THE NEXT GENERATION
OF INSULATION
Annual Report and Accounts 2019
autins INTRODUCTION
AUTINS IS THE LEADING NAME
IN AUTOMOTIVE INSULATION
SOLUTIONS
OUR PURPOSE
Autins is a specialist in solving
acoustic and thermal problems in
the automotive industry and other
specialist applications. We have a
unique product offering, due to the
breadth of materials, products and
manufacturing processes and a highly
responsive technical support service,
which is valued by customers.
Up to
40%
lighter weight for equivalent
acoustic performance
Door blankets
IMPROVE CABIN ACOUSTICS
AND ENVIRONMENT
Pillars
HIGH PERFORMANCE
3D ACOUSTIC ABSORPTION
Bonnet liners
ABSORPTION OF ENGINE NOISE
Wheel arches
BLOCK OUT ROAD NOISE
Dash mats
ABSORPTION FOR
INTERIOR ACOUSTICS
Battery insulation/Transmission under tray
INCREASE THERMAL STABILITY
MARKET LEADING PRODUCT
Neptune – Light Weight Solutions
Up to 40% lighter for the same acoustic
performance versus comparative
materials, Neptune is a real advantage.
Using patented engineered fibres and
manufacturing processes we create a
lightweight ultra-fine fibre acoustic
absorbing material that offers superior
performance. Using Neptune throughout
the vehicle can reduce its weight, without
compromising acoustic performance,
by over 2kg. This reduces CO₂ and fuel
consumption. A benefit to car makers,
drivers and the environment.
Autins Group plc Annual Report and Accounts 2019
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FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT Strategic report
Introduction
INTRODUCTION
HIGHLIGHTS FOR 2019
Gareth Kaminski-Cook
Chief Executive Officer
Despite the considerable
challenges faced by the automotive
industry, decisive management action
ensured that 2019 was a year of recovery,
repositioning and new business wins.
We were successful in securing 22 new
customers, achieving 14% growth in
Europe and delivering a significant
increase in sales of the Neptune
technology.
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Autins Group plc Annual Report and Accounts 2019
FINANCIAL OVERVIEW
Revenue
£26.9m
-8.1%
FY18: £29.2m
Gross profit
£7.5m
+2.9%
FY18: £7.2m
Adjusted EBITDA1
Adjusted operating loss1
£0.0m
FY18: -£0.3m
-£0.8m
FY18: -£1.0m
Reported loss after tax
Earnings per share
-£1.5m
FY18: -£1.4m
Net debt2
£2.3m
FY18: £4.2m
-6.25p
FY18: -6.1p
Final dividend
Nil
FY18: Nil
1 Adjusted EBITDA excludes exceptional costs of £0.4 million (FY18: £0.2 million), and £nil
(FY18: £0.4 million) of non-recurring Neptune start up costs. Adjusted operating profit
and loss before tax additionally excludes £0.2 million of amortisation in both years and
an impairment of £0.1 million in FY19.
2 Cash less bank overdrafts, invoice discounting and hire purchase finance.
OPERATIONAL HIGHLIGHTS
• Positive EBITDA in H2 19 as a result of improved margin
and lower overheads.
• Gross margin increased to 27.8% (FY18: 24.8%) arising
from labour control measures and material savings.
• Cost reduction exercise completed in full with c.£1.0 million
of overhead cost removed from the business.
• Neptune pipeline grew to £35.0 million with £5.0 million
(annualised) of Neptune parts in production and an
additional £1.6 million p.a. won but not yet in production.
• Revenue in Germany increased by 23% to £4.3 million
(FY18: £3.4 million) with further share growth of a
multi-platform part for a major European OEM and
continued growth of acoustic flooring products.
CONTENTS
Strategic report
Introduction
At a glance
Our technology and partnerships
Our markets
Chairman’s statement
Chief Executive Officer’s review
Business model and strategy
Strategy in action
Financial review
Key performance indicators (‘KPIs’)
Corporate social responsibility
Principal risks and uncertainties
Governance
Statement of Directors’ responsibilities
Board of Directors and
Senior Management
Corporate Governance statement
Directors’ report
Director’s Remuneration report
Audit Committee report
Financial statements
Independent Auditor’s report
Consolidated income statement
Consolidated statement of
comprehensive income
Consolidated statement of
financial position
Parent company statement of
financial position
Consolidated statement of
changes in equity
Parent company statement of
changes in equity
Consolidated statement of cashflows
Notes to the financial statements
Directors, secretary, registered office
and advisors
2
4
6
8
10
12
14
16
18
22
24
26
29
30
32
36
40
41
42
48
49
50
51
52
53
54
56
80
WWW.AUTINS.COM
Autins Group plc Annual Report and Accounts 2019
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FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT At a glance
119
2018: 97
customers served
OUR CONNECTION
TO OUR CUSTOMERS
Local manufacturing, technical support and
customer service is important for our customers
and a critical part of our business model. All of our
locations in the UK, Germany and Sweden are able
to provide full service support to customers.
The businesses in each country are fully integrated
for sales pipeline development, customer program
management, new product introductions and R&D
projects with computer aided visual management.
This supports fast, accurate and efficient
coordination using common practices.
Delivering technical expertise
The Technical Centre is located at MIRA in
Nuneaton, the world class technology centre
for the automotive industry.
This gives us immediate access to thought
leadership in all areas of development including
electric and autonomous vehicle development.
AT A GLANCE
GROWING OUR
CUSTOMER BASE
WHO WE ARE
Employees
c.225
3Countries
6Operating locations
WHAT WE DO
WE DESIGN
We use our acoustic and thermal expertise
and experience to research, test and develop
bespoke solutions for each customer.
Innovative design is the starting point for
how we differentiate ourselves.
WE MANUFACTURE
We have a very wide range of advanced
manufacturing and conversion processes
which delivers truly world class quality
products and services.
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.
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Autins Group plc Annual Report and Accounts 2019
WHERE WE OPERATE
Autins’ locations
Deliveries to over
160
different customer locations
UK
TAMWORTH
Materials’ manufacturing,
assembly & conversion operation
NUNEATON
Group technical centre:
laboratory & test site
RUGBY
Group headquarters,
new product introduction centre,
assembly & conversion operation
NORTHAMPTON
Joint venture with Indica
Industries (India), materials’
manufacturing and assembly
SWEDEN
GOTHENBURG
New product introduction
centre, materials’ manufacturing,
assembly & conversion operation
GERMANY
DUSSELDORF
New product introduction
centre, assembly &
conversion operation
N
E S UPPLIER
TIE R O
A C C R E D I T E D
TIER O
E SUPPLIER
N
Autins Group plc Annual Report and Accounts 2019
5
CUSTOMERS
AUTOMOTIVE
13OEMs
22Tier 2/3
NON-AUTOMOTIVE
32Flooring
48Tier 1
97Number of vehicle
models supplied
4Other sector
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT Our technology and
partnerships
OUR TECHNOLOGY AND PARTNERSHIPS
BESPOKE SOLUTIONS –
DESIGNING AND DEVELOPING
SPECIALIST PRODUCTS
Specialists in bespoke technical solutions
Our customers require optimised solutions that
are tailored to their specific acoustic and thermal
challenges. We work closely with our customers
from concept through to manufacture and product
launch, providing engineering design expertise
across projects of all sizes.
Our knowledgeable and experienced team are
subject matter experts who are specialists in
creating bespoke solutions. We continue to provide
support after product launch to ensure our
customer’s problems stay solved.
Expertise in design
Design is an integral part of our core business.
We offer a product design and development service
that starts with effective customer conversations to
understand their needs.
From prototype part supply through development
and design until part delivery and approval, this
service is flexible and supportive to ensure that
customer requirements are met.
NEPTUNE – Thickness Recovery FY19
s
s
e
n
k
c
i
h
T
e
n
u
t
p
e
N
28
27
26
25
24
23
22
21
20
Thickness Recovery after
Compressive Loading
Initial Thickness
1
2
3
Time after removing load
4
5
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Autins Group plc Annual Report and Accounts 2019
Joe Oxenham
Acoustic Engineer
Working directly with customers means
that we understand exactly what they
need. This ensures that projects can be
completed swiftly and that we develop
the right solution for that customer.
Working with partners
Our dynamic and supportive approach
with all partners – both customers and
suppliers – endeavours to build long term
partnerships. By working together, we
can offer tailor made solutions that are
superior to those that might have been
developed in isolation.
Jon Bell
Group Programmes Manager
Our customers trust us to solve
their problems; by gathering technical
research and data, our technical staff
are able to demonstrate and optimise
product performance across a range
of applications.
Product development and innovation
Our dedicated product development
programme ensures that we continue to
provide innovative and market leading
solutions. Projects are identified based
on future technology developments and
market trends; or in collaboration with
customer and supplier partners.
We analyse material parameters and
product data to develop Autins'
solutions and to drive product
innovation. This includes bespoke
acoustic testing and modelling for
application specific conditions, which
enables us to demonstrate and optimise
product performance and promote
weight reduction alongside creating
competitive advantage and generating
premium margins.
FORMULA ONE HYBRID PROJECT
In January 2019, Autins was approached to support development
of noise, vibration and harshness (‘NVH’) solutions for a limited
production plug-in hybrid sports car that will bring fully-fledged
Formula One technology directly from the race track to the road.
Our Programme Management team, together with acousticians from
the Autins Technical Centre, collaborated to design a comprehensive
bespoke NVH package which included Light Foam (made in Sweden),
Neptune (made in Tamworth and processed in Rugby) and additional
complex foam assemblies.
The NVH solutions supplied were across the full vehicle and had to
cater for high temperatures in the engine bay, tight packaging space
throughout the vehicle and in some cases adhere to the back of the
carbon fibre panels.
The dual power source of the V6 hybrid petrol engine and four electric
motors also meant that the NVH package had to work across an
extended frequency range but also be very light weight in such a
performance-focused vehicle.
Our acoustic experts specified all product materials, designed
components and also supplied the initial parts to support prototype
builds. The production of this lightning-fast two-seater is limited to a
few hundred units with a multi-million dollar price tag attached. The
first vehicles – of which all have been sold – are expected to roll off the
production line in 2020.
Autins Group plc Annual Report and Accounts 2019
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FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT Our markets
OUR MARKETS
INCREASED SHARE
IN A GROWING MARKET
During a challenging year for the automotive
market globally our customers have been
looking for opportunities to work with
suppliers who can tailor solutions to their
specific needs and offer higher levels of
performance without adding cost. As a
specialist supplier Autins has increased
their share of wallet with current customers
and won new customers.
Whist macroeconomic uncertainty has
slowed automotive markets the global
automotive noise, vibration and harshness
('NVH') materials market is projected to
grow from $8.2 billion in 2018 to $11.3
billion by 2024, growing at a compound
annual growth rate of 5.4% between 2019
and 2024. The passenger car segment
accounts for the major share of the market.
MARKET DRIVERS
THE BENEFITS WE DELIVER
LIGHTWEIGHT
Weight reduction of up to 40%
BETTER ACOUSTIC PERFORMANCE
Market leading materials
ENHANCED PRODUCT DESIGN
Unique tailored solutions
PASSION, RESPONSIVENESS AND CREATIVITY
for problem solving
DEDICATION AND EXPERTISE
In acoustic and thermal solutions
ENERGY EFFICIENT
Thermal insulation to increase battery efficiency
COMFORT AND LUXURY
Proven supplier to world leading brands
Consumer desire for more comfort and
energy efficient solutions in their cars
Large, existing market for Autins’
products and solutions
• Over £700 million European Noise, Vibration
and Harshness (‘NVH’) market
• Luxury vehicle growth
• Desire for absorption and encapsulation of noise
and energy requires combinations of new
technologies and materials
• Electric vehicle growth (more sensitive to road
noise and individual noise sources)
• Move to more environmentally friendly solutions
and partners committed to carbon emission
reductions
Non-automotive markets require
specialist NVH solutions
New technology and material
combinations
Regional sourcing of technical support
and material
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Autins Group plc Annual Report and Accounts 2019
SITE ACCREDITATIONS
Autins UK – Rugby
IATF 16949:2016
ISO 9001:2015
ISO 14001:2015
ISO 45001:2018
JLRQ
Formel Q
CCC Certification
Autins UK – Tamworth
IATF 16949:2016
ISO 9001:2015
Autins UK – Nuneaton
ISO 9001:2015
Autins AB – Sweden
IATF 16949:2016
ISO 9001:2015
ISO 14001:2015
Autins GmbH – Germany
IATF 16949:2016
ISO 9001:2015
FUTURE OPPORTUNITIES
Electric Vehicle Growth
Electric vehicle sales grew by over 50% across Europe
during Q3 of 2019 the largest growth to date. Autins
Group has seen a rapid increase in requests for help
diagnosing sources of noise and designing solutions
for concept cars and complete NVH packages.
Electric Vehicles are a focus area and specialism
of Autins.
£700m
addressable European market
Office interiors and industrial applications
Autins has supplied acoustic solutions into specialist
applications for many years including construction and
industrial equipment, commercial vehicles, medical
devices and office furniture. The Neptune product
provides additional opportunities to solve acoustic and
thermal issues and going forward Autins will apply
more focus and structure to finding new markets.
Flooring
Flooring manufacturers use Autins’ expertise in acoustics
and materials to help them achieve superior
performance with their existing products, often for major
multi-occupancy contract projects. This consultancy
support is highly valued by the major companies such
as IVC, Tarkett and Gerflor and continues to be an
important and growing business for the Group.
Autins Group plc Annual Report and Accounts 2019
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FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT Chairman’s statement
CHAIRMAN’S STATEMENT
A YEAR OF RECOVERY AND
CONTINUED STRATEGIC FOCUS
+6.9%
Pts of Gross Margin
H2 year on year
The past year has been one of
recovery and continued strategic
focus for the Group. We have ended
the year in a stronger position both
operationally and financially and can
look ahead with confidence, despite
significant challenges in the
automotive market.
Financial performance
Group sales for the year were £26.9 million,
8.1% down on 2018 and strongly influenced by the
challenging trading conditions in the automotive
industry. In particular, we have seen additional
OEM factory shutdowns and demand affected by
uncertainty over the future of diesel vehicles.
Against this backdrop, it is pleasing to note that
sales at our German subsidiary increased by 23%
to £4.3 million.
Roll sales of our proprietary Neptune material
and components more than doubled in the year.
Neptune is enabling the Group to develop sales
opportunities with new OEMs and their Tier 1
suppliers that over time will see us to grow
our market share in the European automotive
NVH market.
Our focus on operational improvement continued
with gross margin increasing to 27.8% in 2019
compared to 24.8% in 2018. The second half of 2019
produced a gross margin of 29.1% compared to
22.2% in the same period in 2018. This operational
improvement significantly supports and accelerates
our progress to a return to profitability across the
Group, as it did at EBITDA level in the second half.
Adam Attwood
Chairman
OUR KEY STRENGTHS
• Specialist market applications
• Market leading performance
materials
• Increasing OEM & Tier approvals
• Established European
manufacturing and technical
support
• Proven expertise in NVH
consultancy
• Focused NVH specialist supplier
• Acoustic and thermal problems
solver
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Autins Group plc Annual Report and Accounts 2019
Following a successful placing of new shares
in August, raising net proceeds of £3.3 million, our
net debt improved in 2019 to £2.3 million from
£4.2 million. The additional funding enables us to
support organic growth in mainland Europe, drive
operational efficiency through investment in
automation and support the Group’s enhanced
working capital commitments due to Brexit planning.
Strategy
In June 2019, the Board conducted its annual
review of the Group’s strategy and the key drivers in
our markets. Although the automotive market is
undergoing a period of significant change, this also
represents a significant opportunity for the Group.
Electric vehicles have significant noise, vibration
and harshness (‘NVH’) challenges and the Group is
committed to being at the forefront of providing
creative, high performance and financially
compelling solutions for our key OEM clients
across Europe.
We are committed to becoming one of the leading
European specialists in NVH solutions for electric
vehicle manufacturers. Our specialist knowledge
of acoustic and thermal management within the
vehicle enables us to design and develop new NVH
solutions specific to electric vehicles in collaboration
with vehicle manufacturers and their Tier 1 suppliers.
Our proprietary Neptune material is ideally suited
for these applications due to its specific acoustic
and thermal performance and its significantly
lighter weight.
Now more than ever, automotive OEMs demand
their suppliers to be flexible and deliver high levels
of operational efficiency. Autins’ operational focus
has always been to deliver highly responsive
automated manufacturing and we will continue to
ensure that our products remain attractive to our
customers by offering the highest levels of product
performance, quality and cost effectiveness.
We are also committed to improving further the
environmental impact of our product range by
increasing recycled content, recycling waste more
efficiently and developing ways to eliminate certain
products from our production process.
People
Our staff are our most important asset. It is their
energy, experience and creativity that drives the
Group forward. Under the leadership of our Chief
Executive, Gareth Kaminski-Cook, who joined
on 1 October 2018, there is a renewed energy
throughout the business, galvanized through our
core values. I would like to thank all staff for their
commitment and enthusiasm throughout the year.
We have strengthened our manufacturing
operations leadership team during the year, and
this investment has brought new focus and
expertise and is translating into improved operating
and financial performance.
In July, we welcomed Neil MacDonald to the Board
as Non-Executive Director and Chairman of the
Audit Committee. Neil replaces Terry Garthwaite,
who sadly died in April and was a much respected
member of the Board since the Group’s listing on
AIM in 2016.
Corporate governance
The Board strongly believes that robust corporate
governance and risk management improves the
strategic delivery and financial health of the Group.
We apply the Quoted Companies Alliance Corporate
Governance Code (the “QCA Code”).
Further details on how the Group complies with the
principles of the QCA Code can be found on pages
32 to 35 of this annual report.
Dividend
The Board continues to believe that a suspension
of dividend payments remains appropriate.
Accordingly, no final dividend payment is proposed.
The Board will continue to monitor net earnings,
gearing levels, expected capital requirements and
growth opportunities with a view to reinstating its
progressive dividend policy at the appropriate time.
Outlook
The Group is well positioned. We will continue to
focus on operational improvement, sales growth
and new market development. Despite market and
political uncertainties, the Board anticipates that
the Group will maintain positive momentum and
continue its financial recovery in 2020.
Adam Attwood
Chairman
Autins Group plc Annual Report and Accounts 2019
11
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT Chief Executive Officer’s
review
CHIEF EXECUTIVE OFFICER’S REVIEW
POSITIVE MOMENTUM GENERATES
OPTIMISM FOR THE FUTURE
With a strengthened culture of
teamwork and accountability we
have managed to significantly
improve margins throughout the
year and very positive momentum is
being achieved with new customer
wins and growth in the Neptune
business.
Autins is a specialist materials technology
company, supplying acoustic and thermal
solutions primarily for the automotive
market. We also supply solutions for a
variety of specialist niche applications
including flooring and industrial.
Controlling noise pollution and thermal
waste is a fast growing and attractive
market for which Autins’ technical
expertise, broad range of materials
knowledge and conversion capability is
perfectly suited and highly regarded.
Our strategic objectives were further refined in
2019. The Group’s priorities are to optimise our
technical capability, grow market share in the
automotive NVH market and to leverage our unique
Neptune technology to secure new customers,
target new markets and build our reputation across
Europe. In very challenging market conditions, the
financial performance of the Group has improved
particularly in the second half of the year and
positive momentum is being achieved with new
customer wins and growth in the Neptune business.
Margin improvement
The Board’s primary focus for 2019 was to
turnaround a declining financial performance by
reducing overheads and improving operating
margins. Despite some reduction in demand for our
products, driven by uncertain market conditions,
the business has managed to significantly improve
margins throughout the year and deliver a small
positive adjusted EBITDA for the period. Importantly,
this has been achieved whilst maintaining our world
class levels of quality and customer service.
+8%Acoustic flooring growth
Gareth Kaminski-Cook
Chief Executive Officer
STRATEGIC PRIORITIES
• Margin improvement
• Growing the customer base
• Leverage Neptune technology
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Autins Group plc Annual Report and Accounts 2019
There are significant opportunities to further
improve profitability. The new and highly
motivated operational team has a well organised
and targeted plan to further improve operational
efficiencies and reduce costs which is already
underway and delivering results. With a
strengthened culture of teamwork and
accountability we expect to deliver improving
results throughout the coming year.
Growing the customer base
Our principal strategic focus has been to secure
new customers and new markets across Europe
and we have continued to make excellent
progress. During 2019, we successfully secured
22 new customers in several different markets,
such as automotive, with both OEMs and Tier 1
suppliers, as well as in flooring and industrial
applications. These new customer wins include
global OEM brands and large Tier 1 suppliers.
Although the challenges faced by our major
customer had a negative impact on sales, our
overall share of wallet across all UK customers
grew during the period. Our success in delivering
increased market penetration was a direct result
of the Board’s long-term strategic commitment
to our unique Neptune technology offering and
the increasing reputation of our technical
commercial team, all backed up by world class
customer service and product quality.
Sales in Europe have continued to grow, up 14%
year on year, with Germany forging ahead by
23%. European sales now represent 19% of the
Groups revenue, compared to 17% last year.
The enquiry pipeline is very strong and continues
to expand, having grown 26% to c.£45 million
in the year. This combined with our strong track
record of converting the pipeline in to sales,
underpins our European growth strategy
going forward.
Leverage Neptune technology
Our Neptune based products provide the same
acoustic absorption capability as existing
alternative solutions but with material and
weight savings of up to 40%. The enthusiastic
response we received when introducing Neptune
to customers a year ago has now been translated
into sales and production, whilst the enquiry
pipeline value continues to grow by more than
60% year on year. The technical superiority of
Neptune and the solutions it offers has
strengthened our relationship with existing
customers as well as opening the doors to new
significant opportunities in the markets we
have targeted.
The exceptional performance and lightweight
properties combined with our consultative
design and development capability is
particularly relevant to the emerging EV market.
This has resulted in Autins supplying or being
specified on numerous vehicles including Jaguar
Land Rover’s I-Pace, Volvo’s Polestar, the London
Taxi made by LEVC, AMG’s Project One and
BMW’s i8 Spyder.
LIVING OUR VALUES
EVERY DAY
TEAMWORK
We believe that the best teams
win. Either working with
customers and partners or
internally, we collaborate
effectively in order to win together.
ACCOUNTABILITY
We empower our teams and will do
what we say and do what is needed
in order to deliver the results.
Optimism for the future
We have strong, specialist capabilities and an
agile business model with which to serve the fast
growing automotive NVH market and other
important areas where noise and thermal energy
control are becoming more important.
EXPERTISE
We have world leading acoustic
and thermal technical knowledge
which is the basis of our
Company’s value proposition.
As the automotive industry increasingly focuses
on passenger experience and comfort, we are
perfectly placed to help solve the new technical
challenges facing designers, by offering new,
innovative and green solutions to control noise
and improve thermal efficiency. The Group’s
technical capability, broad product offering, and
materials expertise means we are strongly
positioned to create further value for our
shareholders through continuous margin
improvement, organic growth and leveraging
our unique Neptune technology.
This has been a challenging year both for the
Group and the industries we serve. It has also
been a year of repositioning, recovery and new
business wins. We are in a strong position to
make the most of the opportunities ahead. The
positive momentum we have already generated
is encouraging and provides grounds for
optimism for the future.
CREATIVITY
We solve problems, we use our
initiative and leverage our
expertise to deliver thoughtful
solutions for our customers.
AGILITY
We are responsive, adaptable,
easy to do business with and
ready to do what it takes to get
it done.
PASSION
We are passionate about what
we do – it is in our DNA. Ultimately
we make spaces quieter, more
efficient and more comfortable
– this is what we do and this
underpins all the other values.
Gareth Kaminski-Cook
Chief Executive Officer
Autins Group plc Annual Report and Accounts 2019
13
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT Business model and strategy
BUSINESS MODEL AND STRATEGY
ADDING VALUE THROUGH
EXPERTISE, INNOVATION AND SERVICE
DESIGNING
SOLUTIONS
OUR BUSINESS MODEL
INNOVATIVE TECHNOLOGY
Range of materials:
Range of processes:
• Non-Woven PET/PP including
• Manufacturing
Neptune
• Thermoplastics
• PUR
• Laminates
• Conversion
• Tooling and component
design and testing
SPECIALIST
TECHNICAL SUPPORT
• Acoustic and thermal experts
• Diagnosis
• Tooling and component
design
• Tailored solutions
• Rigorous program
management
OUR MISSION
OUR STRATEGY
STRATEGIC PILLARS
Accelerate sales
in automotive
Develop Autins
brand reputation
• Leverage the Neptune
technology and our technical
expertise to win new
customers
• Build Autins brand reputation
as an NVH solution provider
of choice
Expand sales into other areas
• Leverage our acoustic and
thermal expertise to open up
new markets
To deliver superior value for our
shareholders by being a trusted
partner to our stakeholders and by
creating a positive workplace for our
employees to excel, whilst providing
first class solutions and support to
our customers.
OUR VISION
To be the preferred supplier of
innovative acoustic and thermal
solutions to our customers in the
automotive industry and other
segments where we believe we can
deliver value.
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Autins Group plc Annual Report and Accounts 2019
OUR BUSINESS MODEL
2.1x
Neptune production growth
CONTINUOUS QUALITY INNOVATION
• Laboratory testing
• Diagnosis
• Rigorous NPI
EXCEPTIONAL SERVICE
• Fast
• Responsive
• Customer focused
• Creative culture
SOLVING
PROBLEMS
OUR STRATEGY
PROGRESS IN 2019
CURRENT FOCUS
Diversification of
customer base
Segment expansion
• Sales to non-automotive grew
Accelerate conversion of pipeline
to sales in new automotive
applications
• Sales to our major customer reduced
to £2.1 million (8% of Group sales)
from 58% to 57%
• 22 new customers
Geographic expansion
• Germany and Sweden have grown to
19% of total Group sales
Neptune technology
• Sales opportunity pipeline grew
to over £30 million
• All target OEMs have approved Neptune
with four designating it as the “preferred
material”
Reduce total cost to serve
our customers
Improved working capital
control and daily management
Autins Group plc Annual Report and Accounts 2019
15
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
Strategy in action
STRATEGY IN ACTION
GROWING THE
CUSTOMER BASE
Josh Kimberling
Group Sales Director
During 2019 we have continued to
work hard to grow our customer base,
forming and developing partnerships
with our customers to support them from
design to production. These partnerships
allow us to build long lasting relations on
which to build year on year.
50%of all customers are
now in Europe
2018
2019
Sweden
22%
Germany
27%
UK
51%
Sweden
19%
Germany
31%
UK
50%
Since the IPO in 2016, our customer base
has grown from less than 50 to 119, with
automotive customers representing 70%
and flooring the majority of the
remaining 30%.
During 2019, the customer base expanded
in all three countries, with German
automotive customers almost doubling.
50% of all customers are now in Europe.
We believe that our customers choose
Autins because of our specialist technical
competence, materials knowledge and
broad range of manufacturing and
conversion processes.
16
Autins Group plc Annual Report and Accounts 2019
10new blue chip auto
customers in Germany
RETAINING AND GROWING
EACH CUSTOMER
A TRUSTED
PARTNER
Once we have won a customer, we have a track record
of delivering truly world class quality and service so that
they have an exceptional experience dealing with us.
This is in our DNA because of decades delivering to the
automotive industry and our values of agility, creativity
and passion help us to maintain this standard.
During 2019 the value of business, per vehicle, that we
supplied to our major customer grew by 15%, based on
these principles of technical and service excellence.
Autins Group plc Annual Report and Accounts 2019
17
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT Financial review
FINANCIAL REVIEW
IMPROVING PERFORMANCE IN
CHALLENGING CONDITIONS
+23%growth in Germany
Component sales decreased 9.9% to £25.5 million
(FY18: £28.3 million). We continued, in line with our
overall diversification strategy, to expand our
customer base, with new contracts secured for
future periods. Direct component sales to the
Group’s largest customer accounted for 57% of
Group revenue (FY18: 58%).
Revenue from acoustic flooring products grew 8%
to £1.5 million (FY18: £1.4 million). As in FY18, this
growth was achieved by the German business with
continued development of the customer base and
product range. Following a fundamental design
change by a customer in building and industrial
applications sector sales fell £0.3 million to
£0.5 million and are expected to discontinue in FY20.
UK automotive component sales fell 15% to
£19.5 million (FY18: £23.0 million) with a reduced
revenue in H2 compared to H1 as a result of
extended shutdowns following the original Brexit
date of 29 March, certain platforms ceasing
production and reductions due to facelifts and
relaunches of certain other vehicles. Sales to our
largest customer were again below expectations
compared to initial forecasts.
The German business continued to grow with
revenues increasing by 23% on the prior year to
£4.3 million. We continue to target large German
OEMs with Neptune being a key differentiator and
has secured new work for future periods with central
European Tiers who support a range of OEMs.
Swedish automotive revenues were adversely
affected by reduced export sales and a
significant delay to the start of production for
the new contracts noted in last year’s report.
Revenues therefore decreased 11% to £1.0 million
(FY18: £1.1 million) in the year. Management remain
confident of the site’s strategic importance and note
that new parts with Volvo have been secured since
the year-end that will be in production during FY20.
James Larner
Chief Financial Officer
The Group’s primary focus in the year was to reduce
costs and working capital usage whilst retaining
core skills and operational capability to allow for
future growth as demand in the automotive sector
normalised.
Progress was made in many areas which
culminated in the Group’s successful equity raise in
August 2019 delivering cash of £3.3 million (net of
£0.2 million costs) to support future working capital
and investments to facilitate growth and
operational efficiency. In the near term, this funding
allows for reduced utilisation of the Group’s banking
facilities with associated savings in interest costs.
Revenue
During 2019, reduced general automotive sector
demand combined with specific pressures and
model changes at the Group’s largest customer,
meant that total revenue decreased by 8.1% to
£26.9 million (FY18: £29.2 million).
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Autins Group plc Annual Report and Accounts 2019
Tooling sales increased to £1.4 million (FY18: £0.9
million) reflecting the strong order intake within the
year. The Group had £0.3 million (FY18: £0.2 million)
of tooling held for resale at the year-end which will
be converted into revenue during Q1 of FY20.
Gross margin
Component gross margins recovered to 27.8%
(FY18: 25.5%) as a result of significant focus on
operational efficiencies.
Management’s continued focus on operational
efficiency, standardisation and flexibility has
allowed for an improved response to customer
demand fluctuations and reduced overall costs to
serve. Future improvements from automation and
improved site layouts are expected to deliver
savings during FY20.
The Group continues to pursue opportunities to
secure component contracts using Neptune
materials (either solely or in composite with other
materials) which will increase utilisation of the
production line and thus reduced unit costs.
The Group saw significant benefits from working
with its supply chain on material costs, design and
utilisation in the year and continues to work with
suppliers to take further steps to optimise existing
and future component requirements.
EBITDA and operating profit
Adjusted EBITDA was £0.1 million (FY18: Loss of
£0.3 million) with an adjusted operating loss of
£0.8 million (FY18: £1.0 million) after allowing
for exceptional and non-recurring costs as noted
below. Reported operating loss was £1.55 million
(FY18: £1.84 million).
The adjusted measures are stated after excluding
items that management consider to be a result of
significant one-off events, start-up costs in relation
to the Group’s Neptune facility, performance of the
joint venture business and differences in accounting
treatments that arose on the Group’s conversion to
IFRS at the time of listing. Management information
used in running the Group is measured with a focus
on the underlying performance and, as such, these
items are excluded.
The Board acknowledge that these are alternative
measures of performance and are not GAAP (nor
are they intended to be) but believe these adjusted
measures are more indicative of the performance of
the underlying business and informative to users of
the accounts.
Reported EBITDA was a loss of £0.9 million
(FY18: loss of £0.9 million) after charging £0.43 million
(FY18: £0.23 million) of exceptional costs, and £nil
(FY18: £0.4 million) of non-recurring incremental
start-up costs for the Neptune facility.
Exceptional and adjusting items
The Group incurred exceptional remuneration,
redundancy and associated costs of £0.43 million
(FY18: £nil) as a result of the overhead cost reduction
programme announced in October 2018 and
completed in the year, and subsequent work with
the Group’s banks to rebalance existing facilities
into a form that was more suited for the period of
variable demand expected, and subsequently
experienced, during the second half of the year.
In FY18, the Group incurred exceptional
remuneration and associated costs of £0.15 million
as a result of the resignation of the former
Chief Executive Officer, Michael Jennings, on
15 March 2018, and subsequent appointment
of Gareth Kaminski-Cook as well as £0.1 million
in early termination charges on leased
management offices that were no longer in use
and considered onerous.
In FY18, the Group concluded the commissioning
process for the Neptune production facility after
incurring £0.36 million (FY19: £nil) of non-recurring
start-up costs. These costs were excluded from
adjusted EBITDA and operating profit in the year.
To be consistent with analysts measure of the
group’s performance amortisation of £0.2 million
(FY18: £0.2 million) in relation to acquired intangible
assets recognised as a result of the Group’s
conversion to IFRS at IPO (having previously
being held as non amortising Goodwill) and an
impairment of previously recognised development
costs of £0.1 million (FY18: £nil) have been excluded
from adjusted operating profit.
Joint venture
The Group’s joint venture, Indica Automotive,
is an acoustic foam conversion business based in
Northampton that supplies components into the
Group’s UK operations (who remain the largest
customer) as well as its own automotive customer
base. The joint venture continues to leverage
the access to low cost material and finished
component sources provided by its other parent
Indica Industries PV based in India.
Indica Automotive’s turnover decreased by 13% to
£2.9 million (FY18: £3.3 million) as call offs for
existing parts were reduced but with strong margin
and overhead cost control delivered a profit after
tax of £0.4 million (FY18: £0.4 million).
Autins Group plc Annual Report and Accounts 2019
19
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT FINANCIAL REVIEW CONTINUED
Currency
The Group’s overseas operations and certain key
raw material suppliers require the Group to trade in
currencies other than Sterling, its base currency.
During the year, operational transactions were
conducted in US Dollar, Swedish Kronor and Euro
and the retranslation of the results of the German
and Swedish operations were affected by currency
fluctuations. The key raw materials for Neptune
production are currently imported from South
Korea with transactions conducted in US Dollars.
Whilst the Group has taken steps to mitigate this
risk by establishing alternative sources for non
patented product (which would be transacted in
Euro), the quantum of US dollar transactions is
expected to increase in the near term.
The Group continues to benefit from a natural
hedging arising from its structure and trading
balance which mean that the Group’s result in both
years has only been impacted in a limited way as a
result of currency translations.
The Group held no forward currency contracting
arrangements at either year-end. Transactions of
a speculative nature are, and will continue to be,
prohibited. As part of the Neptune production
ramp-up, management will continue to monitor
the Group’s US Dollar exposure and its impact on
the Group’s results. Where the frequency and
quantum of purchases can support active currency
management, we may implement a formal
hedging strategy.
Net finance expense
Costs were increased in the year as the Group
increased its utilisation of bank facilities following
the losses in H2 18 and through the cost reduction
programme in H1 19. In addition, contingency
inventory was held in preparation for the
anticipated Brexit deadline of March 2019 to ensure
continuity of supply which further increased
working capital borrowing.
The interest element of hire purchase agreements
was stable in the year but should decrease in FY20
as a number of agreements become fully repaid.
An analysis of the net finance expense is presented
in note 8 on page 69.
Taxation
The effective tax rate in the year was below that
expected based on current UK corporation tax
levels. Given the quantum of prior year losses
recognised and expected profitability in the next
two years, the Group has chosen to not recognise
current year losses as a deferred taxation asset.
The asset created in the prior year has been
reviewed and considered to be supportable
based on the Group’s expected trading.
The Group’s technical R&D and applications teams
have, as in prior years, continued to enhance
materials and processes. Following the Group’s
cost reduction programme in October 2018, the
multi-horizon development plan developed in FY18
was refocused on items that could bring more
immediate benefit to the Group with less resource
applied. However, sufficient R&D has continued for
management to maintain their belief that the
enhanced reliefs, combined with available brought
forward losses, will mean that the effective tax rate
will remain below the UK statutory level for the
short to medium term.
As reported previously, the Group’s overseas
subsidiaries continue to have significant taxable
losses available which will, in the short term, offset
expected trading profits in Sweden and Germany
that are higher relative corporation tax territories
than the UK. Having reviewed recent trading
performance for the European entities, the Group
has increased the tax asset recognised by
£0.05 million in relation to these losses. The Group
has a further £0.13 million (FY18: £0.1 million)
unrecognised tax asset in respect of European losses
Earnings per share
Loss per share was 6.25 pence (FY18: Loss per
share 6.14 pence) reflecting the loss in the year.
The weighted average number of shares increased
to 23,971,000 in the year reflecting the effect of the
placing of 17,500,000 new shares on 22 August 2019
(FY18: 22,100,984). Calculations of earnings per share,
including the potential dilution arising from the
senior management share option scheme in future
periods, are presented in note 10 on page 70.
Dividends
The Board are not proposing a final dividend for
the current year (FY18: £nil) and no interim dividend
(FY18: £0.004 per share) was paid.
Net cash/(debt) and working capital
The Group ended the year with net debt of
£2.3 million (FY18: £4.2 million) as disclosed in the
reconciliation of movements in cash and financing
liabilities on page 55 after a net £3.3 million cash
injection following the equity placing in August 2019.
The Group has £0.5 million (FY18: £0.9 million)
of Hire Purchase agreements in the UK and
£0.1 million (FY18: £0.2 million) of long-term asset
20
Autins Group plc Annual Report and Accounts 2019
backed bank loans in Sweden – these loans
will be fully repaid in FY20. There were £nil
(FY18: £0.5 million) of new hire purchase
agreements in the year and £0.1 million of new
short term trade import facility was utilised at the
year-end in support of Neptune purchases.
The Group has focused on working capital
optimisation in the year and management of
materials through the entire supply chain has
therefore improved. This can be clearly seen with
inventory being £0.4 million lower than FY18
supporting similar revenue in the final quarter.
Tooling contract balances remained unchanged
at £0.2 million and represent projects that will be
invoiced in early FY20.
Collection of trade debtors improved in the year
with a reduction of overdue balances from
additional focus and applied resource. A provision
of £0.2 million (FY18: £0.2 million) has been retained
against overdue invoices which the Group
continues to pursue.
Trade creditors have reduced significantly in the
year with the Group removing stretch agreed with
suppliers ahead of the benefits arising from the cost
reduction programme combined with a change in
balance between employed and temporary
production labour reducing amounts outstanding
to temporary staff agencies at year-end.
Going concern
The Board have concluded, on the basis of current
and forecast trading and related expected
cashflows and available sources of finance, that it
remains appropriate to prepare the Group’s results
on the basis of a Going Concern.
The Group received a net cash injection of
£3.3 million in August 2019 as a result of an equity
placing and this, combined with continued support
from the Group’s primary and supporting banks
mean that the Group has significant headroom
within it’s facilities to allow for reasonably
foreseeable cashflow requirements in the event of
changes to its demand or cost base.
The Board continues to review the structure of the
Group’s banking arrangements with a view to
ensuring that it remains appropriate for the planned
growth within mainland Europe and to allow for the
more variable demand that has become a feature of
the automotive market in the last 18 months. The
Group’s current banking remains without covenant.
Acquisitions, goodwill and intangible assets
There were no acquisitions made in the year,
nor any adjustment to fair values attributed to
previous transactions.
The Board, acknowledging that this is the second
year of reported losses and that the Group’s current
market capitalisation is currently less than the
Group’s net assets, has reviewed the carrying value
of Goodwill and other Intangible assets held at
30 September 2019 (both existing and generated in
the year) by reference to discounted cashflow
forecasts for separately identifiable cash generating
units. These forecasts are based on Board
approved budgets and an assessment of likely
conversion from pipeline to revenue.
Having considered the assumptions, headroom
and a range of reasonably foreseeable sensitivities
indicated by these assessments the Board
are able to conclude that the carrying values are
fully recoverable.
Capital expenditure
Additions to tangible fixed assets were £0.2 million
(FY18: £1.1 million) in the year with no significant
single item acquired. The Group continues to
benefit from investment in equipment in recent
years and therefore has capacity to address current
demand levels. Planning for additional investments
designed to improve operational efficiency is
ongoing and the Board expects expenditure to be
incurred in the second half of FY20 in support of
such operational gains.
Research and development costs of £0.15 million
(FY18: £0.2 million) have been capitalised in the period
as the Board considers they meet the Group’s stated
policy for recognition of internally generated assets.
The costs are focused on targeted projects designed
to enhance the Group’s current material range and
capability after changes to the in-house technical
team required a review of the overall Research and
Product Development plan developed in FY18. As
noted in the exceptional and adjusting items section
above, during the year, previously capitalised costs
of £0.1 million were impaired when it became clear
that, due to a change in customer design, the
development was no longer commercially viable
and so would fail the Group’s recognition criteria.
Financial risk management
Details of our financial risk management policies
are disclosed in note 3 on page 64.
James Larner
Chief Financial Officer
Autins Group plc Annual Report and Accounts 2019
21
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT KEY PERFORMANCE INDICATORS (‘KPIS’)
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
2019 0.0%
2018
2.0%
2017
2016 3.1%
2015
8.1%
15.6%
(One incident would represent 2.0 for FY19)
Comment
No incidents in the year that have resulted in lost time (being more than one day away from work as a
result of an incident at work).
The business has had no lost time incidents since October 2017 and is now focussing on reducing
medically treated incidents and high potential near misses involving Fork Lift Trucks – an area with the
highest incident rate in the year.
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
-19.7%
2019
2.8%
2018
2017
2016
1.8%
(Target: CAGR 15-20% over 3-5 years)
30.4%
Comment
Gross profit increased despite reduced revenues with margin improved by 2.3% points due to a recovery
in operational inefficiencies from strict labour controls, improved input material cost from supply chain
review and improvement in commercial returns from Neptune utilisation and diversification of
customer base and geography.
Non-UK revenue as a proportion of consolidated sales (%)
KPI Definition
Measure is calculated as the value of external sales for German and Swedish operations as a proportion of
total revenues.
Performance
2019
2018
2017
2016
2015 3.8%
6.8%
(Target: 30% by FY20)
19.0%
17.2%
12.4%
Comment
Sales in Germany continued to grow strongly in the period with further customer sites of the large
German OEM group adopting the multi-platform, cross brand component in FY19.
The relative revenue share also benefitted from a decrease in overall sales lead by UK component revenues.
The Group remains committed to diversifying it’s revenue streams across territories and customers with
30% considered the next milestone.
22
Autins Group plc Annual Report and Accounts 2019
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.
Performance
-8.1%
2019
2018
2017
2016 1.3%
10.9%
(Target: CAGR 15-20% over 3-5 years)
26.7%
Comment
Whilst order intake and pipeline development both increased in the year, absolute revenues fell with
significant reductions in call offs in the UK and from the Group’s largest customer. Tooling sales
increased £0.5 million in the year and sales from the German entity grew 23% to £4.3 million. Neither
were sufficient to offset reduced revenues in the UK and Sweden.
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
-437%
(Target: CAGR 15% over 5 years)
-1.8%
2019
2018
-10.3%
2017
-63.4%
2016
Comment
Deterioration in the year a reflection of the higher loss after tax in the period (after a much reduced
taxation credit than in FY18) and an increase in the weighted average number of shares. Weighted
average shares in issue increased 1.87 million from FY18 as a result of equity placing in August 2019.
FY17 increased by 7.58 million from FY16 as a result of new shares issued in relation to the Group’s IPO.
New product & customer sales as a % of Group (%)
KPI Definition
New product and customer sales are measured as the combined revenue generated from products
(primarily Neptune) and customers secured by the Group in the current and previous three years,
as a percentage of total revenue from continuing operations.
Performance
2019
2018
2017
2016
12.7%
5.6%
2015 1.2%
(Target: over 10%)
21.4%
18.3%
Comment
Growth in Germany with major European OEM continued. New sales representing a higher proportion of
overall revenue as more established customers reduced call offs in the period. Absolute growth with
new customers and products was 8%/£0.4 million.
Materially all non-automotive sales are new to the Group in the last three years and represent 7.3% of
sales (FY18: 7.4%). Neptune external roll sales represented 1.1% (FY18: 0.5%) in the year.
Autins Group plc Annual Report and Accounts 2019
23
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT Corporate social responsibility
CORPORATE SOCIAL RESPONSIBILITY
OUR PEOPLE
We are an international business operating
in the global community – we take our
responsibility to be a good corporate
citizen seriously.
DIVERSITY MATTERS
c.50%
of Autins employees are
non-British
We are very proud of the diverse
nature of our employee base. We
currently employ people from 20
different nationalities from across
Europe, Africa, South America, the
Middle East and the Indian
continent. This breadth of culture
helps us to be more international
and expansive in our outlook and
more tolerant. We want Autins to
be an attractive employer and
provide a safe place to work,
develop and thrive.
c.50%
of Autins employees
are female
Across all our functions and in all
countries, we have a balanced
gender diversity, which we firmly
believe inspires more creativity,
better teamwork and makes Autins
a better place to work. Female
employees represent:
• 50% of the manufacturing
workforce
• 50% of the sales team
• 50% of the technical teams –
R&D, project management and
engineering teams
• 60% of finance functions
24
Autins Group plc Annual Report and Accounts 2019
INCLUSIVITY
COLEBRIDGE ENTERPRISES
“In 2012 we started to outsource some of our
assembly work to Colebridge Enterprises, a
social enterprise that provides work-based
opportunities for individuals who are
marginalised because of a disability, mental
health issue or lack of work experience
or qualifications.
Over the years this relationship has enabled
the trust to support a diverse group of people
back into employment, health and improved
wellbeing. Long-term sustainability for this
inspiring project arises from the regular
income that is generated from working with
organisations such as Autins Group.”
Autins Group plc Annual Report and Accounts 2019
25
LISTENING TO
OUR PEOPLE
Our employees are the most
valuable asset we have – they
provide the expertise and service
that our customers experience
every day.
It is therefore critical that we have
an engaged and highly motivated
workforce. To this end, during
2019 we introduced Employee
Satisfaction surveys and the
results were analysed to identify
improvement areas. The results
were shared with all employees
by leadership and together with
each team, improvement plans
were created that are owned by
the teams and supported by
management. During 2020, more
frequent “pulse” surveys will be
conducted to monitor progress
to improvement.
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT Principal risks and
uncertainties
PRINCIPAL RISKS AND UNCERTAINTIES
Risk
Description and potential impact
Mitigation
Failing to
successfully
implement our
growth
strategies
Our future success requires an effective
implementation of the growth and diversification
strategies developed and refined in recent years.
Failure to implement our strategies may
adversely affect our reputation and prospects,
whilst the execution of our strategies could place
strain on our managerial, operational and
financial reserves.
Dependence
on automotive
sector and
market cycles
The Group’s revenues are primarily derived from
the automotive sector.
Demand for passenger cars could be materially
affected by changes in government policy,
including tax regimes, environmental standards
and incentives.
The continued and expected growth in
alternative fuel and electric vehicles may change
type of NVH solution required to meet new
regulatory and customer standards arising from
changes to vehicle acoustic and thermal
challenges (from moving to alternative fuels and
hybrid vehicles).
We have clear functional leadership within the Group and
through targeted recruitment reinforced the Leadership team
in the year. Management information, teams and interactions
are designed to align management focus in support of our
strategic aims.
Our values have been deployed across all layers of the
organisation to help create alignment from all staff around
our strategic aims.
Executive and Leadership team key KPIs and policy
deployment are cascaded throughout the organisation
creating direct alignment of goals and to allow identification
of under-performance and allow actions to be taken to
address and improve results.
We remain committed to diversify and grow the business in
terms of customers, geographies and applications, as well as
leverage our vertical integration into materials to reduce the
current reliance on a limited section of the European
automotive sector.
We believe that there are adjacent sectors to which our
knowledge, materials and process capability are transferable
and have started to explore those sectors.
Our specialist R&D team continue to work on improving our
processes, materials and applications to address the
changing demands both within automotive and target
growth sectors.
We have demonstrated our ability to diversify with our
sustained growth and new product offerings in the acoustic
flooring market in Europe and have been able to transfer our
skills into the building and industrial applications market to
secure new revenues.
We continue to develop knowledge and seek additional
approvals for Neptune, our class leading automotive material,
to facilitate commercial exploitation in targeted non-
automotive markets to which we believe it is suited.
Dependence
on key
customer
More than half of the Group’s revenues continue
to be derived from one key customer. In addition,
both European sites also have high sales
concentration from a single customer or contract.
The target addressable market within our specialist area of
automotive NVH is significant and therefore provides huge
potential opportunity for diversification and market share
gain with other European OEMs.
The Group’s income and individual site’s
profitability could be materially adversely
affected by changes to our relationship with
these key customers, including a decision to
diversify or change how, or from whom, they
source the components that we currently
provide, an inability to agree on mutually
acceptable pricing or a significant dispute with
the Group.
Should the commercial relationship with one of
our key customers terminate for any reason, or if
one of these customers significantly reduces its
current or forecast business with us and we are
unable to enter similar relationships with other
customers on a timely basis, or at all, our
business could be materially adversely affected.
Management continues to be focused on strengthening
customer relationships, and, for our key customers, we
ensure that multiple contact points are maintained.
Key Customer Account Plans that outline our strategic
development activities have been deployed and are routinely
reviewed by management. These plans also document roles
and responsibilities of all Group functions in their support of
customer relationships.
We have targeted large Tier One suppliers whose core
competency is not NVH in order to offer specialist NVH
support. This allows us to leverage the technical acceptance
for Neptune held with all strategic OEM customers.
Our sales structure, performance measurement and
incentives are aligned and linked to achievement of
diversification of our automotive customer base in the UK
and Europe, both directly with OEMs and via their tiers.
26
Autins Group plc Annual Report and Accounts 2019
Risk
Description and potential impact
Mitigation
Working
capital funding
& overall
finance
structure
The group has a primary UK bank with secondary
funders in Europe. The current structure offers
limited fixed term funding, with the majority
being directed at supporting working capital
requirements.
Working capital funding is primarily provided by
an invoice financing facility that, by its nature, can
provide a variable level of availability.
Material short-term demand reductions (such as
would arise with an unplanned shutdown by one
of our key customers) would have an immediate
reduction in this facility’s headroom.
It is also likely that this headroom reduction
would be magnified by a significant increase in
the level of inventory within the supply chain and
unwind of trade payables on the lower demand.
Our annual budgeting and in-year reforecasting processes
model the effect of certain contingencies and their effect on
working capital.
The equity raise completed in the year allowed the group to
re-balance its funding and mix of debt and equity.
We continue to work with funders to introduce more fixed
value growth funding, such as overdrafts and term loans that
are more suited to a period of variable market demand.
Long term asset backed finance products are used for capital
investments.
Our supply chain management has been designed to allow
key suppliers to make adjustments to inbound materials and
improved manufacturing processes together with clear
targets on working capital usage mean that operational
management are able to closely control inventory levels.
Retention of
key staff in
business-
critical roles
As an SME, the Group inevitably has certain roles
that are business critical and a higher level of
reliance on certain individuals for key external
relationships and growth.
Management conduct regular reviews to discuss key staff and
development plans as well as ensuring that our reward and
remuneration packages remain competitive against
benchmark levels in the region.
The Automotive sector had undergone a period
of sustained growth, especially within the UK,
which has reduced the availability of certain skills
and experienced personnel.
Dependence
on relationship
with IkSung
The licensor of the intellectual property rights
related to Neptune, IkSung, are the supplier of
both patented and non patented ingredients
used in manufacture of the patented materials.
There is therefore risk of a potentially significant
adverse impact on our ability to serve customers
were this relationship to deteriorate or
breakdown.
Major failure
of Neptune
line
The Group’s Neptune production line is the only
such facility in Europe.
An extended breakdown could affect our ability
to maintain continuity of supply to existing
customers which could in turn affect the rate of
enquiry growth and conversion.
We have continued to invest in training and personal
development to ensure staff skills remain relevant and that
individuals can be developed to support business growth
and succession planning. We therefore support
apprenticeships and progression for recognised professional
qualifications in support functions.
Alternative suppliers have been secured for all non patented
materials within Neptune to allow risk mitigation.
The Group has pro-actively sought to reinforce the
relationship at senior levels with IkSung and discussed
potential for collaboration on future projects that would
enhance the existing trading arrangements.
The licensing agreement conveys the right to source the
proprietary fibre directly from the manufacturer (a large 3rd
party material producer) in the event of IkSung being unable
to do so.
Research & Product Development (‘R&PD’) projects have
been launched with a specific aim of improving the existing
material and to explore new material compositions that
would reduce this reliance whilst retaining (or enhancing) the
competitive advantage that Neptune brings to the Group.
Investments made during the extended installation and
commissioning phase included automated process control
and diagnostic systems not employed by IkSung that allow
for more effective identification and resolution of faults.
In addition, the Group received and maintains a critical
spares package for the line and has a number of specialist
engineers who have received tailored maintenance training
with regards the line. The Group has a schedule of
preventative maintenance and repairs in addition to the
extensive clean down and inspection completed at the end of
each production run.
The Group also has an ongoing technical support agreement
with IkSung for major machine failures and a back to back
agreement is held which would allow material to be imported
to support demand.
Autins Group plc Annual Report and Accounts 2019
27
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT PRINCIPAL RISKS AND UNCERTAINTIES CONTINUED
Risk
Description and potential impact
Mitigation
Risk of
competing
materials to
Neptune
The impact of
the EU
referendum
(Brexit)
IT systems and
software
Currency and
foreign
exchange
The commercialisation or competitiveness of
Neptune could be impeded by technological
advances in existing or potential substitute
materials which could cause a reduction in
demand.
Based on the current political environment, there
remains significant uncertainty concerning the
timing and form Brexit will take.
Potential implications for automotive
manufacturers tends to be focused around
currency fluctuation and cross border business
regulation and tariffs with corresponding impact
on the cost and availability of raw materials and
labour.
Changes to cross-border trading, including tariffs
and non tariff barriers, could increase both
working capital requirements, by extending
supply chains, and the costs of both
manufacturing and sales.
Uncertainty continues over the long-term impact
of Brexit on the UK economy and the specific
effects it will have on growth in the automotive
sectors’ production and supply chain activities in
the UK, the Group’s current largest segment.
The Group has a range of systems and software
infrastructures upon which it relies to receive,
process and plan customer orders as well as
manage its supply chain.
Recent trends in Automotive OEM system design
and the Group’s increasing customer base
necessitates an increasing amount of EDI linkages
which add complexity and increased risk around
integrity of data.
Interruption of access or loss of these systems
could negatively affect the Group’s ability to
produce, despatch and invoice customers as
well as interrupt the smooth running of its own
supply chain.
A growing proportion of the Group’s business is
carried out in currencies other than Sterling. The
Group’s financial position or results of operations
may be impacted to the extent that there are
fluctuations in exchange rates.
The Group does not currently, but 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 specialist R&D technicians have focused projects
designed to improve both Neptune and our other existing
materials and to explore new materials applications.
The location, design and manufacturing capacity of all our
operational facilities are constructed to meet local market
demands, in territory, and we have plans to invest in further
capacity within Europe in the year to meet supply chain
developments in mainland Europe.
We have invested in relationships with supply chain partners
in the year to establish safety stocks whilst also developing
secondary suppliers and in certain instances more localised
supply to prevent cross border trading.
We have continued to establish emergency concepts
allowing for smooth transition of manufacturing between
sites to both address risks of cross border trading and allow
for better utilisation of Group capacity.
The Group seeks to position itself as an employer of choice
whilst recognising the competitive market and has taken
steps to engage staff in the year to better understand needs
and motivations and support retention.
The Board will continue to assess potential risks and impacts
of changes in the automotive supply chain and demand
levels as the final timing and terms of Brexit are confirmed
and take appropriate steps to minimise their impact.
The Group has invested in its IT infrastructure in order to both
improve operational functionality and also protect sensitive
and proprietary data from cyber-attacks. The Group has
developed an IT security training programme in the year to
update staff understanding of the changing risks associated
with cyber-security, profiling and phishing
Specialist 3rd party IT support and improvement are
employed with multi-layer data backup and storage.
The Group continues to monitor its IT requirements and may,
in future periods, invest further in ERP systems to support
diversification, growth and business efficiency.
Critical business continuity and disaster recovery plans are
reviewed in conjunction with our external IT support
providers and, based on testing of these plans,
improvements are developed and deployed.
The Group maintains banking facilities in the functional
currency of overseas operations and continues to seek,
where possible, to buy materials and services locally to the
procuring site so as to minimise transactional risk.
The Board would consider, for significant future capital
projects, a hedging strategy to give certainty at the time of
order placement. Speculative transactions of any kind remain
prohibited.
The Board may implement a hedging strategy to limit or
mitigate risk when it believes that the level of transactional
risk are sufficiently significant to have potential for material
impacts on the Group’s results.
The Strategic Report was approved by the Board on 11 December 2019 and signed by order of the Board by the Chairman.
Adam Attwood
Chairman
11 December 2019
28
Autins Group plc Annual Report and Accounts 2019
Governance
Statement of Directors’
responsibilities
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
IN RESPECT OF THE ANNUAL REPORT AND ACCOUNTS
The Directors are responsible for preparing the Annual Report
and financial statements in accordance with applicable law
and regulations.
Company law requires the Directors to prepare Group and Parent
Company financial statements for each financial year. As required
by the AIM Rules of the London Stock Exchange, they are required
to prepare the Group financial statements in accordance with
IFRSs as adopted by the EU and applicable law and have elected
to prepare the Parent Company financial statements in accordance
with UK Accounting Standards and applicable law (UK Generally
Accepted Accounting Practice), including FRS 101 Reduced
Disclosure Framework. Under company law the Directors must not
approve the financial statements unless they are satisfied that they
give a true and fair view of the state of affairs of the Group and
Parent Company and of the profit or loss of the Group for that
period. In preparing each of the Group and Parent Company
financial statements, the Directors are required to:
• select suitable accounting policies and then apply
them consistently;
• make judgements and estimates that are reasonable
and prudent;
•
•
for the Group financial statements, state whether they have
been prepared in accordance with IFRSs as adopted by the EU;
for the Parent Company financial statements, state whether
applicable UK Accounting Standards have been followed,
subject to any material departures disclosed and explained
in the financial statements; and
• prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Parent Company
will continue in business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Parent
Company’s transactions and disclose with reasonable accuracy
at any time the financial position of the Group and the Parent
Company and enable them to ensure that its financial statements
comply with the Companies Act 2006. They are also responsible for
taking such steps as are reasonably open to them to safeguard the
assets of the Group and the Parent Company and to prevent and
detect fraud and other irregularities.
Website publication
The directors are responsible for ensuring the annual report and
the financial statements are made available on a website. Financial
statements are published on the company’s website in accordance
with legislation in the United Kingdom governing the preparation
and dissemination of financial statements, which may vary from
legislation in other jurisdictions. The maintenance and integrity of
the company’s website is the responsibility of the directors. The
directors’ responsibility also extends to the ongoing integrity of the
financial statements contained therein.
Autins Group plc Annual Report and Accounts 2019
29
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT Board of Directors and
Senior Management
BOARD OF DIRECTORS AND SENIOR MANAGEMENT
Board Director
Senior Management
Adam Attwood
Non-Executive Chairman
Dr Kathryn Beresford
Group R&D Manager
Adam joined the Autins’ Board in January 2016
as Non-Executive Chairman, having previously
provided strategic guidance to the Board since
2013. He has many years experience of
working with growth-focused SMEs. Originally
a corporate solicitor with Norton Rose
Fulbright, he moved into quoted company
advisory and European M&A with
Charterhouse Bank. He progressed to direct
private equity investment with Livingbridge
Equity Partners focussing on investments in
the Midlands region. Adam has a portfolio of
non-executive roles with manufacturing and
branded businesses. Adam chairs the Group’s
Nominations Committee.
Dr Kathy Beresford holds a PhD in
Multichannel Automotive Audio from 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 7
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.
Stefan Janzen
Group Applications Manager
Joshua Kimberling
Group Sales Director
Neil MacDonald
Non-Executive Director
Joshua has spent his career in the sales and
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.
Matthias Migl
Managing Director, Autins GmbH
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.
Neil was appointed to the Board in July 2019 as
Non-Executive Director and is Chairman of the Audit
Committee. He is a Chartered Accountant with more
than 30 years of experience in engineering industries.
He is the former Group Finance Director of AES
Engineering Limited, the international mechanical seals
manufacturer; and previously Group Finance Director of
the international aerospace company, Firth Rixson. He
currently serves on the board of Pressure Technologies
plc as Non-Executive Chairman. Neil holds numerous
other non-executive roles in the public and private
sector.
James Larner
Chief Financial Officer and Company Secretary
James spent a significant portion of his career operating
in finance and operational roles within the Tata Steel
Group with particular focus on cost and working capital
management. He joined Caparo Mill Products as Finance
Director which again required specific focus on cost and
working capital before taking up the role as UK Finance
Director at Autins. James is an Accounting and Finance
graduate from Birmingham University who qualified as a
chartered accountant with Ernst & Young in 2001. James
joined the Group Board as Chief Financial Officer in
January 2016.
30
Autins Group plc Annual Report and Accounts 2019
Henrik Petterson
Operations Manager, Autins AB
Gareth Kaminski-Cook
Chief Executive Officer
Henrik brings 20 years’ experience in the
automotive industry, progressing rapidly from
operator to operational manager for Schenker
Automotive’s direct sequenced supply to
Volvo. Henrik played a leading role in the
creation, management and development of
Autins’ Swedish site, with a keen eye on cost,
agility and automotive best practice. Since
April 2019, Henrik has been the in-country
manager for Autins’ Swedish operations
bringing in Group support to facilitate
operational scaling as required. Henrik has
a master’s degree in Electricity and Signal
Technology from the University of
Borås, Sweden.
Gareth joined Autins in October 2018 from Low
& Bonar plc, the performance materials group,
where he was Group Director of Strategy, Sales
and Marketing and Global Business Director,
Interiors and Transportation (a global business
supplying specialist materials to the
Automotive and Flooring industries).
Gareth has 25 years’ experience in market-
leading industrial organisations across several
business sectors, having worked previously for
Saint Gobain, Rexam, BPB and Danaher. He has
a deep understanding of the manufacture and
application of specialist acoustic and thermal
materials across relevant industrial markets
including Automotive and Building Products.
Ian Griffiths
Non-Executive Director
Mark White
UK Operations Manager
Joerg Thul
Group QHSE Director
Joerg is an experienced quality professional
with a background in engineering and a track
record in creating, managing and developing
the quality function within the automotive
supply chain. Joerg is accomplished in the
introduction, use and maintenance of core
automotive quality and lean tools and has a
degree in Integrated Technologies from
Sheffield University.
Ian joined the Board in April 2016 as
Non-Executive Director and chairs the
Remuneration Committee. He brings
strategic and operational international
engineering sector experience, having spent
nearly 30 years with GKN plc. Ian served as a
Non-Executive Director of Ultra Electronics
Holdings plc from 2003 to 2012. He has been
a Non-Executive Director and Remuneration
Committee Chairman of Renold plc since
2010, was appointed Chairman of Trackwise
Plc in July 2018 and was Chairman of Hydro
International plc from 2014 to 2016.
Mark joined Autins in April 2019 from Jaguar
Landrover where he was a senior manager.
Mark served over 20 years at JLR holding
various management positions in the body
construction, trim and final assembly
sections. Mark brings a wealth of experience
in lean and automotive process
improvement and was part of the senior
team that implemented the highly
automated bodyshop for the new D7u multi
vehicle platform.
Dean Trappett
Group Engineering Manager
Dean is an experienced engineering manager
with a demonstrated history of working in first
tier automotive companies. He has
commercial and customer skills combined
with 26 years process, continuous
improvement & manufacturing knowledge,
leading teams in both Manufacturing
Engineering and New Product / Process
introduction. Dean joined Autins in
September 2019 to lead the group
engineering role within the business.
Autins Group plc Annual Report and Accounts 2019
31
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT Corporate Governance
statement
CORPORATE GOVERNANCE STATEMENT
FOR THE YEAR ENDED 30 SEPTEMBER 2019
The Group, mindful of changes to governance requirements for AIM quoted companies, and having considered the size and nature of the
Company and composition of the Board, formally adopted the QCA Corporate Governance Code for Small and Mid-Size Quoted Companies
(the QCA Code) in September 2018. This was in line with the Board’s previously stated aims of seeking to apply, or work towards, best practice
for smaller quoted companies. The Group remains subject to the UK City Code on Takeovers and Mergers.
The statement on Corporate Governance below should be read in conjunction with relevant sections of the Company Overview, Strategic Report and
Governance sections of these Annual Reports and Accounts which are cross referred from these pages and the Group’s website – www.autins.com.
QCA Principle 1: Establish a strategy and business model which promote long-term value for shareholders
An overview of the Group’s business model is set out on pages 14 to 15 of this report, whilst the Group’s strategy is described on pages 14 to 15.
Leadership and day-to-day management of the Group is the responsibility of the Chief Executive. The Executive Directors, in conjunction with
the Leadership team (details of whom are on pages 30 to 31) formulate, review and recommend the Group’s strategy for Board approval as part
of the annual planning cycle. The Leadership team will then take ownership of specific policy deployment plans that are designed to
implement and promote the approved strategy in addition to delivery of annual financial plans.
The Group’s business model has been designed to deliver sustainable, long term, 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.
QCA Principle 2: Seek to understand and meet shareholders needs and expectations
The Group seeks regular dialogue with both existing and potential shareholders in order to confirm that our wider investor relations plan has
allowed investors to clearly understand the strategy, business model and performance.
The Executive Directors meet regularly with investors and analysts at investor roadshows and by hosting tours of our facilities in order to
facilitate open communications regarding the Group’s business performance (both current and expected future state) and reconfirm the
Board’s understanding of shareholder’s expectations and needs with regards the Group.
The Board recognises the importance of the Annual General Meeting (AGM) and therefore encourages participation by all investors at the AGM.
All Board members present at the AGM therefore make themselves available to answer any questions from shareholders that may arise. Notice
of the AGM is in excess of 21 clear days and the business of the meeting is conducted with separate resolutions, voted on initially by a show of
hands and with the result of the voting being clearly indicated.
The results of the AGM are subsequently published on the Company’s corporate website and are announced through a regulatory information
service. The Board will also disclose any actions to be taken as a result of resolutions, for which, votes against have been received from at least
20 per cent of independent Shareholders.
The Group has not appointed a Senior Independent Director, but considers annually whether one should be appointed.
QCA Principle 3: Take into account wider Stakeholder and Social responsibilities and their implications for long-term success
The Group is aware of its Corporate Social Responsibilities and has spent time in the year refining its CSR policies, data recording and
procedures. The Group recognises the need to maintain effective working relationships across a range of stakeholder groups including its
employees, customers, suppliers, shareholders and the wider community in which it operates. The revised policy document will be deployed
during FY20 and is designed to provide a focal point for the Group’s CSR efforts.
The Board’s primary responsibility is to promote the success of the Group for the benefit of its members as a whole, but the Board recognises
its obligation to balance the Group’s operations and working methodologies to take account of, and balance with, the needs of all of the wider
shareholder groups. Where feedback is received from stakeholders, the Group endeavours to make appropriate amendments to working
arrangements and operational plans to address this feedback whilst remaining consistent with the Group’s longer-term strategies.
The Group employs a full time Environmental, Health and Safety professional who ensures that due account is taken of any impact on the
environment that its activities may have and seeks to minimise this impact wherever practical and possible. The Group remains fully compliant
with Health, Safety and Environmental legislation relevant to its activities and performs regular reviews of its various procedures and systems
in order to maintain and enhance both compliance and the sharing of best practice.
During the year, the Group launched Autins Values, as set of six principles designed to influence and inform our response to stakeholder needs
and the Group’s responsibilities to them. Management launched an annual Group Employee Engagement Survey in the year to assess the
implementation of these values and to address, where possible, any concerns raised and ensure the alignment of interests between the
Group and that of our employees.
QCA Principle 4: Embed effective risk management, considering both opportunities and threats, throughout the organisation
The Audit Committee provides guidance, having taken feedback from management and third party advisors, to the Board with regards the
effectiveness of the Group’s system of Internal Control. The Group has designed and implemented systems to manage, limit and control the
risk of failure to achieve business objectives. As with all systems, the Group’s processes cannot eliminate all risk completely, but provide
reasonable rather than absolute assurance against material loss or misstatement.
32
Autins Group plc Annual Report and Accounts 2019
The Chief Financial Officer leads a continuous process, with support from the Leadership and finance team, to identify, evaluate and manage
the Group’s significant risks. The Group’s register of potentially material or significant risks are reviewed by the Board twice per annum. This
register informs the principal risks and uncertainties as stated on pages 26 to 28.
As an SME, the Executive Directors, supported by the Group’s Leadership Team, are actively involved in the daily management of all aspects of
Group operations and meet on a regular basis to discuss:
• Quality, Environmental and Health & Safety performance.
• Monthly financial and commercial results of the business compared to forecast.
• Achievement against annual policy deployment activities that support the Board’s overall strategic plans.
• Business risks and appropriate control systems improvements to manage those risks.
• Progress on performance improvement projects.
• Steps taken to embed internal control and risk management further into the Group’s operations.
On a monthly basis, agreed financial and non-financial KPIs together with management accounts are reviewed by the Board to assess progress
against its key objectives for the year. The Executive Directors’ provide a supporting written commentary in order to highlight key areas of
performance and address previously agreed areas of interest. These KPI’s, management accounts and more detailed departmental level data
are cascaded via the Leadership Team throughout the organisation.
The Board further considers whether any significant strategic, organisational or compliance issues have occurred (or are at risk) to ensure that
the Group’s assets are safeguarded and financial information and accounting records can be relied upon.
A summary of the principal risks and uncertainties facing the Group, as well as mitigating actions, are set out on pages 26 to 28 of this report.
QCA Principle 5: Maintain the Board as a well-functioning, balanced team led by the Chair
Role of the Board
The Company and Group are managed by a Board of Directors, chaired by Adam Attwood, who are ultimately responsible for taking all major
strategic decisions and also addressing any significant operational matters. Deployment of the Group’s strategy and management of day to
day decisions is delegated to the Executive Directors and the Leadership Team. The Board also reviews the Group’s risk profile and the
adequacy of the implemented systems of internal control that are in place. The management information systems continue to be evolved to
adapt to changing data enquiry needs and to ensure that they are capable of facilitating informed decisions by the Board to allow them to
properly discharge their duties.
Delegation of responsibilities
The Group maintains a formal schedule of matters reserved for the Board which is reviewed at least annually. A schedule of delegated
authorities under which Management can operate without reference to the Board exists and was last reviewed, revised and approved by the
Board in December 2019.
Board composition
The Board consisted of two Executive Directors, a Non Executive Chairman and two Independent Non Executive Directors for the majority of
the year. All Non Executive Directors that served in the year were considered to be independent of management by the Board and were free
from any business or other relationship that could materially interfere with the exercise of their independent judgement in accordance with the
QCA Code.
The Group considers annually whether a Senior Independent Director should be appointed, but has not currently chosen to do so.
The Board are satisfied that they have sufficient members and with an appropriate balance of skills and experience to allow it to operate
effectively and exert control over, and provide challenge and guidance to, the business and its management team. No individual Board
member has unconstrained powers to make decisions of a material nature.
Role of Chairman and Chief Executive
The Chairman and Chief Executive Board positions are separate with clearly defined individual duties and responsibilities. The Chairman is
responsible for the leadership and management of the Board and its governance and as such meets regularly and separately with the
Executive and Non Executive Directors to discuss matters for the Board.
The Chief Executive is responsible for day-to-day management and leadership of the Group. This includes guiding the Leadership Team (details of
whom are on pages 30 to 31), in its formulation, review and confirmation of the Group strategy for Board approval and subsequent execution.
The Board convenes regularly with at least 10 scheduled meetings per year. These meetings incorporate an annual strategy day and scheduled
presentations by Leadership team members to provide the Board with additional insight into their area of expertise. Additional meetings are
held in person or via teleconference where it is considered necessary to respond to any urgent change in circumstance.
Details of Directors’ attendance at scheduled Board and Committee meetings during the year can be found on page 36 within the
Director’s report.
Autins Group plc Annual Report and Accounts 2019
33
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT CORPORATE GOVERNANCE STATEMENT CONTINUED
QCA Principle 6: Ensure that between them, the Directors have the necessary up-to-date experience, skills and capabilities
The Board composition has changed in the year but is still considered to have all appropriate skills, experience and knowledge sufficient to
give the Board the ability to constructively challenge strategy, decision making and scrutinise business performance.
The Board’s biographical details are set out on the Group’s website and within this Annual Report and Accounts on page 30 to 31.
Board composition remains under review to ensure it remains appropriate to the strategic and managerial requirements of the Group. One
third of the Directors are required, in accordance with the Company’s Articles of Association, to retire annually in rotation. This enables the
Shareholders to decide on the election of the Company’s Board.
Attendance and participation in relevant training, networking and update events are encouraged in order to create, maintain or enhance
relevant skills and knowledge. Updates from the Quoted Companies Alliance and external advisers are utilised to ensure relevant knowledge of
Corporate Governance matters where appropriate.
All Directors have access to the Group’s (or independent) professional advice at the Company’s expense. In addition, they have access to the
advice and services of the Company Secretary who is responsible to the Board for advice on Corporate Governance matters.
QCA Principle 7: Evaluate Board performance based on clear and relevant objectives, seeking continuous improvement
As part of his responsibilities with regards Board effectiveness and governance, the Chairman, informally assesses the performance of the
Board and its Directors on an ongoing basis and brings to the relevant party’s attention any areas for improvement.
The Board has committed to using the QCA Board effectiveness review to assess the 12 defined key areas of Board effectiveness. Due to the
change of Chief Executive at the start of the period and the change in Non Executive Director in the second half year, the effectiveness review
scheduled for FY19 was postponed. The Board will next conduct an evaluation of its own performance in the second half of FY20.
The Board is satisfied that its operating culture is open and dynamic enough not to warrant the use of Group resources for an externally
facilitated review at this time. This approach will be reviewed on an annual basis.
The effectiveness of the Board and its Committees are reviewed on at least an annual basis but kept under review in accordance with
Corporate Governance best practice.
QCA Principle 8: Promote a corporate culture that is based on ethical values and behaviours
As an SME, we recognise that it’s our people that will underpin delivery of our business model. We therefore aim to create systems and roles
that support the recruitment, retention, engagement and development of our staff in response to ever changing customer demands.
During the year Autins’ core values, as proposed by the Leadership team, were approved by the Board and deployed across the business.
These values seek to establish a framework which all employees can support, will govern our behaviours and underpin a high performance
culture that the Board believes is required in order to deliver our strategy.
Our aim is that the Group’s culture will be built on these Autins values and they will inform the expected behaviours that will be an integral part of
our induction, appraisal and performance management and remuneration processes. We have already established a twice yearly Leadership
Organisational Management Review which allows for peer to peer review of critical business challenges, staff performance and reward.
A positive Health and Safety culture is promoted within the business and the Group seek to reflect this in all of our policies and procedures, as
well as in our approach to the training and development of the people involved in our operations. Health and Safety is the standing first
agenda item at all Board and Leadership meetings. The Group’s Health & Safety Manager, who reports ultimately to the Chief Executive, has
direct access to the Executive Directors should he wish to raise any urgent concerns.
The Group’s policies and procedures are given to all new employees at induction, and are available to both permanent and temporary staff via
our Employee Engagement App. The App is also the Group’s portal for Anti-Bribery, Corruption and Whistle-blowing policy. Any concerns
raised are passed directly to the Chairman of the Audit Committee for independent review. All policies and procedures are subject to a periodic
review and re-approval to ensure they continue to meet their aims.
The Group’s share dealing code is applicable to all staff and available for review on the Employment Engagement App. All staff are subject to a
closed period from the last day of each full or half year until 48 hours after the results for that period have been published and require
authorisation from the Company Secretary for any trading activity outside of a close period.
QCA Principle 9: Maintain Governance structures and processes that are fit for purpose and support good decision making
by the Board
The Board maintains separate Audit, Nomination and Remuneration Committees whose purpose is to consider and oversee issues of policy
outside main Board meetings.
Audit Committee
The Audit Committee comprises the three Non-executive Directors. It was chaired by Terry Garthwaite until April 2019 and by Neil MacDonald
from July 2019.
34
Autins Group plc Annual Report and Accounts 2019
The Committee’s role includes:
• Going concern review, including sensitivity assumptions.
• Review of the financial statements, Annual Report and investor presentation.
• Consideration of the external audit report and management representation letter.
• Review of the audit plan and audit engagement letter.
• Review of the interim results and associated presentation for investors.
• Meetings with the auditor with and without management present.
• Review the Group’s whistle-blowing policy and procedures.
• Review and challenge the Group’s assessment of business risks and internal controls to mitigate these risks.
• Considering the appointment, fees, independence and effectiveness of the auditor, 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 and their interaction with changes in GAAP.
• Ad-hoc reviews of banking facilities and documents associated with the issue of new equity.
The Board retains ultimate responsibility for reviewing and approving the Annual Report and Accounts and the half-yearly reports.
Remuneration Committee
The Remuneration Committee comprises the two independent Non-Executive Directors and is chaired by Ian Griffiths. The Committee is
responsible, within its agreed terms of reference, for the following remuneration matters:
• Setting and reviewing the remuneration policy for all Executive Directors.
• Confirm that remuneration payments made to Directors are consistent with approved policy.
• Ensuring that remuneration payments are in accordance with appropriate benchmarks as well as assessing changes in practice that may
have future remuneration impacts.
• Overseeing incentives-based remuneration for Senior Management or other employees identified as relevant by the Committee.
In carrying out these duties the Committee shall ensure the appropriateness, relevance and market practice in respect of such remuneration policy.
Nomination Committee
The Nomination Committee is chaired by Adam Attwood. It has responsibility for reviewing the size, composition and structure of the Board
(and its Committees) and making recommendations of any changes it believes are required for succession planning. The Committee identifies
and nominates for approval by the Board of candidates to fill vacancies as and when they arise as well as reviewing the results of any Board
performance evaluations and proposing corrective actions if required.
Whilst the Committee has ultimate responsibility for reviewing the structure, size and composition of the Board and recommending any
changes required, in practice the Board as a whole considers any recommendations for appointments.
Interaction with the Board and governance
During the year, the Chair of each Committee will provide the Board with a summary of key issues considered, and conclusions drawn, at the
Committee meetings. Details regarding the frequency and attendance of meetings for these committees are contained in the Director’s Report.
Written Terms of Reference have been established (and are regularly reviewed) for all Board Committees. These Terms of Reference are available on
the Group’s Investor website and confirm the duties, authority, reporting responsibilities and minimum meeting frequency for each Committee.
Board committees are authorised, in the furtherance of their duties, to engage the services of external advisers as they deem necessary at the
Company’s expense.
QCA Principle 10: Communicate how the Group is governed and is performing by maintaining a dialogue with
shareholders and other relevant stakeholders
The Group communicates formally with shareholders via the Annual Report and Accounts, the full-year and half-year results announcements
and associated presentations, periodic market announcements and trading updates (as appropriate) and the AGM.
The Executive Directors periodically meet with analysts and shareholders in face to face meetings as well as hosting Investor road shows and
events both at the Group’s and investor’s premises.
The Group’s website has been reviewed and redesigned to allow a more accessible platform to communicate the Group’s strategy, products
and processes to the wider community. A dedicated Investors section is maintained within the main site and is updated regularly. The
Investor’s website contains all financial reports and associated Investor presentations since the Group’s Initial Public Offering, together with
downloadable copies of standing data (including the terms of reference of the Board’s subcommittees) that are of use to stakeholders.
This governance statement was last reviewed and updated on 11 December 2019.
Autins Group plc Annual Report and Accounts 2019
35
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT Directors’ report
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 SEPTEMBER 2019
The Directors present their report and the audited financial statements for the Group for the year ended 30 September 2019 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 3 to 28 which is incorporated into this report by
reference. The Directors’ statement on Corporate Governance is set out on pages 32 to 35. This report should be read in conjunction with
information concerning Directors’ Remuneration and employee share schemes in the Remuneration report on page 40, 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
48 to 49. Following the year-end, the Directors assessed the appropriateness of the Group declaring a final dividend and concluded that no
dividend would be appropriate.
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 (deceased 6 April 2019);
•
Ian Griffiths;
• Gareth Kaminski-Cook;
• James Larner; and
• Neil MacDonald (appointed 16 July 2019)
Corporate governance
The Directors’ statement regarding Corporate Governance can be found on pages 32 to 35. The Company is a member of the Quoted Company
Alliance (QCA) and has chosen to adopt the QCA Corporate Governance Code for Small and Mid-Size Quoted Companies (the QCA Code) with
effect from 27 September 2018 (and therefore for the whole of FY19). The Group has continued to use QCA resources, networking and training
events to improve the knowledge and implementation of corporate governance standards through the year
Board of Directors and Board committees
Biographical details of all the Directors at the date of this report are set out on pages 30 to 31.
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 operated throughout the year. Their roles and membership are
stated on page 35 as part of the Corporate Governance statement.
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
Terry Garthwaite (deceased 6 April 2019)
Ian Griffiths
Gareth Kaminski-Cook
James Larner
Neil MacDonald (appointed 16 July 2019)
Board
Audit Committee
Remuneration Committee
Nomination Committee
Number
Attended
Number
Attended
Number
Attended
Number
Attended
10
6*
10
10
10
2*
10
6
10
10
10
2
4
1*
4
n/a
n/a
2*
4
1
4
n/a
n/a
2
n/a
6*
7
n/a
n/a
1*
n/a
6
7
n/a
n/a
1
1
-
1
n/a
n/a
1
1
-
1
n/a
n/a
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.
36
Autins Group plc Annual Report and Accounts 2019
Auditor independence
The Audit Committee and the Group’s external auditor, BDO LLP, have safeguards in place to avoid the possibility that the auditor’s objectivity
and independence could be compromised. These safeguards include the auditor’s 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 ixBrl tagging and advice and compliance support with
regards the Group’s long-term incentive plan.
Re-election of Directors
At every Annual General Meeting, 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 retire from office by rotation.
As announced on 16 July 2019, Neil MacDonald was appointed by the Board as a Non-Executive Director and has since served as a member of
the Board and Chair of the Audit Committee. He will stand for 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 2019 were as follows:
Adam Attwood
Ian Griffiths
Gareth Kaminski-Cook
James Larner
Neil MacDonald
2p ordinary shares
at 30 September
2019
% of issued
ordinary share
capital
2p ordinary shares
at 1 October 2018
% of issued
ordinary share
capital
600,000
14,311
180,228
25,000
125,000
1.52
0.04
0.46
0.06
0.32
455,428
14,311
Nil
Nil
Nil
2.06
0.06
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
Cavendish Asset Management
Thornbridge Investment Management
Ruffer LLP
Karen Holdback
Kevin Westwood
Unicorn Asset Management
Jarvis Securities
Toscafund
Number of
voting rights
as at
11 December
2019
8,707,702
6,176,361
54,450,338
2,500,000
2,490,741
2,025,000
2,025,000
1,769,806
1,618,220
1,590,300
% voting
rights as at
11 December
2019
Number of voting
rights as at
30 September
2019
% voting
rights as at
30 September
2019
21.99%
15.60%
13.76%
6.31%
6.29%
5.11%
5.11%
4.47%
4.09%
4.02%
8,707,702
6,176,361
4,450,338
2,500,000
2,490,741
2,025,000
2,025,000
1,769,806
1,618,220
1,590,300
21.99%
15.60%
11.24%
6.31%
6.29%
5.11%
5.11%
4.47%
4.09%
4.02%
Autins Group plc Annual Report and Accounts 2019
37
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT DIRECTORS’ REPORT CONTINUED
Financial risk management
In certain circumstances, the Group uses financial instruments to manage specific 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 64 to 66 of the financial statements.
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.
Research & Development
The Group’s dedicated Research and Product Development (‘R&PD) plan, first launched in FY17, was modified in the year (in response to the
overall costs reduction programme) to focus on those items that could deliver enhanced value to the Group in the near term. Particular focus
was paid to improving the environmental impacts of our products and developing materials and processes tailored for the evolving Electric
Vehicle market.
The high level of success in the year lead to the majority of costs being recognised as intangible assets having met the Group’s stated
accounting policy for such expenditure.
The R&PD plan is reviewed at least twice per annum to ensure its focus continues to address customer and market problems.
Health and safety
The Chief Executive, with support from a full time Environmental, Health and Safety professional, has overall accountability for health and
safety across the organisation.
The Group remains committed to providing a safe and healthy working environment for staff and contractors alike. Group wide health and
safety standards and systems exist to set out, in support of a one company approach, the required range of policies and procedures designed
to manage risks and promote wellbeing at all sites.
Management and the Board regularly review a range of health and safety performance measures and take appropriate steps to address any
areas for concern including ensuring lessons learned from incidents that occur are shared across the Group for best practice improvements.
Charitable and political donations in the year
The Company did not make any political donations during the year.
The Group matched funds raised by staff and donated £410 to Macmillan Cancer Research. Staff time and resources were also provided to
WMG Academy, a school specialising in engineering education, and Rugby Free School, a primary school near our UK Head Office as well as in
support of the KidsOut Giving Tree campaign (Registered Charity no. 1075789).
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 26 to 28. The Company’s financial position and its cashflows are outlined in the Financial Review on
pages 18 to 21.
The Board have concluded, on the basis of current and forecast trading and related expected cashflows and available sources of finance, that
it remains appropriate to prepare the Group’s results on the basis of a Going Concern.
The Group received a net cash injection of £3.3 million in August 2019 as a result of an equity placing and this, combined with continued
support from the Group’s primary and supporting banks mean that the Group has sufficient headroom within it’s facilities to allow for
reasonably foreseeable cashflow requirements in the event of changes to its demand or cost base.
The Board continues to review the structure of the Group’s banking arrangements with a view to ensuring that it remains appropriate for the
planned growth within mainland Europe and to allow for the more variable demand that has become a feature of the automotive market in the
last 18 months. The Group’s current banking remains without covenant.
38
Autins Group plc Annual Report and Accounts 2019
Auditor
BDO LLP, the Company’s independent auditor, have 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, that 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 he ought to have taken as a Director to make himself aware of any relevant audit information and to establish that the Company’s
auditor is aware of the information.
The confirmation is given and should be interpreted in accordance with the provisions of section 418 of the Companies Act 2006.
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 7 February 2020 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 11 December 2019.
By order of the Board.
James Larner
Company Secretary
11 December 2019
Autins Group plc
Central Point One
Central Park Drive
Rugby
Warwickshire CV23 0WE
Company number: 08958960
Autins Group plc Annual Report and Accounts 2019
39
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT Director’s Remuneration report
DIRECTOR’S REMUNERATION REPORT
The remuneration of the Executive Directors and certain other key management team members is subject to the approval and oversight of the
Remuneration Committee which is chaired by Ian Griffiths.
The Company’s remuneration policy is designed to promote the achievement of its strategic goals with regard to growth and diversification
and to attract and retain staff and Directors capable of accelerating achievement of the strategic plans.
In setting the measurement of executive performance due notice is taken of the risk profile of the business and to reward progress. The
committee believes that the Executive Director and leadership team should be rewarded for securing long term growth that provides for a
sustained growth of investor returns.
Fixed pay is based on a market-based approach which takes into account the size of the Company, peer review of compensation packages and
the experience and qualifications of the executive in question. Variable pay is designed to promote out-performance, which is both achievable,
repeatable and sustainable.
Directors
The Directors who served during the year under review and up to the date of approving the Annual Report and Accounts are disclosed in the
Directors Report.
At every Annual General Meeting, 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 retire from office by rotation.
As announced on 16 July 2019, Neil MacDonald was appointed by the Board as a Non-Executive Director and has since served as a member of
the Board and Chair of the Audit Committee. He will stand for election at the forthcoming AGM.
Directors’ Interests – Interests in shares (unaudited)
2p ordinary shares at 30 September 2019 % of issued ordinary share capital
2p ordinary shares at 1 October 2018 % of issued ordinary share capital
Adam Attwood
Ian Griffiths
Gareth Kaminski-Cook
James Larner
Neil MacDonald
600,000
14,311
180,228
25,000
125,000
1.52
0.04
0.46
0.06
0.32
455,428
14,311
Nil
Nil
Nil
2.06
0.06
n/a
n/a
n/a
Directors’ Interests – Interests in share options (unaudited)
Details of options held by Directors who were in office at 30 September 2019 are set out below. The Company’s option schemes are set out in
more detail in notes 20 & 24 to the financial statements.
Date of Grant
Number
Exercise Price
Expiry Date
James Larner
Gareth Kaminski-Cook
29 March 2019
29 March 2019
81,395
279,070
£0.02 29 March 2029
£0.02 29 March 2029
The market price of the Company’s shares at 30 September was 20.5 pence. The range of market prices during the year was 17 pence to 37 pence.
Contracts of service
The Executive Directors, Gareth Kaminski-Cook and James Larner, each have a service agreement containing one year’s and six month’s notice respectively
and claw back and malus clauses with regard to any paid or unpaid bonuses. Michael Jennings had a service agreement containing one year’s notice.
The Non-Executive Directors, Adam Attwood, Ian Griffiths and Neil MacDonald, have a service agreement with a three-month notice period.
Terry Garthwaite’s service agreement contained a three-month notice period.
Salaries and benefits
The Remuneration Committee meets at least twice per year in order to consider to review and set the remuneration packages for the Executive Directors.
Remuneration is benchmarked annually to ensure they remain comparable and competitive with companies of a similar size and complexity.
Remuneration for the Executive Directors comprises basic salary, pension contributions and benefits in kind (including healthcare, company
cars and life insurance). The Non-Executive Directors remuneration consists of basic salaries but are reimbursed for travel and other out of
pocket expenses. Remuneration for Executive Directors also includes share options as detailed above.
Year ended 30 September 2019
M Jennings
G Kaminski-Cook
J Larner
A Attwood
T Garthwaite
I Griffiths1
N MacDonald
Salary
£000
Benefits
£000
Pension
£000
Total FY19
£000
Total FY18
£000
–
259
142
60
23
51
9
544
–
26
14
–
–
–
–
40
–
11
8
–
–
–
–
19
–
296
164
60
23
51
9
603
268
–
139
60
45
45
–
557
1
Ian Griffiths received additional remuneration in FY19 in recognition of a period as acting Chief Executive during the transition from Michael Jennings to Gareth Kaminski-Cook.
By order of the Board
Ian Griffiths
Non Executive Director and Chair of the Remuneration Committee
11 December 2019
40
Autins Group plc Annual Report and Accounts 2019
Audit Committee report
AUDIT COMMITTEE REPORT
Members of the Audit Committee
The Committee currently consists of all serving Non-Executive Directors. The committee was chaired by Terry Garthwaite (until 6 April) and Neil
MacDonald (from 16 July) during the year.
The Board is satisfied those who served as Chairman of the Committee in the period had relevant and recent financial experience as both were
Chartered Accountants who have served as Finance Director and Chair of Audit Committees in other organisations.
Meetings of the Committee may, by invitation, be attended by the Chief Executive and the Chief Financial Officer. The Committee met four
times in the year.
The Committee reports the outcome of its deliberations at the subsequent Board meeting and minutes of each meeting are made available to
all members of the Board.
Duties
The Audit Committee’s duties are set out in its Terms of Reference, which are available on the Company’s website (www.autins.com/investors)
and on request from the Company Secretary.
The main items of business considered by the Audit Committee during the year included:
• Going concern review, including sensitivity assumptions,
• Review of the financial statements, Annual Report and investor presentation,
• Consideration of the external audit report and management representation letter,
• Review of the FY19 audit plan and audit engagement letter,
• Review of the interim results and associated presentation for investors,
• Meetings with the auditor with and without management present,
• Ad-hoc reviews of banking facilities and documents associated with the issue of new equity.
Role of the Auditor
The Audit Committee monitors the relationship with the Auditor, BDO LLP, to ensure that auditor independence and objectivity are maintained.
The Committee therefore monitors the provision of any non-audit services by the external auditor and during the year certain non-audit
services have been placed with other appropriate providers.
The Audit Committee recommends BDO LLP are re-appointed as auditor at the next AGM.
Audit process
The Auditor prepares and presents a plan for the audit of the full year financial statements that establishes the scope, areas of special focus
and audit timetable. This plan is reviewed and agreed in advance by the Audit Committee.
Following the audit of the annual financial statements the Auditor presents its findings to the Audit Committee for discussion. There were no
major areas of concern highlighted by the Auditor during the year beyond those areas of significant risk and audit judgment that are routinely
discussed and disclosed in their report to the members of the Group.
Internal audit
The Committee considers that, taking account of the size and structure of the Group’s trading and assets, an internal audit function is not
required. The Committee will keep this under review to ensure that as the Group develops and complexity increases appropriate resources are
dedicated to the creation of an internal audit function.
Risk management and internal controls
As described on page 34 of the Corporate Governance Report, the Group has established a framework of risk management and internal
control systems, policies and procedures. The Audit Committee is responsible for reviewing the risk management and internal control
framework and ensuring that it operates effectively. During the year, the Committee has reviewed the framework and the Committee is
satisfied that it is currently operating effectively.
Whistleblowing
As noted in the Corporate Governance Report, the Group has a formal whistleblowing policy which sets out the process for any employee of
the Group to raise, in confidence, any concerns about possible improprieties in financial reporting or other governance matters. The Chairman
of the Audit Committee acts as the independent reviewer for any claims that are raised, with any relevant matters and actions recorded at the
next appropriate meeting. During the year, there have been no incidents recorded or raised for consideration.
By order of the Board
Neil MacDonald
Non-Executive Director
11 December 2019
Autins Group plc Annual Report and Accounts 2019
41
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT Financial statements
Independent Auditor’s report
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF AUTINS GROUP PLC
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 2019 which comprise the consolidated income statement, the consolidated statement of comprehensive income, the
consolidated and parent company statements of financial position, the consolidated and parent company statements of changes in equity,
the consolidated statement of cashflows 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 2019
and of the Group’s loss 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 and the parent company in accordance with the ethical requirements that are relevant to our audit of
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 judgement, 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.
42
Autins Group plc Annual Report and Accounts 2019
Key audit matter
How we addressed the key audit matter in our audit
Impairment risks
The Group has goodwill, other intangibles and property, plant and
equipment of £14.2 million. In accordance with accounting standards,
goodwill is not amortised but is subject to an annual impairment
review through assessment of the value in use of the Automotive Noise,
Vibration and Harshness (‘NVH’) CGU to which it is attributable. In
addition, the existence of continuing operating losses and the Group’s
market value being lower than the consolidated net assets, provide
further indicators that impairments may be present.
In addition, property, plant and equipment within the NVH CGU
includes the Neptune production facility with a net book value of
£5.1 million which was completed and brought into use in the previous
financial year. This asset is still generating losses although there is an
emerging track record of securing customer orders and a significant
pipeline of enquiries which management are confident will enable the
site to start to generate cash and profits in 2020 and beyond.
The Group’s accounting policies and critical estimates and judgements
are described in Notes 1 and 2 respectively. Details of the impairment
considerations are included in Notes 11 and 12.
We consider there to be a significant risk in relation to the achievement
of the forecast future trading and cashflows used to determine the
value in use supporting the carrying value of the goodwill, other
intangible assets and property, plant and equipment in the NVH CGU
and the Neptune facility within the NVH CGU. No other CGUs have any
material assets which could be subject to impairment
We have reviewed and challenged the judgements adopted by
management in undertaking the impairment tests, which
comprised assessment of the value in use for the NVH CGU and
the Neptune facility. These included
• The identification of the Cash Generating Units (CGUs) and
validating the assumptions and evidence supporting the
allocation of all associated revenue, costs and assets to CGUs;
• The calculation of the discount rate used to discount the
cashflows in each CGU;
• The assumptions used by management in their forecasts of the
future trading performance and cash generation of each CGU.
This included comparison with the information used to assess
going concern, challenging the robustness of the key
assumptions, including the rate of securing new customers for
the Neptune facility and assessment of conversion rates in the
enquiry pipeline;
• The appropriateness of the sensitivities applied by
management, including reperformance of the value in use
calculations to assess the level of underperformance against
management’s forecasts required to eliminate the headroom
for both the NVH CGU and the Neptune facility;
• We used our valuation experts to confirm the appropriateness
of the models used by management to calculate the value in
use for each CGU and the calculation of the discount rate; and
• we considered the outcomes achieved compared with the prior
year forecasts to understand the reasons for the variations and
challenged how the current year’s budgets and forecasts
incorporated this information.
Key observations
Nothing has come to our attention as a result of performing the above procedures that causes us to believe that any material misstatement
is present in respect of the carrying value of goodwill, other intangible assets and property, plant and equipment, either in respect of the
Neptune facility or the wider NVH CGU.
Autins Group plc Annual Report and Accounts 2019
43
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF AUTINS GROUP PLC CONTINUED
Key audit matter
How we addressed the key audit matter in our audit
Going concern
As disclosed in Note 1, the financial review on pages 18 to 21 and the
principal risks and uncertainties on pages 26 to 28 the financial
statements have been prepared on a going concern basis.
During this second year of losses, management have implemented
various initiatives to reduce costs and improve margins and
operating efficiency. The funding to deliver these initiatives, together
with funding the losses and providing time to implement more robust
working capital controls included the agreement of extensions to the
existing banking facilities for the period through to February 2020,
further supported by an equity issue in August 2019 which raised
£3.3 million net of expenses.
In support of their going concern assessment, management have
prepared detailed forecasts and projections covering the period to
30 September 2021. These include consideration of all reasonably
foreseeable trading events and circumstances (including an
assessment of the impact of any future agreement in respect of
Brexit) in determining the level of facilities the Group requires. Based
upon a continuation of the existing trade loan finance and invoice
discounting facilities these forecasts and projections indicate there
are adequate levels of headroom.
The ability to achieve the forecast customer volumes, together with
renewal of the existing (or alternative) facilities, which are all currently
uncommitted and “due on demand”, was a key area of focus during
our audit and is accordingly considered to be a key audit matter
We critically assessed management’s trading and cashflow
budgets and forecasts covering the period to 30 September
2021. This included testing the key estimates and judgements
and, in doing so, we specifically considered the principal trading
and cashflow assumptions and the evidence supporting the
banking facilities used in the calculation of the available
headroom.
We reviewed the various scenarios and sensitivities performed
by management in respect of the key assumptions underpinning
the forecasts and challenged the sensitivities to ensure they
reflected all reasonably foreseeable circumstances.
Whilst acknowledging that no audit should be expected to
predict the unknowable factors or all possible future
implications for a business, and this is particularly the case in
relation to Brexit, we have discussed the Group’s assessment of
its impact as part of our consideration of the trading and
cashflow budgets and forecasts.
We also verified the current status of the facilities provided by
the Group’s primary banker which are consistent with the
amounts included in the budgets and forecasts used by
management to form their conclusions on going concern.
Key observations
Nothing has come to our attention as a result of performing the above procedures that causes us to believe that a material uncertainty
exists in respect of the adoption of the going concern basis of preparation for the financial statements.
Recoverability of trade receivables
The accounting policy and details of the estimation uncertainty
are disclosed in Note I and Note 2 respectively. Details of trade
receivables and impairment provisions are included in Note 15.
The historic issues with the Group’s major customer, first reported in
the previous year, remain unresolved and the impairment provision
therefore remains unchanged.
The continued economic uncertainty and potential impacts of Brexit
on the Automotive sector, combined with the ongoing discussions
over the recovery of some historic debts due from the Group’s major
customer from the previous financial year, increase the risk that
impairment and credit note provisions against trade receivables may
be understated.
In addition, the introduction of IFRS 9 Financial Instruments, has
introduced the requirement to recognise impairment provisions
using an expected credit loss model compared to the previous policy
of recognising incurred credit losses
Due to the quantum of receivables and the uncertainty involved with
their recoverability this was considered to be a key audit matter
We evaluated and tested management’s assessment of the
recoverability of unpaid amounts due from the Group’s major
customer. This included inspecting correspondence with the
customer and verifying amounts recovered or credited both
during the year and since the year end.
We also reviewed management’s assessment of the
recoverability of amounts due from other customers and tested
a sample of both current and overdue debts to supporting
evidence, either amounts subsequently recovered or
correspondence with the customers confirming acceptance of
the debts or their intentions to settle the amounts due.
We challenged management’s assessment of the adequacy of
the provisions for impairment, having regard to the
implementation of an expected credit loss model. We
considered the empirical evidence and available forward
looking information in support of management’s assessment
that no material expected credit losses are expected to arise.
This included a critical assessment of the appropriateness of the
impairment and credit note provisions and assessment of the
appropriateness of isolating the period year issues encountered
with the Group’s major customer.
Key observations
Nothing has come to our attention as a result of performing the above procedures that causes us to believe that any material
misstatement is present in respect of the recoverability of trade receivables.
44
Autins Group plc Annual Report and Accounts 2019
Our application of materiality
We apply the concept of materiality both in planning and performing our audit, in evaluating the effect of misstatements on the audit and
forming our opinions.
Materiality
Materiality is assessed against 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. Misstatements below these levels will not
necessarily be evaluated as immaterial as we also take account of the nature of identified misstatements, and the particular circumstances
of their occurrence, when evaluating their effect on the financial statements as a whole. Materiality provides a basis for determining the
nature and extent of our audit procedures.
FY 2019
FY 2018
Group materiality
Basis for materiality
£270,000
£295,000
Materiality based on 1% of Group turnover
Materiality based on 1% Group turnover
At this stage of the Group’s development, we concluded that turnover was a more relevant measure than the losses in the year.
Performance materiality is the application of materiality at the individual account or balance level set at an amount to reduce to an
appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds materiality for the
financial statements as a whole. Performance materiality for the Group was set at £191,000 (2018: £221,000) which represents 71 (2018 –
75%) of the above materiality levels. The determination of performance materiality reflects our assessment of the risk of undetected errors
existing, the nature of the systems and controls, the impact of there being a number of components and locations and the level of
misstatements arising in previous audits.
Materiality in respect of the audit of the parent company was set at £237,000 (2018: £285,000) using a benchmark based on 2% of net assets
in both 2019 and 2018, capped by reference to Group materiality. Performance materiality for the parent company was set at £178,000
(2018: £213,000) which represents 75% (2018 – 75%) of the above materiality levels.
Our audit work on the significant components of the Group was executed at levels of materiality applicable to the individual entity which
were lower than Group materiality. Financial statement materiality applied to the significant components of the Group was in the range of
£132,000 to £237,000.
Reporting threshold
We agreed with the Audit Committee that we would report to them all uncorrected audit differences in excess of £12,750 (2018: £15,000),
which was set at 5% of materiality, as well as differences below these thresholds that, in our view warranted reporting on qualitative grounds.
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 two dormant entities. The Group engagement team carried out
audits of the complete financial information of the significant components of the Group which are Autins Limited, Solar Nonwovens Limited
and also the parent company, Autins Group plc. Our work was focused on these entities given their significance to the Group’s financial
position and performance.
The work over the significant components gave us coverage of 83% (2018 85%) 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 other information comprises the information included in the Annual Report and Accounts other than the financial statements and our
auditor’s report thereon. The directors are responsible for the other information. 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.
Autins Group plc Annual Report and Accounts 2019
45
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF AUTINS GROUP PLC CONTINUED
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 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.
Responsibilities of directors
As explained in greater detail in the directors’ responsibilities statement,, 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.
46
Autins Group plc Annual Report and Accounts 2019
Auditor’s responsibilities for the audit of the financial statements
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.
Use of our report
This report is made solely to the parent 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 parent 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 parent company and the parent company’s members as a body, for our audit work, for this report, or for the
opinions we have formed.
Andrew Mair (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
Birmingham, United Kingdom
11 December 2019
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
Autins Group plc Annual Report and Accounts 2019
47
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 30 SEPTEMBER 2019
Revenue
Cost of sales
Gross profit
Other operating income
Distribution expenses
Administrative expenses excluding exceptional costs and amortisation
Amortisation of acquired intangible assets
Other exceptional operating costs
Total administrative expenses
Operating loss
Finance expense
Share of post-tax profit of equity accounted joint ventures
Loss before tax
Tax credit
Loss after tax for the year
Earnings per share for loss attributable to the owners of the parent during the year
Basic (pence)
Diluted (pence)
All amounts relate to continuing operations.
The notes on pages 56 to 79 form part of these financial statements.
Consolidated income
statement
Note
4
5
5
5
5
8
13
9
10
10
2019
£000
26,860
(19,403)
7,457
–
(734)
(7,608)
(237)
(433)
(8,278)
(1,555)
(192)
203
(1,544)
45
(1,499)
2018
£000
29,243
(21,996)
7,247
39
(846)
(7,804)
(237)
(234)
(8,275)
(1,835)
(118)
219
(1,734)
376
(1,358)
(6.25)p
(6.25)p
(6.14)p
(6.14)p
48
Autins Group plc Annual Report and Accounts 2019
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 SEPTEMBER 2019
Loss after tax for the year
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Currency translation differences
Total comprehensive expense for the year
The notes on pages 56 to 79 form part of these financial statements.
Consolidated statement of
comprehensive income
2019
£000
(1,499)
(15)
(1,514)
2018
£000
(1,358)
(27)
(1,385)
Autins Group plc Annual Report and Accounts 2019
49
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 SEPTEMBER 2019
REGISTERED NUMBER: 08958960
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 and cash equivalents
Total current assets
Total assets
Current liabilities
Trade and other payables
Borrowings
Total current liabilities
Non-current liabilities
Trade and other payables
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
Profit and loss account
Total equity
Consolidated statement of
financial position
Note
11
12
13
18
14
15
16
17
16
17
18
19
21
21
21
21
2019
£000
10,727
3,493
217
223
14,660
1,961
6,729
3,132
11,822
26,482
4,635
5,143
9,778
115
301
185
601
10,379
16,103
792
15,883
1,886
(145)
(2,313)
16,103
2018
£000
(restated)
11,282
3,767
204
371
15,624
2,322
6,994
91
9,407
25,031
5,910
3,713
9,623
115
602
379
1,096
10,719
14,312
442
12,938
1,886
(130)
(824)
14,312
The notes on pages 56 to 79 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
James Larner
Chief Financial Officer
50
Autins Group plc Annual Report and Accounts 2019
PARENT COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 30 SEPTEMBER 2019
REGISTERED NUMBER: 08958960
Non-current assets
Intangible assets
Investments
Total non-current assets
Current assets
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
Current liabilities
Trade and other payables
Total current liabilities
Non-current liabilities
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
Profit and loss account
Total equity
Parent company statement of
financial position
Note
12
13
15
16
18
19
21
21
21
2019
£000
57
16,239
16,296
6,076
3,075
9,151
25,447
8,198
8,198
–
–
8,198
17,249
792
15,883
1,886
(1,312)
17,249
2018
£000
57
16,239
16,296
7,171
1
7,172
23,468
8,130
8,130
36
36
8,166
15,302
442
12,938
1,886
36
15,302
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 loss for the parent Company for the year was £1,358,000 (2018: loss of £475,000) after recognising an impairment on
inter-group receivables of £720,000 upon adoption of IFRS 9 Financial Instruments.
The notes on pages 56 to 79 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
James Larner
Chief Financial Officer
Autins Group plc Annual Report and Accounts 2019
51
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 SEPTEMBER 2019
At 30 September 2017
Comprehensive income for the year
Loss for the year
Other comprehensive income
Total comprehensive expense for the year
Contributions by and distributions to owners
Share based payment
Dividends
Total contributions by and distributions to owners
At 30 September 2018
Comprehensive expense for the year
Loss for the year
Other comprehensive income
Total comprehensive expense for the year
Contributions by and distributions to owners
Shares issued
Share issue expenses
Share based payment
Total contributions by and distributions to owners
At 30 September 2019
Consolidated statement of
changes in equity
Share
capital
£000
442
Share
premium
account
£000
12,938
Other
reserves
£000
1,886
Cumulative
currency
differences
reserve
£000
Profit and
loss
account
£000
Total
equity
£000
(103)
780
15,943
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(27)
(27)
–
–
–
Share
capital
£000
Share
premium
account
£000
442
12,938
Other
reserves
£000
1,886
Cumulative
currency
differences
reserve
£000
Profit and
loss
account
£000
(1,358)
–
(1,358)
19
(265)
(246)
(824)
(1,358)
(27)
(1,385)
19
(265)
(246)
14,312
Total
equity
£000
(130)
(824)
14,312
–
(15)
(15)
(1,499)
–
(1,499)
(15)
(1,499)
(1,514)
–
–
–
–
–
–
10
10
3,500
(205)
10
3,305
–
–
–
3,150
(205)
–
2,945
–
–
–
–
–
–
–
–
–
–
350
–
–
350
792
15,883
1,886
(145)
(2,313)
16,103
At 30 September 2018
442
12,938
1,886
(130)
The cumulative currency differences reserve may be reclassified subsequently to profit and loss.
52
Autins Group plc Annual Report and Accounts 2019
PARENT COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 SEPTEMBER 2019
At 30 September 2017
Comprehensive expense for the year
Loss for the year and total comprehensive expense
Total comprehensive expense for the year
Contributions by and distributions to owners
Share based payment
Dividends
Total contributions by and distributions to owners
At 30 September 2018
Comprehensive income for the year
Loss for the year and total comprehensive expense
Total comprehensive expense for the year
Contributions by and distributions to owners
Shares issued
Share issue expenses
Share based payment
Total contributions by and distributions to owners
At 30 September 2019
Parent company statement of
changes in equity
Profit and
loss
account
£000
757
(475)
(475)
19
(265)
(246)
36
(1,358)
(1,358)
–
–
10
10
Total
equity
£000
16,023
(475)
(475)
19
(265)
(246)
15,302
(1,358)
(1,358)
3,500
(205)
10
3,305
Share
capital
£000
442
–
–
–
–
Share
premium
account
£000
12,938
–
–
–
–
Other
reserves
£000
1,886
–
–
–
–
442
12,938
1,886
–
–
350
–
–
350
792
–
–
3,150
(205)
–
2,945
–
–
–
–
–
–
15,883
1,886
(1,312)
17,249
Autins Group plc Annual Report and Accounts 2019
53
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT CONSOLIDATED STATEMENT OF CASHFLOWS
FOR THE YEAR ENDED 30 SEPTEMBER 2019
Operating activities
Loss after tax
Adjustments for:
Income tax
Finance expense
Employee share based payment charge
Depreciation of property, plant and equipment
Amortisation and impairment of intangible assets
Share of post-tax profit of equity accounted joint ventures
Decrease in trade and other receivables
Decrease/(increase) in inventories
(Decrease)/increase in trade and other payables
Cash used in operations
Income taxes received
Net cashflows from operating activities
Investing activities
Purchase of property, plant and equipment
Purchase of intangible assets
Dividend received from equity-accounted for joint venture
Net cash used in investing activities
Financing activities
Interest paid
Issue of shares
Share issue expenses paid
Bank loans advanced
Bank loans repaid
Finance lease advances
Hire purchase and finance leases repaid
Increase in invoice discounting
Dividends paid
Net cash from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Cash and cash equivalents comprise:
Cash balances
Bank overdrafts
Consolidated statement of
cashflows
2019
£000
2018
£000
(restated)
(1,499)
(1,358)
(45)
192
10
800
352
(203)
(393)
249
361
(1,229)
(619)
(1,012)
15
(997)
(232)
(152)
190
(194)
(192)
3,500
(205)
127
(151)
–
(432)
736
–
3,383
2,192
(67)
2,125
2019
£000
3,132
(1,007)
2,125
(376)
118
19
649
264
(219)
(903)
352
(459)
53
(54)
(957)
182
(775)
(890)
(221)
258
(853)
(118)
–
–
–
(165)
355
(472)
781
(265)
116
(1,512)
1,445
(67)
2018
£000
91
(158)
(67)
Non cash transactions
The Group acquired plant and equipment at a cost of £nil (2018: £528,000) under hire purchase arrangements which has been shown net in
the consolidated statement of cashflows.
54
Autins Group plc Annual Report and Accounts 2019
Reconciliation of movements in net cash/financing liabilities
Year ended 30 September 2019
Cash and cash equivalents
Cash balances
Bank overdrafts
Financing liabilities
Invoice discounting
Bank loans
Hire purchase liabilities
Financing
Year ended 30 September 2018
Cash and cash equivalents
Cash balances
Bank overdrafts
Financing liabilities
Invoice discounting
Bank loans
Hire purchase liabilities
Financing
Opening
£000
Cash flows
£000
Non-cash
movements
£000
91
(158)
(67)
(2,980)
(240)
(937)
(4,157)
(4,224)
3,041
(849)
2,192
(736)
24
432
(280)
1,912
–
–
–
–
–
–
–
–
Opening
£000
Cash flows
£000
Non-cash
movements
£000
1,625
(180)
1,445
(2,199)
(405)
(881)
(3,485)
(2,040)
(1,534)
22
(1,512)
(781)
165
472
(144)
(1,656)
–
–
–
–
–
(528)
(528)
(528)
Closing
£000
3,132
(1,007)
2,125
(3,716)
(216)
(505)
(4,437)
(2,312)
Closing
£000
91
(158)
(67)
(2,980)
(240)
(937)
(4,157)
(4,224)
Autins Group plc Annual Report and Accounts 2019
55
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT Notes to the financial
statements
NOTES TO THE FINANCIAL STATEMENTS
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 (FRS101) 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 cashflows;
•
•
IFRS 7 Financial instruments disclosures;
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.
Going concern
The Board have concluded, on the basis of current and forecast trading and related expected cashflows and available sources of finance,
that it remains appropriate to prepare the Group’s results on the basis of a Going Concern.
The Group received a net cash injection of £3.3 million in August 2019 as a result of an equity placing and this, combined with continued
support from the Group’s primary and supporting banks mean that the Group has sufficient headroom within it’s facilities to allow for
reasonably foreseeable cashflow requirements in the event of changes to its demand or cost base.
The Board continues to review the structure of the Group’s banking arrangements with a view to ensuring that it remains appropriate for
the planned growth within mainland Europe and to allow for the more variable demand that has become a feature of the automotive
market in the last 18 months. The Group’s current banking remains without covenant.
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 International Financial Reporting Standards (“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 2018 and the following new standards have been adopted in these financial statements.
IFRS 15 Revenue from Contracts with Customers
IFRS 15 establishes principles for reporting the nature, amount and timing of revenue arising from an entity’s contracts with customers. This
requires a five step approach for identification of the contracts, performance obligations and transaction price, allocating the transaction price
and recognising revenue when performance obligations are satisfied taking account of when control of an asset is obtained by a customer.
There has been no effect in the recognition or reporting of the Group’s revenue with the point when the customer obtains control judged to
be at the same point as that arising from the previous standard’s principles in respect of the risks and rewards of ownership passing to the
customer. However, the classification of tooling balances, which were previously reported in inventories, has changed within the statement
of financial position. Having regard to the commercial terms in relation to the production and sale of tooling, IFRS 15 requires the balances
to be included within contract assets and recognised within trade and other receivables. As such, the previously reported Consolidated
Statement of Financial Position and Consolidated Statement of Cash Flows have been restated to recognise the change in presentation.
There is no change in the valuation of the asset or any impact on the income statement. At 30 September 2018, inventories have been
reduced by £231,000 with a corresponding increase in other receivables. The movement in these balances in the periods are as follows:
Brought forward at 1 October
Additions during the year
Recognised as cost of sales in the year
Assets as at 30 September
Revenue yet to be recognised on tooling contract balances
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Autins Group plc Annual Report and Accounts 2019
Tooling contract balances
2019
£000
231
1,029
(984)
276
435
2018
£000
0
897
(666)
231
350
Tooling revenue is recognised at a point in time when the obligation for it to be capable of the specified production use are satisfied which
is considered to be when the specific tool has passed pre-production assessment and sign off by the relevant customer engineer. There are
no long-term contracts
IFRS 9 Financial instruments
IFRS 9, ‘Financial instruments’, addresses the classification, measurement and recognition of financial assets and liabilities and replaces
guidance in IAS39 relating to the subsequent classification and measurement of financial instruments. IFRS 9 retains the initial fair value
measurement model from IAS39 and there has been no impact on the measurement or classification of the Group’s financial instruments.
However, loans and receivables will now be classified within new IFRS9 amortised cost categories – as such receivables are considered
balances held to collect the cash inflows. Among other things, the standard introduced a forward-looking credit loss impairment model
whereby entities need to consider and recognise impairment triggers that might occur in the future (an “expected loss” model). The Board
has considered the potential impact of the introduction of IFRS9 applied retrospectively with the simplified approach adopted in respect of
expected credit losses on trade receivables. The Board has determined that historic collection levels for trade debt do not suggest an
expectation of loss and there is therefore no significant impact on numbers reported in the financial statements for the year ended
30 September 2019 or as previously presented.
Impairment provisions for receivables from other group companies are recognised based on a forward-looking expected credit loss model
taking account of the expected manner of recovery including assessment of future cashflows. The methodology used to determine the
amount of the provision is based on whether there has been a significant increase in credit risk since initial recognition of the financial
asset. For those where the credit risk has not increased significantly since initial recognition of the financial asset, twelve-month expected
credit losses are recognised. For those for which credit risk has increased significantly, lifetime expected credit losses are recognised based
on the probability of projected outcomes.
New standards, interpretations and amendments not yet effective
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 former operating
lease contracts will result in a lessee acquiring and recognising a right-to-use asset and a financial 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 and the Board’s stated intention to apply the modified retrospective approach with the liability representing the
discounted future lease payments from transition, it is estimated that an asset of £5.3 million and corresponding liability of £6 million
would be accounted for as at 30 September 2019 with a debit to retained earnings of £0.7 million.
The income statement will also be impacted, with the 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 initial overall charge to the income statement estimated at £0.1 million for the year ended 30 September 2020 which would
reverse over the period of the leases as finance charges decrease under the effective interest method and an increase in EBITDA of £1.2 million.
The Board has yet to conclude which of the six practical expedients are appropriate to apply at initial adoption and continue to review
them in the context of the Group’s operating model, assets and liabilities.
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.
Autins Group plc Annual Report and Accounts 2019
57
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT NOTES TO THE FINANCIAL STATEMENTS CONTINUED
1. Accounting policies continued
Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable when performance obligations are satisfied 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 customer has taken control of the goods and is able to benefit from or direct the
use of the goods, which is usually when the goods have been accepted by the customer.
The Group recognises revenue from the sale of tooling when the obligation for it to be capable of the specified production use are satisfied
which is considered to be when the specific tool has passed pre-production assessment and sign off by the relevant customer engineer.
Where the costs of developing a specific automotive tooling component for a customer do not result in a product that will enter volume
production, the revenue arising from cost recovery for obsolete materials, tooling and design and development work is recognised at the
point of customer acceptance of the claim.
Expenditure
Expenditure is recognised in respect of goods and services received when supplied in accordance with contractual terms. Provision is
made when a present obligation exists for a future liability relating to a past event and where the amount of the obligation can be
reliably estimated.
Exceptional expenses
The Group classifies certain one-off charges or credits that have a material impact on the financial results, and which are largely non-
trading or not expected to 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 expensed 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 cashflow 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 cashflow of post tax royalty earnings potential
Estimated discounted cashflow
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Autins Group plc Annual Report and Accounts 2019
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:
Plant and machinery
Leasehold improvements
Fixtures and fittings
5-20 years straight line or units of production (see below)
–
– Period of the lease
–
3-15 years straight line
Depreciation of the Group’s Neptune material production line has been provided based on a fixed unit of production method since the
commencement of commercial production.
The unit of production has been calculated based on the original equipment manufacturer’s warranted minimum annual capacity,
adjusted for management’s recent experience, and management’s assessment of expected life. Any re-assessment of this lifetime capacity
will affect the depreciation rate prospectively.
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 contract balances
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 a contract asset in receivables when the Group has a
documented commitment from the customer and is valued at the lower of cost and net realisable value. The cost is expensed when the
revenue is recognised and 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 fifteen 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 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.
Autins Group plc Annual Report and Accounts 2019
59
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT NOTES TO THE FINANCIAL STATEMENTS CONTINUED
1. Accounting policies continued
Revenue based grants
Revenue based grants are recognised as income based on the specific terms related to them as follows:
• A grant is recognised in other operating income when the grant proceeds are received (or receivable) provided that the terms of the
grant do not impose future performance-related conditions.
•
If the terms of a grant do impose performance-related conditions then the grant is only recognised in income when the
performance-related conditions are met.
• Any grants that are received before the revenue recognition criteria are met are recognised in the statement of financial position as 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.
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 finance 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.
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Autins Group plc Annual Report and Accounts 2019
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 cashflows.
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.
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 at fair value through profit and loss or through other comprehensive income.
The classes of financial assets are commented upon further below:
(a) 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 and contract balances), but also incorporate other types of
contractual monetary asset. They are initially recognised at fair value plus transaction costs that are directly attributable to their
acquisition or issue, and are subsequently carried at amortised cost using the effective interest method.
The Group’s receivables comprise trade and other receivables included within the consolidated statement of financial position.
The Group applies the simplified IFRS 9 approach and recognises loss allowances for expected credit losses (ECLs) on financial assets
measured at amortised cost to the extent that these are experienced and significant for assets subject to similar credit risks and ageing.
The group measures loss allowances for trade receivables and contract assets at an amount equal to lifetime ECL and the expected loss
rates are based on a three year period adjusted where required for current and forward looking information on the group’s customers. The
potential default of receivables from other group companies is measured using a 12 month ECL and assessment for any significant changes
in risk related to changes in underlying trading or prospects. The gross carrying amount of a financial asset is written off (either partially or
in full) against the allowance to the extent that there is no realistic prospect of recovery.
(b) Cash and cash equivalents
Cash and cash equivalents comprise cash held at bank and bank overdrafts which are available on demand.
Autins Group plc Annual Report and Accounts 2019
61
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT NOTES TO THE FINANCIAL STATEMENTS CONTINUED
1. Accounting policies continued
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 or through other comprehensive income. This reflects the purpose for which the liabilities were acquired.
Other financial liabilities comprise:
• Trade payables, amounts owed to equity accounted joint ventures, accruals and other creditors are initially recognised at fair value, and
subsequently carried at amortised cost using the effective interest method.
• Bank loans, invoice discounting 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.
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 Automotive Noise, Vibration and Harshness (‘NVH’). Revenue and profit before
tax primarily arises from the principal activity based in the UK. Management reviews the performance of the Group by reference to total
results against budget.
The total profit measure is operating profit as disclosed on the face of the consolidated income statement. No differences exist between
the basis of preparation of the performance measures used by management and the figures in the Group financial statements.
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Autins Group plc Annual Report and Accounts 2019
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 (Note 11)
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 key areas of estimation uncertainty regarding depreciation is the use of the unit of production calculation for the Neptune assets and
the determination of the lifetime capacity; risk of obsolescence from technological and regulatory changes; and required future capital
expenditure (refurbishment or replacement of key components). The lifetime capacity has initially been assessed using an assumed 2.7
million linear metres production per annum (based on a weighted average of the original equipment manufacturer’s warranted minimum
annual production capacity for each of three primary material grades produced) and fifteen years use at full line speed when refurbishment
and replacement of key components would be considered likely. Management will continue to monitor the position for future periods.
Property, plant and equipment (Note 11) and other intangible assets (Note 12)
The carrying values of these assets are tested for impairment when there is an indication that the value of the assets might not be
realisable or impaired either at an individual cash generating unit level or for the Group as a whole.
When carrying out impairment tests these would be based upon future cashflow forecasts and these forecasts would include management
estimates for sales pricing and volumes informed by external market forecasts and experience. Costs to serve
and attributable overhead will also include management estimates based on recent experience and expected adjustment for
management actions.
In calculating the discount to be applied, management estimates are required in assessing the appropriate WACC for the Group’s specific
risk and adjusting for country specific risks.
There are no reasonable changes in the base rates used that would result in the value in use being less than the recoverable amount.
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.
Trade receivables (Note 15)
Estimate
Trade receivables are initially recognised at invoiced value.
Where specific amounts remain outstanding or disputed beyond their agreed settlement date management, having reviewed all
commercial documentation, proof of delivery and credit risk of the customer, apply judgement as to the likelihood of the future settlement.
This judgement will be influenced by the passage of time, the documentation available and previous experience of collection of past due
invoices with that customer and the Group’s customer base in general.
In addition, where the Group has historic experience of a rate of loss against a specific group of receivables (or where circumstances are
indicative of a likely future change in the rate of estimated loss) then a change in that estimated loss rate would alter the impairment
provision recognised.
Autins Group plc Annual Report and Accounts 2019
63
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT NOTES TO THE FINANCIAL STATEMENTS CONTINUED
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 and floating rate overdrafts
• Fixed rate hire purchase agreements
• Floating rate invoice discounting
Group financial instruments by category
Financial assets
Cash and cash equivalents
Trade and other receivables
Total financial assets
Financial liabilities
Trade and other payables
Borrowings
Total financial liabilities
Financial assets at
amortised cost
2019
£000
3,132
6,193
9,325
2018
£000
restated
91
6,450
6,541
Financial liabilities at
amortised cost
2019
£000
4,044
5,444
9,488
2018
£000
5,427
4,315
9,742
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 2019 the Group has net trade receivables of
£5,709,000 (2018: £6,020,000).
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. Having assessed the recoverability of past due invoices, including
consideration of time elapsed and associated commercial documents, the directors have made provision of £218,000 at 30 September
2019 (2018: £218,000) for doubtful debts
Credit risk on cash and cash equivalents is considered to be minimal as the counterparties are all substantial banks with high credit ratings.
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Autins Group plc Annual Report and Accounts 2019
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 invoice discounting facility at
30 September 2019 of up to £6 million subject to eligible receivables (2018: £6 million discounting facility), a £1.25 million overdraft and
£0.6 million import loan facility (2018: £nil) together with the existing hire purchase facilities of £0.5 million (2018: up to £4.5 million for capex).
The tables below set out the maturities of the Group’s financial liabilities:
At 30 September 2019
Overdrafts
Trade and other payables
Bank loans
Hire purchase and finance leases
Invoice discounting
Total
At 30 September 2018
Overdrafts
Trade and other payables
Bank loans
Hire purchase and finance leases
Invoice discounting
Total
Up to 1 year
£000
1 to 2 years
£000
2 to 5 years
£000
1,007
4,038
216
267
3,716
9,244
–
–
–
119
–
119
–
–
–
180
–
180
Up to 1 year
£000
1 to 2 years
£000
2 to 5 years
£000
158
5,427
147
493
2,980
9,205
–
–
93
236
–
329
–
–
–
316
–
316
Foreign exchange risk
Foreign exchange risk is the risk that movements in exchange rates adversely affect the profitability or cashflows 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.
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 cashflow interest rate risk on its import and capital asset backed loans and on the floating rate invoice discounting
and overdrafts where the cost of borrowing in all cases is calculated by a fixed margin over LIBOR ranging from 1.75% to 3.75%.
Invoice discounting
Overdrafts
Import goods bank loan facility
Asset backed bank loans
Total floating rate debt
2019
£000
3,716
121
127
89
4,053
2018
£000
2,980
158
–
240
3,378
Borrowings under asset finance/hire purchase arrangements are at a fixed interest rate over their term and a fixed rate of interest of 4.5%
applies to the UK overdraft facility of £886,000 (2018: £nil).
The interest rates applicable to the fixed rate borrowings are equivalent to current market rates and therefore there is no material
difference between their carrying value and fair value.
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 and a 1% increase in base rates would impact the
annual results by approximately £40,000.
Autins Group plc Annual Report and Accounts 2019
65
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT NOTES TO THE FINANCIAL STATEMENTS CONTINUED
3. Financial instruments – risk management continued
Capital management
The Group is financed by a mixture of equity and 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.
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.
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, recognised at a point in time, arises from:
Sales of components
Sales of tooling
2019
£000
2018
£000
25,411
1,449
26,860
28,322
921
29,243
Segmental information
The Group currently has one main reportable segment in each year, namely Automotive (‘NVH’) which involves provision of insulation
materials to reduce noise, vibration and harshness to automotive manufacturing. Turnover and operating profit are disclosed for other
segments in aggregate, mainly flooring sales, as they individually do not have a significant impact on the Group result. These segments
have no significant identifiable assets or liabilities.
Factors that management used to identify the Group’s reportable segments
The Group’s reportable segments are strategic business units that offer different products and services.
Measurement of operating segment profit or loss
The 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 office equipment products, are included within the others segment.
Neither element is considered significant.
66
Autins Group plc Annual Report and Accounts 2019
Segmental analysis for the year ended 30 September 2019
Group’s revenue per consolidated statement of comprehensive income
Depreciation
Amortisation and impairment
Segment operating (loss)/profit
Finance expense
Share of post-tax profit of equity accounted joint ventures
Group loss before tax
Additions to non-current assets
Reportable segment assets
Investment in joint ventures
Reportable segment assets/total Group assets
Reportable segment liabilities/total Group liabilities
Segmental analysis for the year ended 30 September 2018
Group’s revenue per consolidated statement of comprehensive income
Depreciation
Amortisation
Segment operating (loss)/profit
Finance expense
Share of post-tax profit of equity accounted joint ventures
Group profit before tax
Additions to non-current assets
Reportable segment assets
Investment in joint ventures
Reportable segment assets/total Group assets
Reportable segment liabilities/total Group liabilities
Automotive
NVH
£000
Others
£000
2019
Total
£000
24,841
2,019
26,860
800
280
(1,584)
384
26,265
217
26,482
10,379
Automotive
NVH
£000
27,057
649
264
–
72
29
–
–
–
–
–
Others
£000
2,186
–
–
800
352
(1,555)
(192)
203
(1,544)
384
26,265
217
26,482
10,379
2018
Total
£000
29,243
649
264
(1,944)
109
(1,835)
(118)
219
(1,734)
1,704
24,827
204
25,031
10,719
–
–
–
–
–
1,704
24,827
204
25,031
10,719
Revenues from one customer in 2019 total £15,187,000 (2018: £17,182,000). This major customer purchases goods from Automotive
Insulations Limited in the United Kingdom and there are no other customers which account for more than 10% of total revenue.
External revenues by location of customers
United Kingdom
Sweden
Germany
Other European
Rest of the World
2019
£000
20,826
989
3,707
1,291
47
26,860
2018
£000
restated
24,171
1,111
3,069
863
29
29,243
The 2018 analysis has been restated to show £863,000 of sales made by the German subsidiary and previously included in Germany as
other European revenue.
The only material non-current assets in any location outside of the United Kingdom are £937,000 (2018: £1,035,000) of fixed assets and
£581,000 (2018:£596,000) of goodwill in respect of the Swedish subsidiary.
Autins Group plc Annual Report and Accounts 2019
67
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT NOTES TO THE FINANCIAL STATEMENTS CONTINUED
5. Loss from operations
The operating loss is stated after charging:
Foreign exchange losses
Depreciation
Amortisation of intangible assets
Impairment of intangible assets
Cost of inventory sold
Impairment of trade receivables
Research and development
Revenue grant income
Employee benefit expenses (see note 6)
Lease payments
Auditors’ remuneration:
Fees for audit of the Group
Additional fees in respect of prior year audit
Fees for taxation advisory services
Fees for other services
Exceptional costs in respect of:
Change of Chief Executive and senior management restructuring
Restructuring programme
Onerous leases
Solar Nonwovens operating loss during the commissioning phase
2019
£000
57
800
280
72
18,454
–
–
–
7,479
1,338
60
40
–
–
–
433
–
433
–
2018
£000
88
649
264
–
20,571
218
90
(39)
7,588
1,434
60
–
25
3
159
-
75
234
364
Current year exceptional costs
Overhead and financing restructuring programme
In response to the challenging trading conditions affecting the automotive industry the Group completed a significant overhead cost out
programme in the period and sought to adjust its funding arrangements to suit a period of uncertainty. This programme required a number
of redundancies (with associated costs of £364,000 and additional legal and professional expenses of £69,000 associated with a review of
the Group’s overall banking facilities and structure resulting in exceptional charges of £433,000).
Prior year exceptional costs
During the prior year Michael Jennings resigned as CEO generating £159,000 of exceptional costs. Other exceptional costs of £75,000 related
to the exit costs of withdrawing from office facilities at MIRA following a strategic review undertaken by the new CEO.
The start up process and commissioning of the major plant for the Neptune line, completed in the year ended 30 September 2018, resulted
in an operating loss of £364,000 from the incremental costs of the operation and the specific premises taken on for the plant.
Research and development costs
The Group focus for research and development work in the year was on ongoing projects where costs are capitalised and as required to
deliver growth in future periods. Revenue grants of £nil (2018: £39,000) are in relation to government assistance on research projects.
68
Autins Group plc Annual Report and Accounts 2019
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
Group
2019
£000
6,440
879
10
150
7,479
Group
2018
£000
6,540
885
19
144
7,588
Company
2019
£000
Company
2018
£000
1,332
162
10
41
1,545
1,341
163
19
51
1,574
2019
Number
2018
Number
2019
Number
2018
Number
5
68
153
226
5
71
155
231
5
13
–
18
5
14
–
19
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 2019
A Attwood
G Kaminski-Cook
J Larner
T Garthwaite
I Griffiths
N MacDonald
Year ended 30 September 2018
A Attwood
M Jennings
J Larner
T Garthwaite
I Griffiths
8. Finance expense
Bank interest
Interest element of hire purchase agreements
Salary
£000
Benefits
£000
Pension
£000
60
259
142
23
51
9
544
–
26
14
–
–
–
40
–
11
8
–
–
–
19
Salary
£000
Benefits
£000
Pension
£000
60
244
120
45
45
514
–
1
9
–
–
10
–
23
10
–
–
33
2019
£000
128
64
192
Total
£000
60
296
164
23
51
9
603
Total
£000
60
268
139
45
45
557
2018
£000
59
59
118
Autins Group plc Annual Report and Accounts 2019
69
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT NOTES TO THE FINANCIAL STATEMENTS CONTINUED
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 loss for the period
Adjustment in respect of previous periods
Total current tax
Deferred tax expense
Origination and reversal of timing differences
Adjustment in respect of previous periods
Total deferred tax
Total tax credit
(ii) Total tax credit
Tax credit excluding share of tax of equity accounted for joint ventures (as stated above)
Share of tax expenses of equity accounted joint ventures
2019
£000
–
–
–
(45)
–
(45)
(45)
2019
£000
(45)
51
6
2018
£000
–
(47)
(47)
(387)
58
(329)
(376)
2018
£000
(376)
51
(325)
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 loss for the year are as follows:
Loss for the year
Income tax charge/(credit) (including tax on joint ventures)
Loss before income taxes
Expected tax credit based on corporation tax rate of 19% in 2019 (2018: 19%)
Expenses not deductible for tax purposes
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
2019
£000
(1,499)
6
(1,493)
(284)
18
(9)
10
271
–
–
6
2018
£000
(1,358)
(325)
(1,683)
(320)
14
(47)
40
–
(23)
11
(325)
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 2019.
The current rate of corporation tax in Sweden is 21.4% and the current rate of corporation tax in Germany is 30-33%. The Group’s
Swedish subsidiary did not have taxable profits during the years under review and the German subsidiary profits are offset by losses
brought forward.
10. Earnings per share
Loss used in calculating basic and diluted EPS
Number of shares
Weighted average number of £0.02 shares for the purpose of basic earnings per share (‘000s)
Weighted average number of £0.02 shares for the purpose of diluted earnings per share (‘000s)
Earnings per share (pence)
Diluted earnings per share (pence)
2019
£000
2018
£000
(1,499)
(1,358)
23,971
23,971
(6.25)p
(6.25)p
22,101
22,101
(6.14)p
(6.14)p
Earnings per share have been calculated based on the share capital of Autins Group plc and the earnings of the Group for both years. There
are options in place over 633,657 (2018: 563,690) shares that were anti-dilutive at the year end but which may dilute future earnings
per share.
70
Autins Group plc Annual Report and Accounts 2019
11. Property, plant and equipment
Group
COST
At 1 October 2017
Additions
Reallocation
Foreign exchange movement
Disposals
At 30 September 2018
Additions
Reclass from intangible fixed assets
Foreign exchange movement
At 30 September 2019
DEPRECIATION
At 1 October 2017
Charge for year
Foreign exchange movement
Eliminated on disposal
At 30 September 2018
Charge for year
Foreign exchange movement
At 30 September 2019
NET BOOK VALUE
At 30 September 2019
At 30 September 2018
At 30 September 2017
Plant and
machinery
£000
Leasehold
improvements
£000
Fixtures and
fittings
£000
12,200
1,098
27
(77)
(27)
13,221
226
52
(49)
13,450
1,914
589
(11)
(27)
2,465
739
(10)
3,194
10,256
10,756
10,286
194
11
(27)
–
–
178
–
–
–
178
15
16
–
–
31
13
–
44
134
147
179
612
19
–
–
(72)
559
6
–
–
565
208
44
–
(72)
180
48
–
228
337
379
404
Net book value of assets held under hire purchase and finance lease contracts are as follows:
At 30 September 2019
At 30 September 2018
Plant and
Machinery
£000
Leasehold
Improvements
£000
Fixtures and
fittings
£000
1,530
2,044
–
–
–
74
Total
£000
13,006
1,128
–
(77)
(99)
13,958
232
52
(49)
14,193
2,137
649
(11)
(99)
2,676
800
(10)
3,466
10,727
11,282
10,869
Totals
£000
1,530
2,118
Depreciation of £137,000 was charged on these assets in the year (2018: £161,000).
The Neptune plant and equipment represents £4.99 million (2018: £5.2 million) of the net book value. The Directors, having prepared a
discounted cashflow assessment for the Neptune facility as a standalone cash generating unit, are satisfied that the carrying value remains
appropriate. Whilst start-up losses continued in the current year, the cost actions already taken, together with sales enquiry levels and
conversion into orders support a reasonable expectation of profitability in the foreseeable future with the overall carrying value supported
with net annual cashflows at only a quarter of those forecast from Neptune product sales.
The Company has no fixed assets.
Autins Group plc Annual Report and Accounts 2019
71
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
12. Intangible assets
Group
COST
At 1 October 2018
Additions
Foreign currency differences
At 30 September 2018
Additions
Reclass to tangible fixed assets
Foreign currency differences
At 30 September 2019
AMORTISATION AND IMPAIRMENT
At 1 October 2017
Charge for the year
At 30 September 2018
Charge for the year
Impairment in the year
At 30 September 2019
NET BOOK VALUE
At 30 September 2019
At 30 September 2018
At 30 September 2017
Goodwill
£000
Development
costs
£000
Customer
relationships
£000
Tooling
intellectual
property
£000
2,245
–
(27)
2,218
–
–
(22)
2,196
–
–
–
–
–
–
2,196
2,218
2,245
493
221
–
714
152
(52)
–
814
–
27
27
43
72
142
672
687
493
1,079
–
–
1,079
–
–
–
1,079
526
154
680
154
–
834
245
399
553
830
–
–
830
–
–
–
830
284
83
367
83
–
450
380
463
546
Total
£000
4,647
221
(27)
4,841
152
(52)
(22)
4,919
810
264
1,074
280
72
1,426
3,493
3,767
3,837
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 the existing established products 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 three-year (2018: three-year) discounted cashflows together with a terminal value which assumes a
1% (2018: 1%) long term growth rate. The cashflows have been discounted at pre-tax rates of 11.8% (2018: 9.8%) reflecting the Group’s
weighted average cost of capital adjusted for country-specific tax rates and risks. The key revenue assumption reflects current trading
experience. The Directors, whilst acknowledging the loss in the current year, have reviewed a range of reasonably foreseeable trading
forecasts for future periods. These forecasts take account of changes in operational efficiency and commercial arrangements that predict
an improvement from the current year trading margins as well as the benefit of overhead cost actions already announced and enacted.
Recurring operating cashflows from automotive NVH (which are separate from the newer product technology Neptune trade and assets) in
the terminal year would have to fall by two thirds before an impairment arose.
The Company had a closing net book value of £50,000 (2018: £50,000 from transfers in from a fellow group company) for goodwill and
£7,000 (2018: £7,000) for development costs in intangible assets.
72
Autins Group plc Annual Report and Accounts 2019
13. Fixed asset investments
Company
COST AND NET BOOK VALUE
At 30 September 2018 and 2019
Investments in
subsidiaries
£000
16,239
The subsidiaries of the Company, which have all been included in the consolidated financial statements based on their results to
30 September 2019, are as follows:
Name
UK subsidiaries:
Autins Limited
Automotive Insulations Limited
Solar Nonwovens Limited
Autins Technical Centre Limited
Acoustic Insulations Limited
European subsidiaries:
Autins Gmbh
Autins AB
DBX Acoustics AB
Principal activity
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 September 2019
and 2018
Ownership %
100
100
100
100
100
100
100
100
The Group agrees to guarantee the liabilities of Solar Nonwovens Limited and Autins Technical Centre Limited, thereby allowing these
companies to take the 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 Autins Limited.
Interests in joint ventures comprise the following:
Name
Indica Automotive Limited
Principal activity
Supply of insulating materials
30 September 2019
and 2018
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 2017
Share of profit for the year
Dividend paid by JV
Net book value at 30 September 2018
Share of profit for the year
Dividend paid by JV
Net book value at 30 September 2019
Interest in
joint ventures
£000
243
219
(258)
204
203
(190)
217
Autins Group plc Annual Report and Accounts 2019
73
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT NOTES TO THE FINANCIAL STATEMENTS CONTINUED
13. Fixed asset investments continued
The Group’s share of joint venture profit in each year was as follows:
Profit before tax
Taxation
Profit after tax
Summarised aggregated financial information in relation to the joint venture 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
2019
£000
254
(51)
203
2019
£000
1,120
67
(735)
(18)
98
(241)
(18)
434
217
2019
£’000
2,933
406
406
203
66
1
103
2019
£000
1,562
73
326
1,961
2018
£000
270
(51)
219
2018
£000
1,127
108
(792)
(35)
100
(334)
(45)
408
204
2018
£000
3,382
438
438
219
84
3
102
2018
£000
restated
1,731
92
499
2,322
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. Inventories have been restated to reclassify tooling contract balances to receivables.
74
Autins Group plc Annual Report and Accounts 2019
15. Trade and other receivables
Trade receivables
Provisions for impairment
Trade receivables net
Amounts owed by subsidiaries undertakings
Amount owed by equity-accounted joint venture controlled entities
Tooling contract balances
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
Past due impairment loss
Group
2019
£000
5,927
(218)
5,709
–
94
276
114
6,193
24
512
6,729
5,429
498
(218)
5,709
Group
2018
£000
restated
6,238
(218)
6,020
–
–
231
199
6,450
39
505
–
6,994
5,723
515
(218)
6,020
Company
2019
£000
Company
2018
£000
–
–
–
5,987
22
–
–
6,009
–
67
–
6,076
–
–
–
–
–
–
–
7,075
–
–
–
7,075
–
70
26
7,171
–
–
–
–
The Company recognised an impairment on inter-group receivables of £720,000 upon adoption of IFRS9 Financial Instruments
With the exception of one large customer which accounts for 63% (2018: 60% of the net trade receivable balance at the year end, credit risk
with respect to accounts receivable is dispersed due to the number of customers. An impairment allowance of £nil (2018: £218,000) has
been charged in respect of specific trade receivables for the year ended 30 September 2019. The expected credit loss in respect of debt not
due and past due is otherwise considered immaterial.
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 2019 were £3,716,000 (2018: £2,980,000). The credit
risk remained with the Group and accordingly the trade receivable and amounts drawn down under the financing arrangements are
presented gross.
The movement in the provision for trade receivables is as follows:
Group
At 1 October
Charged in year
Receivables written off in year
At 30 September
16. Trade and other payables
Current
Trade payables
Amounts owed to subsidiaries
Amount owed to equity-accounted joint venture controlled entities
Accruals
Total financial liabilities, excluding 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
2019
£000
218
–
–
218
2018
£000
–
218
–
218
Company
2019
£000
Company
2018
£000
189
7,879
–
6
8,074
124
–
8,198
–
107
7,906
–
79
8,092
38
–
8,130
–
Group
2019
£000
2,696
–
696
652
4,044
583
8
4,635
115
Group
2018
£000
4,226
–
686
515
5,427
475
8
5,910
115
No interest is payable on the amounts owed to the company or by the company to its subsidiaries.
Autins Group plc Annual Report and Accounts 2019
75
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT NOTES TO THE FINANCIAL STATEMENTS CONTINUED
17. Borrowings
Bank loans and overdrafts
Hire purchase and finance leases
Invoice discounting
Total borrowings
Bank overdrafts
Bank loans
Hire purchase and finance leases
Invoice discounting
Current
Bank loans
Hire purchase and finance leases
Non-current
Group
2019
£000
1,223
505
3,716
5,444
1,007
216
204
3,716
5,143
–
301
301
Group
2018
£000
398
937
2,980
4,315
158
147
428
2,980
3,713
93
509
602
Company
2019
£000
Company
2018
£000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Bank loans and overdrafts are secured by fixed and floating charges over the Group’s assets.
Principal terms and the debt repayment schedule of the Group’s bank borrowings are as follows:
Bank loans
Bank import loan facility
SEK
GBP
Secured
Secured
Repayable by instalments
Repayable within 150 days
Nominal Currency
Conditions
Rate %
Base rate + 3.75%
Base rate + 2.25%
Year of
Maturity
Up to 2020
Net obligations under hire purchase and finance lease 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
2019
£000
267
299
566
(61)
505
2018
£000
493
552
1,045
(108)
937
76
Autins Group plc Annual Report and Accounts 2019
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, 21% (2018: 22%) for
Sweden and 30% for Germany. The movement on the deferred tax account is as shown below:
Opening balance
Total credit recognised in profit and loss
Movement in foreign exchange
Closing net balance
Group
Details of the 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
Deferred tax on intangible assets
On fair valued assets
Other temporary differences
Closing liability
2019
£000
8
(45)
(1)
(38)
2019
£000
32
(316)
61
(223)
–
109
76
–
185
2018
£000
337
(329)
–
8
2018
£000
53
(432)
8
(371)
85
184
76
34
379
The group deferred tax has arisen primarily due to the timing differences on accelerated capital allowances, recognition of intangible
assets on acquisition or development costs and tax losses carried forward.
The Company deferred tax liability of £nil (2018: £36,000) relates primarily to the timing differences in respect of finance income arising on
the loan notes. The company has an unrecognised deferred tax asset of approximately £74,000 in respect of losses carried forward.
The Group has an unrecognised deferred tax asset of approximately £400,000 at 30 September 2019 (2018: £135,000) in respect of losses
carried forward as it is, as yet, uncertain when these will be utilised.
Group tax losses have been recognised where there is capacity to utilise them against specific group or joint venture profits or where
budgets and forecasts indicate that they can be used to offset overseas trading profits within the next two years, supported by the trend in
trading results and order books in these entities.
19. Share capital
Allotted, issued and fully paid ordinary shares of £0.02 each
At 30 September 2018
Issued on 23 August 2019
At 30 September 2019
Number
22,100,984
17,500,000
39,600,984
£000
442
350
792
A further 17,500,000 shares were issued on 23 August 2019 at 20 pence each for cash. The directors are authorised to issue further shares
representing up to 10% in number of those already issued.
Autins Group plc Annual Report and Accounts 2019
77
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
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 conditions in respect of 455,505 of share options issued in 2016 can no longer be met.
631,972 share options were issued in December 2017 of which 377,358 were forfeited when an employee left. These are exercisable three
years from the grant date for a period of 7 years subject to achieving growth in the earnings per share. The exercise price was equal to the
market price of the shares at the grant date. The fair value of the options issued was determined using a Log-normal Monte-Carlo
stochastic model and was calculated at 53 pence per share. The main assumptions were a volatility of 51.8%, a dividend yield of 0.525%
and an annual risk free rate of 0.2%.
569,512 options were issued in March 2019 with an exercise price of £0.02 per share. These are exercisable three years from the grant date
for a period of 7 years subject to achieving growth in the earnings per share. The fair value of the options issued was determined using a
Black Scholes model with the assumptions set out above and was calculated at 29 pence per share.
There were 633,657 of unexpired options in place at 30 September 2019 with an average exercise price of £0.22 (2018: 563,690 and £1.54)
and a remaining average exercise period of 6.2 years (2018: 5.5 years).
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 50% of Autins AB and 10% of Autins 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. A share premium of £3,150,000 arose on the shares issued in the year and £205,000 of issue expenses were deducted
from this balance.
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 3 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 2019 of £nil (2018: £nil).
The Company had no lease or capital commitments.
2019
£000
1,071
3,046
3,604
100
122
7,943
2018
£000
960
2,777
4,269
79
25
8,110
78
Autins Group plc Annual Report and Accounts 2019
23. Dividends
Final dividend paid on £0.02 shares at nil (2018: 0.8 pence per share)
Interim dividend paid on £0.02 shares at nil (2018: 0.4 pence per share)
2019
£000
–
–
–
2018
£000
177
88
265
24. Related party transactions
Share options
Directors and other key management members hold the following unexpired share options (see note 20).The share price target options can
no longer vest.
At 30 September 2019
J Larner
G Kaminski-Cook
Other senior management
At 30 September 2018
J Larner
Other senior management
Transactions with related parties and key management personnel
Group key management personnel costs
Group aggregate salaries and short term benefits
Post employment benefits
Share based payments
Indica Automotive Limited is a joint venture undertaking in which the Group has joint control.
Transactions:
Sales and costs recharged to joint venture
Purchases from joint venture
Balance at the year end owed to the Group
Balance at the year end (owed by) the Group
25. Control
In the opinion of the Directors there is no one ultimate controlling party.
Number of options
EPS
target
Share price
target
81,395
279,070
244,025
604,490
–
–
–
–
Number of options
EPS
target
44,643
275,358
320,001
Share price
target
44,643
64,140
108,783
2019
£000
1,778
36
10
1,824
2019
£000
92
2,352
94
(696)
2018
£000
1,651
48
19
1,718
2018
£000
19
2,718
–
(686)
Autins Group plc Annual Report and Accounts 2019
79
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT Directors, secretary, registered office
and advisors
DIRECTORS, SECRETARY, REGISTERED OFFICE AND ADVISORS
Directors
Adam Attwood, Non-Executive Chairman
Gareth Kaminski-Cook (Appointed 1 October 2018)
James Larner, Chief Financial Officer
Terry Garthwaite, Non-Executive Director
Ian Griffiths, Non-Executive Director
Michael Jennings (Resigned 31 August 2018)
Company Secretary
James Larner
Registered Office
Central Point One
Central Park Drive
Rugby
Warwickshire
CV23 0WE
Telephone Number
+44 (0)1788 578 300
Website
Nominated Advisor and Broker
Solicitors to the Company
Auditors
Public Relations
Registrars
www.autins.com
N+I Singer
1 Bartholomew Lane
London
EC2N 2AX
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
80
Autins Group plc Annual Report and Accounts 2019
Autins Group plc
Central Point One Central Park Drive Rugby
CV23 0WE
T: +44 (0)1788 578 300
W: www.autins.com
autins