Annual Report and Accounts 2017
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autins
Introduction
...as
ONE COMPANY
in everything we do
Our purpose
We address complex and challenging problems through
responsive and innovative applications engineering and
advanced manufacturing that results in optimised specialist
solutions for acoustic and thermal management worldwide.
Our strategy
To deliver sustainable profitable growth. As a partner of
choice for the automotive industry, we generate growth by
providing differentiated acoustic and thermal products with
a clear benefit to the customer. We do this through a high-
performing, values-led organisation focused on delivering
our strategic goals.
Visit us at: www.autins.com
Strategic Report
Financial Statements
Highlights
Autins at a glance
Our products and technology
Chairman and Chief Executive’s statement
Strategy
Strategy in action
Financial review
Key performance indicators
Principal risks and uncertainties
Governance
Board of Directors and Senior Management
Directors’ report
Statement of Directors’ responsibilities
1
2
4
6
8
10
14
17
18
20
22
26
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
Notes to the financial statements
Directors, secretary, registered
office and advisors
27
31
32
33
34
35
36
37
39
62
Strategic Report
Governance
Financial Statements
Operational highlights
Financial highlights
▶ Strong growth across all the Group’s
Revenue
Gross profit
operations.
▶ Neptune product gaining traction directly
through OEMs and through Tier 1 channels
with orders in the year awarded across
8 OEMs, 19 vehicles, and well over 100
different parts.
▶ Good progress from our business in Germany.
Growing and profitable in the year and won a
multi-platform part for a major European
automotive group.
▶ Good progress from our business in Sweden.
Growing and profitable in the year and won
multiple parts on existing and newly launched
programmes for a major European OEM.
▶ Continued investment for growth focused
on research, test and product development,
advanced manufacturing, and continued
strengthening of our organisation and
capabilities.
▶ Non-automotive sales continued to show
steady double-digit growth year-on-year.
£26.4m
+29.3%
£9.0m
+38.2%
2016: £20.4m
2016: £6.5m
Adjusted EBITDA
Adjusted operating profit
£2.0m
+42.9%
£1.5m
+66.7%
2016: £1.4m
2016: £0.9m
Reported profit after tax
Earnings per share
£0.4m
+35.2%
1.82p
-10.3%
2016: £0.3m
2016: 2.03p
Net debt
£2.0m
2016: Net cash £3.3m
Final dividend
0.8p
2016: £Nil
•
•
Adjusted EBITDA excludes exceptional costs of £0.5m (FY2016:£Nil), additional IPO
related costs of £0.1m (FY2016: £0.2m) and £0.6m (FY2016: £0.3m) of non recurring
Neptune start up costs.
Adjusted operating profit additionally excludes £0.2m of amortisation in both years.
Autins Group plc Annual Report and Accounts 2017
1
Autins at a glance
DESIGNING
solutions
We are a recognised leader in acoustic and thermal management
technology. We combine applications expertise with advanced
manufacturing capabilities to provide best-in-class solutions that create
competitive advantage and generate premium margins. The end
markets for our product offering are supported by long-term resilient
growth drivers.
Our products
Neptune
Lightweight, ultra-
micro fibre acoustic
absorber
Fleeces
Nonwoven mono-
material polyester
fleeces with application
specific scrims
Heavy layer
Thermoplastic mass
barriers
Light foam
Low density
polyurethane foam with
application specific
scrims and heat shields
Foams
Injection moulded
polyurethane foam,
open/semi-open/closed
cell foams
Multi-layer
Layered barriers and
absorbers tuned to
specific applications
e.g. Ozone
Our processes
Materials
manufacturing
Ultra-micro fibre,
low-density PUR foams
Conversion
and assembly
Cutting, sealing,
moulding, welding
Customer
support
Tooling and component,
design and testing
2
Autins Group plc Annual Report and Accounts 2017
Strategic Report
Governance
Financial Statements
Our business model
Market intelligence
Expertise and experience
translated into specialised
know-how. Macro level
trends and micro level
customer challenges
combine to provide the
insight to inform our
development.
Product offering
Research and product
development plans that
deliver improved acoustic
and thermal performance
through lightweight
specialist materials.
Engaged employees
One company in everything
we do, harnessing
our Group-wide knowledge
to identify opportunities
for improvement and
providing an advantage
to the customer.
Core capability
Acoustic and thermal
insulation design,
engineering, test, coupled
with advanced
manufacturing and NPI
ability.
Our locations
Operational excellence
N
P
I
Materials manufacturing
Supply chain
Conversion & assembly
management
Customer support
Tamworth, UK
Materials’ manufacturing,
assembly & conversion
operation
Rugby, UK
Group headquarters, new
product introduction centre,
assembly & conversion
operation
Gothenburg, Sweden
New product introduction
centre, materials’
manufacturing, assembly &
conversion operation
Nuneaton, UK
Group technical centre:
laboratory & test site
Hilden, Germany
New product introduction
centre, assembly & conversion
operation
Northampton, UK
Joint venture with Indica
Industries (India), materials’
manufacturing and assembly
Autins Group plc Annual Report and Accounts 2017
3
Our products and technology
SOLVING
problems
Our capabilities:
We design
We use our acoustic and thermal expertise and experience
to research, test and develop a range of class-leading
products. Innovative design is the starting point for how we
differentiate ourselves.
We manufacture
We deploy advanced manufacturing across our supply chain
to deliver performance that meets and exceeds customer
requirements. We focus on continuous business process
improvement to underpin how we work as one company in
everything we do.
We support
We recognise that our products exist to solve customer
problems. We are focused on providing support to our
customers throughout their programme life cycles to ensure
those problems stay solved.
4
Autins Group plc Annual Report and Accounts 2017
Bonnet liners
Low density polyurethane (‘PUR') foam product with
protective covers
Lightweight, superior acoustic performance, low flame
response, high temperature environments
Bumper
Heavy layer product and PUR
Significant mass used to reduce vibrations
and act as a barrier to noise transmission
Wheel arches
Combination product including polyester, recycled
fibres or advanced materials such as Neptune
Cost-effective recycled materials, improved acoustic
profile via multi-layer material solution
Door blankets
Neptune product in multiple thicknesses
High performance 3D acoustic absorption in key frequency
range, thermally efficient
Dash mats
Multi-layer product with Ozone and Neptune option,
delivering special acoustic performance
Material combinations balancing barrier to engine noise
and absorption for interior acoustics
Battery insulation
Polyester wadding product with multi-purpose scrims
– oil and water resistant
High performance protection via specialised coatings,
optional barrier films, thermally efficient
Transmission undertray
Low density PUR foam with protective covers and
optional aluminium heat shielding
Lightweight, superior acoustic performance, low flame
response, high temperature environments
Strategic Report
Governance
Financial Statements
Autins Group plc Annual Report and Accounts 2017
5
Chairman and Chief Executive’s statement
FOCUSING
our organisation
We have delivered strong top line growth in FY2017 and the Board expects that this
will continue in FY2018. Our ongoing investment programmes will enable the Group
to sustain this growth in the long term through a better product range, along with
better test and manufacturing facilities to better serve our growing customer base
and do so profitably.
Performance
We are pleased to report our first full year results since
our IPO in August 2016, which show strong growth in
revenue, up by 29% to £26.4 million (FY2016: £20.4 million),
and gross profit ahead 38% to £9.0 million (FY2016: £6.5
million). In line with our strategic plans, this supported
further investment in the business: in which we continue
to strengthen our management and key staff
as we build core capabilities in research, test, and
engineering and, similarly, we continue to invest in our
core manufacturing processes.
At an operating level, each region has made progress.
Having become wholly-owned at the time of the IPO in
2016, both Germany and Sweden have achieved
promising wins with important Original Equipment
Manufacturers (‘OEMs'). This, combined with further
improvements in the year, has meant that our operations
in both countries delivered profits in the year. Coupled
with access to strategically important European OEMs
and large addressable markets, Autins is well placed for a
bright future in Germany and Sweden.
In the UK, we have re-aligned our manufacturing
processes across our sites in Rugby and Tamworth to
better balance our capacity and the respective sites’
utilisation levels. This will continue in FY2018 as we focus
on ensuring that our operational performance not only
meets and exceeds our customers’ requirements but also
provides us with a competitive advantage.
We have made solid progress in the year and remain
committed to delivering improved financial performance,
whilst being fully focused to stay on track with our
ambitious long-term growth plans.
Market
Looking at the automotive market at a macro level, the
pace and breadth of innovation in vehicles is
considerable. We just have to look at the changing
landscape of electronics, powertrain, connectivity, smart
design, not to mention related digital services. There are
significant implications for the car’s interior environment
as a result, with major challenges arising from an
engineering and value perspective. Autonomous vehicles
will only heighten this.
These increasing innovation challenges are re-shaping
conventional automotive structures and relationships
across OEMs and the tiers of suppliers as well as between
the traditional automotive companies and the ‘purer’
technology companies. The consequential trends may be
to drive consolidation and M&A activity but it will also
likely encourage sharing of platforms and manufacturing
along with outsourcing certain design and technology
development. This will inevitably force more critical and
focused thinking on what is core to the OEMs and the tiers
of suppliers. Our strategy at Autins is to offer clearly
differentiated and specialised products that not only
play to our core capabilities but also provide a clear
advantage to the customer. We plan to do this by
partnering with OEMs and Tier 1s alike so that we can
increasingly become and be seen as their Noise, Vibration
and Harshness (‘NVH') partner; supporting them
throughout their programme life cycle and solving their
problems.
6
Autins Group plc Annual Report and Accounts 2017
Strategic Report
Governance
Financial Statements
Strategy
Our strategy has been refreshed as part of our annual
business planning cycle and very much centres on
our underlying intent to drive sustainable profitable
growth, see pages 8 to 9 for more details. Our focus is for
Autins to be a specialist solutions provider and to operate
as one company in everything we do. Our investment
programme, to fuel our growth, is well aligned with this
whether it is in new product development and testing
capability or in our facilities and manufacturing processes
and capacity.
These respective investments in capability and capacity
better position Autins to capitalise on the significant
growth potential in our target markets. Our initial priority
has been to ensure that our growth path is clear, focused
and being followed and furthermore to establish a
business model that can deliver on this growth potential
and be able to scale effectively. In light of this, our
operating performance needs to be continuously
improving so that we see these scaling benefits reach all
the way to the bottom line.
Dividend
The Board is proposing a first final dividend
of 0.8 pence per share. The Board continues to adopt a
progressive dividend policy alongside continuing
investment in the business. The dividend will be paid to
shareholders on the register on 19 January 2018 on 16
February 2018.
Governance
The Board is committed to promoting the highest
standards of corporate governance and ensuring
effective communication with shareholders. This year’s
Annual Report has continued to be refined to provide a
clear picture of our business model and strategic plan. We
have recently conducted a detailed internal review and
assessment of Board effectiveness. This will form the
basis from which we will look to develop Board
performance in the spirit of continuous improvement and
best practice.
People
We have outstanding employees and, on behalf of the
Board, we would like to thank them all for their ongoing
support and commitment to Autins. Our success is built
upon a foundation of managing to harness and deploy
their experience and expertise across the entire Group,
as one company.
Outlook
In the near term, our results will be weighted to the
second half of the year. This reflects our ongoing growth
in conjunction with our continued investment. Across
the full year, we are confident that 2018 will be a period
of significant progress for Autins as we work to realise
the full potential of the Group.
Adam Attwood
Chairman
Michael Jennings
Chief Executive
Adam Attwood
Chairman
Michael Jennings
Chief Executive
Group sales progression (last 3 years)
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15000
14000
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12000
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10000
9000
8000
7000
6000
5000
H1 2015
H2 2015
H1 2016
H2 2016
H1 2017
H2 2017
Automotive
Non-automotive
Tooling
Group gross profit progression (last 3 years)
s
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G
6000
5000
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0
H1 2015
H2 2015
H1 2016
H2 2016
H1 2017
H2 2017
Autins Group plc Annual Report and Accounts 2017
7
Strategy
DRIVING
growth
Strategic market drivers:
▶ Large target addressable market in automotive
> common market drivers across OEMs
▶ Premium vehicle growth especially SUVs
> changing NVH & lighter materials
▶ Regulatory pressure (emissions, VOC, smaller
engines)
> changing NVH needs & lighter materials
▶ Electric vehicle growth
> changing NVH & thermal needs & lighter
materials
▶ New interior demands, technologies, materials,
combinations
> multi-layer/thickness/function, non-wovens,
weight
8
Autins Group plc Annual Report and Accounts 2017
Strategic intent
Market-led
▶ Growth agenda built on best-in-
class differentiated products
▶ Specialist applications and
materials research and product
development
▶ Broader market and customer
coverage
Operational excellence
▶ Competitive advantage built
around advanced manufacturing
supply chain management
▶ Vertically integrated, mixed model
assembly, product introduction
centres
▶ Better position and footprint
Performance driven
▶ Customer-focused capabilities
harnessing experience and
expertise
▶ Group-wide business processes
with one face to market
▶ One company in everything we do
Strategic Report
Governance
Financial Statements
Strategy in a nutshell
As one company, we are focused on investing in
our core specialist capability to realise our full
growth potential and transform the business.
We want to create clear advantages to work
with Autins so that we become integral to our
customers and investors alike.
Autins Group plc Annual Report and Accounts 2017
9
Strategic progress 2017
▶ New wins: Volvo, Aston Martin, London Taxi development
▶ Neptune OEM approvals continue to progress
▶ MIRA Technical Centre and team fully in place
▶ 3-Horizon research & product development programme
in place
▶ New wins: VW, Porsche, Bentley
▶ Multiple tier collaborations working and winning together
▶ Launched Autins Operating System across all facilities
▶ Indica Automotive joint venture performing well
▶ Strengthening of core leadership and management
▶ Recruitment and investment in key staff across sales,
operations and technical teams
▶ Group-wide business processes e.g. shared support services,
key account management
▶ One company branding introduced
Strategy in action
ENABLING GROWTH
through innovation
Researched and tested to ensure our
product offering is clearly based on data-
driven performance benefits.
The client
Electric vehicle (‘EV') models have
been announced and scheduled by
every major automotive OEM. Now
comes the challenge of
implementation.
The problem
With the removal of the internal
combustion engine (‘ICE’) and therefore
engine noise, there is an expectation
of a quieter drive in EVs. In practice
the removal of one major noise source
uncovers a range of different noise,
vibration and harshness challenges
across the vehicle. Additionally, no
longer having an ICE to use as a heat
source requires use of precious battery
power to keep the cabin comfortable
all year round.
The solution
At Autins we understand how to isolate and eliminate noise created by new EV
components, typically creating more tonal and high frequency noises, which can be
particularly annoying for passengers. Using our materials to offer lightweight solutions
with superior acoustic performance, we reduce the noise previously masked by the ICE
without having to increase the weight of the vehicle.
Bonnet liners
▶ Light foam product with protective covers.
▶ The lightweight, superior acoustic performance is ideally suited for EVs.
Wheel arches
▶ Combination product including advanced materials such as Neptune.
▶ Lightweight, superior acoustic performance to block out road noise in EVs.
Dash mats
▶ Multi-layer product, Ozone & Neptune option, special acoustic performance.
▶ Material combinations balancing barrier to road and wind noise and absorption for
interior acoustics.
Door blankets
▶ Neptune product in multiple thicknesses.
▶ High-performance 3D acoustic absorption in key frequency range and thermally
efficient for improved cabin temperature stability.
Pillars
▶ Neptune product in multiple thicknesses.
▶ High-performance 3D acoustic absorption of perceived enhanced road and wind
noise and thermally efficient for improved cabin temperature stability.
Encapsulation
▶ Multi-layer product, Ozone & Neptune options, special acoustic performance.
▶ Material combinations to isolate noise from electric motors, gearbox, pumps, and
HVAC preventing them from travelling throughout the vehicle.
Battery insulation
▶ Polyester, recycled fibres or advanced materials such as Neptune.
▶ Optimising range efficiency by reducing thermal effects on the battery.
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Autins Group plc Annual Report and Accounts 2017
Strategic Report
Governance
Financial Statements
Autins Group plc Annual Report and Accounts 2017
11
Strategy in action continued
ENABLING GROWTH
differentiated solutions
Linking existing know-how with potential new
application areas resulted in innovative extensions
to our product range.
The client
The London Taxi Company recently
rebranded as the London Electric
Vehicle Company (‘LEVC') ahead of the
launch of their new plug-in hybrid
electric taxi specifically developed to
make cities cleaner and greener.
The problem
Challenging convention to offer NVH
solutions optimised for LEVCs unique
plug-in hybrid electric vehicle design
and functionality.
The solution
▶ Matching Autins’ extensive applications knowledge with the design features and
demand of the electric black cab, we fast-tracked a suite of parts designed and
tested at our Group technical centre on the Horiba Mira Technology Park. The end
parts may be tailor-made but the core solution utilised pre-engineered
developments that already existed in our wider product range.
Parcel shelf
▶ Starting with handmade prototypes tested in vehicle to reach the optimal solution,
Autins supplied not only the answer but reverse engineered the solution back into
CAD drawings to produce tooling and products ready for production.
Footwell and quarter panel
▶ Presented with a problem area, Autins designed a multi-layer solution to solve a
multi-faceted noise issue. Combining materials to create a barrier to road noise,
whilst at the same time providing superior absorption for interior acoustics.
Brake pump encapsulation
▶ By encapsulating the brake pump with an injection moulded polyurethane foam,
we were able to simultaneously reduce vibration and block noise at the source.
Bonnet liner
▶ Autins’ light foam bonnet liner is 65% lighter than the conventional melamine foam
liner that had originally been specified. Our smart 2D tooling design delivered a
cost effective alternative, whilst offering an improved surface and edge finish. The
result: reduced weight, improved aesthetics and safer handling.
12
Autins Group plc Annual Report and Accounts 2017
Strategic Report
Governance
Financial Statements
Autins Group plc Annual Report and Accounts 2017
13
Financial review
DELIVERING
progress
Revenue
The Group continued to grow with total revenue up 29%
at £26.4 million (FY2016: £20.4 million).
Sales of components increased by 26% to £24.8 million
(FY2016: £19.7 million). Direct sales to the Group’s largest
customer accounted for 64% of Group revenues (FY16:
65%). The Board expects this concentration to reduce in
the coming year as revenues from new customer
programmes begin volume production.
Within component manufacturing, flooring revenue grew
by 50% to £0.9m (FY2016: £0.6m) with the Swedish DBX
business acquired in April 2016 adding £0.1m year on year.
The UK component manufacturing business continued to
be a major driver in terms of organic growth, with sales
increasing by 20% to £22.0 million (FY2016: £18.4 million).
Non-automotive components revenue in the UK
increased by £0.2m with ongoing development of the
product range to allow access to new markets.
Having secured new work with a major European OEM,
German automotive revenues have more than doubled to
£1.1m in the year. The Board expect continued growth in
the coming year as this contract is implemented across
more of the OEM’s plants.
Swedish automotive revenues were £0.8m
(FY2016: £0.3m) having benefitted from a combination
of new platform launches in the second half of 2017
and a full year’s trading following the acquisition of the
remaining 51% on 20 April 2016.
Sales of tooling increased as anticipated to £1.5 million
(FY2016: £0.6 million), with a number of new pressed and
moulded components developed and entered into
volume production.
Gross margin
Component gross margins increased to 34.6% (FY2016:
33.1%) with the continued benefit of new higher value
added contracts secured in previous years.
The Board continues to seek opportunities to improve
margins with commercial focus on higher added value
products and materials, development of a common
operational strategy and targeted capital investments
designed to improve efficiency.
EBITDA and operating profit
Adjusted EBITDA was £2.0m (FY2016: £1.4m) with an
adjusted operating profit of £1.5m (FY2016: £1.0m) after
excluding exceptional and non-recurring costs as noted
below. Management believe these adjusted measures are
more indicative of the underlying business.
Unadjusted EBITDA was £0.9m (FY2016: £0.9m) after
charging £0.55m (FY2016: £0.2m) of exceptional costs,
and £0.6m (FY2016: £0.3m) of non-recurring incremental
start-up costs for the Neptune facility.
Exceptional and non-recurring items
The Group incurred exceptional remuneration and
associated costs of £0.2m (FY2016: £nil) as a result of the
resignation of the former Chief Executive Officer, Jim Griffin,
on 1 February 2017, and subsequent appointment of Michael
Jennings.
Following the change of Chief Executive, a review of
Group staffing was conducted to ensure it was aligned to
the Group’s strategic growth ambitions and a one
company culture. This resulted in a further £0.1m of
exceptional costs in the year (FY2016: £nil).
During the year, the Group incurred £0.2m (FY2016: £nil) of
costs performing critical repairs to production presses
within the Rugby facility. Whilst the Board believe that
these repairs arose from an inherent design fault, this is
being contested by the equipment manufacturer and the
repairs have therefore been expensed as incurred. We
continue to work with independent assessors and the
equipment manufacturer to achieve an agreed
resolution.
Further legal and professional costs of £0.1m were incurred
in relation to the Group’s IPO in the year (FY2016: £0.2m).
Amortisation of £0.2m (FY2016: £0.2m) in relation to
acquired intangible assets has been excluded from
adjusted operating profit.
14
Autins Group plc Annual Report and Accounts 2017
Strategic Report
Governance
Financial Statements
The business continues to invest in customer-facing staff
and capital equipment in support of profitable growth
and diversification away from the Group who remain the
current largest customer.
Currency
The Group trades in currencies other than sterling, its base
currency, due to its three overseas operations and certain raw
material supplies. It therefore has a level of operational
transactions conducted in Swedish krona and euro. The
Group is also subject to currency variation in the retranslation
of the results and net assets of those overseas operations.
As a result of the Neptune capital purchase stage
payments, the currency with the greatest impact on
Group results in the year has been the US dollar. The raw
material supply agreement with IkSung Co, Ltd means
there will also be an ongoing potential transactional risk
on our results from the US dollar as Neptune volumes
increase.
The Group held no forward currency contracting
arrangements at either year end. During the current year the
Group held a forward purchase contract for US dollar in
relation to the final IkSung stage payment.
The Group’s structure and trading balance are such that
net currency exposure is naturally reduced. The Board
will continue to monitor the situation and use derivatives
to manage the Group’s foreign currency risks where the
underlying operational business or significant capital
expenditure increases exposure. Transactions of a
speculative nature are, and will continue to be,
prohibited.
Net finance expense
The Group applied cash from the IPO to significantly
reduce bank debt in the prior year and this year settled
£1.1m of loan notes outstanding from an earlier buyout of
minority shareholders. As a result of this reduced gearing,
net finance expense for the year fell significantly to £0.1m
(FY2016: £0.6m). An analysis of the net finance income is
presented in note 8 on page 51.
James Larner
Chief Financial Officer
The Group’s Neptune production facility has, whilst
working towards full operational status, incurred further
non-recurring start-up costs for Neptune of £0.6m
(FY2016: £0.3m) in the year. This has been part of an
extended commissioning period of the plant with
ongoing refinement and commercialisation of the
Neptune product for use in European OEM markets.
Attributable commissioning costs in FY2017 totalled
£0.4m and have been capitalised. Our current completion
schedule indicates we will bring the asset into full use
from 1 January 2018, at which time depreciation will
commence in line with our accounting policies.
Joint ventures
The Group’s current year share of joint venture activities relates
solely to Indica Automotive, a foam conversion business based
in Northampton. The comparative year included pre-
acquisition losses at the Group’s Swedish business prior to its
full acquisition on 20 April 2016.
Indica Automotive’s turnover increased by 43% to £2.6m
(FY2016: £1.8m) with a profit before tax of £0.5m (FY2016:
£0.4m) after £0.05m of exceptional costs (FY2016: £Nil).
The Group’s share of profit after tax was £0.2m
(FY2016: £0.1m).
Autins Group plc Annual Report and Accounts 2017
15
Financial review continued
Taxation
The lower effective tax rate reflects enhanced R&D claims
for the current and prior periods, together with utilisation
and recognition of brought forward tax losses.
investments in capacity for growth across the Group prior to
the IPO and refinance to HSBC. There were no new hire
purchase agreements and £0.1m of new asset-backed loans
in the year.
The creation of a dedicated technical Research and
Development (‘R&D') team together with an expectation
of ongoing development of the Neptune product mean
the effective tax rate is likely to remain below the UK
statutory level at least in the short term.
The Group’s overseas subsidiaries continue to have
significant taxable losses available. This will, in the short
term, offset expected trading profits in Sweden and
Germany that are higher relative corporation tax territories
than the UK. As a result of trading in the year and forecasts
for FY2018, the Group has recognised a deferred tax asset
of £0.2m (FY2016: £0.1m) in relation to these losses. The
Group has a further £0.1m (FY2016: £0.2m) unrecognised
tax asset in respect of losses in the German subsidiary.
Earnings per share (‘EPS')
The weighted average number of shares in issue has
increased by 7.58 million as a result of new shares issued
in relation to the Group’s IPO on 22 August 2016.
As a result, despite the increased level of profit in the
year, earnings per share decreased to 1.82p per share
(FY2016: 2.03p per share).
Had the same weighted average number of shares been
applied to the prior year then the FY2016 EPS
comparative would have been 1.3p per share.
Calculations of earnings per share, including the potential
dilution arising from the senior management share
option scheme, are presented in note 10 on page 53.
Dividends
The Board propose a final dividend of 0.8p per share for
the current year. Our dividend policy remains to balance
reinvestment in support of the Group’s growth strategy
whilst progressively growing returns in line with earnings.
Net (debt)/cash and working capital
The Group ended the year with net debt (cash and cash
equivalents less loan notes, bank financing and hire purchase
agreements) of £2.0m (FY2016: Net cash £3.3m) and cash and
cash equivalents of £1.4m (FY2016: £6.3m). During the year
cash was applied to settle loan notes of £1.1m, making the
final capital stage payments on the Neptune line of US$2.2m,
as well as further capital investments and fund working
capital. The Group has £0.9m (FY2016: £1.3m) of hire purchase
agreements in the UK and £0.4m (FY2016: £0.5m) of long-term
asset-backed bank loans in Sweden. These reflect the
As reported last year, the Group had, in support of IPO costs,
secured £0.25m of short-term extended arrangements with
certain key suppliers which were normalised in the year.
Debtors increased in the year reflecting the Group’s growth,
with the position magnified by the £2m year-on-year increase
in component revenue in the final quarter, as well as £0.25m
higher tooling sales.
As part of the IPO process, the Group refinanced with HSBC in
November 2016 having secured additional facilities to support
growth and implementing a central banking platform that
allows greater central cash and debt management. The HSBC
facilities come without formal covenant and are over a
three-year term to November 2019.
The Directors are satisfied that future funding requirements
for the Group’s planned growth are adequately supported by
these new banking arrangements.
Acquisitions, goodwill and intangible assets
There were no acquisitions made in the year, but the fair
values attributed to the assets of our Swedish entity were
revised during the period as detailed in note 12 on page
54 resulting in an increase to non-separable goodwill.
The Board considered the carrying value of goodwill and
other intangibles (both existing and generated in the
year) at 30 September 2017 and concluded that the
carrying value was fully recoverable.
Capital expenditure
Total capital additions were £2.6m (FY16: £5.0m) in the
year. The Group continued to invest in plant for capacity
expansion for growth, as well as investment in laboratory
and specialist testing equipment for the Group’s
Technical Centre and R&D team.
In bringing the Neptune operation towards full
operational capability a further, £0.85m was spent in the
year on commissioning and line improvements.
Financial risk management
Details of our financial risk management policies are
disclosed in note 3 on pages 46 to 48.
James Larner
Chief Financial Officer
16
Autins Group plc Annual Report and Accounts 2017
Strategic Report
Governance
Financial Statements
Key performance indicators (‘KPIs’)
Lost time injury frequency rate (‘LTIFR’)
KPI definition
LTIFR is calculated as the number of lost time injuries divided
by one million and multiplied by the number of hours worked.
Performance
2017
2016
3.1
2015
8.1
Gross profit growth (£)
KPI definition
Measure is calculated as the change in gross profit from continuing
operations in the current year compared with prior year. The effect
of any acquisitions in the current or prior year is adjusted.
Performance
2017
15.7
2016
+1.3%
+26.7%
(One incident would represent 4.7 for FY2018)
(Target: CAGR 15-20% over 3-5 years)
Comment
Three incidents in the year that resulted in lost time (being more than one
day away from work as a result of an incident at work).
No individual required admission to hospital and there were no permanent
injuries sustained. Our long-term target is for zero lost time injuries.
Comment
Gross profit benefitted from increased revenues but also improved
margins as the proportion of higher value-added products and materials
increased in the year. The effect of gross profit growth in Sweden has
been excluded from both periods as acquired in April 2016.
Organic revenue growth (%)
KPI definition
Organic revenue growth measures the change in revenue in
the current year compared with the prior year from continuing
operations. The effects of any acquisitions in the current or prior
year are adjusted.
EPS growth (%)
KPI definition
EPS growth measures the change in basic earnings per share
in the current year compared to that of the prior year.
Performance
Performance
2017
2016
+1.%
(Target: CAGR 15-20% over 3-5 years)
+30.4%
-63.4%
(Target: CAGR 15% over 5 years)
-10.3%
2017
2016
Comment
Orders and revenues grew strongly in all areas with new OEM platforms
coming into volume production in the year. FY2016’s growth was lower as
significant tooling sales for new vehicles in FY2015 were replaced by
component revenues. The effect of revenue growth in Sweden has been
excluded from both periods as acquired in April 2016.
Comment
Weighted average shares in issue increased by 7.58 million in FY2017 as a
result of new shares issued in relation to the Group’s IPO. Had the same
weighted average been used for both periods then the FY2016 EPS would
have been 1.3p per share which is 40% growth. Decrease in FY2016 was a
result of both a partial dilution effect of new shares issued on IPO
combined with exceptional costs in relation to the IPO and establishment
of Neptune manufacturing.
R&D spend as a proportion of consolidated sales (%)
KPI definition
Measures the level of expensed research and development (‘R&D')
in the year as a percentage of the consolidated Group revenue.
New product & customer sales as a % of Group (%)
KPI definition
New product and new customer sales are measured as the combined
revenue generated from products (e.g. Neptune) and customers
secured by the Group in the current and previous two years, as a
percentage of total revenue from continuing operations.
Performance
2017
1.0%
2016
2015
(Target 2%)
0.9%
Performance
2017
3.4%
2016
5.6%
2015
1.2%
(Target: over 10%)
12.7%
Comment
The significant increase in FY2016 was largely attributable to a single
large collaborative project that ended in early FY2017. Spending on R&D
has continued, but a larger proportion of successful projects required
capitalisation in accordance with our accounting policies. Capitalised
R&D in FY2017 was £0.3m (FY2016: £0.2m)
Comment
Increasing penetration of Neptune has delivered some volume in the year
and will continue to do so in future periods. New contracts with major
European OEMs as well as further penetration into their Tier 1 supply
chains have, and will continue to deliver, growth for the Group. All
non-automotive sales are new to the Group in the last three years.
Autins Group plc Annual Report and Accounts 2017
17
Principal risks and uncertainties
Risk
Description and potential impact
Mitigation
Failing to
successfully
implement our
growth strategies
Our future success is dependent on the effective
implementation of our growth and diversification
strategies.
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.
We have aligned our management effort in support of our
strategic aims with clear functional leadership established.
The Group’s management capacity has been improved with the
appointment of a number of high-calibre individuals to key
business roles.
Operational plans and key KPIs have been established to allow
identification and correction of under-performance.
Dependence on
single sector and
certain key
customers
The vast majority of the Group’s business serves the
automotive sector.
A significant proportion of our revenue continues to
be derived from one key customer.
Our relationship with this key customer could be
materially adversely affected by several factors,
including a decision to diversify or change how, or
from whom, they source components that we
currently provide, an inability to agree on mutually
acceptable pricing or a significant dispute with the
Group.
If our commercial relationship with a key customer
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.
Even with our focus on specialised areas within the automotive
industry our target addressable market is significant. Our
current market share provides huge potential for growth.
Strength of customer relationships is a priority for the Group
and, for our key customers, multiple contact points are
maintained.
We have Key Customer Account Plans which outline our
strategic approach and development activities in terms of joint
NVH solutions. These plans also document roles and
responsibilities of all Group functions in their support of
customer relationships.
Our strategy to diversify and grow our business in terms of
customers, geographies and applications, as well as our
vertical integration into materials reduces reliance on
individual customers and sectors.
Dependence on
relationship with
IkSung Co., Ltd
IkSung are both a supplier of patented materials and
a licensor of intellectual property rights in relation to
the Neptune material.
Were this relationship to deteriorate or breakdown,
this could have a significant adverse effect on our
business.
We are actively engaged with suppliers to provide alternative
and dual sources for non-patented materials.
The terms of our licensing agreement convey the right to source
the proprietary fibre directly from the manufacturer.
Our R&D effort includes plans to improve existing materials and
to explore new materials that would reduce this reliance.
Major failure of
Neptune line
The Neptune production line is the only such facility
in Europe and a major breakdown could affect our
ability to support customer growth
The line was purchased with a critical spares package and
specialised maintenance training to allow the Group to perform
preventative maintenance and repairs.
In addition, an ongoing technical support agreement is held
with IkSung for major machine failures and a back-to-back
agreement is held which would allow material to be imported
to support demand.
18
Autins Group plc Annual Report and Accounts 2017
Strategic Report
Governance
Financial Statements
Risk
Description and potential impact
Mitigation
Risk of competing
materials to
Neptune
Technological advances in existing or potential
substitute materials may impede the
commercialisation or competitiveness of of Neptune
and cause a reduction in demand.
The impact of the
EU Referendum
(‘Brexit’)
Based on the considerable business press coverage,
there is increasing uncertainty and concern on what
form Brexit will take due to the relative lack of detail
and clarity therein.
The potential implications tend to focus around
currency fluctuation and cross-border business with
corresponding impact on the cost and availability of
raw materials and labour.
Potential changes to cross-border trading, including
tariffs and non-tariff barriers, could affect both
working capital requirements, by extending supply
chains, and the costs of both manufacturing and sales.
There remains uncertainty over the impact on the UK
economy and the future growth the automotive
sectors’ production and supply chain activities.
IT Systems and
software
The Group relies on a range of systems and software
infrastructures and has EDI links to several
customers.
Loss or interruption of access to these could disrupt
customer and production scheduling.
Currency and
foreign exchange
A proportion 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 future financial
position.
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.
Our multi-horizon research and product development plan is
designed to improve our existing materials and to explore new
materials and applications.
We have engaged with key third parties, suppliers and automotive
industry bodies about the potential impacts of Brexit.
The Group has manufacturing operations within Europe, as well
as the UK with manufacturing capacity designed to serve local
markets, in territory, and is reviewing future investments to meet
likely automotive supply chain expansion in mainland Europe.
As part of optimising operational capacity the Group has
transferred manufacture of certain components to the territory
in which they are sold, reducing risk on cross-border trading.
Whilst recognising the competitive market, the Group seeks to
position itself as an employer of choice.
As further details of the Brexit terms emerge, management will
continue to assess potential risks and impacts of changes in
the automotive supply chain to the Group’s stakeholders.
There has been ongoing investment in the IT infrastructure of
the Group.
This seeks to both improve operational functionality and also
protect sensitive and proprietary data.
Critical business continuity and disaster recovery plans are
reviewed as an ongoing process in conjunction with our
external IT support providers.
The Group seeks, where possible, to buy materials and services
in the functional currency of the procuring site so as to
minimise transactional risk.
In addition, external borrowings are maintained in the
functional currency of local operations.
For significant future capital projects the Board would consider
a hedging strategy to give certainty 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.
This Strategic Report was approved by the Board on 12 December 2017 and signed by order of the Board by the Chairman.
Adam Attwood
Chairman
12 December 2017
Autins Group plc Annual Report and Accounts 2017
19
Board of Directors and Senior Management
1
Adam Attwood
Non-Executive Chairman
2
Terence (Terry) Brian Garthwaite
Non-Executive Director
3
Ian Roy Griffiths
Non-Executive Director
Adam trained as a solicitor with 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 holding non-executive roles for companies
within the consumer products and IT industries. He
has since acted in a non-executive capacity with a
variety of private businesses. He joined the Autins’
Board in January 2016 as Non-Executive Chairman,
having previously provided strategic guidance to the
Board since April 2013. Adam chairs the Group’s
Nomination Committee.
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 chairs the Group’s Audit Committee.
Ian was appointed to the Board in April 2016 as a
Non-Executive Director and is Chairman of the
Group’s 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. 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 which he joined
as a Non-Executive Director and Chairman-elect in
October 2014.
4
Michael Jennings
Chief Executive
5
James David Larner
Chief Financial Officer and Company Secretary
6
Wayne Hodgkiss
Group Operations Director
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 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.
Michael joined the Board as Chief Executive in
February 2017.
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 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 Ernst and
Young in 2001. James joined the Group Board as
Chief Financial Officer in January 2016.
Wayne brings a wealth of operational leadership
experience predominantly from the automotive
sector but also from industrial and aerospace
supply. He has worked in senior positions with BMW,
Johnson Controls, Goodrich, Terex Pegson, DHL
Automotive, Bentley, and most recently EAD /
London Taxi Company. He leads all of the Group’s
operations and has done so since June 2017.
7
Dr Kathryn Beresford
Group Technical Director
8
Joshua Kimberling
Group Sales Director
9
Stefan Janzen
Group Technical Director
Dr Kathy Beresford completed her PhD in
Multichannel Automotive Audio at the Institute of
Sound Recording, at the University of Surrey in 2010
and was awarded a postgraduate award (with
distinction) in Innovative Business Leadership from
the University of Warwick in 2016. She spent seven
years working in local government in varied roles
conducting educational data analysis, modelling
and interpretation alongside performance and
project management. Kathy joined the Autins Group
in June 2015 to lead research, development and
innovation and to lead the establishment of the
Group’s technical facilities at the Horiba MIRA
Technology Park.
Joshua has spent his career in sales management
of automotive, process control and healthcare
products. Most recently as Director at Flow-Mon
Ltd, growing the business’ global sales of UK
manufactured process control products. Prior to
this Joshua worked in both the US and Germany
for Robert Bosch in the sales and marketing of
automotive electronics, having account
management responsibilities for major OEM’s in
the US and Europe. Joshua joined the Group in
November 2016 to oversee sales and marketing.
Stefan worked for HP Pelzer Group for over 20 years
as a research and development engineer focused on
automotive acoustic products and solutions, before
joining Autins GmbH as Research and Development
Manager in late 2013. Stefan has a degree in Biology
from Westfälische Wilhelms University in Münster,
Germany.
10
Kevin Sheldon
Plant Manager, UK
11
Örjan Karlsson
Managing Director, Autins AB
12
Matthias Migl
Managing Director, Autins GmbH
Kevin has over 25 years experience of operational
process improvement and leadership and joined the
Group in October 2017 to lead UK operations. Prior
to this Kevin had been General Manager of Swissport
Stansted and Birmingham Airports since 2010.
He has spent a significant part of his career in senior
operational roles within the automotive and
construction equipment including periods at Terex
Pegson Ltd, Johnson Controls Automotive and MG
Rover (Powertrain).
Örjan has over 20 years’ experience in the
automotive industry, having worked at Saab
Automobile, Volvo Cars and Volvo AB and various
suppliers to the automotive industry, with a focus
on planning, implementing new projects and
increasing capacity. Örjan has been Managing
Director of Autins AB since June 2012.
Matthias has 20 years’ experience in the automotive
industry including with the specialist NVH and soft
trim component manufacturer HP Pelzer Group, with
a particular focus on acoustics. Matthias has been
Managing Director of Autins GmbH since 2013 and
holds a degree in Chemical Engineering from
Friedrich – Alexander University, Erlangen, Germany.
20
Autins Group plc Annual Report and Accounts 2017
Strategic Report
Governance
Financial Statements
1
4
7
2
5
8
3
6
9
10
11
12
Autins Group plc Annual Report and Accounts 2017
21
Directors’ report
For the year ended 30 September 2017
The Directors present their report and the audited financial statements for the Group for the year ended 30 September 2017 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 2 to 19 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 20 to the financial statements, and which is incorporated by way of cross-reference into the Directors’ Report.
The principal activities of the Group are the manufacture and sale of insulating materials to the automotive industry. The Company is an
investment holding company. The Directors are not aware, at the date of this report, of any likely changes in the Group’s activities in the next year.
Results and dividends
The results for the year are set out in the consolidated income statement and consolidated statement of comprehensive income on pages 31
and 32. Following the year end, the Directors assessed the appropriateness of the Group declaring a first final dividend and are recommending
that a dividend of 0.8 pence should be paid.
Directors
The Directors who served during the year under review and up to the date of approving the Annual Report and Accounts were:
▶ Adam Attwood;
▶ Terry Garthwaite;
▶ Jim Griffin (resigned 1 February 2017);
▶ Ian Griffiths;
▶ Michael Jennings (appointed 6 February 2017); and
▶ James Larner
Corporate governance
Whilst the Group is not required to comply with the UK Corporate Governance Code the Directors acknowledge the importance of good
corporate governance. The Board therefore seek to apply the principles of the Code as far as is practicable taking account the Group’s size
and stage of development. The Company is a member of the Quoted Company Alliance (‘QCA') and are therefore using QCA resources to
improve corporate governance standards.
Board of Directors and Board Committees
Biographical details of all the Directors at the date of this report are set out on page 20.
The Board has formally delegated certain duties and responsibilities to the Audit, Remuneration and Nomination Committees. These
committees seek advice from the Company’s advisors as the need arises and operate throughout the year.
Meetings of the Board and its Committees
The following table sets out the number of meetings of the Board and Committees during the year under review and individual attendance by
the relevant members at these meetings:
Adam Attwood
Michael Jennings (appointed 6/2/17)
Jim Griffin (resigned 1/2/17)
James Larner
Terry Garthwaite
Ian Griffiths
Board
Audit Committee
Remuneration Committee
Nomination Committee
Number
Attended
Number
Attended
Number
Attended
Number
Attended
11
8*
3*
11
11
11
11
8
2
11
11
11
4
n/a
n/a
n/a
4
4
4
n/a
n/a
n/a
4
4
4
n/a
n/a
n/a
4
4
4
n/a
n/a
n/a
4
4
1
n/a
n/a
n/a
1
1
1
n/a
n/a
n/a
1
1
* Number of potential meetings adjusted for date of appointment and/or resignation
Should a Director be 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 defined terms of reference. The members of the Committees and their duties
are set out below.
Audit Committee
The Audit Committee comprises the three Non-Executive Directors under the chairmanship of Terry Garthwaite. The Committee has terms of
reference that are reviewed at least annually and meets formally not less than three times every year.
22
Autins Group plc Annual Report and Accounts 2017
Strategic Report
Governance
Financial Statements
The Committee’s role includes:
▶ Considering the appointment, fees, independence and effectiveness of the auditor and the audit process, and discuss the scope of the
audit and its findings.
▶ Review audit and non-audit services and fees.
▶ Monitor the Group’s accounting policies.
▶ Review and challenge the Group’s assessment of business risks and internal controls to mitigate these risks.
▶ Review the annual and interim statements prior to their submission for approval by the Board.
▶ Review and challenge the going concern assumptions for the Group.
▶ Review the Group’s whistle-blowing policy.
The ultimate responsibility for reviewing and approving the Annual Report and Accounts and the half-yearly reports remains with the Board.
Remuneration Committee
The Remuneration Committee is chaired by Ian Griffiths and comprises the three Non-Executive Directors. The Committee is responsible,
within agreed terms of reference, for the following remuneration matters:
▶ Setting the remuneration policy for all Executive Directors.
▶ Ensuring that remuneration payments made to Directors are consistent with the approved policy.
▶ Overseeing incentives-based remuneration for Senior Management or employees.
Details of employee share-based payment schemes are given in note 20 on page 59.
In carrying out these duties the Committee ensures the appropriateness, relevance and market practice in respect of such remuneration
policy. The committee has taken appropriate advice from BDO's human capital team with regards the Executive Director and Group senior
management long-term incentive schemes.
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 Committee meets as and
when required, comprises the three Non-Executive Directors and is chaired by Adam Attwood.
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.
The Board made use of its membership of the QCA to access a formal Board effectiveness review. Each Director has completed an
assessment, with additional narrative feedback where appropriate, across 12 key areas of Board effectiveness. The Chairman has collated the
scoring and feedback and the Board will develop an action plan to address the findings in the coming year.
Those questions specifically addressing the Chairman’s performance have been returned to an independent Non-Executive Director.
The Board are satisfied that their operating culture is such that an externally facilitated review was not necessary.
Board diversity
Vacancies on the Board will be filled following an evaluation of candidates who possess the required balance of skills, knowledge and
experience, using recruitment consultants where appropriate. The process for the appointment of Non-Executive Directors is managed by the
Nomination Committee. The Group recognises the importance of diversity at Board level and the Board comprises individuals with a wide
range of skills and experiences from a variety of business backgrounds.
Internal control and risk management
The Board are responsible for the Group’s system of internal control and for reviewing its effectiveness, taking guidance from the Audit
Committee. The systems as implemented are designed to manage, limit and control the risk of failure to achieve business objectives rather
than eliminate all risk completely. They can therefore only provide reasonable and not absolute assurance against material loss or
misstatement.
The Company’s Executive Directors, supported by the Group’s Senior Management Team, are actively involved in the daily management of the
operations of the Group and meet on a regular basis to discuss:
▶ Business risks and appropriate control systems improvements to manage those risks.
▶ Monthly financial and commercial results of the business compared to forecast.
▶ Environmental, health & safety performance.
▶ Progress on performance improvement projects.
▶ Steps taken to embed internal control and risk management further into the Group’s operations.
Autins Group plc Annual Report and Accounts 2017
23
Directors’ report continued
For the year ended 30 September 2017
The Group operates a whistle-blowing policy which is communicated to all employees via the Employee Engagement App which is a resource
that holds Group-wide policies and risk procedures. Any concerns raised are passed to the Chairman of the Audit Committee for independent
review.
Auditor independence
The Group’s external auditors, BDO LLP, and the Audit Committee 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 by the Group’s auditor, BDO LLP, in the year included tax compliance and advice regarding the Group’s
long-term incentive plan.
Re-election of Directors
For the time being one-third of the Directors (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 at every AGM retire from office by rotation. On this basis, Terry Garthwaite and
Ian Griffiths will offer themselves for re-election at the forthcoming AGM.
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 Company or any of its subsidiary
undertakings, excepting an indemnity provision between each Director and the Company 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 beneficial interests in the shares of the Company of those Directors serving at 30 September 2017 were as follows:
Adam Attwood
Ian Griffiths
Terry Garthwaite
Michael Jennings (appointed 6 February 2017)
James Larner
2p Ordinary Shares at
30 September 2017
% of issued
Ordinary Share capital
2p Ordinary Shares at
1 October 2016
% of issued
Ordinary Share capital
455,428
14,311
Nil
71,557
Nil
2.06
0.06
n/a
0.32
n/a
419,650
Nil
Nil
n/a
Nil
1.90
n/a
n/a
n/a
n/a
Share capital
Full details of the Company’s authorised and issued share capital are set out in note 19 to the consolidated financial statements.
The Company has one class of Ordinary Share capital with a nominal value of £0.02 each. 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
The following substantial interests (3% or more) in voting rights attaching to the Company’s Ordinary Shares had been notified to the
Company:
Shareholder
Schroders
Miton Group plc
James (Jim) Griffin
Karen Holdback
Kevin Westwood
Hargreave Hale
Ruffer LLP
Unicorn Asset Management
Number of voting rights
as at 12 December 2017
% voting rights
as at 12 December 2017
Number of voting rights
as at 30 September 2017
% voting rights
as at 30 September 2017
5,074,955
3,496,361
3,035,626
1,275,000
1,275,000
1,124,750
750,000
710,000
22.96%
15.82%
13.74%
5.77%
5.77%
5.09%
3.39%
3.21%
5,074,955
3,496,361
3,035,626
1,275,000
1,275,000
1,124,750
750,000
710,000
22.96%
15.82%
13.74%
5.77%
5.77%
5.09%
3.39%
3.21%
Financial risk management
The Group, in certain circumstances, uses financial instruments to manage certain types of financial 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 46 to 48 of the financial statements and in the risks section on pages 18 to 19.
Future business developments
The Group’s strategy 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.
24
Autins Group plc Annual Report and Accounts 2017
Strategic Report
Governance
Financial Statements
Research and development
As noted in the Financial Review the Group continues to invest in its research and development activities, with further investments at the
laboratory of Autins Technical Centre completed in the year. The Group has developed and implemented a three horizon research and
product development plan which is designed to improve materials and processes within the Group and support development of customer
solutions through the entire vehicle life cycle.
Health and safety
The Group remains committed to providing a safe and healthy working environment for staff and contractors alike. The Group-wide health
and safety standards exist to set out, in support of a one Company approach, the required range of policies, procedures and systems
designed to manage risks and promote wellbeing at all sites. The Company Secretary, with support from a full time environmental, health and
safety professional, has overall accountability for health and safety across the organisation.
Charitable and political donations in the year
The Company did not make any political donations during the year (FY2016: nil).
A donation of £5,000 (FY2016: £nil) was made to Eastwood Volunteer Bureau’s (Registered Charity No: 1091495) befriending service and the
Group provided staff time and resources to WMG Academy, a school specialising in engineering education.
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 2 to 19. The Company’s financial position and its cash flows are outlined in the Financial Review on
pages 14 to 16.
The Board, after making reasonable enquiries, has an expectation that the Group and the Company have a sufficiently strong business model
together with adequate financial resources and facilities to ensure that they continue to operate for the foreseeable future. The Company,
whilst investing in equipment and working capital for future growth, has access, when required, to borrowing facilities designed to meet the
Group’s future cash requirements. Accordingly, the Directors have adopted the going concern basis in preparing the financial statements.
Auditors
The Company’s independent auditor, BDO LLP has expressed their willingness to continue in office. As recommended by the Audit Committee
and pursuant to section 487 of the Companies Act 2006, the Company will propose a resolution at the AGM to reappoint BDO LLP as auditor
and authorise the Directors to agree its remuneration.
Audit information
The Directors who were in office on the date of approval of the Directors’ Report have confirmed that, so far as they are aware, there is no
relevant audit information of which the Company’s auditor is unaware. Each of the Directors has confirmed they have taken all the reasonable
steps that they ought to have taken as a Director to make themselves 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.
Annual General Meeting
Details of the Company’s Annual General Meeting and the resolutions to be proposed are set out in the separate notice of meeting. The
meeting will be held at 12pm on 2 February at the offices of Freeths LLP, 3rd Floor The Colmore Building, Colmore Circus, Queensway,
Birmingham B4 6AT.
The Directors’ Report has been approved by the Board of Directors on 12 December 2017.
Signed on behalf of the Board.
James Larner
Company Secretary
12 December 2017
Autins Group plc
Central Point One
Central Park Drive
Rugby
Warwickshire CV23 0WE
Company number: 8958960
Autins Group plc Annual Report and Accounts 2017
25
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, subject to any
material departures disclosed and explained in the financial statements;
▶ 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.
26
Autins Group plc Annual Report and Accounts 2017
Independent auditor’s report to the members of Autins Group plc
Strategic Report
Governance
Financial Statements
Opinion
We have audited the financial statements of Autins Group plc (the ‘parent Company’) and its subsidiaries (the ‘Group’) for the year ended
30 September 2017 which comprise the consolidated income statement, the consolidated statement of comprehensive income, the
consolidated and Company statements of financial position, the consolidated statement of cash flows, the consolidated and Company
statements of changes in equity and notes to the financial statements, including a summary of significant accounting policies.
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 the preparation of the parent Company financial statements is applicable law and United Kingdom Accounting Standards, including
Financial Reporting Standard 101 Reduced Disclosure Framework (United Kingdom Generally Accepted Accounting Practice).
In our opinion:
▶ the financial statements give a true and fair view of the state of the Group’s and of the parent Company’s affairs as at 30 September 2017
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 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.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under
those standards are further described in the auditor’s responsibilities for the audit of the financial statements section of our report. We are
independent of the Group, in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK,
including the FRC’s Ethical Standard as applied to listed entities and we have fulfilled our other ethical responsibilities in accordance with
these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:
▶ the directors’ use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or
▶ the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the
Group’s or the parent Company’s ability to continue to adopt the going concern basis of accounting for a period of at least twelve months
from the date when the financial statements are authorised for issue.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of
the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) we identified,
including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts
of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these matters.
Autins Group plc Annual Report and Accounts 2017
2727
Independent auditor’s report to the members of Autins Group plc continued
Matter
Our response
Accounting for the costs and depreciation for the Neptune
production facility (Solar Nonwovens)
We reviewed the accounting policy and methodology adopted to
apportion costs between capital and revenue, acknowledging that
such allocations involve judgement.
Refer to the Accounting Policies (page 39) and Note 5 (page 50) and
Note 11 (page 53).
During the year, the Group has continued to invest in establishing
the Neptune production facility in the UK, capitalising additional
costs associated with commissioning the plant and machinery of
£0.7m, expensing other operating costs as incurred.
Following a detailed review, further costs of £0.7m which had
previously been treated as leasehold improvements have been
reclassified as plant and machinery.
The costs capitalised include staff costs and other attributable
expenses together with third party time and materials.
At 30 September 2017, the production line was still undergoing
testing and enhancements to satisfy the line speed and quality
requirements to enable it to satisfy the judgement that full
operational status had been achieved. This is currently expected to
be completed by the end of 2017 and consequently no depreciation
has been recognised in these financial statements.
The areas of judgement, the levels and nature of which give rise to a
significant risk that the assets may be misstated, are
▶ The allocation of commissioning and other costs associated
with the facility between revenue and capital
▶ The assessment of when the facility is capable of operating as
intended by management commences being depreciated.
▶ The evidence supporting of the carrying value of the facility
We tested a sample of the costs capitalised for the commissioning of
the production facilities to assess compliance with the accounting
policy and ensure appropriate judgement had been applied. The
costs include third party costs, staff costs, an allocation of the direct
costs associated with the site and the costs of pre-production
samples of the Neptune product. Our testing also included a sample
of the amounts previously designated as leasehold improvements to
confirm the transfer was appropriate.
We inspected technical analysis and reports produced by the
engineering manager which documented the progress with and status
of commissioning the facility at 30 September 2017. We discussed the
our findings with the board in the context of the decision that the
production line is yet to reach a stage at which it is capable of normal
levels of production. We also considered the analysis and evidence in
support of the ultimate feasibility of the production line and
timescales for final commissioning being completed.
We received and reviewed the assessment of the potential markets
and sales volumes which are expected to be achieved once
production commences, underpinned by a combination of
committed production schedules, product listings with customers
and enquiries. Our testing included considering key assumptions
and judgements in the value in use calculations produced in support
of the carrying value of the facility of £4.7m at 30 September 2017.
Based on our testing we have concluded that the accounting estimates
and judgments that have been applied to the assets at the Neptune
facility are appropriate and have been appropriately disclosed.
28
Autins Group plc Annual Report and Accounts 2017
Strategic Report
Governance
Financial Statements
Our application of materiality
We apply the concept of materiality in planning and performing the audit, in evaluating the effect of identified misstatements on the audit and
forming our opinions.
Materiality
The magnitude of an omission or misstatement that, individually or in the aggregate, could reasonably be expected to influence the economic
decisions of the users of the financial statements. Materiality provides a basis for determining the nature and extent of our audit procedures.
We determined materiality for the Group to be £300,000 (2016 - £275,000), which was based on 1.25% of turnover. At this stage in the Group’s
development, we consider this to be a more relevant measure than profit for the year.
Reporting threshold
An amount below which identified misstatements are considered to be clearly trivial.
We agreed with the Audit Committee that we would report to them all uncorrected audit differences in excess of £15,000, which was set at 5%
of materiality, as well as differences below that threshold that, in our view, warranted reporting on the qualitative grounds. We evaluated all
uncorrected misstatements against both quantitative measures of materiality discussed above and in light of other relevant qualitative
considerations when forming our opinion.
An overview of the scope of our audit
The Group manages its operations from the UK and has common financial systems, processes and controls covering all significant components.
The Group comprises six trading components, a parent Company and three dormant entities. We performed an audit of the complete
financial information of Automotive Insulations Limited, Solar Non-Woven Limited and Autins Group plc. All work was performed by the Group
audit team and the work was focused on these entities given their financial significance to the Group’s financial position and performance.
The work over the significant components above gave us coverage of 88% of revenue and we performed analytical review procedures over the
remaining trading entities to ensure we had the evidence needed to form our opinion on the financial statements as a whole.
Other information
The directors are responsible for the other information. The other information comprises the information included in the Annual Report and
Accounts 2017, other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the
other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether
the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to
be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine
whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the
work we have performed, we conclude that there is a material misstatement of this other information we are required to report that fact. We
have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
▶ the information given in the strategic report and the directors’ report for the financial year for which the financial statements are prepared
is consistent with the financial statements; and
▶ the strategic report and the directors’ report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Group and the parent Company and its environment obtained in the course of the
audit, we have not identified any material misstatements in the strategic report or the directors’ report.
We have nothing to report in respect of the following matters in relation to which 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.
Autins Group plc Annual Report and Accounts 2017
29
Independent auditor’s report to the members of Autins Group plc continued
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement set out on page 26, the directors are responsible for the preparation of the
financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is
necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Group’s and the parent Company’s ability to continue as
a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the
directors either intend to liquidate the Group or the parent Company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
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.
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected
to influence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Andrew Mair (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
Birmingham
United Kingdom
Date: 12 December 2017
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127
30
Autins Group plc Annual Report and Accounts 2017
Strategic Report
Governance
Financial Statements
Consolidated income statement
For the year ended 30 September 2017
Revenue
Cost of sales
Gross profit
Other operating income
Selling and distribution expenses
Administrative expenses excluding exceptional costs and amortisation
Exceptional IPO related administrative expenses (net)
Amortisation of acquired intangible assets
Other exceptional operating costs
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 credit
Profit after tax for the year
Attributable to equity holders of the Parent Company
Non-controlling interest
Note
2017
£000
2016
£000
4
5
5
5
5
5
8
13
9
26,357
(17,327)
20,378
(13,845)
9,030
121
(871)
(7,384)
(92)
(237)
(458)
(8,171)
109
(92)
190
–
207
196
403
403
–
403
6,533
291
(693)
(5,410)
(182)
(237)
–
(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 year
Basic (pence)
Diluted (pence)
10
10
1.82p
1.82p
2.03p
2.03p
All amounts relate to continuing operations.
The notes on pages 39 to 61 form part of these financial statements.
Autins Group plc Annual Report and Accounts 2017
31
Consolidated statement of comprehensive income
For the year ended 30 September 2017
Profit after tax for the year
Other comprehensive income
Items that may be reclassified subsequently to profit and 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 39 to 61 form part of these financial statements.
Note
2017
£000
403
(15)
–
(15)
388
388
–
388
2016
£000
298
(88)
(7)
(95)
203
207
(4)
203
32
Autins Group plc Annual Report and Accounts 2017
Consolidated statement of financial position
As at 30 September 2017
Non-current assets
Property, plant and equipment
Intangible assets
Investments in equity-accounted joint ventures
Deferred tax asset
Total non-current assets
Current assets
Inventories
Trade and other receivables
Cash in hand and at bank
Total current assets
Total assets
Current liabilities
Trade and other payables
Loans and borrowings
Total current liabilities
Non-current liabilities
Trade and other payables
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
Total equity
The notes on pages 39 to 61 form part of these financial statements.
Strategic Report
Governance
Financial Statements
Note
2017
£000
2016
£000
11
12
13
18
14
15
16
17
16
17
18
19
21
21
21
21
10,869
3,837
243
159
15,108
1,967
7,378
1,625
10,970
26,078
5,851
2,947
8,798
123
718
496
1,337
10,135
15,943
442
12,938
1,886
(103)
780
15,943
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
The financial statements were approved and authorised for issue by the Board and were signed on its behalf on 12 December 2017.
James Larner
Chief Financial Officer
Autins Group plc Annual Report and Accounts 2017
33
Parent Company statement of financial position
As at 30 September 2017
Non-current assets
Intangible assets
Investments
Total non-current assets
Current assets
Trade and other receivables
Cash in hand and at bank
Total current assets
Total assets
Current liabilities
Trade and other payables
Loans and borrowings
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
Note
12
13
15
16
17
17
18
19
21
21
21
2017
£000
2016
£000
54
16,239
16,293
8,044
77
8,121
24,414
8,362
–
8,362
–
29
29
8,391
16,023
442
12,938
1,886
757
16,023
–
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
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 £296,000 (2016: £71,000).
The notes on pages 39 to 61 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 12 December 2017.
James Larner
Chief Financial Officer
34
Autins Group plc Annual Report and Accounts 2017
Strategic Report
Governance
Financial Statements
Consolidated statement of changes in equity
For the year ended 30 September 2017
At 1 October 2016
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-based payment
Dividends
Total contributions by and distributions to owners
Share
capital
£000
Share
premium
£000
442
12,938
Other
reserves
£000
1,886
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Cumulative
currency
differences
reserve
£000
(88)
–
(15)
(15)
–
–
–
Retained
earnings
£000
Total
equity
£000
539
15,717
403
–
403
15
(177)
(162)
403
(15)
388
15
(177)
(162)
At 30 September 2017
442
12,938
1,886
(103)
780
15,943
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-based payment
Dividends
Bonus share issue
Issue of share capital (net of expenses of
issue)
Acquisition of minority interest
Total contributions by and distributions
to owners
At 30 September 2016
Share
capital
£000
255
–
–
–
–
–
14
173
–
187
442
Share
premium
£000
–
–
–
–
–
–
–
12,938
–
12,938
Other
reserves
£000
1,391
–
–
–
–
–
–
495
–
495
Cumulative
currency
differences
reserve
£000
Retained
earnings
£000
Non-
controlling
interest
£000
(64)
3
(7)
(4)
–
–
–
–
68
68
–
Total
£000
2,122
295
(88)
207
10
(9)
–
13,606
(219)
13,388
15,717
Total
equity
£000
2,058
298
(95)
203
10
(9)
–
13,606
(151)
13,456
15,717
476
295
–
295
10
(9)
(14)
–
(219)
(232)
539
–
–
(88)
(88)
–
–
–
–
–
–
12,938
1,886
(88)
The cumulative currency differences reserve may be reclassified subsequently to profit and loss.
Autins Group plc Annual Report and Accounts 2017
35
Parent Company statement of changes in equity
For the year ended 30 September 2017
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-based payment
Bonus share issue
Issue of share capital (net of expenses of issue)
Total contributions by and distributions to owners
At 30 September 2016
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-based payment
Total contributions by and distributions to owners
Share
capital
£000
255
–
–
–
14
173
187
442
–
–
–
–
–
Share
premium
account
£000
–
–
–
–
–
12,938
12,938
Other
reserves
£000
1,391
Retained
earnings
£000
565
–
–
–
–
495
495
71
71
(9)
10
(14)
–
(13)
Total
equity
£000
2,211
71
71
(9)
10
–
13,606
13,607
12,938
1,886
623
15,889
–
–
–
–
–
–
–
–
–
–
296
296
(177)
15
(162)
296
296
(177)
15
(162)
At 30 September 2017
442
12,938
1,886
757
16,023
36
Autins Group plc Annual Report and Accounts 2017
Consolidated statement of cash flows
For the year ended 30 September 2017
Operating activities
Profit after tax
Adjustments for:
Income tax credit
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
Loss/(profit) on sale of fixed assets
Share of post-tax profit of equity accounted joint ventures
Increase in trade and other receivables
Increase in inventories
Increase in trade and other payables
Cash (used in)/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
Increase/(decrease) in invoice discounting
Bank loans drawn
Repayment of Directors’ loans
Dividends paid
Net cash from financing activities
Net (decrease)/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 overdrafts
Strategic Report
Governance
Financial Statements
2017
£000
403
(196)
92
15
528
237
–
38
(190)
927
(2,357)
(402)
930
(1,829)
(902)
(92)
(994)
(3,903)
–
(363)
–
153
(4,113)
–
–
(81)
(1,175)
(219)
(400)
2,199
105
–
(177)
252
(4,855)
6,300
–
1,445
1,625
(180)
1,445
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
Non-cash transactions
Ordinary Shares with a value of £500,000 were issued to settle the consideration for the acquisition of Autins AB (formerly Scandins AB) and of
the non-controlling interest in Autins GmbH (formerly RI Rheinland Insulations GmbH) in the year ended 30 September 2016.
The Group acquired plant and equipment at a cost of £nil (2016: £240,000) under hire purchase arrangements and at 30 September 2016 there
was a capital accrual of £1,410,000 which was subsequently settled in the year ended 30 September 2017.
Autins Group plc Annual Report and Accounts 2017
37
Consolidated statement of cash flows continued
For the year ended 30 September 2017
Reconciliation of movements in net cash/financing liabilities
Year ended 30 September 2017
Cash balances
Bank overdrafts
Invoice discounting
Bank loans
Hire purchase liabilities
Loan notes
Year ended 30 September 2016
Cash balances
Bank overdrafts
Invoice discounting
Bank loans
Hire purchase liabilities
Loan notes
Opening
£000
Cash flows
£000
Non-cash
movements
£000
6,449
(149)
6,300
–
(519)
(1,281)
(1,164)
3,336
505
–
505
(1,893)
(1,260)
(1,461)
(1,355)
(4,824)
(31)
(4,855)
(2,199)
114
400
1,175
(5,365)
5,944
(93)
5,851
1,893
741
420
425
–
–
–
–
–
–
(11)
(11)
–
(56)
(56)
–
–
(240)
(234)
Closing
£000
1,625
(180)
1,445
(2,199)
(405)
(881)
–
(2,040)
6,449
(149)
6,300
–
(519)
(1,281)
(1,164)
(5,464)
9,330
(530)
3,336
38
Autins Group plc Annual Report and Accounts 2017
Strategic Report
Governance
Financial Statements
Notes to the financial statements
For the year ended 30 September 2017
1. Accounting policies
Description of business
Autins Group is a public limited company registered and domiciled in England and Wales 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 Parent Company financial statements have been prepared under applicable United Kingdom Accounting Standards (‘FRS 101’) in order to
apply IFRS accounting standards. The following FRS 101 disclosure exemptions have been taken in respect of the Parent Company only
information:
▶ IAS 7 Statement of cash flows;
▶ IFRS 7 Financial instruments disclosures; and
▶ IAS 24 Key management remuneration.
The consolidated 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 IFRC Interpretations issued by the International Accounting
Standards Board as adopted by the European Union for periods beginning on or after 1 October 2016. There were no new standards or
interpretations effective for the first time for the period beginning on 1 October 2016 which impacted on the financial statements.
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 that may, or will, 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 and will therefore be effective for the Group’s results for the year
ending 30 September 2019.
IFRS 15 establishes principles for reporting the nature, amount and timing of revenue arising from an entity’s contracts with customers. It also
seeks to establish a single framework for revenue recognition across all industries.
The Group has conducted a review to assess the impact of IFRS 15. Based on this review the Board’s view is that there will be limited effect in
the recognition or reporting of the Group’s components revenue, but some potential for earlier recognition of revenue arising from tooling
sales to automotive customers may occur.
▶ For component revenue the Board considers that there is a single performance criteria (in relation to the transfer of significant risk and
reward of ownership to the buyer, which is usually when the goods have been accepted by the customer) and recognition under the new
standard would align to the Group’s current accounting policy.
▶ Earlier recognition of tooling sales could arise due to an assessment of the performance criteria and financing component for each individual
contract and it’s associated stage payments. The overall impact to Group revenues therefore cannot be determined at this time as it is
dependent on individual contracts.
IFRS 9 Financial Instruments
IFRS 9 Financial instruments, addresses the classification, measurement and recognition of financial assets and liabilities and replaces
guidance in IAS 39 relating to the subsequent classification and measurement of financial instruments.
The standard is effective for accounting periods beginning on or after 1 January 2018 and will therefore be effective for the Group’s results for
the year ended 30 September 2019.
IFRS 9 retains the initial fair value measurement model from IAS 39 but requires the use of one of three subsequent measurement categories, namely:
▶ amortised cost;
▶ fair value through other comprehensive income (‘FVOCI'); or
▶ fair value through profit and loss (‘FVTPL').
Autins Group plc Annual Report and Accounts 2017
39
Notes to the financial statements continued
For the year ended 30 September 2017
1. Accounting policies continued
The basis of classification depends on the entity’s business model and the contractual cash flow characteristics of the financial asset. The
standard also introduces an expected credit losses model that replaces the incurred loss impairment model used in IAS 39.
The Group has conducted a review to assess the potential impact of the standard which indicates that the impact is not expected to be
significant. The Group does not apply hedge accounting nor have any hedging instruments and has limited financial assets that would require
subsequent measurement. In addition, the Group has experienced limited levels of credit loss historically and has a customer base that is
primarily automotive OEM's and large Tier 1 automotive suppliers which would give a limited expected credit loss effect.
IFRS 16 Leases
This standard is effective for accounting periods beginning on or after 1 January 2019 and will therefore impact the Group results for the year
ending 30 September 2020. It 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. Based on
the current leases in place it is estimated that an asset and corresponding liability of £6.0m would be accounted for as at 30 September 2019.
The income statement will also be impacted, with rent expense relating to operating leases being replaced by a straight-line depreciation
charge arising from the right-to-use assets and interest charges arising from lease financing which are higher in earlier years. This would result
in an increased overall charge to the income statement estimated at £0.2m for the year ended 30 September 2020 which would reverse over
the period of the leases.
There are no other new standards, interpretations and amendments which are not yet effective in these financial statements, expected to
have an effect on the Company’s or Group’s future financial statements.
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.
40
Autins Group plc Annual Report and Accounts 2017
Strategic Report
Governance
Financial Statements
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 reoccur 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.
Any direct costs are written-off in the income statement. 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 of non-financial assets
Impairment tests on goodwill are undertaken annually at the financial year end. All other individual non-financial 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.
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
Useful economic life
Valuation method
Tooling intellectual property
Key customer relationships
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. It is provided at the following rates:
Depreciation commences once an asset is considered to be capable of operating in the manner intended and to the specification set by
management when ordering the equipment.
Plant and machinery
Leasehold improvements
Fixtures and fittings
–
–
–
5-20 years straight line
Period of the lease
3-15 years straight line
Autins Group plc Annual Report and Accounts 2017
41
Notes to the financial statements continued
For the year ended 30 September 2017
1. Accounting policies continued
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 being 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 the consolidated income statement 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.
Amortisation is charged on a straight-line basis over the estimated period in which the intangible asset has economic benefit from
the commencement of the related product sales and is reported within administrative expenses in the consolidated statement of
comprehensive income.
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 within deferred income in the statement of
financial position as an other creditor within liabilities.
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.
42
Autins Group plc Annual Report and Accounts 2017
Strategic Report
Governance
Financial Statements
Translation of the results of overseas businesses
The results of overseas subsidiaries and joint ventures are translated into the Group’s presentational 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.
Borrowing costs
Borrowings are recognised initially at fair value, net of transaction costs incurred. They are subsequently carried at amortised cost and the
difference between the proceeds (net of transaction costs) and the total redemption value is recognised in the income statement over the
period of the borrowings using the effective interest method.
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 statement of comprehensive income 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
statement of comprehensive income 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, determined by reference to the fair
value of the options granted.
Invoice discounting
The Group has an agreement with HSBC whereby its trade receivables are 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 are included as an asset within trade receivables (net of
any provisions and discounts) and the proceeds received are included within current liabilities as short-term borrowings under invoice
discounting facilities. The net cash advances or repayments are presented as financing cash flows.
Charges and interest are recognised in the finance expense in the consolidated statement of comprehensive income 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.
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.
Autins Group plc Annual Report and Accounts 2017
43
Notes to the financial statements continued
For the year ended 30 September 2017
1. Accounting policies continued
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 goods 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 included within the consolidated
statement of financial position.
(b) Cash and cash equivalents
Cash and cash equivalents comprise cash held at bank and bank overdrafts which are 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 and amounts due to Directors are initially
recognised at fair value, and subsequently carried at amortised cost using the effective interest method.
▶ Bank loans, invoice discounting, 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 (effective rate) 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.
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 or 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.
44
Autins Group plc Annual Report and Accounts 2017
Strategic Report
Governance
Financial Statements
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 consider the reportable segment to be NVH. Revenue and profit before tax primarily arises from the principal activity based in the
UK. All material assets are 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 and any further evidence that arises relevant to judgements taken. In the future, actual experience may differ from these
estimates and assumptions. The estimates and judgements 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.
Property, plant and equipment
Judgement
Depreciation commences once an asset is considered to be capable of operating in the manner intended and to the specification set by
management when ordering the equipment. Judgement is applied based on testing of the equipment and trial product which impacts the
commencement and charge in a period. As disclosed in note 11, the Group held assets of £4,720,000 (2016: £3,204,000) in respect of plant and
equipment that management consider have not met this criteria.
Estimates
Property, plant and equipment are depreciated over the estimated useful lives of the assets. Useful lives are based on management’s
estimates of the period that the assets will generate revenue, which are reviewed annually for continued appropriateness and events which
may cause the estimate to be revised.
The carrying values are tested for impairment when there is an indication that the value of the assets might not be realisable or impaired.
When carrying out impairment tests these would be based upon future cash flow forecasts and these forecasts would include management
estimates for sales pricing and volumes informed by external market forecasts and experience. Future events or changes in the market could
cause the assumptions to change, therefore this could have an adverse effect on the future results of the Group.
Other intangible assets
As set out in note 1, intangible assets acquired in a business combination are capitalised and amortised over their estimated useful lives
which may be impacted by future events.
Estimate
Both initial valuations and subsequent impairment tests for intangible assets are based on risk adjusted future cash flows discounted using
appropriate discount rates. These future cash flows will be based on forecasts which include estimated factors and are inherently
judgemental. Future events could cause the assumptions to change which could have an adverse effect on the future results of the Group.
Judgement
The capitalisation of development costs is also subject to a degree of judgement in respect of the viability of new products, supported by the
results of testing and customer trials, and by forecasts for the overall value and timing of sales which may be impacted by other future factors
which could impact the assumptions made.
Autins Group plc Annual Report and Accounts 2017
45
Notes to the financial statements continued
For the year ended 30 September 2017
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
2017
£000
1,625
6,435
8,060
2016
£000
6,449
4,385
10,834
Financial liabilities at
amortised cost
2017
£000
5,278
3,665
8,943
2016
£000
5,922
3,113
9,035
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 2017 the Group has trade receivables of £6,366,000
(2016: £3,965,000).
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 past due and not impaired is included in note 15. There have been no material impairments to trade or other
receivables in the two years included within this financial information.
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 2017 and consequently no
material provisions have been made for bad and doubtful debts.
46
Autins Group plc Annual Report and Accounts 2017
Strategic Report
Governance
Financial Statements
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 invoice discounting facility at 30
September 2016 which in November 2016 was replaced by a £6m discounting facility (of which £3.9m is unutilised at 30 September 2017) and
up to £4.5m for asset finance.
The tables below set out the maturities of the Group’s financial liabilities:
At 30 September 2017
Overdrafts
Trade and other payables
Bank loans
Hire purchase
Invoice discounting
Total
At 30 September 2016
Overdrafts
Trade and other payables
Bank loans
Hire purchase
Loan notes
Total
Up to 1 year
£000
1 to 2 years
£000
2 to 5 years
£000
180
5,278
174
452
2,199
8,283
–
–
141
388
–
529
–
–
90
163
–
253
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
*
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 the Swedish krona denominated goodwill in respect of Autins AB (formerly Scandins AB).
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 on the floating rate invoice
discounting where the cost of borrowing in all cases is calculated by a fixed margin over LIBOR.
Invoice discounting
Asset-backed bank loans
Total floating rate debt
2017
£000
2,199
405
2,604
2016
£000
–
519
519
Borrowings with loan note holders and under asset finance/hire purchase arrangements are at a fixed interest rate over their term.
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.
Capital management
The Group’s IPO in August 2016 raised cash which was used to repay prior debt finance and the Group is now principally equity financed,
utilising invoice discounting facilities as required for working capital purposes and with term finance used for certain capital projects. The
capital comprises all components of equity which includes share capital, retained earnings and other reserves.
Autins Group plc Annual Report and Accounts 2017
47
Notes to the financial statements continued
For the year ended 30 September 2017
3. Financial instruments – risk management continued
The Company’s 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 and invoice discounting 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.
4. Revenue and segmental information
Revenue analysis
Revenue arises from:
Sale of components
Sale of tooling
2017
£000
2016
£000
24,844
1,513
26,357
19,745
633
20,378
Segmental information
The Group currently has one main reportable segment in each year, namely NVH which involves provision of insulation materials to reduce
noise, vibration and harshness to automotive manufacturers. 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.
The Group’s non-automotive revenues, including acoustic flooring and building products, are included within the others segment. Neither
element is considered significant.
Segmental analysis for the year ended 30 September 2017
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
48
Autins Group plc Annual Report and Accounts 2017
Automotive
NVH
£000
Others
£000
2016
Total
£000
24,925
1,432
26,357
528
237
19
3,001
25,835
243
26,078
10,135
–
–
90
–
–
–
–
–
528
237
109
(92)
190
207
3,001
25,835
243
26,078
10,135
Strategic Report
Governance
Financial Statements
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 existing interest on acquisition of control
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
Others
£000
864
–
–
84
–
–
–
–
–
2016
Total
£000
20,378
379
237
302
(558)
115
327
186
6,511
25,483
206
25,689
9,972
Revenues from one customer in 2017 total £16,960,000 (2016: £13,158,000). This major customer purchases goods from Automotive
Insulations Limited in the United Kingdom. There are no other customers which account for more than 10% of total revenue.
External revenues by location of customers
United Kingdom
Sweden
Germany
Rest of the World
2017
£000
23,044
1,002
2,260
51
26,357
2016
£000
18,940
461
916
61
20,378
The only material non-current assets in any location outside of the United Kingdom are £1,157,000 (2016: £1,099,000) of fixed assets and
£629,000 (2016: £574,000) of goodwill in respect of the Swedish subsidiary.
Autins Group plc Annual Report and Accounts 2017
49
Notes to the financial statements continued
For the year ended 30 September 2017
5. Profit from operations
The operating profit is stated after charging:
Foreign exchange losses/(gains)
Depreciation
Amortisation of intangible assets
Loss/(profit) 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 services
Fees for taxation advisory services
Fees for other services
Exceptional costs in respect of:
IPO-related expenses (net)
Other exceptional costs:
Change of Chief Executive and Senior Management restructuring
Critical press repair costs
Solar Nonwovens operating loss during the commissioning phase
2017
£000
3
528
237
38
15,551
256
(121)
7,063
1,426
2016
£000
(89)
379
237
(96)
12,930
684
(264)
4,814
1,031
43
3
5
6
92
274
184
458
590
41
9
23
23
182
-
-
-
261
IPO-related expenses
IPO costs spanned the prior year end as a result of the timing of the IPO. Exceptional costs therefore include a further £92,000 of IPO-related
administrative expenses. Costs of £648,000 in the prior year were offset by £466,000 recharged to Director shareholders who sold shares
(£182,000 net).
In addition in the prior year, auditors remuneration of £199,000 in respect of corporate finance services and £11,000 in respect of other assurance
services were included in August 2016 share issue costs which were allocated between the share premium account and operating costs.
Other exceptional costs
During the year Jim Griffin resigned as CEO and was replaced by Michael Jennings resulting in £158,000 of exceptional costs. Following this
change of Chief Executive a review of Group staffing was conducted to ensure it was aligned to the Group’s strategic growth ambitions with a
consequential further £116,000 of exceptional expense in the year. Other exceptional costs of £184,000 relate to critical press repairs that
arose following the identification of structural cracks in the head of three presses within the UK (2016: £nil).
Solar Nonwovens operating loss
The ongoing start up process and commissioning of the major plant for the Neptune line resulted in an operating loss of £590,000 (2016:
£261,000) from the incremental costs of the operation and the specific premises taken on for the plant.
Research and development costs
The Group strategically invested in research and development work as disclosed above and as required to deliver growth in future periods.
Revenue grants of £121,000 (2016: £264,000) are in relation to government assistance on research projects.
50
Autins Group plc Annual Report and Accounts 2017
Strategic Report
Governance
Financial Statements
6. Staff costs
Wages and salaries
Social security costs
Share-based payment
Other pension costs
The average monthly number of employees during each year was as follows:
Directors
Administrative and development
Production
Company
2017
£000
1,169
150
15
35
1,369
Company
2016
£000
362
41
10
7
420
Group
2017
£000
6,090
835
15
123
7,063
Group
2016
£000
4,237
516
10
51
4,814
2017
Number
2016
Number
2017
Number
2016
Number
5
14
–
19
5
3
–
8
5
78
111
194
5
60
89
154
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 Group key personnel is disclosed in note 24.
7. Directors’ remuneration
Year ended 30 September 2017
A. Attwood
M. Jennings
J. Griffin
J. Larner
T. Garthwaite
I. Griffiths
Year ended 30 September 2016
A. Attwood
J. Griffin*
J. Larner
T. Garthwaite
I. Griffiths
K. Holdback
K. Westwood
234
19
*
J Griffin’s salary under a new service contract only commenced from August 2016.
8. Finance expense
Bank loan interest
Loan note interest
Interest element of hire purchase agreements
Salary
£000
Benefits
£000
Pension
£000
Compensation
£000
60
185
94
120
45
45
549
–
–
4
7
–
–
11
Salary
£000
45
35
73
26
23
17
15
–
6
7
7
–
–
20
–
–
30
–
–
–
30
Benefits
£000
Pension
£000
–
5
6
–
–
3
5
Total
£000
60
191
135
134
45
45
610
Total
£000
45
40
83
26
23
20
20
257
2016
£000
266
234
58
558
–
–
4
–
–
–
–
4
2017
£000
27
11
54
92
Autins Group plc Annual Report and Accounts 2017
51
Notes to the financial statements continued
For the year ended 30 September 2017
9. Income tax
(i) Tax credit 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
Total deferred tax
(ii) Total tax (credit)/expense
Tax credit excluding share of tax of equity accounted for joint ventures (as stated above)
Share of tax expense of equity accounted joint ventures
2017
£000
–
26
26
(141)
(30)
(51)
(222)
(196)
2017
£000
(196)
47
(149)
2016
£000
43
–
43
(105)
(29)
(21)
(155)
(112)
2016
£000
(112)
38
(74)
No tax arises in respect of other comprehensive income.
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 (including tax on joint ventures)
Profit before income taxes
Expected tax charge based on corporation tax rate of 19.5% in 2017 (2016: 20.0%)
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
Utilisation of unrecognised losses
Adjustments in respect of previous periods
Total tax including joint ventures
2017
£000
403
(149)
254
50
35
–
(85)
(52)
5
(77)
(25)
(149)
2016
£000
298
(74)
224
45
17
(65)
(30)
(33)
13
–
(21)
(74)
The current rate of UK corporation tax is 19%. Changes to reduce the UK corporation tax rate to 17% from 1 April 2020 have been substantively
enacted and accordingly are applied to deferred taxation balances at 30 September 2017.
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.
52
Autins Group plc Annual Report and Accounts 2017
Strategic Report
Governance
Financial Statements
10. Earnings per share
Profit
Profit used in calculating basic and diluted earnings per share
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)
2017
£000
403
22,101
22,101
1.82p
1.82p
2016
£000
295
14,513
14,524
2.03p
2.03p
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 309,076 (2016: 436,152) shares that were anti-dilutive at the year end but which may dilute future earnings per share.
11. Property, plant and equipment
Group
COST
At 1 October 2015
Additions
Acquisition of subsidiary
Foreign exchange movement
Disposals
At 30 September 2016
Additions
Reallocation
Foreign exchange movement
Disposals
At 30 September 2017
DEPRECIATION
At 1 October 2015
Charge for year
Eliminated on disposal
At 30 September 2016
Charge for year
Eliminated on disposal
At 30 September 2017
NET BOOK VALUE
At 30 September 2017
At 30 September 2016
At 30 September 2015
Net book value of assets held under hire purchase contracts are as follows:
At 30 September 2017
At 30 September 2016
At 30 September 2015
Plant and
machinery
£000
Leasehold
improvements
£000
Fixtures and
fittings
£000
4,161
4,230
744
55
(133)
9,057
2,547
656
27
(87)
12,200
1,219
300
(44)
1,475
441
(2)
1,914
10,286
7,582
2,942
–
781
–
–
–
781
69
(656)
–
–
194
–
1
–
1
14
–
15
179
780
–
559
24
–
–
(2)
581
31
–
–
–
612
57
78
–
135
73
–
208
404
446
502
Total
£000
4,720
5,035
744
55
(135)
10,419
2,647
–
27
(87)
13,006
1,276
379
(44)
1,611
528
(2)
2,137
10,869
8,808
3,444
Plant and
machinery
£000
Leasehold
improvements
£000
Fixtures and
fittings
£000
1,668
1,767
1,758
–
–
–
81
86
21
Totals
£000
1,749
1,853
1,779
Depreciation of £104,000 was charged on these assets in the year (2016: £110,000).
Plant and machinery and leasehold improvements include assets of £4,720,000 (2016: £3,204,000) and £Nil (2016: £771,000) respectively in
respect of Solar Nonwovens Limited which management considered were not yet capable of being brought into economic use, as the
Directors consider that the new production plant was not manufacturing product to its full design specification before the year end.
The Company has no fixed assets.
Autins Group plc Annual Report and Accounts 2017
53
Notes to the financial statements continued
For the year ended 30 September 2017
12. Intangible assets
Group
COST
At 1 October 2015
Additions
Foreign currency differences
At 30 September 2016
Additions
Foreign currency differences
At 30 September 2017
AMORTISATION
At 1 October 2015
Charge for the year
At 30 September 2016
Charge for the year
At 30 September 2017
NET BOOK VALUE
At 30 September 2017
At 30 September 2016
At 30 September 2015
Goodwill
£000
Development
costs
£000
Customer
relationships
£000
Tooling
intellectual
property
£000
1,616
552
22
2,190
41
14
2,245
–
–
–
–
–
2,245
2,190
1,616
–
180
–
180
313
–
493
–
–
–
–
–
493
180
–
1,079
–
1,079
–
–
1,079
218
154
372
154
526
553
707
861
830
–
830
–
–
830
118
83
201
83
284
546
629
712
Total
£000
3,525
732
22
4,279
354
14
4,647
336
237
573
237
810
3,837
3,706
3,189
The acquisition of Autins AB (formerly Scandins AB) which occurred in 2016 included some provisional values which were finalised within 12
months of acquisition. This has resulted in an additional £41,000 of liabilities being identified and therefore an addition to goodwill of £41,000.
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 five-year discounted cash flows together with a terminal value and 1% (FY2016: 1%) long-term
growth rate. The cash flows have been discounted at pre-tax rates of 11.8% (FY2016: 11.8%) reflecting the Group’s weighted average cost of
capital adjusted for country-specific tax rates and risks. The key turnover assumption reflects current trading experience. The Directors have
reviewed a range of reasonably foreseeable sensitivities which would not impair the asset and recurring operating cash flows would have to
fall to £1.1m before an impairment arose.
The Company had transfers in from a fellow Group Company and a closing net book value of £50,000 for goodwill and £4,000 of additions for
development costs in the year in intangible assets.
13. Fixed asset investments
Company
COST AND NET BOOK VALUE
At 30 September 2015
Additions in year ended 30 September 2016
At 30 September 2016 and 2017
54
Autins Group plc Annual Report and Accounts 2017
Investments
in
subsidiaries
£000
3,027
13,212
16,239
Strategic Report
Governance
Financial Statements
The subsidiaries of the Company, which have all been included in the consolidated financial statements based on their results to 30
September 2017, are as follows:
Name
Principal activity
UK subsidiaries:
Automotive Insulations Limited
Auto Insulations Limited
Solar Nonwovens Limited
Autins Technical Centre Limited
Acoustic Insulations Limited
European subsidiaries:
Autins GmbH (formerly RI Rheinland Insulations GmbH)
Autins AB (formerly Scandins AB)
DBX Acoustics AB
Supply of insulating materials
Dormant
Supply of insulating materials
Development of insulating materials
Dormant
Supply of insulating materials
Supply of insulating materials
Supply of insulating materials
30 Sept 2017
and 2016
Ownership %
100
100
100
100
100
100
100
100
The Group agrees to guarantee the liabilities of Autins Technical Centre Limited, thereby allowing this Company to take exemption from an
audit under Section 479A of the Companies Act 2006.
All UK companies are incorporated in England with a registered office at Central Point One, Central Park Drive, Rugby,
Warwickshire, CV23 0WE.
Autins AB and DBX Acoustics AB operate in and are incorporated in Sweden with a registered office at Hamneviksvägen 12, SE-418 79
Gothenburg. Autins GmbH operates in and is incorporated in Germany with a registered office at Hilden Amtsgericht, Düsseldorf HRB 70344.
They are held by Automotive Insulations Limited. Autins AB was a joint venture until 20 April 2016.
Interests in joint ventures comprise the following:
Name
Principal activity
Indica Automotive Limited
Supply of insulating materials
30 Sept 2017
and 2016
Ownership %
50
The joint venture is incorporated in England with a registered office at Central Point One, Central Park Drive, Rugby, Warwickshire, CV23 0WE.
The Group has a 50% shareholding and joint management is exercised through the right to appoint two of the four Directors.
Group
COST AND NET BOOK VALUE
At 30 September 2015
Share on acquisition of full control
Share of profit for the year
Dividend paid by JV
Net book value at 30 September 2016
Share of profit for the year
Dividend paid by JV
Net book value at 30 September 2017
The Group’s share of joint venture profit in each year was as follows:
Profit before tax
Taxation
Profit after tax
Interest in
joint
ventures
£000
111
(5)
115
(15)
206
190
(153)
243
2016
£000
153
(38)
115
2017
£000
237
(47)
190
Autins Group plc Annual Report and Accounts 2017
55
Notes to the financial statements continued
For the year ended 30 September 2017
13. Fixed asset investments continued
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
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
2017
£000
1,031
192
(659)
(78)
46
(265)
(78)
486
243
2017
£000
2,616
380
380
190
94
4
(94)
2017
£000
1,205
52
710
–
1,967
2016
£000
621
271
(360)
(120)
60
(85)
(60)
412
206
2016
£000
2,907
225
225
115
94
9
(76)
2016
£000
623
463
176
303
1,565
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 undertakings
Amounts owed by equity-accounted joint ventures
Other receivables
Total financial assets other than cash and cash equivalents classified as loans
and receivables
Corporation tax debtor
Prepayments
Other taxes
Total trade and other receivables
The analysis of trade receivables is as follows:
Not yet due
Past due but not impaired
Group
2017
£000
6,366
–
–
69
6,435
174
769
–
7,378
6,165
201
6,366
Group
2016
£000
3,965
–
–
420
4,385
43
527
–
4,955
3,906
59
3,965
Company
2017
£000
4
7,872
–
1
7,877
–
156
11
8,044
4
–
4
Company
2016
£000
–
6,201
–
315
6,516
–
89
–
6,605
–
–
–
56
Autins Group plc Annual Report and Accounts 2017
Strategic Report
Governance
Financial Statements
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 has financing agreements whereby certain trade debts are subject to an invoice discounting agreement which is secured against
the associated trade receivables. The amounts outstanding at 30 September 2017 were £2,199,000 (FY2016: £Nil). The credit risk remained
with the Group and accordingly the trade receivable and amounts drawn down under the financing arrangements are presented gross.
16. Trade and other payables
Current
Trade payables
Amounts owed to subsidiaries
Amount owed to equity-accounted joint ventures
Other creditors
Accruals
Total financial liabilities, excluding loans borrowings, classified as financial
liabilities measured at amortised cost
Social security and other taxes
Deferred income
Total current trade and other payables
Non-current liabilities
Deferred income
Group
2017
£000
3,696
–
737
70
775
5,278
567
6
5,851
Group
2016
£000
3,210
–
393
402
1,917
5,922
378
–
6,300
Company
2017
£000
Company
2016
£000
29
8,231
–
–
44
8,304
58
–
8,362
393
10,295
–
2
75
10,765
13
–
10,778
123
–
–
–
Accruals at 30 September 2016 included £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
Group
2017
£000
585
–
881
2,199
3,665
180
174
–
394
2,199
2,947
231
–
487
718
Group
2016
£000
668
1,164
1,281
–
3,113
149
174
270
401
–
994
345
894
880
2,119
Company
2017
£000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Company
2016
£000
–
1,164
–
–
1,164
–
–
270
–
–
270
–
894
–
894
Bank loans 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:
Bank loans
Loan notes
Bank loans A
Bank loans B
Bank loans C
Nominal currency
Conditions
SEK
Sterling
Sterling
Sterling
Sterling
Secured
Secured
Secured
Secured
Unsecured
Repayable by instalments
Repaid November 2016
Repaid August 2016
Repaid August 2016
Repaid August 2016
Rate %
Year of
maturity
Base rate + 3.75% Up to 2020
2016
2016
2016
2019
0%
LIBOR + 2.5%
LIBOR + 3.0%
10.0%
Autins Group plc Annual Report and Accounts 2017
57
Notes to the financial statements continued
For the year ended 30 September 2017
17. Loans and borrowings continued
The secured loan notes were subordinated to the debts held by the Group’s principal bankers. Interest on these loan notes was imputed on a
fair value basis to the balance 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 are secured against certain trade receivable balances.
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
2017
£000
452
551
1,003
(122)
881
2016
£000
455
997
1,452
(171)
1,281
18. Deferred tax
Deferred tax is calculated in full on temporary differences under the liability method using a tax rate of 17% for the UK, 22% for Sweden and
30% for Germany. The movement on the deferred tax account is as shown below:
Opening balance
On acquisition of subsidiary
Expensed/(credited) in income statement in respect of:
Accelerated capital allowances
Losses carried forward
Amortisation of intangible fixed assets
Finance income and other timing differences
Total credit
Closing net balance
Group
Details of the net deferred tax (asset) and liability are as follows:
Deferred tax (asset)
Accelerated capital allowances
Losses
Other temporary differences
Closing asset
Deferred tax liability
Accelerated capital allowances
Losses
Deferred tax on intangible assets
On fair valued assets
Other temporary differences
Closing liability
2017
£000
559
–
(70)
(100)
(51)
(1)
(222)
337
2017
£000
25
(191)
7
(159)
151
(14)
251
71
37
496
2016
£000
657
57
(49)
(99)
(47)
40
(155)
559
2016
£000
–
–
–
–
246
(105)
274
57
87
559
The Group’s deferred tax liability has arisen due to the timing difference on accelerated capital allowances, recognition of intangible assets on
acquisition or development costs 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’s deferred tax liability of £29,000 (2016: £55,000) relates primarily to the timing differences in respect of finance income arising
on the loan notes.
The Group has an unrecognised deferred tax asset of approximately £135,000 at 30 September 2017 (2016: £180,000) in respect of losses
carried forward in a subsidiary as it is, as yet, uncertain when these will be utilised. UK tax losses have been recognised as they are expected
to be utilised against trading profits in the short term.
58
Autins Group plc Annual Report and Accounts 2017
Strategic Report
Governance
Financial Statements
19. Share capital
Allotted, issued and fully paid
22,100,984 Ordinary Shares of £0.02 each
2017
£000
442
2016
£000
442
There were no shares issued in the year ended 30 September 2017. The Directors are authorised to issue further shares representing up to 10%
in number of those already issued.
Movements in share capital
At 1 October 2015
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 and 2017
Nominal
value
£000
Number
255
255,003
14
167
6
14,390
13,200,257
8,333,334
298,000
442 22,100,984
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 are 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 in August 2016 with an exercise price of £1.68, of which 146,429 options were forfeited when employees left in the year ended 30 September
2017 and 19,353 new options were issued with an exercise price of £2.28. There were 309,076 options in existence at 30 September 2017 with an
average exercise price of £1.72 (2016: 436,152 and £1.68) and remaining average exercise period of six years (FY2016: seven years).
The fair value of the options issued last year 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%.
Having reviewed the incentive scheme since the year end and taken appropriate advice, it is the Remuneration Committee’s intention to approve the
award of FY2018 options with a single performance criteria of earnings per share growth.
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 arose from 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 £495,000 from the difference between the fair value of shares issued
and the existing cost of investment in order to acquire the remaining 51% of Autins AB (formerly Scandins AB) and 10% of Autins GmbH (formerly RI
Rheinland Insulations GmbH) in April 2016.
The share premium account represents the amount by which the issue price of shares exceeds the nominal value of the shares less any share
issue expenses.
Autins Group plc Annual Report and Accounts 2017
59
Notes to the financial statements continued
For the year ended 30 September 2017
22. Commitments
The Group leases all its office and manufacturing properties as well as a number of vehicles and forklifts used by the business. The lease
terms vary from three years for vehicles and for overseas property rentals with a rolling renewal option on the property through to 15-year
terms for the principal manufacturing sites, subject to three-yearly rent reviews. The total value of minimum lease payments due until the end
of the leases are 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 2017 of £296,000 (2016 : £282,000).
The Company had no lease or capital commitments.
23. Dividends
Dividend paid on £0.02 shares at 0.8 pence per share
Dividends paid on £1 Ordinary Shares at 3.5 pence per share
For the period from 29 April 2014 to 15 August 2016 the Group had 255,000 £1 Ordinary Shares in issue.
24. Related-party transactions
The following amounts due from/(to) Directors existed:
J Griffin
Opening balance
Amounts withdrawn from Company
Recharge of share sale expenses
Closing balance
A. Attwood
Opening balance
Amounts paid to Company
Recharge of share sale expenses
Closing balance
K. Holdback
Opening balance
Amounts (paid to)/withdrawn from Company
Recharge of share sale expenses
Closing balance
60
Autins Group plc Annual Report and Accounts 2017
2017
£000
1,102
3,103
4,933
93
71
2016
£000
972
3,530
5,597
123
117
9,302
10,339
2017
£000
177
–
177
2017
£000
(2)
2
–
–
2016
£000
–
9
9
2016
£000
(180)
100
78
(2)
£000
£000
18
(18)
–
–
–
–
18
18
£000
£000
105
(105)
–
–
(180)
100
185
105
Strategic Report
Governance
Financial Statements
K. Westwood
Opening balance
Amounts (paid to)/withdrawn from Company
Recharge of share sale expenses
Closing balance
£000
£000
105
(105)
–
–
(180)
100
185
105
The loans did not bear interest and were repayable on demand. The Directors were 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 included in other
debtors at 30 September 2016 and paid to the Company in the year ended 30 September 2017.
Share options
Directors and other Senior Management members hold the following share options (see note 20).
J. Larner
Other Senior Management
130,208 share options held by J. Griffin at 30 September 2016 were forfeited on his resignation as a Director.
Transactions with related parties and key management personnel
Group key management personnel costs
Group aggregate salaries and post-employment benefits
Number of options
EPS target
44,643
109,895
Share price
target
44,643
109,895
154,538
154,538
2017
£000
1,768
2016
£000
1,063
The aggregate value of transactions with related parties and entities over which they have control or significant influence were as follows. No
amounts were owed at the year end.
2017
£000
2016
£000
Salaries and wages paid to close family members on a normal commercial basis*
Legal and advisory fees**
Donations***
Consumables****
8
15
1
–
33
18
7
4
Salaries paid to close family members are on the same terms and conditions as other employees.
*
** Advisory fees were paid to the EEF, of which one of the Directors was Vice Chair of the Regional Advisory Board 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.
Autins AB (formerly Scandins AB) is a Swedish undertaking in which the Group had joint control until acquiring a full interest on 20 April 2016.
Transactions:
Sales to joint venture
Purchases from joint venture
Sale of fixed assets
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.
2017
£000
–
–
–
2017
£000
2016
£000
123
727
185
2016
£000
53
2,396
(737)
116
1,781
(393)
Autins Group plc Annual Report and Accounts 2017
61
Directors, secretary, registered office and advisors
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 Advisor 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
Link Asset Services
The Registry
34 Beckenham Road
Beckenham
Kent
BR3 4TU
62
Autins Group plc Annual Report and Accounts 2017
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Autins Group plc
Central Point One
Central Park Drive
Rugby
CV23 0WE
T: +44 (0)1788 578 300
W: www.autins.com
autins