 to shareholders on the register on
17 March 2017.
Net cash/(debt) and working capital
The Group ended the year with net cash (being the
net of cash and cash equivalents and the Group’s
loans and borrowings as stated in note 17 on page
54) of £3.3m (2015: Net debt £5.5m) and cash and
cash equivalents of £6.3m (2015: £0.5m). Cash raised
from the IPO was used to settle £5.9m of invoice
finance, tooling finance and mezzanine debt
products leaving the Group with £1.28m (2015:
£1.46m) hire purchase loans at Automotive
Insulations and £0.67m (2015: £0.0m) of long term
asset backed finance at Scandins, which reflects
the recent investments in facilities across the
whole Group.
The Group had, in support of IPO costs, secured
short term extended terms from certain key
suppliers that required normalising in the new year
at a cash cost of £0.25m.
On the basis of these new facilities, and having
reviewed the Group’s budgets and forecasts and
made appropriate enquiries, the Directors have
formed a judgement at the time of approving the
financial statements, that the Group can have a
reasonable expectation that adequate resources
will be available for it to continue its operations
for the foreseeable future and consequently it is
appropriate to adopt the going concern principle in
the preparation of these financial statements.
Acquisitions, goodwill and intangible assets
Two acquisitions were made in the year and the 10%
Non Controlling Interest of RI Rheinland Insulations
GmbH was purchased to consolidate the Group’s
control. The total cost of these transactions was
£0.55m with £0.5m settled by grant of share options
that were exercised on the Group’s admission to
AIM. There was no contingent consideration.
Details of the acquisitions are made in notes 26 to 27
on page 59.
No amortisation has been charged in relation to
intangibles acquired in the year as the Directors are
satisfied that after fair valuation of assets and
liabilities the remaining intangibles acquired were
non separable goodwill.
In anticipation of further growth, the Group has,
since the year-end, sought to improve working
capital monitoring and control systems to maintain
working capital days and therefore limit the amount
of cash consumed by increased trading activity.
The Board considered the carrying value of
Goodwill and other Intangibles (both existing
and acquired in the year) at 30 September 2016
and concluded that the carrying value was
fully recoverable.
Going concern
Since the year-end, the Group has refinanced with
HSBC which facilitates the implementation of a
central treasury function to control cash
management and borrowings and oversee
mitigation of financial risks.
The HSBC facilities come without formal covenants,
are over a three-year term and provide trading
headroom to facilitate growth.
RI Rheinland Insulations GmbH had net liabilities
at acquisition (including inter-group working
capital loans and trading balances) resulting in
a net charge of £0.2m to retained earnings.
The acquisition of the Scandins joint venture
generated a gain of £0.3m. This gain recognises the
excess fair value attributable to the Group’s
existing 49% shareholding of Scandins.
Autins Group plc Annual report and accounts 2016 09
Key performance
indicators
Lost time injury frequency rate (LTIFR)*
2016
2015
3.1
Component revenue
2016
2015
Component gross margin
2016
2015
EBITDA
2016
2015
£0.9m
R&D spend as a proportion of consolidated sales
2016
2015
0.9%
Capital expenditure
2016
2015
£1.3m
£17.3m
15.6
£19.5m
33.1%
31.6%
£1.8m
3.4%
£5.0m
* LTIFR is calculated as the number of lost time injuries dividend by 1 million and
multiplied by the number of hours worked
Autins Group plc Annual report and accounts 2016Strategic ReportGovernanceFinancial Statements 10
Principal risks
and uncertainties
Risk
Description and potential impact
Mitigation
Failing to
successfully
implement our
growth strategies
Dependence on
certain key
customers
Our future success will depend on the effective implementation
of our growth and expansion strategies, as well as on demand
for our products. The execution of our strategies may place
strain on our managerial, operational and financial reserves,
and the failure to implement our strategies may adversely
affect our reputation and prospects.
A significant proportion of our revenue for the year ended 30
September 2016 was derived from one key customer. Our
relationship with key customers could be materially adversely
affected by several factors, including a customer decision to
diversify or change how, or from whom, they source the
products or services that we currently provide, an inability to
agree on mutually acceptable pricing terms or a significant
dispute with the Group.
If our commercial relationship with a key customers terminates
for any reason, or if one of our key customers significantly
reduces its current or forecast business with us and we are
unable to enter into similar relationships with other customers
on a timely basis, or at all, our business could be materially
adversely affected.
We have increased the breadth and depth of our management
with the appointment to Group roles of several high calibre
executives with international experience. Our increased
geographical footprint and investment in the Autins Technical
Centre provide a sound foundation for growth.
Our strategy to diversify our business in terms of customers,
geographies and applications, as well as our vertical integration
into materials reduces reliance on individual customers and
sectors.
Our relationship with our core customer spans several decades,
and our key account plans ensure we work closely together to
develop NVH solutions.
Dependence on
relationship with
IkSung
We enjoy a close working relationship with IkSung as both a
supplier of materials and a licensor of intellectual property
rights. Were this relationship to deteriorate or breakdown, this
could have a significant adverse effect on our business.
To remain competitive, we must continually update and
develop our products, and the associated investment may
affect profitability.
The potential
impact on
profitability and
cashflow of
increasing research
and development
spend
Risk of competing
materials to
Neptune and Ozone
There may be technological advances in existing or potential
substitute materials, which may impede the commercial
progress of Neptune and Ozone and cause a reduction in
demand.
Should our relationship with our strategic supplier break down,
the terms of our agreement give Autins the right to source the
proprietary fibre directly from the manufacturer.
We actively engage with universities and R&D centres both to
improve our existing materials and to explore new materials.
Our work with partners allows us to benefit from their expertise,
and also to share investment and risks with them.
We have taken steps to ensure that appropriate tax credits are
received to offset the costs of research and development.
We also seek to secure government grant funding to partially
offset the costs of research.
Where appropriate, costs of development are capitalised as an
intangible asset and amortised over their useful life.
Our work with universities and other R&D centres to improve
our existing materials and to explore new materials, is a
mitigating factor.
Our strategy to diversify our business into non-automotive
applications also counters this risk.
Autins Group plc Annual report and accounts 2016 11
Risk
Description and potential impact
Mitigation
The impact of the
EU Referendum
(Brexit)
Currency and
foreign exchange
There are significant uncertainties in relation to the terms and
time frame within which Brexit will be effected, and there are
significant uncertainties as to what the impact will be on the
fiscal, monetary and regulatory landscape in the UK, including
inter alia, the UK’s tax system, the conduct of cross-border
business and export and import tariffs.
There remains uncertainty in relation to how, when and to what
extent these developments will impact on the UK economy and
the future growth of its various industries, including the
automotive sectors’ production and supply chain industries.
Although it is not possible to fully predict the effects of Brexit,
any of these risks, taken singularly or in aggregate, could have a
material effect on the Group’s business, financial condition and
results of operations.
A portion of the Group’s business is carried out in currencies
other than Sterling. To the extent that there are fluctuations in
exchange rates, this may have an impact on the Group’s
financial position or results of operation, as shown in the
Group’s accounts going forward.
The Group may engage in foreign currency hedging
transactions to mitigate potential foreign currency exposure.
The Directors cannot predict the effect of exchange rate
fluctuations upon future operating results and there can be no
assurance that exchange rate fluctuations will not have a
material adverse effect on the business, operating results or
financial condition of the Group.
The Group is maintaining an open dialogue regarding Brexit
impacts with key third parties, suppliers and automotive
industry bodies.
The Group has manufacturing operations within Europe, as well
as the UK. The Group will closely monitor the impact of Brexit
on the European automotive supply chain and will look to
optimise investment and local supply to minimise the impact of
any future tariff charges.
The IPO left the Group with reduced levels of debt, net cash
balances and significant financing headroom.
Where possible the Group buys its materials and services in the
functional currency of the entity involved so as to minimise
transactional risks.
In addition, external borrowings are largely maintained in the
functional currency of the local operations.
For future capital projects the Board is considering a hedging
strategy that would remove uncertainty at the time of order
placement.
The Board continues to monitor the level of transactional
currency risk to which the Group is exposed and may
implement a hedging strategy to limit or mitigate risk when the
value of these transactions are considered significant enough
to have a material impact on results.
Autins Group plc Annual report and accounts 2016Strategic ReportGovernanceFinancial Statements 12
Milestones
Over 50 years of
manufacturing
experience
Autins has been well established for 50 years, with
exponential growth within the last 5 years. Autins
historical moments noted below have equipped the
company for future development and growth.
2008
> Nominated 1st tier
for new XJ
2006
> Awarded TS
16949
2010
> Nominated 1st tier
for Range Rover
Evoque
2007
> Awarded Ford Q1
> 1st Large Cut and
Seal Technology
Awards:
> JLRQ Award
Jaguar Land Rover
> VDA A Rating
Bentley Motors Limited
> Investors in People
Investors in People
> EAL Accredited training facility
ELA
> ISO/TS 16949
ISO 9001
ISO 14001
OHSAS 18001
NQA
1966
> Set up in 1966
as Automotive
Insulations
Autins Group plc Annual report and accounts 2016 13
2016
> Two new European OEMs
> Opened AITC facility
> Formed Solar
Nonwovens
2014
> Moved to new headquarters
> 1st Moulding Press installed
> 1st Water Jet installed
> BS OHSAS 18001:2007
> Formed IA Joint Venture
2012
> Formed SI Sweden
2015
> Neptune European
exclusivity agreed
> China Part Marking
Accredited
> PU Foam Production
Started
2013
> 1st £1m monthly
revenues
> Formed RI Germany
rheinland insulations GmbH
SOUND & HE AT SOLUTIONS
P A R T O F T H E A U T I N S G R O U P
100 years of service
Throughout the Autins Group, many staff have been loyal to the
Company and served for an impressive number of years, equating to
a very knowledgeable and experienced team. An exemplary example
comes from our Automotive Insulations Ltd team, between these
five staff members from the factory, they have achieved 100 years
of service.
Autins Group plc Annual report and accounts 2016Strategic ReportGovernanceFinancial Statements 14
Market overview
A growing
global market
The global automotive market
The UK automotive market
The NVH market
The global automotive noise, vibration and
harshness (NVH) materials market is projected to
reach $11.6 billion by 2020, growing at a compound
annual growth rate of 5.4% between 2015 and 2020.
The passenger car segment accounted for the
major share of the market.
NVH market growth has outpaced that of the
automotive market as a whole on account of several
factors, notably increased legislation on vehicle
noise, ‘lightweighting’ of vehicles, and consumer
demand for a more comfortable and sophisticated
environment, not only within the premium
segment. Downsized engines and alternative
powertrains also present greater NVH challenges
and an increasing need for high performance
electromagnetic shielding.
Suppliers of automotive NVH materials are
predominantly headquartered in Europe and
operate globally. Autins’ competitors include
Autoneum Holding AG, International Automotive
Components, 3M Company, Grupo Antolin and
Pritex Limited.
The global automotive industry has recovered
better than many sectors following the economic
crisis, with industry profits significantly higher
than pre-2007 levels. There has been robust
growth in some key markets, with the U.S.
achieving record sales in 2015. Falling oil prices,
strong growth in employment and low interest
rates helped drive the American market above
the highs set in 2000, with sales of 17.5 million
cars and light trucks, a 5.7% increase on the
previous year. Global macroeconomic
uncertainty did, however, result in a slowdown in
some emerging markets, resulting in a flat year
overall. Despite a tougher than expected year for
emerging markets, global profits are expected to
double by 2020, with emerging markets
representing a sizeable proportion of the
incremental profits. To a lesser extent, continued
strong growth in the US, Europe, Japan and
South Korea is also expected to help drive profits
through 2020.
In the context of a strong global market, the UK is
set for further growth across both vehicle
production and the local sourcing of components.
By 2020 the UK is expected to be producing two
million vehicles a year, up 33% on current levels and
representing a 5.9% compound annual growth rate.
In addition, UK sourced components are expected
to increase from 41% to 50% over the same period.
Research from the Department for Business,
Innovation and Skills (BIS) reports that vehicle
manufacturers want to source an additional £6.0
billion from Tier One and Tier Two suppliers in the
UK. Companies such as Jaguar Land Rover have
demonstrated a strong commitment to UK
sourcing, with the likes of the Discovery Sport,
Jaguar XE, and F-PACE models achieving UK
sourcing ratios of around 55%. Given that the
Discovery Sport and Jaguar XE are expected to
generate around £3.5 billion each of UK sourcing
throughout their useful lives, there is a significant
market to be won for UK based suppliers.
Since the economic crisis, the UK government has
strengthened its relationship with the domestic
automotive industry, and supported several
initiatives to help drive the sector. The Automotive
Council was established in 2009 to enhance
dialogue and strengthen co-operation between UK
government and the automotive sector. Several
strategies emerging from this body, such as the
Advanced Propulsion Centre, are unique within
Europe. In 2013, the government’s automotive
strategy was published which, alongside the launch
of the Automotive Investment Organisation, has put
the automotive industry in a strong position to
receive further inward investment.
increase in UK vehicle production by 2020 50%
33%
UK sourced components by 2020
5.4%
growth forecast in global NVH market
Autins Group plc Annual report and accounts 2016 15
See our strategy on p.19
Strategic ReportGovernanceFinancial Statements 16
L
o
n
g
-
t
e
r
m
Our business model
How Autins
deliver value
n s o l u t i ons
ti o
o w
w - h
o
n
Design a n d k
ufacture NVH & in s u l a
n
a
e m
W
c
u
s
t
o
m
e
r
T
o
d
e
l
i
v
e
r
r
v
e
l
a
t
i
o
n
s
h
i
p
s
a
l
u
e
f
o
r o
ur stakeholders
Patented te
c
h
n
o
l
o
g
y
For our ch
o
s
e
n
m
a
r
k
e
t
s
e
c
t
o
r
s
g o ur key strengths
p l y i n
p
A
e
c
n
e
s
e
r
n p
a
e
p
uro
Strong E
Highly skilled wor k f o r c e
Autins Group plc Annual report and accounts 2016
17
Our business model is built on competitive advantages
that differentiate us in our marketplace and mean we are
well-positioned for growth.
We provide insulation solutions
Based on our innovation and research we manufacture specialist components and
materials using a number of different processes, including:
> Thermoforming
> Reaction injection
> Die cutting
> Vacuum forming
For our chosen market sectors
We supply the leading automotive manufacturers in Europe as well as Tier 1 suppliers to
the automotive industry. Potential new applications for our solutions include:
> Commercial vehicles
> Marine
> Rail
> Industrial
Applying our key strengths
> Design and know-how
> Patented technology
> Strong European presence
> Highly skilled workforce
> Long-term customer relationships
To deliver value for our stakeholders
Customers
Advanced materials to
improve performance and
meet increasingly stringent
regulations
Employees
Opportunity to work at the
leading edge of technology
Investors
Sustainable increase in
shareholder value
“I joined Autins 12 years ago as a machine
operator and soon progressed. The
opportunities for development at Autins are
incredible - my 25 year old self would never
have imagined that I would become factory
manager.”
Irek Kimak
— Factory Manager, Rugby
Strategic ReportGovernanceFinancial Statements 18
Our strategy
Delivering
sustainable
growth
Our vision
Our objective is to be recognised as one of
Europe’s premium acoustic and thermal
insulation materials and components
manufacturers. We will achieve this by
delivering sustainable growth through
product and process innovation, together with
higher gross margins through a commitment
to continuous improvement and recognition
by customers as a supplier of choice with a
highly skilled, motivated and engaged
workforce.
Autins Group plc Annual report and accounts 2016 19
Our strategy
Broaden customer
and sector base
Expand
geographically
Improve gross
margins
> Diversify automotive OEM customers
> Extend tier one and strategic supplier
relationships
> Build on established presence in UK,
> Focus innovation to better differentiate
Sweden and Germany
our solutions
> Capitalise on Group capabilities to further
> Vertically integrate into manufacture of
> Target opportunities in non-automotive
penetrate European markets
materials
sectors
> Evaluate opportunities in India via joint
> Adopt lean enterprise processes to
venture with Indica Industries Ltd
enhance performance
Our strategy is built upon three pillars of expertise
Specialist Component Manufacturing Division
> New processes – 3D and drape moulding,
robotic waterjet cutting
> High value specialist components – heat shields,
Specialist Materials Manufacturing Division
> Specialist blended non-woven materials
> Proprietary blend of light foam (Sweden)
> Acoustic flooring material (Sweden and
dash insulators
> Investment to broaden product portfolio for
new customers and markets, e.g. office pods
> Deployment of auto industry disciplines into
new sectors
Germany)
> Solar Nonwovens Ltd (Neptune)
>
Innovation and research
> Growth driven by new high margin
NVH solutions
> Track record of successful innovation – strategic
supplier status with Jaguar Land Rover
> Establishment of Autins Technical Centre –
independent research and development and
testing facility, based at MIRA Technology Park
– to reinforce innovation credentials
See our key performance indicators on p.09
Autins Group plc Annual report and accounts 2016Strategic ReportGovernanceFinancial Statements 20
Strategy in action
Continuous
improvement
and innovation
The Autins Technical Centre was established in 2016 to
be the core provider of technical research,
development and innovation for all Autins Group
companies. The technical team provide a high quality,
specialist service to colleagues across the Group from
concept to production.
Innovation and research
With strength in a range of technical topics, including acoustics, textiles and
polymers, the Autins Group is supported by the collaborative research and
development service provided by the Autins Technical Centre. The technical staff
work closely with all teams across the business to support the development of
innovative technical solutions for materials, products and processes. The ongoing
vision for the Autins Technical Centre is to continue to provide high quality service to
colleagues within the Group, but also to provide a revenue stream through a
UKAS-accredited laboratory service to external customers by the end of 2017.
Particular areas of innovation and continuous improvement are highlighted below.
> Ongoing evolution of noise, vibration
and harshness technology – from
commodity to high-value solutions
> Development of complex, technical
components
> New manufacturing techniques
> Lower-cost solutions – sonic sewing,
shaped flat cut parts
> Materials manufacturing within the
Group – Light foam, Neptune
> Material and process innovation
> IPR – materials, tooling and
– drape moulding, water-jet cutting
manufacturing
“The Autins Technical Centre is the first port of
call for staff across the business who need
technical knowledge, information and testing
resources. We have a strong, multidisciplinary
team with extensive experience in acoustic and
thermal materials, polymers, fibres, textiles and
materials testing.”
Dr. Kathy Beresford
— Group Technical Director
Autins Group plc Annual report and accounts 2016 21
Autins Technical Centre based
at MIRA Technology Park
Autins Technical Centre (AITC) is based on the expanding
enterprise park at MIRA Technology Park. With access to
acoustic, mechanical and thermal materials testing equipment,
the team can combine their expertise with live data collected
within the laboratory environment to enhance and develop
Autins Group products and processes.
The technical facility is co-located with office and workshops of
both potential and current customers of the Autins Group; this
enables the technical team to respond rapidly to customers
whilst they’re onsite using HORIBA MIRA’s extensive test track.
“My PhD focused on polymer materials and I came to Autins on a
12 week industrial internship. I was offered a permanent position
and now work at AITC. It is exciting to be part of a team which is
at the forefront of innovative developments at Autins.”
Dr. Chinemelum Nedolisa
— Materials Researcher
This Strategic Report was approved by the Board on 7 March 2017
and signed by order of the Board by the Chairman.
Adam Attwood
Chairman
7 March 2017
Autins Group plc Annual report and accounts 2016Strategic ReportGovernanceFinancial Statements 22
Board of
directors
Michael Jennings
Chief Executive
James David Larner
Chief Financial Officer and Company Secretary
James has spent a significant portion of his
career operating in finance roles within the Tata
Steel Group. Following on from this he acted as
Finance Director for Caparo Mill Products Division
before taking up the role as UK Finance Director
at Autins. James also held the role of Treasurer to
Birmingham Rathbone, a Midlands based charity
until becoming its Chairman in 2012. James
started his career in an audit role, qualifying with
EY in 2001. James joined the Group Board as Chief
Financial Officer in January 2016.
Michael has spent his career in industrial
product and technology led businesses in the
automotive, electronics and pharmaceutical
sectors and, most recently, was Chief Executive
of Hydro International plc, the previously AIM
quoted global environmental solutions company,
from July 2013 until its takeover in late 2016.
Prior to this Michael was the Managing Director
of the Industrial and Pharmaceutical Divisions at
BOC Group plc where he led the successful sale
of the Pharmaceutical Systems business from
BOC to IMA Group in 2008. Following the sale
Michael joined IMA as Managing Director of its
Pharmaceutical division. Prior to this, other roles
included Vice-President and General Manager
of the Enclosure Systems Division at Flextronics,
Director at the Thermo King Division of Ingersoll-
Rand and Plant Manager in the Spark Plugs
Division of AlliedSignal (now part of Honeywell).
Autins Group plc Annual report and accounts 2016 23
Adam Richard Attwood
Chairman
Terence (Terry) Brian Garthwaite
Non-Executive Director
Ian Roy Griffiths
Non-Executive Director
Terry has over 35 years’ experience as a director
of both publically listed and private companies.
He held a number of senior finance positions
within Foseco plc including Director of Corporate
Finance, prior to spending 11 years as Group
Finance Director at Senior plc. He has also held
Non-Executive positions at Wilmington Group
plc, Brammer plc and Renishaw plc chairing the
audit committee on each occasion. Terry qualified
as a chartered accountant prior to joining Price
Waterhouse. Terry joined the Board in April 2016
and will chair the Company’s Audit Committee.
Adam originally trained as a solicitor with
Norton Rose (now Norton Rose Fulbright), before
spending five years at Charterhouse Bank working
in quoted company advisory and European
M&A. He then spent seven years with ISIS Equity
Partners (now Livingbridge) as an Investment
Director. Over this period, Adam held a series of
Non-Executive roles for companies operating
within both the consumer products and IT
industries. For the past ten years, he has worked in
a Non-Executive capacity with a variety of private
businesses. He has acted as Chairman of the Mills
CNC Group for the past eight years and formally
joined the Autins’ Board in January 2016 as Non-
Executive Chairman, having previously provided
strategic guidance to the Board since April 2013.
Adam will chair the Company’s Nominations
Committee.
Ian was appointed to the Board in April 2016 as
a Non-Executive Director and is Chairman of the
Remuneration Committee. He brings wide-ranging
international experience of the engineering
business-to-business sector at both strategic and
operational levels, having spent nearly 30 years
with GKN plc, latterly as an Executive Director of
GKN plc where he was Group Managing Director
of GKN Automotive and served on the Board
of GKN plc from 2001 to 2006. Ian served as a
Non-Executive Director on the Board of Ultra
Electronics Holdings plc from 2003 to 2012. He
has been a Non-Executive Director of Renold plc
since 2010 where he also chairs the Remuneration
Committee and was Chairman of Hydro
International plc, a Company admitted to trading
on the AIM Market of the London Stock Exchange,
which he joined as a Non-Executive Director and
Chairman-elect in October 2014.
Autins Group plc Annual report and accounts 2016Financial StatementsStrategic ReportGovernance 24
Directors’ report
For the year ended 30 September 2016
The Directors present their report for the year ended 30 September 2016 in accordance with section 415 of the Companies Act 2006. Particulars of important events
affecting the Group, together with the factors likely to affect its future development, performance and position are set out in the Strategic Report on pages 1 to 21
which is incorporated into this report by reference. In addition, this report should be read in conjunction with information concerning Directors’ Remuneration and
employee share schemes in notes 7 and 24 to the financial statements, and which is incorporated by way of cross-reference into the Directors’ Report.
The Company is an investment holding company and the principal activity of its subsidiary undertakings is the supply of insulating materials to the automotive
industry.
The Company did not make any political donations during the year.
Results and dividends
The results for the year are set out in the consolidated income statement, on page 30. Following the year-end, the Directors assessed the appropriateness of the
Group declaring a second interim dividend and are recommending that a dividend of 0.4 pence should be paid.
Directors
The Directors who served during the year and up to the date of approval were as follows:
> Adam Attwood (appointed 18 January 2016);
> Terry Garthwaite (appointed 1 March 2016);
> Jim Griffin (resigned 1 February 2017);
> Ian Griffiths (appointed 21 March 2016);
> Karen Holdback (resigned 22 August 2016);
> James Larner (appointed 18 January 2016);
> Kevin Westwood (resigned 22 August 2016); and
> Michael Jennings (appointed 6 February 2017)
Re-election of Directors
At every Annual General Meeting, one-third of the Directors for the time being (excluding any Director appointed since the previous AGM) or, if their number is not a
multiple of three, the number nearest to but not exceeding one-third, shall retire from office by rotation. On this basis, James Larner, and Adam Attwood will offer
themselves for re-election at the forthcoming AGM.
As announced on 1 February 2017, Jim Griffin resigned as Chief Executive. On 6 February 2017, Michael Jennings was appointed as interim Chief Executive for an
initial period of 6 months, during which time he will serve as a member of the Board. He will stand for election at the forthcoming AGM.
Corporate governance
The Directors acknowledge the importance of good corporate governance and, whilst the Group is not required to comply with the UK Corporate Governance
Code, they apply its principles so far as is practicable, taking into account the Company’s size and stage of development.
Board of Directors and Board Committees
The Board comprises five Directors of whom two are Executives and three Non-Executives, and reflects a blend of different experience and backgrounds.
Biographical details of all the Directors at the date of this report are set out on page 23.
Meetings of the Board and its Committees
Audit, Remuneration and Nominations Committees met for the first time after the year end.
In the event that Directors are unable to attend a meeting, their comments on the business to be considered at the meeting are discussed with the Chairman
ahead of the meeting so that their contribution can be included in the wider Board discussion.
Board Committees
As noted above, the Board has three principal committees with clearly defined terms of reference. The members of the committees and their duties are set
out below.
Audit Committee
The Audit Committee assists the Board in discharging its responsibilities, within agreed terms of reference, with regard to corporate governance, financial
reporting and external and internal audits and controls.
Autins Group plc Annual report and accounts 2016 25
The ultimate responsibility for reviewing and approving the Annual Report and Accounts and the half-yearly reports remains with the Board. Membership of the Audit
Committee comprises the three Non-Executive Directors under the chairmanship of Terry Garthwaite.
The Audit Committee meets formally not less than three times every year and otherwise as required but did not meet between the date of admission to AIM (22
August 2016) and the financial year end (30 September 2016). However, following the year-end, the Audit Committee met to consider, inter alia, the external
auditor’s audit plan for the financial year to 30 September 2016.
Remuneration Committee
The Remuneration Committee is responsible, within agreed terms of reference, for establishing a formal and transparent procedure for developing policy on
executive remuneration and for setting the remuneration packages of individual Directors. This includes agreeing with the Board the framework for remuneration
of the Executive Directors and the executive management team. It is furthermore responsible for determining the total individual remuneration packages of each
Director including, where appropriate, bonuses, incentive payments and share options. No Director may be involved in any decision as to their own remuneration.
The membership of the Remuneration Committee comprises the two independent Directors and the committee is chaired by Ian Griffiths.
The Remuneration Committee meets not less than twice a year and at such other times as the Chairman of the Committee shall require but did not meet between
the date of admission to AIM (22 August 2016) and the financial year end (30 September 2016). Prior to the date of admission to AIM, the Committee met to confirm
remuneration arrangements ahead of the IPO, including the approval of the Long-Term Incentive Plan, Annual Bonus Plan and Executive Directors’ service
contracts.
Nomination Committee
The Nomination Committee has responsibility for reviewing the structure, size and composition of the Board and recommending to the Board any changes
required, for succession planning and for identifying and nominating for approval of the Board candidates to fill vacancies as and when they arise. The Committee
is also responsible for reviewing the results of any Board performance evaluation process and making recommendations to the Board concerning the Board’s
committees and the re-election of Directors at the Annual General Meeting. The membership of the Nomination Committee comprises the three Non-Executive
Directors and is chaired by Adam Attwood.
The Nomination Committee meets not less than twice a year and at such other times as the Chairman of the Committee shall require but did not meet between
the date of admission to AIM (22 August 2016) and the financial year end (30 September 2016).
Board evaluation
The Chairman, as part of his responsibilities, informally assesses the performance of the Board and its Directors on an ongoing basis and brings to the Board’s
attention any areas for improvement. For the time being, the Board will continue to evaluate in this way the balance of skills, experience, independence and
knowledge required to ensure that its composition is appropriate to the Group’s size and complexity.
Internal control and risk management
The Board is responsible for the Group’s systems of internal controls and, together with the Audit Committee, reviewing those systems. The systems put in place
are designed to manage, limit and control risk but cannot eliminate all risk completely.
The Executive Directors of the Company are actively involved in the daily management of the operations of the Group. Business risks are regularly identified and
appropriate control systems are implemented to manage those risks. Such systems are designed to manage rather than eliminate the risk of failure to achieve
business objectives and can provide only reasonable and not absolute assurance against material misstatement or loss. Steps have been taken to embed internal
control and risk management further into the operations of the business. The monthly results of each area of the business are reported, discussed and compared
to forecast.
Auditor independence
The Audit Committee and the external auditors, BDO LLP, have safeguards in place to avoid the possibility that the auditors’ objectivity and independence could
be compromised. These safeguards include the auditors’ report to the Audit Committee on the actions they take to comply with the professional and regulatory
requirements and best practice designed to ensure their independence from the Company.
The non-audit work undertaken in the year by the Group’s auditor, BDO LLP, included Reporting Accountant work in relation to the IPO and advice on a tax
restructuring and the long term incentive plan for the Group.
Autins Group plc Annual report and accounts 2016Financial StatementsStrategic ReportGovernance 26
Directors’ report continued
Directors’ interests and indemnity arrangements
At no time during the year did any Director hold a material interest in any contract of significance with the Group or any of its subsidiary undertakings other than an
indemnity provision between each Director and the Group and employment contracts between each Executive Director and the Group. The Group has purchased
and maintained throughout the year Directors’ and Officers’ liability insurance in respect of all Group companies.
Directors’ interests in shares
The interests of the Directors and their families in the shares of the Company at the date of admission to AIM and the end of the financial year were as follows:
Adam Attwood (appointed 18 January 2016)
James Larner (appointed 18 January 2016)
Jim Griffin (resigned 1 February 2017)
Terry Garthwaite
Ian Griffiths
£0.02 Ordinary Shares
as at 22 August 2016
Outstanding options over shares
as at 30 September 2016
and 28 February 2017
419,650
Nil
3,000,000
Nil
Nil
419,650
Nil
3,000,000
Nil
Nil
Share capital
Details of the Company’s share capital are set out in note 19 to the financial statements. The Company has one class of share capital: 22,100,984 fully paid
Ordinary Shares with a nominal value of £0.02 each which, following the Company’s Initial Public Offering, were admitted to the London Stock Exchange
Alternative Investment Market on 22 August 2016. The rights and obligations attached to the Ordinary Shares are governed by UK law and the Company’s Articles
of Association.
Major interests in shares
As at 30 September 2016 and as at 28 February 2017, the following substantial interests (3% or more) in voting rights attaching to the Company’s Ordinary Shares
had been notified to the Company:
Shareholder
Schroder Investment Management Limited
Miton Asset Management Limited
James (Jim) Griffin
Hargreave Hale Limited
Karen Holdback
Kevin Westwood
JP Morgan Asset Management
Ruffer LLP
Number of
voting rights
as at
28 February
2017
4,700,000
3,321,361
3,000,000
1,558,500
1,275,000
1,275,000
770,000
687,500
% voting rights
as at
28 February
2017
Number of
voting rights
as at
30 September
2016
% voting rights
as at
30 September
2016
21.26%
4,700,000
15.2% 3,208,500
13.6% 3,000,000
7.1% 1,558,500
1,275,000
5.8%
1,275,000
5.8%
770,000
3.5%
687,500
3.1%
21.26%
14.52%
13.6%
7.1%
5.8%
5.8%
3.5%
3.1%
Financial risk management
The Group uses financial instruments to manage certain types of risks, including those relating to credit and foreign currency exchange. The Group’s objectives and
policies on financial risk management including information on liquidity, capital, credit and risk can be found on pages 44 and 45 of the financial statements and in
the risks section on pages 45 to 46.
Future business developments
The strategy of the Group is explained in the Strategic Report section of this Annual Report and Accounts which, as noted in the preamble to the Directors’ Report,
is incorporated into this report by reference.
Research & development
The Group continues to invest in its research and development activities, as explained in the joint Chairman and Chief Executive’s Statement and the
Financial Review.
Health and safety
The Group is committed to providing a safe and healthy working environment for all staff and contractors. The Group’s health and safety standard sets out the
range of policies, procedures and systems required to manage risks and promote wellbeing. The Company Secretary has overall accountability for health and
safety across the organisation and reports formally to the Board.
Autins Group plc Annual report and accounts 2016
27
Going concern
The Company’s business activities, together with risk factors which potentially affect its future development, performance or position can be found in the Strategic
Report on pages 1 to 21. Details of the Company’s financial position and its cash flows are outlined in the Financial Review on pages 6 to 8.
After making reasonable enquiries, the Board has an expectation that the Group and the Company have adequate financial resources together with a
strong business model to ensure they continue to operate for the foreseeable future. The Company is a cash-generative business that, when required,
has access to borrowing facilities to meet the Group’s future cash requirements. Accordingly, the Directors have adopted the going concern basis in preparing
the financial statements.
Auditors
As recommended by the Audit Committee, pursuant to section 487 of the Companies Act 2006 and having indicated its willingness to act, the Company will
propose a resolution at the AGM that BDO LLP be reappointed as auditor of the Company.
Audit information
Each of the Directors at the date of the Directors’ Report confirms that so far as he is aware, there is no relevant audit information of which the Company’s auditor is
unaware and he has taken all the reasonable steps that he ought to have taken as a Director to make himself aware of any relevant audit information and to
establish that the Company’s auditor is aware of the information.
The confirmation is given and should be interpreted in accordance with the provisions of section 418 of the Companies Act 2006.
Shareholder relations and the Annual General Meeting
The Chief Executive and Chief Financial Officer meet analysts and institutional shareholders of the Company after the interim and annual results announcements and
on an as-needed basis at other times in the year to update shareholders on the progress of the Group. Additionally, the Non-Executive Directors are available to meet
shareholders if requested.
The Directors encourage the participation of all shareholders, including private shareholders, at the Annual General Meeting. The Annual Report and Accounts are
published on the Company’s website, www.autins.co.uk, and can be accessed by shareholders and potential investors.
Notice of the Annual General Meeting will be sent to shareholders at least 21 clear days before the meeting. The voting results will be announced following
the meeting.
The Company uses its corporate website (www.autins.co.uk) to communicate with its institutional shareholders and private investors and posts the latest
announcements, press releases and published financial information together with market updates and other information about the Group.
Details of the Company’s first Annual General Meeting and the resolutions to be proposed will be set out in a separate notice of meeting.
The Directors’ Report has been approved by the Board of Directors on 7 March 2017.
Signed by order of the Board.
James Larner
Company Secretary
7 March 2017
Autins Group plc
Central Point One
Central Park Drive
Rugby
Warwickshire CV23 0WE
Company number: 8958960
Autins Group plc Annual report and accounts 2016Financial StatementsStrategic ReportGovernance 28
Statement of Directors’ responsibilities
In respect of the Annual Report and Accounts
The Directors are responsible for preparing the Annual Report and financial statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare Group and Parent Company financial statements for each financial year. As required by the AIM Rules of the London
Stock Exchange, they are required to prepare the Group financial statements in accordance with IFRSs as adopted by the EU and applicable law and have elected
to prepare the Parent Company financial statements in accordance with UK Accounting Standards and applicable law (UK Generally Accepted Accounting
Practice), including FRS 101 Reduced Disclosure Framework. Under Company law the Directors must not approve the financial statements unless they are satisfied
that they give a true and fair view of the state of affairs of the Group and Parent Company and of the profit or loss of the Group for that period. In preparing each of
the Group and Parent Company financial statements, the Directors are required to:
> select suitable accounting policies and then apply them consistently;
> make judgements and estimates that are reasonable and prudent;
> for the Group financial statements, state whether they have been prepared in accordance with IFRSs as adopted by the EU;
> for the Parent Company financial statements, state whether applicable UK Accounting Standards have been followed, subject to any material departures
disclosed and explained in the financial statements; and
> prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Parent Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Parent Company’s transactions and disclose
with reasonable accuracy at any time the financial position of the Group and the Parent Company and enable them to ensure that its financial statements comply
with the Companies Act 2006. They are also responsible for taking such steps as are reasonably open to them to safeguard the assets of the Group and the Parent
Company and to prevent and detect fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Parent Company’s website. Legislation
in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
Autins Group plc Annual report and accounts 2016 29
Independent auditor’s report to the members of Autins Group plc
We have audited the financial statements of Autins Group plc for the year ended 30 September 2016 which comprise the consolidated and Company statement of
financial position, the consolidated income statement and consolidated statement of comprehensive income, the consolidated and Company statement of cash
flows, the consolidated and Company statement of changes in equity and the related notes. The financial reporting framework that has been applied in the
preparation of the Group financial statements is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union. The
financial reporting framework that has been applied in preparation of the Parent Company financial statements is applicable law and United Kingdom Accounting
Standards (United Kingdom Generally Accepted Accounting Practice).
This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been
undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To
the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members as a body, for our
audit work, for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditors
As explained more fully in the statement of Directors’ responsibilities, the Directors are responsible for the preparation of the financial statements and for being
satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law
and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Financial Reporting Council’s (FRC’s) Ethical Standards
for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements is provided on the FRC’s website at www.frc.org.uk/auditscopeukprivate.
Opinion on financial statements
In our opinion:
> the financial statements give a true and fair view of the state of the Group’s and the Parent Company’s affairs as at 30 September 2016 and of the Group’s profit
for the year then ended;
> the Group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union;
> the Parent Company’s financial statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
> the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
Opinion on other matters prescribed by the Companies Act 2006
In our opinion the information given in the Strategic Report and Directors’ report for the financial year for which the financial statements are prepared is consistent
with the financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:
> adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have not been received from branches not visited by
us; or
> the Parent Company financial statements are not in agreement with the accounting records and returns; or
> certain disclosures of Directors’ remuneration specified by law are not made; or
> we have not received all the information and explanations we require for our audit.
Andrew Mair (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
Birmingham
7 March 2017
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
Autins Group plc Annual report and accounts 2016Financial StatementsStrategic ReportGovernance 30
Consolidated income statement
For the year ended 30 September 2016
Revenue
Cost of sales
Gross profit
Other operating income
Distribution expenses
Administrative expenses excluding exceptional IPO costs
Exceptional IPO related administrative expenses (net)
Total administrative expenses
Operating profit
Finance expense
Share of post-tax profit of equity-accounted joint ventures
Gain on existing interest on acquisition of control
Profit before tax
Tax income/(expense)
Profit after tax for the period
Attributable to equity holders of the Parent Company
Non-controlling interest
Note
4
5
8
13
26
9
2016
£000
20,378
(13,845)
6,533
291
(693)
(5,647)
(182)
(5,829)
302
(558)
115
327
186
112
298
295
3
298
Earnings per share for profit attributable to the owners of the Parent during the period
Basic (pence)
Diluted (pence)
10
10
2.03p
2.03p
All amounts relate to continuing operations.
The notes on pages 38 to 60 form part of these financial statements.
2015
£000
19,781
(13,737)
6,044
191
(634)
(4,403)
–
(4,403)
1,198
(386)
87
–
899
(182)
717
749
(32)
717
5.56p
5.56p
Autins Group plc Annual report and accounts 2016 Consolidated statement of comprehensive income
For the year ended 30 September 2016
Profit after tax for the year
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Currency translation differences
Attributable to equity holders of the Parent Company
Non-controlling interest
Total currency translation differences
Total comprehensive income for the year
Attributable to equity holders of the Parent Company
Non-controlling interest
The notes on pages 38 to 60 form part of these financial statements.
31
Note
2016
£000
298
(88)
(7)
(95)
203
207
(4)
203
2015
£000
717
–
–
–
717
749
(32)
717
Autins Group plc Annual report and accounts 2016Financial StatementsStrategic ReportGovernance 32
Consolidated statement of financial position
As at 30 September 2016
Non-current assets
Property, plant and equipment
Intangible assets
Investments in equity-accounted joint ventures
Total non-current assets
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
Current liabilities
Trade and other payables
Loans and borrowings
Corporation tax liability
Total current liabilities
Non-current liabilities
Loans and borrowings
Deferred tax liability
Total non-current liabilities
Total liabilities
Net assets
Equity attributable to equity holders of the Company
Share capital
Share premium account
Other reserves
Currency differences reserve
Retained earnings
Non-controlling interest
Total equity
The notes on pages 38 to 60 form part of these financial statements.
The financial statements were approved and authorised for issue by the Board and were signed on its behalf on 7 March 2017.
James Larner
Chief Financial Officer
Note
2016
£000
11
12
13
14
15
16
17
17
18
19
19
21
21
21
8,808
3,706
206
12,720
1,565
4,955
6,449
12,969
25,689
6,300
994
–
7,294
2,119
559
2,678
9,972
15,717
442
12,938
1,886
(88)
539
15,717
–
15,717
2015
£000
3,444
3,189
111
6,744
1,392
4,105
505
6,002
12,746
3,975
2,930
87
6,992
3,039
657
3,696
10,688
2,058
255
–
1,391
–
476
2,122
(64)
2,058
Autins Group plc Annual report and accounts 2016 Parent Company statement of financial position
As at 30 September 2016
Non-current assets
Investments
Total non-current assets
Current assets
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
Current liabilities
Trade and other payables
Loans and borrowings
Corporation tax liability
Total current liabilities
Non-current liabilities
Loans and borrowings
Deferred tax liability
Total non-current liabilities
Total liabilities
Net assets
Equity attributable to equity holders of the Company
Share capital
Share premium account
Other reserves
Retained earnings
Total equity
33
Note
13
15
16
17
17
18
19
19
21
21
2016
£000
16,239
16,239
6,605
5,042
11,647
27,886
10,778
270
–
11,048
894
55
949
11,997
15,889
442
12,938
1,886
623
15,889
2015
£000
3,027
3,027
1,489
1
1,490
4,517
871
440
14
1,325
930
51
981
2,306
2,211
255
–
1,391
565
2,211
The Company has elected to take the exemption under section 408 of the Companies Act not to present the Parent Company profit and loss account. The profit for
the Parent Company for the year was £71,000 (2015: £253,000).
The notes on pages 38 to 60 form part of these financial statements.
The financial statements were approved and authorised for issue by the Board and were signed on its behalf on 7 March 2017.
James Larner
Chief Financial Officer
Autins Group plc Annual report and accounts 2016Financial StatementsStrategic ReportGovernance 34
Consolidated statement of changes in equity
For the year ended 30 September 2016
At 1 October 2014
Comprehensive income for the year
Profit for the year
Total comprehensive income for the year
Contributions by and distributions to owners
Dividends
Bonus share issue
Repayment of capital
Issue of share capital
Total contributions by and distributions to owners
At 30 September 2015
At 1 October 2015
Comprehensive income for the year
Profit for the year
Other comprehensive income
Total comprehensive income for the year
Contributions by and distributions to owners
Share option expense
Dividends
Bonus share issue
Issue of share capital (net of expenses of issue)
Acquisition of minority interest (note 27)
Total contributions by and distributions
to owners
At 30 September 2016
Share
premium
account
capital
£000
–
–
–
–
–
–
–
12,938
–
12,938
12,938
Share
capital
£‘000
255
–
–
–
–
–
14
173
–
187
442
The cumulative currency differences reserve may be reclassified subsequently to profit and loss.
Share
capital
£000
255
–
–
–
1,014
(1,014)
–
–
255
Other
reserves
£000
1,391
–
–
–
–
–
–
495
–
495
1,886
Other
reserves
£000
2,403
–
–
–
(1,014)
–
2
(1,012)
1,391
Retained
earnings
£000
(264)
749
749
(9)
–
–
–
(9)
Non-
controlling
interest
£000
(32)
(32)
(32)
–
–
–
–
–
Total
£000
2,394
749
749
(9)
–
(1,014)
2
(1,021)
Total
equity
£000
2,362
717
717
(9)
–
(1,014)
2
(1,021)
476
2,122
(64)
2,058
Cumulative
currency
differences
reserve
£000
Retained
earnings
£000
Total
£000
2,122
295
(88)
207
10
(9)
–
13,606
(219)
476
295
–
295
10
(9)
(14)
–
(219)
Non-
controlling
interest
£000
(64)
3
(7)
(4)
–
–
–
–
68
68
–
Total
equity
£000
2,058
298
(95)
203
10
(9)
–
13,606
(151)
13,456
15,717
(232)
13,388
(88)
539
15,717
–
–
(88)
(88)
–
–
–
–
–
–
Autins Group plc Annual report and accounts 2016 Parent Company statement of changes in equity
For the year ended 30 September 2016
At 1 October 2014
Comprehensive income for the year
Profit for the year and total comprehensive expense
Total comprehensive income for the year
Contributions by and distributions to owners
Dividends
Bonus share issue
Repayment of capital
Issue of share capital
Total contributions by and distributions to owners
At 1 October 2015
Comprehensive income for the year
Profit for the year and total comprehensive expense
Total comprehensive income for the year
Contributions by and distributions to owners
Dividends
Share option expense
Bonus share issue
Issue of share capital (net of expenses of issue)
Total contributions by and distributions to owners
At 30 September 2016
35
Share
capital
£000
255
–
255
–
1,014
(1,014)
–
–
255
–
255
–
–
14
173
187
442
Share
premium
account
£000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
12,938
12,938
12,938
Other
reserves
£000
2,403
–
2,403
–
(1,014)
–
2
(1,012)
1,391
–
1,391
–
–
–
495
495
1,886
Retained
earnings
£000
321
253
574
(9)
–
–
–
(9)
565
71
636
(9)
10
(14)
–
(13)
623
Total
equity
£000
2,979
253
3,232
(9)
–
(1,014)
2
(1,021)
2,211
71
2,282
(9)
10
–
13,606
13,607
15,889
Autins Group plc Annual report and accounts 2016Financial StatementsStrategic ReportGovernance 36
Consolidated statement of cash flows
For the year ended 30 September 2016
Operating activities
Profit after tax
Adjustments for:
Income tax (credit)/expense
Finance expense
Employee share-based payment charge
Depreciation of property, plant and equipment
Amortisation of intangible assets
Gain on existing interest on acquisition of control
(Profit)/loss on sale of fixed assets
Share of post-tax profit of equity-accounted joint ventures
Increase in trade and other receivables
(Increase)/decrease in inventories
Increase in trade and other payables
Cash generated from operations
Income taxes paid
Net cash flows from operating activities
Investing activities
Purchase of property, plant and equipment
Proceeds from sale of property, plant and equipment
Purchase of intangible assets
Acquisition of subsidiary (net of overdraft acquired)
Dividend received from equity-accounted for joint venture
Net cash used in investing activities
Financing activities
Share capital issued
Share issue expenses
Interest paid
Loan notes repaid
Bank loans repaid
Hire purchase repaid
(Decrease)/increase in invoice discounting
Bank loans drawn
Repayment of Directors’ loans
Dividends paid
Net cash used in financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Overdraft on acquisition
Cash and cash equivalents at end of year
Cash and cash equivalents comprise:
Cash balances
Bank overdraft
2016
£000
298
(112)
558
10
379
237
(327)
(96)
(115)
832
(840)
(67)
748
(159)
673
(173)
500
(3,417)
187
(180)
(56)
15
(3,451)
14,000
(895)
(324)
(425)
(3,908)
(420)
(1,893)
2,976
(300)
(9)
8,802
5,851
505
(56)
6,300
6,449
(149)
6,300
2015
£000
717
182
386
–
339
237
–
93
(87)
1,867
(240)
259
862
881
2,748
(79)
2,669
(405)
2
–
–
–
(403)
–
–
(250)
(254)
(1,195)
(253)
219
250
(369)
(9)
(1,861)
405
100
–
505
505
–
505
Non-cash transactions
Ordinary Shares with a value of £500,000 were issued to settle the consideration for the acquisition of Scandins AB and of the non-controlling interest in
RI Rheinland Insulations GmbH.
The Group acquired plant and equipment at a cost of £240,000 and £922,000, respectively, under hire purchase arrangements in 2016 and 2015 and at
30 September 2016 there was a capital accrual of £1,410,000. These transactions have been shown net in the consolidated statement of cash flows.
Autins Group plc Annual report and accounts 2016 Parent Company statement of cash flows
For the year ended 30 September 2016
Operating activities
Profit after tax
Adjustments for:
Income tax (credit)/expense
Finance expense
Employee share-based payment charge
Increase in trade and other receivables
Increase in trade and other payables
Net cash flows from operating activities
Financing activities
Share capital issued
Share issue expenses
Loan notes repaid
Repayment of Directors’ loans
Dividends paid
Net cash from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year (all cash balances)
37
2016
£000
71
(171)
234
10
144
(7,942)
483
(7,459)
(7,315)
14,000
(895)
(440)
(300)
(9)
12,356
5,041
1
5,042
2015
£000
253
(36)
136
–
353
(356)
621
265
618
–
–
(240)
(369)
(9)
(618)
–
1
1
Non-cash transactions
A restructure of the wholly-owned Group subsidiary companies from indirect to directly held investments in shares increased the cost of investment in subsidiaries
by £13,212,000. This was settled on intercompany balances and, accordingly, these are not included in the cash flow statement.
Autins Group plc Annual report and accounts 2016Financial StatementsStrategic ReportGovernance 38
Notes to the financial statements
For the year ended 30 September 2016
1. Accounting policies
Description of business
Autins Group is a public limited Company incorporated and domiciled in the UK and listed on the Alternative Investment Market of the London Stock Exchange
(‘AIM’). The principal activity of the Group is the supply of Noise Vibration and Harshness (NVH) insulating materials primarily to the automotive industry. The
address of the registered office is Central Point One, Central Park Drive, Rugby, Warwickshire CV23 0WE.
Accounting convention and basis of preparation
The financial statements have been prepared in accordance with the historical cost convention, International Financial Reporting Standards (‘IFRS') and IFRIC
interpretations issued by the International Accounting Standards Board as adopted by the European Union. The stated accounting policies have been consistently
applied to all periods presented. The date of transition to IFRS and the effect of transition on the Group financial statements was set out in the placing document at
Admission to AIM.
The Parent Company financial statements have been prepared under applicable UK Accounting Standards (FRS 101) in order to apply IFRS accounting standards
with the option of the FRS 101 disclosure exemptions. The effect of transition to FRS 101 is set out in note 28.
The financial statements are drawn up in sterling, the functional currency of Autins Group plc. The level of rounding for the financial statements is the nearest
thousand pounds.
Composition of the Group
A list of the subsidiary undertakings and joint ventures is given in note 13 to the financial statements.
Changes in accounting policies
These financial statements have been prepared in accordance with IFRS and IFRIC Interpretations issued by the International Accounting Standards Board as
adopted by the European Union for periods beginning on or after 1 October 2015. There were no new standards or interpretations effective for the first time for the
period beginning on 1 October 2015.
New standards, interpretations and amendments not yet effective
The following new standards, interpretations and amendments, which are not yet effective and have not been adopted early in these financial statements and are
not expected to have an effect on the Company’s or Group’s future financial statements are:
> Annual improvements to IFRSs 2012–2014 (effective 1 January 2016)
> Clarification of acceptable methods of depreciation and amortisation (effective 1 January 2016)
> Accounting for acquisitions of interests in joint operations (effective 1 January 2016)
These that may have an effect on the Company’s or Group’s future financial statements are:
IFRS 15 Revenue from Contracts with Customers
> This standard is mandatory for periods beginning on or after 1 January 2018. IFRS 15 is intended to clarify the principles of revenue recognition and establish a
single framework for revenue recognition across all industries.
> Under the new standard, revenue is recognised when a customer obtains control of a good or service. It also establishes principles for reporting information
around the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity’s contracts with customers.
> Adopting this standard may result in changes in the timing of the recognition of tooling sales to automotive customers and also acoustic flooring products to the
wholesale markets, but both impacts are still being assessed.
IFRS 9 Financial Instruments
> Mandatory for periods beginning on or after 1 January 2018. IFRS 9 Financial Instruments will ultimately replace IAS 39 Financial Instruments: Recognition and
Measurement in its entirety. IFRS 9 uses a single approach to determine whether a financial asset is measured at amortised cost or fair value, replacing the many
different rules in IAS 39. The approach in IFRS 9 is based on how an entity manages its financial instruments (its business model) and the contractual cash flow
characteristics of the financial assets. The potential impact of this standard will be assessed closer to the date of adoption as the Group’s ongoing growth phase
may give rise to changes in the nature of the financial assets and liabilities in existence.
IFRS 16 Leases
> This standard is effective for accounting periods beginning on or after 1 January 2019 and sets out the principles for the recognition, measurement, presentation
and disclosure of leases for both lessees and lessors. It replaces IAS 17 Leases and IFRIC 4 “Determining whether an arrangement contains a lease”.
> The most significant changes are in relation to lessee accounting. Under the new standard, the concept of assessing a lease contract as either operating or
financing is replaced by a single lessee accounting model.
> Under this new model, substantially all lease contracts will result in a lessee acquiring a right-to-use asset and obtaining financing. The lessee will be required to
recognise a corresponding asset and liability. The asset will be depreciated over the term of the lease and the interest on the financing liability will be charged
over the same period.
> Adopting this new standard will result in a fundamental change to the Group’s statement of financial position, with right-to-use assets and accompanying
financing liabilities for the Group’s manufacturing sites, warehouses and offices being recognised for the first time.
> The income statement will also be impacted, with rent expense relating to operating leases being replaced by a depreciation charge arising from the right-to-
use assets and interest charges arising from lease financing. The full impact of these changes will be quantified closer to the date of adoption.
Autins Group plc Annual report and accounts 2016 39
Basis of consolidation
The consolidated financial statements incorporate the results of business combinations using the acquisition method. In the statement of financial position, the
acquiree’s identifiable assets (both tangible and intangible), liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date.
The consolidated financial statements present the results of the Company and its subsidiaries (the ‘Group’) as if they formed a single entity. Intercompany
transactions and balances between Group companies are therefore eliminated in full.
Subsidiaries are all entities over which the Group has control. The Group controls an entity when it is exposed to, or has rights to, variable returns from its
involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which
control is transferred to the Group and cease to be consolidated from the date on which control is transferred out of the Group. Any non-controlling interest in a
subsidiary entity is recognised at a proportionate share of the subsidiary’s net assets or liabilities. On acquisition of a non-controlling interest, the difference
between the consideration paid and the non-controlling interest at that date is taken to equity reserves.
Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable and represents the amount receivable for goods supplied, net of returns,
discounts and rebates allowed by the Group and value added taxes.
Revenue from the sale of goods is recognised when the Group has transferred the significant risks and rewards of ownership to the buyer, which is usually when
the goods have been accepted by the customer.
The Group recognises revenue from the sale of tooling when the specific tool has passed pre-production assessment and sign off by the relevant
customer engineer.
Where the costs of developing a specific automotive tooling component for a customer do not result in a product that will enter volume production, the revenue
arising from cost recovery for obsolete materials, tooling and design and development work is recognised at the point of customer acceptance of the claim.
Expenditure
Expenditure is recognised in respect of goods and services received when supplied in accordance with contractual terms. Provision is made when a present
obligation exists for a future liability relating to a past event and where the amount of the obligation can be reliably estimated.
Exceptional expenses
The Group classifies certain one-off charges or credits that have a material impact on the financial results, and which are largely non-trading or not expected to
recur, as ‘exceptional items’. These are disclosed separately to provide further understanding of the financial performance of the Group.
Goodwill
Goodwill arising on acquisitions is the excess of the fair value of the cost of acquisition, over the fair value of identifiable net assets acquired. Goodwill on
acquisition is recorded as an intangible fixed asset. Fair values are attributed to the identifiable assets, liabilities and contingent liabilities that existed at the date of
acquisition, reflecting their condition at that date. Adjustments are also made to align the accounting policies of acquired businesses with those of the Group. This
is applied either on initial acquisition or where control is gained over a previously equity-accounted interest in an entity. A fair value is measured for the entire
holding on taking control and in respect of all assets and liabilities resulting in a gain or loss on a previously held and equity-accounted investment.
Goodwill is assigned an indefinite useful economic life. Impairment reviews are performed annually, or more frequently if events or changes in circumstances
indicate that the carrying value may not be recoverable.
Where the goodwill calculation results in a negative amount (bargain purchase) this amount is taken to the income statement in the period in which is it derived.
Impairment
Impairment tests on goodwill and other intangible assets with indefinite useful economic lives are undertaken annually at the financial year end. All other
individual assets or cash-generating units are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not
be recoverable.
An impairment loss is recognised for the amount by which the carrying value exceeds the recoverable amount of the asset or cash-generating unit.
The recoverable amount is the higher of fair value, reflecting market conditions less costs to sell, and value-in-use based on an internal discounted cash
flow evaluation.
Impairment charges are included in profit or loss, except to the extent they reverse gains previously recognised in other comprehensive income. An impairment
loss recognised for goodwill is not reversed.
Autins Group plc Annual report and accounts 2016Financial StatementsStrategic ReportGovernance 40
1. Accounting policies continued
Intangible assets acquired as part of a business combination
Intangible assets acquired in a business combination are identified and recognised separately from goodwill where they are separable from the acquired entity or
give rise to other contractual/legal rights. Amounts assigned to intangibles acquired as part of a business combination are arrived at by using an appropriate
valuation technique for the asset concerned.
All intangible assets acquired through a business combination are amortised on a straight-line basis over their estimated useful lives.
The intangibles currently recognised by the Group, their useful economic lives and the methods used to determine the separable cost of the intangibles acquired
in business combinations are as follows:
Intangible asset
Tooling intellectual property
Key customer relationships
Useful economic life
Valuation method
10 years
7 years
Estimated discounted cash flow of post-tax royalty earnings potential
Estimated discounted cash flow
Subsequent to initial recognition, intangible assets acquired in a business combination are reported at cost less accumulated amortisation and
impairment losses.
Property, plant and equipment
Items of property, plant and equipment are initially recognised at cost. As well as the purchase price, cost includes directly attributable costs, pre-production plant
commissioning costs and interest incurred during the course of construction.
Depreciation is provided on all items of property, plant and equipment so as to write off their cost, less expected residual value over the expected useful economic
lives from the date when they are brought into use. It is provided at the following rates:
Plant and machinery
Leasehold improvements
Fixtures and fittings
–
–
–
5-20 years straight-line
Period of the lease
3-15 years straight-line
Profit/loss on disposal of property, plant and equipment and intangible assets
Profits and losses on the disposal of property, plant and equipment and intangible assets represent the difference between the net proceeds and net book value
at the date of sale. Disposals are accounted for when the relevant transaction becomes unconditional.
Inventories
Inventories are initially recognised at cost, and subsequently at the lower of cost and net realisable value. Cost comprises all costs of purchase, costs of conversion
and an appropriate proportion of fixed and variable overheads incurred in bringing the inventories to their present location and condition. Net realisable value is
the estimated selling price less costs to complete and sell. Where necessary, provision is made to reduce cost to no more than net realisable value having regard to
the nature and condition of inventory, as well as its anticipated utilisation and saleability.
Tooling for resale
Where a customer project or component is secured, the Group may be required to source and test production tooling in advance of volume production.
Tooling sourced for a customer is recognised at cost and held as an asset for resale within inventory when the Group has a documented commitment from the
customer and is valued at the lower of cost and net realisable value. Where the Group has no customer commitment to meet the costs of tooling production, the
costs are expensed within cost of sales as incurred.
Research and development
An internally-generated intangible asset arising from development (or the development phase) of an internal project is recognised if, and only if, all of the following
have been demonstrated:
> It is technically feasible to complete the development such that it will be available for use, sale or licence;
> There is an intention to complete the development;
> There is an ability to use, sell or licence the resultant asset;
> The method by which probable future economic benefits will be generated is known;
> There are adequate technical, financial and other resources required to complete the development;
> There are reliable measures that can identify the expenditure directly attributable to the project during its development.
The amount recognised is the expenditure incurred from the date when the project first meets the recognition criteria listed above. Expenses capitalised consist of
employee costs incurred on development and an apportionment of appropriate overheads.
Where the above criteria are not met, development expenditure is charged to profit or loss in the period in which it is incurred. The expected life of internally-
generated intangible assets varies based on the anticipated useful life, currently ranging from five to ten years.
Subsequent to initial recognition, internally-generated intangible assets are reported at cost less accumulated amortisation and impairment losses.
Autins Group plc Annual report and accounts 2016Notes to the financial statements continuedFor the year ended 30 September 2016 41
Amortisation is charged on a straight-line basis over the estimated period in which the intangible asset has economic benefit and is reported in the ‘Depreciation/
Amortisation expenses’ line of the consolidated income statement.
Research expenditure is recognised as an expense in the period in which it is incurred.
Revenue-based grants
Revenue-based grants are recognised as income based on the specific terms related to them as follows:
> A grant is recognised in other operating income when the grant proceeds are received (or receivable) provided that the terms of the grant do not impose future
performance-related conditions.
> If the terms of a grant do impose performance-related conditions then the grant is only recognised in income when the performance-related conditions
are met.
> Any grants that are received before the revenue recognition criteria are met are recognised in the statement of financial position as a liability.
Capital grants
Grants received relating to tangible fixed assets are treated as deferred income and released to the income statement over the expected useful lives of the assets
concerned.
Foreign currencies
Transactions entered into by Group entities in a currency other than the currency of the primary economic environment in which they operate (their ‘functional
currency’) are recorded at the rates ruling when the transactions occur. Foreign currency monetary assets and liabilities are translated at the rates ruling at the
reporting date. Exchange differences arising on the retranslation of unsettled monetary assets and liabilities are recognised immediately in the consolidated
income statement.
Translation of the results of overseas businesses
The results of overseas subsidiaries and joint ventures are translated into the Group’s presentation currency of sterling each month at the weighted average
exchange rate for the month. The weighted average exchange rate is used, as it is considered to approximate the actual exchange rates on the date of the
transactions. The assets and liabilities of such undertakings are translated at the year-end exchange rate. Exchange differences arising on translating the opening
net assets at opening rate and the results of overseas operations at actual rate are recognised in other comprehensive income and accumulated in a separate
equity reserve.
Hire purchase and leasing commitments
Hire purchase agreements or leases where the Group has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are
capitalised at the lease’s commencement at the lower of the fair value of the leased asset and the present value of the minimum lease payments.
Each lease payment is allocated between the liability and finance charges. The remaining future rental obligations, net of finance charges, are included in finance
lease liabilities in current or non-current liabilities. The interest element of the finance cost is charged to the income statement over the lease period so as to
produce a constant periodic rate of interest on the remaining balance of the liability for each period. The property, plant and equipment acquired under finance
leases is depreciated over the shorter of the useful life of the asset and the lease term.
Operating lease commitments
Where substantially all of the risks and rewards incidental to ownership are not transferred to the Group (an ‘operating lease’), the total rentals payable under the
lease are charged to the consolidated income statement on a straight-line basis over the lease term. The aggregate benefit of lease incentives is recognised as a
reduction of the rental expense over the lease term on a straight-line basis.
Employee benefit costs
The Group operates a defined contribution pension scheme. Contributions payable to the pension scheme are charged to the consolidated income statement in
the period to which they relate.
Share-based payment
The Group operates an equity-settled share-based compensation plan in which the Group receives services from Directors and certain employees as
consideration for share options. The fair value of the services is recognised as an expense over the vesting period, determined by reference to the fair value of the
options granted.
Invoice discounting
The Group had an agreement with Santander UK PLC whereby its trade receivables were invoice discounted, with recourse after 120 days. On the basis that the
benefits and risks attaching to the debts remained with the Group, the gross debts were included as an asset within trade receivables (net of any provisions and
discounts) and the proceeds received were included within current liabilities as short-term borrowings under invoice discounting facilities.
Charges and interest were recognised in the consolidated income statement as they accrue.
Investments in subsidiaries
Investments in subsidiaries are stated at cost or at the fair value of shares issued as consideration less provision for any impairment.
Autins Group plc Annual report and accounts 2016Financial StatementsStrategic ReportGovernance 42
1. Accounting policies continued
Investments in joint ventures
A joint venture is an arrangement in which the Group has joint control, whereby the Group has rights to the net assets of the arrangement, rather than rights to its
assets and obligations for its liabilities. Joint control is the contractually-agreed sharing of control of an arrangement, which exists only when decisions about the
relevant activities require unanimous consent of the parties sharing control.
The Group accounts for its interests in joint ventures using the equity method. Under the equity method, an investment in a joint venture is initially recognised in
the consolidated statement of financial position at cost and adjusted thereafter to recognise the Group’s share of the profit or loss and other comprehensive
income of the joint venture.
When the Group’s share of losses of a joint venture exceeds the Group’s interest in that joint venture (which includes any long-term interests that, in substance, form
part of the Group’s net investment in the joint venture), the Group discontinues recognising its share of further losses, unless and only to the extent that the Group
has incurred legal or constructive obligations or made payments on behalf of the joint venture for those losses.
Any premium paid for an investment in a joint venture above the fair value of the Group’s share of the identifiable assets, liabilities and contingent liabilities
acquired is capitalised and included in the carrying amount of the investment in the joint venture. Where there is objective evidence that the investment in a joint
venture has been impaired, the carrying amount of the investment is tested for impairment in the same way as other non-financial assets.
Financial assets
The Group classifies its financial assets based upon the purpose for which the asset was acquired. The Group has not classified any of its financial assets as held to
maturity or fair value through profit and loss. The classes of financial assets are commented upon further below:
(a) Loans and receivables
These assets are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise principally through the
provision of services to customers (e.g. trade receivables), but also incorporate other types of contractual monetary asset. They are initially recognised at fair value
plus transactions costs that are directly attributable to their acquisition or issue, and are subsequently carried at amortised cost using the effective interest
method, less provision for impairment.
The Group’s loans and receivables comprise trade, other receivables and amounts due from Directors and are included within the consolidated statement of
financial position.
(b) Cash and cash equivalents
Cash and cash equivalents comprise cash held at bank which is available on demand.
(c) Impairment of financial assets
Impairment provisions against financial assets are recognised when there is objective evidence (such as significant financial difficulties on the part of the
counterparty or default or significant delay in payment) that the Group will be unable to collect all of the amounts due under the terms receivable, the amount of
such a provision being the difference between the net carrying amount and the present value of the future expected cash flows associated with the impaired
receivable. For trade receivables, which are reported net, such provisions are recorded in a separate allowance account with the loss being recognised within
administrative expenses in the income statement. On confirmation that the trade receivables will not be collectable, the gross carrying value of the asset is written
off against the associated provision.
Financial liabilities
The Group classifies its financial liabilities as other financial liabilities and does not enter into any financial liabilities which are held at fair value through profit or
loss. This reflects the purpose for which the liability was acquired.
Other financial liabilities comprise:
> Trade payables, amounts owed to equity-accounted joint ventures, accruals, other creditors, invoice discounting and amounts due to Directors are initially
recognised at fair value, and subsequently carried at amortised cost using the effective interest method.
> Bank loans, loan notes and hire purchase agreements are initially recognised at fair value net of any transaction costs directly attributable to the issue of the
instrument. Such interest-bearing liabilities are subsequently measured at amortised cost ensuring the interest element of the borrowing is expensed over the
repayment period at a constant rate.
Share capital
Financial instruments issued by the Group are treated as equity only to the extent that they do not meet the definition of a financial liability. The Group’s Ordinary
shares are classified as equity instruments.
Dividends
Dividend distributions to the Group’s shareholders are recognised as a liability in the period in which the dividend becomes a committed obligation.
Final dividends are recognised when they are approved by the shareholders. Interim dividends are recognised when paid.
Autins Group plc Annual report and accounts 2016Notes to the financial statements continuedFor the year ended 30 September 2016 43
Taxation
Current taxes are based on the results and are calculated according to local tax rules, using tax rates enacted or substantively enacted by the date of the statement
of financial position.
Deferred taxation
Deferred tax assets and liabilities are recognised where the carrying amount of an asset or liability in the consolidated statement of financial position differs from
its tax base, except for differences arising on:
> the initial recognition of goodwill;
> the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction affects neither accounting
nor taxable profit; and
> investments in subsidiaries and jointly controlled entities where the Group is able to control the timing of the reversal of the difference and it is probable that the
difference will not reverse in the foreseeable future.
Recognition of deferred tax assets is restricted to those instances where it is probable that taxable profit will be available against which the difference can
be utilised.
The amount of the asset or liability is determined using tax rates that have been enacted or substantively enacted by the date of the statement of financial position
and are expected to apply when the deferred tax liabilities or assets are settled or recovered. Deferred tax balances are not discounted.
Deferred tax assets and liabilities are offset when the Group has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and
liabilities relate to taxes levied by the same tax authority on either:
> the same taxable Group Company; or
> different entities which intend either to settle current tax assets and liabilities on a net basis, or to realise the assets and settle the liabilities simultaneously, in
each future period in which significant amounts of deferred tax assets and liabilities are expected to be settled or recovered.
Operating segments
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating
decision-maker has been identified as the Management Team, including the Chief Executive Officer, Chief Financial Officer and Chairman.
The Board considers that the Group’s activity constitutes one primary operating and one separable reporting segment as defined under IFRS 8. Management
considers the reportable segment to be Automotive Noise, Vibration and Harshness (NVH). Revenue and profit before tax primarily arises from the principal activity
based in the UK. Management reviews the performance of the Group by reference to total results against budget.
The total profit measure is operating profit as disclosed on the face of the consolidated income statement. No differences exist between the basis of preparation of
the performance measures used by management and the figures in the Group financial statements.
2. Critical accounting estimates and judgements
The Group makes certain estimates and assumptions regarding the future. Estimates and judgements are continually evaluated based on historical experience
and other factors, including the expectations of future events that are believed to be reasonable under the circumstances. In the future, actual experience may
differ from these estimates and assumptions. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts
of assets and liabilities within the next financial year are discussed below.
Accounting judgements, estimates and assumptions
(a) Property, plant and equipment
Property, plant and equipment are depreciated over the useful lives of the assets. Useful lives are based on the Management’s estimates of the period that the
assets will generate revenue, which are reviewed annually for continued appropriateness. The carrying values are tested for impairment when there is an
indication that the value of the assets might be impaired. When carrying out impairment tests these would be based upon future cash flow forecasts and these
forecasts would be based upon Management judgement. Future events could cause the assumptions to change, therefore this could have an adverse effect on the
future results of the Group.
(b) Other intangible assets
As set out in note 1 intangible assets acquired in a business combination are capitalised and amortised over their useful lives. Both initial valuations and
subsequent impairment tests are based on risk-adjusted future cash flows discounted using appropriate discount rates. These future cash flows will be based on
forecasts which are inherently judgemental. Future events could cause the assumptions to change which could have an adverse effect on the future results of the
Group.
(c) Income taxes
The Group is principally subject to income taxes in the UK where there is judgement in determining the provision for income taxes. During the ordinary course of
business, there are transactions and calculations for which the ultimate tax determination is uncertain. As a result, the Group recognises tax liabilities based on
estimates of whether additional taxes and interest will be due. The Group believes that its accruals for tax liabilities are adequate for all open audit years based on
its assessment of many factors including past experience and interpretations of tax law. This assessment relies on estimates and assumptions and may involve a
series of judgements about future events. To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences will
impact income tax expense in the period in which such determination is made.
Autins Group plc Annual report and accounts 2016Financial StatementsStrategic ReportGovernance 44
2. Critical accounting estimates and judgements continued
(d) Impairment of goodwill
The Group is required to test, on an annual basis, whether goodwill has suffered any impairment. The recoverable amount is determined based on value-in-use
calculations. The use of this method requires the estimation of future cash flows and the determination of a discount rate in order to calculate the present value of
the cash flows. More information including carrying values is included in note 12.
3. Financial instruments – risk management
The Board has overall responsibility for the determination of the Group’s risk management objectives and policies. The overall objective of the Board is to set
policies that seek to reduce risk as far as possible without unduly affecting the Group’s competitiveness and flexibility. All funding requirements and financial risks
are managed based on policies and procedures adopted by the Board of Directors.
The Group is exposed to the following financial risks:
> Credit risk
> Liquidity risk
> Foreign exchange risk
> Interest rate risk
In common with all other businesses, the Group is exposed to risks that arise from its use of financial instruments. The principal financial instruments used by the
Group, from which financial instrument risk arises, are as follows:
> Trade and other receivables
> Cash and cash equivalents
> Trade and other payables
> Floating-rate bank loans
> Fixed-rate hire purchase agreements
> Floating-rate invoice discounting
> Fixed-rate loan notes
Group financial instruments by category
Financial assets
Cash and cash equivalents
Trade and other receivables
Total financial assets
Financial liabilities
Trade and other payables
Loans and borrowings
Total financial liabilities
Loans and receivables
2016
£000
6,449
4,385
10,834
2015
£000
505
3,833
4,338
Financial liabilities at
amortised cost
2016
£000
5,922
3,113
9,035
2015
£000
3,616
5,969
9,585
All financial instruments are carried at amortised cost and the carrying value of the Group’s financial assets and liabilities is considered to approximate to their fair
value at each reporting date. Cash and cash equivalents are held in sterling, euro, and krona and placed on deposit in UK, German and Swedish banks.
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations. The Group is
mainly exposed to credit risk from credit sales. At 30 September 2016, the Group has trade receivables of £3,965,000 (2015: £3,503,000).
The Group is exposed to credit risk in respect of these balances such that, if one or more customers encounter financial difficulties, this could materially and
adversely affect the Group’s financial results. The Group attempts to mitigate credit risk by assessing the creditworthiness of customers and closely monitoring
payment history.
The ageing of debtors is included in note 15. There have been no material impairments to trade or other receivables in the two years included within these
financial statements and no indication of enhanced customer credit risk.
Credit risk on cash and cash equivalents is considered to be minimal as the counterparties are all substantial banks with high credit ratings.
The Directors are unaware of any factors affecting the recoverability of outstanding balances at 30 September 2016, and consequently no material provisions have
been made for bad and doubtful debts.
Autins Group plc Annual report and accounts 2016Notes to the financial statements continuedFor the year ended 30 September 2016 45
Liquidity risk
Liquidity risk arises from the Group’s management of working capital and the continued availability of its other funding facilities. It is the risk that the Group will
encounter difficulty in meeting its financial obligations as they fall due. The Group actively manages its cash generation and maintains sufficient cash holdings to
cover its immediate obligations. There was an unutilised £2.75m (2015: £0.3m) invoice discounting facility at 30 September 2016 which in November 2016 was
replaced with an unutilised £6m discounting facility and up to £4.5m for asset finance.
The tables below set out the maturities of the Group’s financial liabilities:
At 30 September 2016
Overdrafts
Trade and other payables
Bank loans
Hire purchase (including fixed interest)
Loan notes*
Total
At 30 September 2015
Trade and other payables
Bank loans
Hire purchase (including fixed interest)
Loan notes
Invoice discounting
Total
Up to 1 year
£000
1 to 2 years
£000
2 to 5 years
£000
149
5,922
174
455
270
6,970
–
–
142
447
330
919
–
–
203
550
630
1,383
Up to 1 year
£000
1 to 2 years
£000
2 to 5 years
£000
3,616
198
453
440
1,893
6,600
–
56
301
270
–
627
–
1,229
904
960
–
3,093
*
The loan notes were redeemed early in November 2016 utilising Group cash balances.
Foreign exchange risk
Foreign exchange risk is the risk that movements in exchange rates adversely affect the profitability or cash flows of the business.
The majority of the Group’s financial assets are held in sterling but movements in the exchange rate of the euro, the US dollar and the Swedish krona against
sterling have an impact on both the result for the year and equity. The Group considers its most significant exposure is to movements in the euro, however it is
noted that there are no material net foreign currency-denominated assets/liabilities in the Group other than a US dollar capital equipment creditor of £1,410,000 at
30 September 2016, and Swedish krona-denominated goodwill and fixed assets in respect of Scandins AB.
The Directors consider that reasonably foreseeable exchange rate fluctuation will not result in a material movement in these balances.
Interest rate risk
The Group’s exposure to market risk for changes in interest rates relates primarily to cash and external borrowings (including overdrafts and invoice
discounting arrangements).
The Group is exposed to cash flow interest rate risk on its asset-backed loans in the Swedish subsidiary and, until their repayment in August 2016, on the
floating-rate invoice discounting, tooling loans, asset-bridging facility and elements of the unsecured mezzanine debt where the cost of borrowing in all cases is
calculated by a fixed margin over LIBOR.
Invoice discounting
Tooling loan
Asset-bridging facility
Unsecured mezzanine debt
Asset backed bank loans
Total floating rate debt
2016
£000
–
–
–
–
519
519
2015
£000
1,893
165
33
382
–
2,473
At 30 September 2015, £680,000 of the unsecured mezzanine debt was subject to a fixed-rate arrangement.
Borrowings with loan note holders and under asset finance/hire purchase arrangements are at a fixed interest rate over their term. The loan notes were repaid
shortly after the year end and book hire purchase obligations are considered to equate to fair values in the context of current long term interest rates.
All borrowing is approved by the Board of Directors to ensure that it is conducted at the most competitive rates available to it.
The Group has not entered into interest rate derivatives to mitigate the interest rate risk.
Autins Group plc Annual report and accounts 2016Financial StatementsStrategic ReportGovernance 46
3. Financial instruments – risk management continued
Capital management
The Group’s IPO in August 2016 raised cash which was used to repay prior debt finance and the Group is principally now equity financed with undrawn facilities
available and with term finance utilised for certain capital projects. The capital comprises all components of equity which includes share capital, non-controlling
interests, retained earnings and other reserves.
The Company and Group’s objectives when maintaining capital are to safeguard the entity’s ability to continue as a going concern, so that it can continue to
provide returns for shareholders and benefits for other stakeholders; and to provide an adequate return to shareholders by pricing products and services
commensurately with the level of risk.
The capital structure of the Company and Group consists of shareholders, equity as set out in the consolidated statement of changes in equity. All working capital
requirements are financed from existing cash resources.
The Company and Group sets the amount of capital it requires in proportion to risk. The Group manages its capital structure and makes adjustments to it in the
light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Group may
adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
Parent Company financial instruments by category
Financial assets
Cash and cash equivalents
Trade and other receivables
Total financial assets
Financial liabilities
Trade and other payables
Loans and borrowings
Total financial liabilities
Loans and receivables
2016
£000
5,042
6,516
11,558
2015
£000
1
1,045
1,046
Financial liabilities at
amortised cost
2016
£000
10,765
1,164
11,929
2015
£000
871
1,370
2,241
All financial instruments are carried at amortised cost and the carrying value of the Company’s financial assets and liabilities is considered to approximate to their
fair value at each reporting date. Cash and cash equivalents are held in sterling and placed on deposit in UK banks.
Liquidity risk
Liquidity risk arises from the management of working capital and the continued availability of Group funding facilities. It is the risk that the Company will encounter
difficulty in meeting its financial obligations as they fall due. The Group actively manages its cash generation and maintains sufficient cash holdings to cover its
immediate obligations including those of the Parent Company.
The tables below set out the maturities of the Company’s financial liabilities:
At 30 September 2016
Loan Notes*
At 30 September 2015
Loan Notes
*The loan notes were redeemed early in November 2016 utilising cash balances.
Interest rate risk
The Company has no borrowings subject to interest rate risks.
4. Revenue and segmental information
Revenue analysis
Revenue arises from:
Component sales
Sales of tooling
Up to 1 year
£000
1 to 2 years
£000
2 to 5 years
£000
270
330
630
Up to 1 year
£000
1 to 2 years
£000
2 to 5 years
£000
440
270
960
2016
£000
19,745
633
20,378
2015
£000
17,250
2,531
19,781
Autins Group plc Annual report and accounts 2016Notes to the financial statements continuedFor the year ended 30 September 2016 47
Segmental information
The Group currently has one main reportable segment namely Automotive NVH, which involves provision of insulation materials to reduce noise, vibration and
harshness to automotive manufacturing. Turnover and operating profit are disclosed for other segments in aggregate as they individually do not have a significant
impact on the Group result. These segments have no significant identifiable assets or liabilities.
Factors that management used to identify the Group’s reportable segments
The Group’s reportable segments are strategic business units that offer different products and services.
Measurement of operating segment profit or loss
The accounting policies of the operating segments are the same as those described in the summary of significant accounting policies.
The Group evaluates performance on the basis of operating profit/(loss). Automotive remained the only significant segment in the year although there has been
investment and costs incurred in the development and commissioning of equipment which can manufacture both automotive and other products.
Segmental analysis for the year ended 30 September 2016
Group’s revenue per consolidated statement of comprehensive income
Depreciation
Amortisation
Segment operating profit
Finance expense
Share of post-tax profit of equity-accounted joint ventures
Gain on equity interest in joint venture
Group profit before tax
Additions to non-current assets
Reportable segment assets
Investment in joint ventures
Reportable segment assets/total Group assets
Reportable segment liabilities/total Group liabilities
Segmental analysis for the year ended 30 September 2015
Group’s revenue per consolidated statement of comprehensive income
Depreciation
Amortisation
Segment operating profit
Finance expense
Share of post tax profit of equity-accounted joint ventures
Group profit before tax
Additions to non-current assets
Reportable segment assets
Investment in joint ventures
Reportable segment assets/total Group assets
Reportable segment liabilities/total Group liabilities
Automotive
NVH
£000
19,514
379
237
218
6,511
25,483
206
25,689
9,972
Automotive
NVH
£000
19,548
339
237
1,148
1,327
12,635
111
12,746
10,688
Others
£000
864
84
–
–
–
–
–
Others
£000
232
–
–
50
–
–
–
–
–
2016
total
£000
20,378
379
237
302
(558)
115
327
186
6,511
25,483
206
25,689
9,972
2015
total
£000
19,781
339
237
1,198
(386)
87
899
1,327
12,635
111
12,746
10,688
Revenues from one customer in 2016 total £13,158,000 (2015: £12,503,000). This major customer purchases goods from Automotive Insulations Limited in the UK.
External revenues by location of customers
UK
Sweden
Germany
Rest of the World
2016
£000
18,940
461
916
61
20,378
2015
£000
18,999
369
374
39
19,781
Autins Group plc Annual report and accounts 2016Financial StatementsStrategic ReportGovernance 48
4. Revenue and segmental information continued
The only material non-current assets in any location outside of the UK are £1,099,000 (2015: £nil) of fixed assets and £574,000 (2015: £nil) of goodwill in respect of
the Swedish subsidiary acquired in the year.
5. Profit from operations
The operating profit is stated after charging:
Foreign exchange (gains)/losses
Depreciation
Amortisation of intangible assets
(Profit)/loss on disposal of fixed assets
Cost of inventory sold
Research and development
Revenue grant income
Employee benefit expenses (see note 6)
Lease payments
Auditors’ remuneration:
Fees for audit of the Group
Fees for taxation compliance
Fees for taxation advisory services
Fees for other services
2016
£000
(89)
379
237
(96)
12,930
684
(264)
4,814
1,031
41
9
23
23
2015
£000
46
339
237
93
12,938
173
(142)
3,399
522
11
7
–
11
In addition, auditor's remuneration of £199,000 in respect of corporate finance services and £11,000 in respect of other assurance services has been included in
share issue costs which have been allocated between the share premium account and operating costs.
Exceptional IPO related administrative expenses of £648,000 were incurred offset by £466,000 recharged to Director shareholders who sold shares (£182,000 net).
The operating costs in 2016 include £229,000 relating to the set-up of the Solar business before sales commence. In addition, the Group strategically invested in
research and development work as disclosed above and as required to deliver growth in future periods. Revenue grants of £264,000 (2015: £142,000) are in relation
to government assistance on a research project.
Group key personnel are considered to be the Directors and Senior Management team of Autins Group plc and Automotive Insulations Limited, which is the
largest trading entity in the Group. The remuneration of Company and Group key personnel is disclosed in note 24. Company key personnel are considered to be
the Directors.
6. Staff costs
Wages and salaries
Social security costs
Share-based payments
Other pension costs
The average monthly number of employees during each year was as follows:
Directors
Administrative, sales and development
Production staff
2016
£000
4,237
516
10
51
4,814
2016
£000
5
60
89
154
2015
£000
3,124
247
–
28
3,399
2015
£000
3
43
65
111
Autins Group plc Annual report and accounts 2016Notes to the financial statements continuedFor the year ended 30 September 2016 49
Total
£000
45
40
83
26
23
20
20
257
17
6
18
41
2015
£000
200
136
50
386
2015
£000
214
(28)
186
(4)
–
–
182
2015
£000
182
29
211
Salary
£000
Benefits
£000
Pension
£000
45
35
73
26
23
17
15
–
5
6
–
–
3
5
234
19
17
6
18
41
–
–
–
–
–
–
4
–
–
–
–
4
–
–
–
–
2016
£000
266
234
58
558
2016
£000
43
–
43
(105)
(29)
(21)
(112)
2016
£000
(112)
38
(74)
7. Directors remuneration
Year ended 30 September 2016
A. Attwood
J. Griffin*
J. Larner
T. Garthwaite
I. Griffiths
K. Holdback
K. Westwood
Year ended 30 September 2015
J. Griffin
K. Holdback
K. Westwood
*
J. Griffin’s salary under his new service contract only commenced from August 2016.
8. Finance expense
Bank loan interest
Loan note interest (note 17)
Interest element of hire purchase agreements
9. Income tax
(i) Tax (credit)/expense in income statement excluding share of tax of equity accounted for joint ventures
Current tax expense
Current tax on profits for the period
Adjustment in respect of previous periods
Total current tax
Deferred tax expense
Origination and reversal of temporary differences
Impact of change in UK tax rate
Adjustment in respect of previous periods
(ii) Total tax (credit)/expense
Tax (credit)/expense excluding share of tax of equity accounted for joint ventures (as stated above)
Share of tax of equity-accounted joint ventures
No tax arises in respect of other comprehensive income.
Autins Group plc Annual report and accounts 2016Financial StatementsStrategic ReportGovernance
50
9. Income tax continued
The reasons for the difference between the actual tax charge for the year and the standard rate of Corporation Tax in the United Kingdom applied to the profit for
the year are as follows:
Profit for the year
Income tax (credit)/expense (including tax on joint ventures)
Profit before income taxes
Expected tax charge based on Corporation Tax rate of 20.0% in 2016 (2015: 20.5%)
Expenses not deductible for tax purposes
Gain on equity interest not taxable
Enhanced R&D tax relief
Impact of different tax rates
Tax losses not recognised
Adjustments in respect of previous periods
Total tax including joint ventures
2016
£000
298
(74)
224
45
17
(65)
(30)
(33)
13
(21)
(74)
2015
£000
717
211
928
190
13
–
(27)
2
61
(28)
211
The current rate of UK Corporation Tax is 20%. Changes to reduce the UK Corporation Tax rate to 19% from 1 April 2017 and to 17% from 1 April 2020 have been
substantively enacted and accordingly are applied to deferred taxation balances at 30 September 2016.
The current rate of Corporation Tax in Sweden is 22% and the current rate of Corporation Tax in Germany is 30–33%. The Group’s Swedish and German subsidiaries
did not have taxable profits during the years under review.
10. Earnings per share
Profit
Profit used in calculating basic and diluted EPS
Number of shares
Weighted average number of £0.02 shares for the purpose of basic earnings per share (000s)
Weighted average number of £0.02 shares for the purpose of diluted earnings per share (000s)
Earnings per share (pence)
Diluted earnings per share (pence)
2016
£000
295
14,513
14,524
2.03p
2.03p
2015
£000
749
13,470
13,470
5.56p
5.56p
Earnings per share have been calculated based on the share capital of Autins Group plc and the earnings of the Group for both years. There are options in place
over 436,152 shares (2015: nil) that may dilute earnings per share.
11. Property, plant and equipment
Group
COST
At 1 October 2014
Additions
Disposals
At 30 September 2015
Additions
Acquisition of subsidiary
Foreign exchange movement
Disposals
At 30 September 2016
DEPRECIATION
At 1 October 2014
Charge for year
Eliminated on disposal
At 30 September 2015
Charge for year
Eliminated on disposal
At 30 September 2016
NET BOOK VALUE
At 30 September 2016
At 30 September 2015
Plant and
machinery
£000
Leasehold
improvements
£000
Fixtures and
fittings
£000
3,096
1,205
(140)
4,161
4,230
744
55
(133)
9,057
978
286
(45)
1,219
300
(44)
1,475
7,582
2,942
–
–
–
–
781
–
–
–
781
–
–
–
–
1
–
1
780
–
437
122
–
559
24
–
–
(2)
581
4
53
–
57
78
–
135
446
502
Total
£000
3,533
1,327
(140)
4,720
5,035
744
55
(135)
10,419
982
339
(45)
1,276
379
(44)
1,611
8,808
3,444
Autins Group plc Annual report and accounts 2016Notes to the financial statements continuedFor the year ended 30 September 2016 51
Net book value of assets held under hire purchase contracts are as follows:
At 30 September 2016
At 30 September 2015
Depreciation of £110,000 was charged on these assets in the year (2015: £104,000).
Plant and
Machinery
£000
Leasehold
Improvements
£000
Fixtures and
fittings
£000
1,767
1,758
–
–
86
21
Total
£000
1,853
1,779
Plant and machinery and leasehold improvements include assets of £3,204,000 and £771,000, respectively, in respect of Solar Nonwovens Limited which had not
yet been brought into economic use.
The Company has no fixed assets.
12. Intangible assets
Group
COST
At 1 October 2014
Additions
At 30 September 2015
Additions
Foreign currency differences
At 30 September 2016
AMORTISATION
At 1 October 2014
Charge for the year
At 30 September 2015
Charge for the year
At 30 September 2016
NET BOOK VALUE
At 30 September 2016
At 30 September 2015
Goodwill
£000
Development
costs
£000
Customer
relationships
£000
Tooling
intellectual
property
£000
1,616
–
1,616
552
22
2,190
–
–
–
–
–
–
–
–
180
–
180
–
–
–
–
–
2,190
1,616
180
–
1,079
–
1,079
–
–
1,079
64
154
218
154
372
707
861
830
–
830
–
–
830
35
83
118
83
201
629
712
Total
£000
3,525
–
3,525
732
22
4,279
99
237
336
237
573
3,706
3,189
Further details of the acquisitions and goodwill are given in notes 26 and 27.
The Group tests goodwill for impairment annually or where there is an indication that goodwill might be impaired. The Directors have, in considering impairment of
goodwill, reviewed the operating activities and structure of the Group and considers the goodwill is attributable to a single cash-generating unit related to
Automotive NVH.
The recoverable amount of that cash-generating unit has been determined on a value-in-use basis. Value-in-use calculations for the cash-generating unit is based
on projected four-year post-tax discounted cash flows together with a terminal value. The cash flows have been discounted at pre-tax rates of 11.8%, reflecting the
Group’s weighted average cost of capital adjusted for country-specific tax rates and risks. The Directors have reviewed a range of reasonably foreseeable
sensitivities which would not impair the asset and recurring operating cashflows would have to fall to £1m before an impairment arose.
The Company has no intangible assets.
13. Fixed asset investments
Company
COST
At 30 September 2014 and 2015
Additions
Net book value at 30 September 2016
Investments
in
subsidiaries
£000
3,027
13,212
16,239
Autins Group plc Annual report and accounts 2016Financial StatementsStrategic ReportGovernance 52
13. Fixed asset investments continued
Additions arose as a result of an internal restructuring in order for the Company to directly hold all UK trading subsidiaries with a fair value paid for the transfer
resulting in an increase in the cost of investment.
The subsidiaries of the Company, which have all been included in the consolidated financial statements based on their results to 30 September 2016, are as follows:
Name
Automotive Insulations Limited
Auto Insulations Limited
Solar Nonwovens Limited
Autins Technical Centre Limited
Acoustic Insulations Limited
RI Rheinland Insulations GmbH
Scandins AB
DBX Acoustics AB
Principal activity
Supply of insulating materials
Letting of plant and machinery
Supply of insulating materials
Development of insulating materials
Dormant
Supply of insulating materials
Supply of insulating materials
Supply of insulating materials
2016
Ownership %
2015
Ownership %
100
100
100
100
100
100
100
100
100
100
100
100
100
90
49
–
The Group agree to guarantee the liabilities of Auto Insulations Limited, Acoustic Insulations Limited and Autins Technical Centre Limited, thereby allowing them to
take exemption from an audit under Section 479 of the Companies Act 2006.
Scandins AB was a joint venture and RI Rheinland Insulations GmbH had a non-controlling interest of 10% until 20 April 2016. DBX Acoustics AB was acquired in
Sweden by Scandins AB on 20 April 2016. Scandins AB and RI Rheinland Insulations GmbH operate in and are incorporated in Sweden and Germany respectively.
They are held by Automotive Insulations Limited.
Interests in joint ventures comprise the following:
Name
Indica Automotive Limited
Principal activity
Supply of insulating materials
Group
COST AND NET BOOK VALUE
At 30 September 2014
Share of profit for the year
Net book value at 30 September 2015
Share on acquisition of full control
Share of profit after tax for the year
Dividend paid by JV
Net book value at 30 September 2016
The Group’s share of joint venture profit in each year was as follows:
Profit before tax
Taxation
Profit after tax
Summarised aggregated financial information in relation to the joint ventures is presented below:
As at 30 September
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Included in the above amounts are:
Cash and cash equivalents
Current financial liabilities (excluding trade payables)
Non-current financial liabilities (excluding trade payables)
Net assets (100%)
Group share of net assets
2016
Ownership %
2015
Ownership %
50
50
Interest in
joint ventures
£000
24
87
111
(5)
115
(15)
206
2015
£000
116
(29)
87
2015
£000
749
446
(618)
(353)
9
(213)
(353)
224
111
2016
£000
153
(38)
115
2016
£000
621
271
(360)
(120)
60
(85)
(60)
412
206
Autins Group plc Annual report and accounts 2016Notes to the financial statements continuedFor the year ended 30 September 2016
Year ended 30 September
Revenues
Profit after tax
Total comprehensive income (100%)
Group share of total comprehensive income
Included in the above amounts are:
Depreciation and amortisation
Interest expense
Income tax expense
14. Inventories
Group
Raw materials
Work in progress
Finished goods
Tooling stock for resale
53
2016
£000
2,907
225
225
115
94
9
(76)
£000
623
463
176
303
2015
£000
2,905
175
175
87
77
29
(58)
£000
207
627
304
254
1,565
1,392
There are no material stock provisions at any period end, neither have material amounts of stock been written off in any of the periods presented. The Company
has no inventories.
15. Trade and other receivables
Trade receivables
Amounts owed by subsidiaries
Amounts owed by equity-accounted joint ventures
Other receivables
Total financial assets other than cash equivalents classified as receivables
Corporation tax debtor
Prepayments
Total trade and other receivables
The analysis of trade receivables is as follows:
Not yet due
Past due but not impaired
Group
2016
£000
3,965
–
–
420
4,385
43
527
4,955
3,906
59
3,965
Group
2015
£000
3,503
–
135
196
3,834
–
271
4,105
3,476
27
3,503
Company
2016
£000
Company
2015
£000
–
6,201
–
315
6,516
–
89
6,605
–
–
–
–
1,489
–
–
1,489
–
–
1,489
–
–
–
There are no impairment provisions made in respect of trade debtors for the year ends reported above and no material amounts have been written off in any of the
periods presented.
The Group had financing agreements until August 2016 whereby certain trade debts were subject to an invoice discounting agreement which was secured against
the associated trade receivables. The amounts outstanding at 30 September 2015 were £1,893,000. The credit risk remained with the Group and accordingly the
trade receivable and amounts drawn down under the financing arrangements are presented gross.
Autins Group plc Annual report and accounts 2016Financial StatementsStrategic ReportGovernance 54
16. Trade and other payables
Current
Trade payables
Amounts owed to subsidiaries
Amount owed to equity-accounted joint ventures
Other creditors
Amounts due to Directors
Accruals
Total financial liabilities, excluding borrowings, classified as financial liabilities measured at
amortised cost
Social security and other taxes
Total trade and other payables
Accruals includes £1,410,000 in respect of capital equipment.
No interest is payable on the amounts owed to the Company or by the Company to its subsidiaries.
17. Loans and borrowings
Bank loans and overdrafts
Loan notes
Hire purchase
Invoice discounting
Total loans and borrowings
Bank overdrafts
Bank loans
Loan notes
Hire purchase
Invoice discounting
Current
Bank loans
Loan notes
Hire purchase
Non-current
Bank loans and loan notes are secured by fixed and floating charges over the Group’s assets.
Principal terms and the debt repayment schedule of the Group’s loan and borrowings are as follows:
Nominal Currency
Conditions
Bank loans
Loan notes
Bank loans A
Bank loans B
Bank loans C
SEK
Sterling
Sterling
Sterling
Sterling
Secured
Secured
Secured
Secured
Unsecured
Repayable by instalments
Repaid post year end
Repaid August 2016
Repaid August 2016
Repaid August 2016
Group
2016
£000
3,210
–
393
402
–
1,917
5,922
378
6,300
Group
2016
£000
668
1,164
1,281
–
3,113
149
174
270
401
–
994
345
894
880
2,119
Group
2015
£000
2,498
–
346
133
540
99
3,616
359
3,975
Group
2015
£000
1,260
1,355
1,461
1,893
5,969
–
198
440
399
1,893
2,930
1,062
915
1,062
3,039
Company
2016
£000
Company
2015
£000
393
10,295
–
2
–
75
10,765
13
10,778
Company
2016
£000
–
1,043
–
–
1,043
–
–
270
–
–
270
–
894
–
894
–
331
–
–
540
–
871
–
871
Company
2015
£000
1,370
–
–
1,370
–
–
440
–
–
440
–
930
–
930
Rate %
Year of
Maturity
Base rate + 3.75% Up to 2020
2019
0%
2016
LIBOR + 2.5%
2016
LIBOR + 3.0%
2019
10.0%
The secured loan notes are subordinated to the debts held by the Group’s principal bankers. Interest on these loan notes was being imputed on a fair value basis
over the remainder of the period of repayment. On 11 November 2016, the remaining loan notes were repaid by the Company for an amount of £1,136,000 and the
loan interest charge was accelerated by £121,000 in the year to 30 September 2016.
Net obligations under hire purchase contracts are denominated in sterling and secured on the assets to which they relate.
Advances under the Group’s invoice discounting facility were secured against certain trade receivable balances.
Autins Group plc Annual report and accounts 2016Notes to the financial statements continuedFor the year ended 30 September 2016 55
Hire purchase and finance lease liabilities
The future minimum lease payments in respect of hire purchase and finance lease liabilities are as follows:
Group
Less than one year
Between one and five years
Total gross payments
Less: interest charge allocated to future periods
Carrying amount of liability
2016
£000
455
997
1,452
(171)
1,281
2015
£000
453
1,205
1,658
(197)
1,461
18. Deferred tax
Deferred tax is calculated in full on temporary differences under the liability method using a tax rate of 19% (2015: 20%). The movement on the deferred tax account
is as shown below:
Opening balance
On acquisition of subsidiary
Expensed/(credited) in profit and loss in respect of:
Accelerated capital allowances
Losses carried forward
Amortisation of intangible fixed assets
Finance income and other timing differences
Total credit
Closing balance
Group
Details of the net deferred tax liability are as follows:
Accelerated capital allowances
Losses
Deferred tax on intangible asset
On fair valued assets
Other temporary differences
Closing balance
2016
£000
657
57
(49)
(99)
(47)
40
(155)
559
2016
£000
246
(105)
274
57
87
559
2015
£000
660
–
93
–
(47)
(49)
(3)
657
2015
£000
295
–
315
–
47
657
The deferred tax liability has arisen due to the timing difference on accelerated capital allowances, recognition of intangible assets on acquisition and other
short-term timing differences mainly related to the fair values of loan notes issued in consideration of the acquisition of Acoustic Insulations Limited.
The Company deferred tax liability of £55,000 (2015: £51,000) relates solely to the timing differences in respect of finance income arising on the loan notes.
The Group has an unrecognised deferred tax asset of approximately £180,000 at 30 September 2016 (2015: £180,000) in respect of losses carried forward in an
overseas subsidiary as it is, as yet, uncertain when these will be utilised. UK tax losses have been recognised as an asset as they are expected to be utilised against
trading profits in the short term.
19. Share capital
Allotted, issued and fully paid
22,100,984 Ordinary Shares of £0.02 each
Nil (2015: 255,000) Ordinary Shares of £1 each
Nil (2015: 3) Ordinary A Shares of £1 each
2016
£000
442
–
–
442
2015
£000
–
255
–
255
On 12 August 2016, a bonus issue of 14,390 Ordinary A Shares of £1 was made in order to satisfy the rights attaching to the A Shares with the 14,393 A Shares then
converted to £1 Ordinary Shares.
On 15 August 2016 all £1 Ordinary Shares were converted into 50 £0.02 Ordinary Shares.
Autins Group plc Annual report and accounts 2016Financial StatementsStrategic ReportGovernance
56
19. Share capital continued
On 22 August 2016, 8,333,334 £0.02 Ordinary Shares were issued on Admission to AIM for cash consideration of £1.68 per share and 298,000 £0.02 Ordinary Shares
were issued to satisfy the consideration under option agreements for the acquisition of Scandins AB and the remaining 10% of RI Rheinland Insulations GmbH
(see notes 26 and 27).
A share premium of £13,833,000 arose on the issued shares and £895,000 of issue expenses have been debited to the share premium account resulting in
a net balance of £12,938,000. No share premium arises on the 298,000 of consideration shares issued due to the application of merger relief under the Companies
Act 2006.
Recording the fair value of the cost of investment at £1.68 per share and £507,000 in total results in an Other reserve of £495,000.
Movements in share capital
At beginning of the year
255,003 Ordinary and 3 A Ordinary Shares of £1 each
Issues during the year
Bonus issue
Additional shares on conversion into £0.02 shares
Placing of new shares
Issue of shares as consideration
Closing share capital at 30 September 2016
Nominal value
£000
Number
255
255,003
14
167
6
14,390
13,200,257
8,333,334
298,000
442 22,100,984
In the year ended 30 September 2015 a bonus issue of 1,013,850 £1 Ordinary Shares was followed by a repayment of the 1,013,850 shares. 3 'A' Ordinary Shares were
issued with a total value of £2,000 in the same year.
20. Share-based payment (Company and Group)
Share options are granted to Directors and selected employees and are conditional on the employees completing three years’ service. The exercise price is equal
to the market price of the shares at the grant date. Options become exercisable three years from the grant date for a period of seven years, with 50% subject to
achieving target growth in the share price and 50% growth in the earnings per share. 436,152 options were granted at Admission to AIM with an exercise price of
£1.68 (2015; none).
The fair value of the options was determined using a Log-Normal Monte-Carlo stochastic model and was calculated at 49.5 pence per share and 56.2 pence per
share, respectively, for the market-based and performance conditions with an expected vesting period of four and a half years. The main assumptions in the
valuation model were a volatility of 51.8%, a dividend yield of 0.525% and an annual risk free rate of 0.2%.
21. Reserves
Retained earnings are the cumulative net profits in the consolidated statement of comprehensive income. Movements on these reserves are set out in the
consolidated statement of changes in equity.
The cumulative currency differences reserve represents translation differences in respect of the net assets of overseas subsidiaries.
Other reserves of £1,391,000 represent the difference between the fair value and nominal value of shares issued in partial satisfaction of the acquisition of 100% of
the equity of Acoustic Insulations Limited in April 2014 and the £495,000 disclosed in note 19.
22. Commitments
The total value of minimum lease payments due until the end of the lease are payable as follows:
Group
Land and buildings:
Within one year
Later than one year and not later than five years
Later than five years
Other:
Within one year
Later than one year and not later than five years
There are no contingent lease payables in respect of renewal or purchase options.
The Group had capital commitments at 30 September 2016 of £282,000 (2015: £nil).
The Company had no lease or capital commitments.
2016
£000
972
3,530
5,597
123
117
10,339
2015
£000
468
1,502
3,045
97
122
5,234
Autins Group plc Annual report and accounts 2016Notes to the financial statements continuedFor the year ended 30 September 2016 23. Dividends
Dividends paid of £0.035p per share on £1 Ordinary shares
For the period from 29 April 2014 to 15 August 2016 the Group had 255,000 £1 Ordinary Shares in issue.
The 3 £1 A Shares issued on 27 August 2015 had the right to participate only in distributions declared with respect to this share class.
24. Related party transactions
The following amounts due from/(to) directors existed:
J. Griffin
Opening balance
Amounts arising on share re-purchase
Amounts withdrawn from Company
Recharge of share sale expenses
Closing balance
K. Holdback
Opening balance
Amounts arising on share re-purchase
Amounts withdrawn from Company
Recharge of share sale expenses
Closing balance
K. Westwood
Opening balance
Amounts arising on share re-purchase
Amounts withdrawn from Company
Recharge of share sale expenses
Closing balance
A. Attwood
Recharge of share sale expenses
Closing balance
57
2016
£000
9
2015
£000
9
30 Sept 2016
£000
30 Sept 2015
£000
(180)
–
100
78
(2)
£000
(180)
–
100
185
105
£000
(180)
–
100
185
105
–
18
18
34
(338)
124
–
(180)
£000
34
(338)
124
–
(180)
£000
34
(338)
124
–
(180)
–
–
–
The loans did not bear interest and were repayable on demand. The Directors have been recharged an amount of £466,000 relating to the costs of the listing in
respect of existing shares sold, of which £238,000 was offset against the loan account liabilities and £228,000 is now included in other debtors as shown above.
Share options
Directors and other Senior Management members hold the following share options (see note 20).
J. Griffin (options lapsed on his resignation in February 2017)
J. Larner
Other Senior Management
Number of options
EPS target
65,104
44,643
108,329
Share price
target
65,104
44,643
108,329
218,076
218,076
Autins Group plc Annual report and accounts 2016Financial StatementsStrategic ReportGovernance 58
24. Related party transactions continued
Transactions with related parties and key management personnel
Group and Company key management personnel costs
Group aggregate salaries and post-employment benefits
Company aggregate salaries and post-employment benefits
2016
£000
1,063
283
2015
£000
643
41
The aggregate value of transactions with entities over which related parties have control or significant influence were as follows. No amounts were owed at the
year end.
Salaries and wages paid to close family members on a normal commercial basis*
Legal and advisory fees**
Donations***
Consumables****
2016
£000
33
18
7
4
2015
£000
57
9
3
1
Salaries paid to close family members are on the same terms and conditions as other employees.
*
** Advisory fees were paid to EEF Regional Advisory board, of which one of the Directors was Vice Chair for the period under review.
*** Donations or event sponsorship paid to a charity, RDA (Trading) Ltd in which one of the Directors held office.
**** Purchases were made on normal commercial terms from a Company controlled by a close family member of one of the Directors. The purchases related to consumable warehouse products.
Scandins AB is a Swedish undertaking in which the Group had joint control until acquiring a full controlling interest on 20 April 2016.
Transactions:
Sales to joint venture
Purchases from joint venture
Sale of fixed assets
Hire of plant and machinery to Scandins AB
Balance owed to the Group at 20 April 2016/30 September 2015
Indica Automotive Limited is a joint venture undertaking in which the Group has joint control.
Transactions:
Sales to joint venture
Purchases from joint venture
Balance at the year end (owed by) the Group
25. Control
In the opinion of the Directors there is no one ultimate controlling party.
2016
£000
123
727
185
–
289
2016
£000
116
1,781
(393)
2015
£000
97
1,554
–
33
135
2015
£000
131
1,130
(347)
Autins Group plc Annual report and accounts 2016Notes to the financial statements continuedFor the year ended 30 September 2016 59
26. Acquisition of Scandins AB
On 20 April 2016 the Group acquired the remaining 51% of the share capital of Scandins AB, a Company whose principal activity is the manufacture of automotive
acoustic components. Scandins AB was previously an entity held under joint control and recognised as a joint venture.
The provisional consideration of £350,000 for 51% was satisfied by the grant of share options in Autins Group Limited to Örjan Karlsson Holdings AB. The options
were exercised by Örjan Karlsson Holding AB upon Admission to AIM. This placed an overall fair value of £687,000 on the Company and in accordance with IFRS 3 a
gain of £327,000 has been recognised on the previous equity interest. This arises from the fair value of £337,000 placed on the existing 49% share held less the
equity accounted interest and costs incurred at the date of acquisition.
Details of the fair value of identifiable assets and liabilities acquired, purchase consideration and goodwill are as follows:
Fair value of assets acquired
Property, plant and equipment
Trade and other receivables
Inventories
Trade and other payables
Bank overdraft
Owed to Autins Group
Loans and other borrowings
Deferred taxation
Fair value of consideration for 100%
Goodwill (note 12)
At book
value
£000
Fair value
adjustment
£000
Fair value
£000
505
207
106
(279)
(56)
(289)
(191)
–
239
–
–
–
–
–
–
(57)
744
207
106
(279)
(56)
(289)
(191)
(57)
185
687
502
Scandins’ principal customer is the Group and the goodwill is considered to primarily represent the benefit of gaining control of the integral manufacturing in
Sweden for the Group’s automotive activity. From the acquisition date to the Group’s 30 September 2016 year end, Scandins AB contributed £302,000 of external
sales to Group revenues, a result of £nil to the Group result and a cash outflow from operating activities of £85,000. If Scandins had been consolidated for the full
year, Group revenue would have been £354,000 higher and an additional loss of £23,000 included.
DBX Acoustics AB
On 20 April 2016, Scandins AB formed a new wholly-owned subsidiary entity DBX Acoustics AB. DBX Acoustics AB subsequently acquired the wholesale acoustic
flooring trade, made up of a trading name, website, supply chain and marketing know-how, from KBKE I Goteburg AG. Consideration of £50,000 was payable and is
all considered to represent goodwill. As part of this agreement DBX Acoustics AB also committed to purchase, at book value, the saleable flooring inventory from
KBKE I Goteburg AG.
27. Acquisition of non-controlling interest in RI Rheinland Insulations GmbH
On 19 April 2016 Automotive Insulations Limited acquired the 10% non-controlling interest in RI Rheinland Insulations GmbH from Matthias Migl. The provisional
consideration of £150,000 was satisfied by the grant of share options in Autins Group Limited which were exercised by Matthias Migl upon Admission to AIM.
At this date the non-controlling interest represented £68,000 of the net liabilities and under the IFRS accounting, this results in a £219,000 debit to equity.
28. Parent Company restatement and transition to FRS 101
The Company has adopted FRS 101 and the application of International Financial Reporting Standards (IFRS) with reduced disclosure from 1 October 2014.
The main items contributing to the changes in the financial statements compared with that reported under UK GAAP as at the transition date are shown below as
reconciliations between UK GAAP and IFRS of both equity and profit.
Reconciliation of equity as at 1 October 2014:
Capital and reserves
Issued capital
Other reserves
Retained earnings
Total equity
UK GAAP
£000
Restatement
£000
IAS 39
Financial
Instruments
£000
Tax
adjustments
£000
255
4,989
103
5,347
–
(2,586)
–
(2,586)
–
–
319
319
–
–
(101)
(101)
IFRS
£000
255
2,403
321
2,979
Autins Group plc Annual report and accounts 2016Financial StatementsStrategic ReportGovernance 60
28. Parent Company restatement and transition to FRS 101 continued
Reconciliation of equity as at 30 September 2015:
Capital and reserves
Issued capital
Other reserves
Retained earnings
Total equity
UK GAAP
£000
Restatement
£000
IAS 39
Financial
Instruments
£000
Tax
adjustments
£000
255
3,977
447
4,679
–
(2,586)
–
(2,586)
–
–
183
183
–
–
(65)
(65)
IFRS
£000
255
1,391
565
2,211
Restatement
The additional rigour applied in assessing the transition adjustments also led to the identification of an error in the previously reported UK GAAP figures. The fair
value of the consideration for the acquisition of Acoustic Insulations Limited has been reassessed and reduced to reflect a fairer assessment of the valuation at that
time. The resulting adjustment of £2,585,983 to the cost of investment was recognised in other reserves.
IAS 39 Financial Instruments
An adjustment was made to recognise the loan notes issued by the Company in 2014 at their fair value. The loan notes are non-interest bearing and an adjustment
of £508,579 (of which £117,951 was recognised as part of the fair value of the acquisition of Acoustic Insulations and £391,008 within the income statement) was
required at inception to record the liability at fair value at inception. A deferred tax liability was recognised in relation to this adjustment.
In 2015, £136,136 (2014: £72,246) was charged to the income statement as an unwinding of the discount applied. A reduction in income tax payable was also
recognised in relation to this charge together with the change in tax in respect of the finance income recognised in 2014.
Reconciliation of total comprehensive income for the year ended 30 September 2015:
Administrative expenses
Investment income
Finance expense
Profit before tax
Taxation
Profit for the year/total comprehensive income
IAS 39
Financial
Instruments
£000
Other
adjustments
£000
UK GAAP
£000
(3)
356
–
353
–
353
–
–
(136)
(136)
–
(136)
–
–
–
36
36
IFRS
£000
(3)
356
(136)
217
36
253
IAS 39 Financial Instruments
An IAS 39 Financial Instruments adjustment was made to recognise the fair value of loan notes issued by the Group. The loan notes are non-interest bearing. The
£136,136 adjustment relates to the unwind of the fair value discount for the year with an associated deferred tax credit.
Autins Group plc Annual report and accounts 2016Notes to the financial statements continuedFor the year ended 30 September 2016 61
Directors, secretary, registered office and advisers
Directors
Adam Attwood, Non-Executive Chairman
Jim Griffin, Chief Executive Officer (Resigned 1 February 2017)
James Larner, Chief Financial Officer
Terry Garthwaite, Non-Executive Director
Ian Griffiths, Non-Executive Director
Michael Jennings (Appointed 6 February 2017)
Company Secretary
James Larner
Registered Office
Central Point One
Central Park Drive
Rugby
Warwickshire
CV23 0WE
Telephone Number
+44 (0)1788 578 300
Website
www.autins.co.uk
Nominated Adviser and Broker
Solicitors to the Company
Auditors
Public Relations
Registrars
Cantor Fitzgerald Europe
One Churchill Place
Canary Wharf
London
E14 5RB
Freeths LLP
1 Vine Street
Mayfair
London
W1J 0AH
BDO LLP
Two Snowhill
Birmingham
B4 6GA
Newgate Communications
50 Basinghall Street
London
EC2V 5DE
Capita Registrars Limited
The Registry
34 Beckenham Road
Beckenham
Kent
BR3 4TU
Autins Group plc Annual report and accounts 2016Financial StatementsStrategic ReportGovernance A
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Autins Group plc
Central Point One
Central Park Drive
Rugby
Warwickshire
CV23 0WE
T: +44 (0)1788 578 300
W: www.autins.co.uk