DESIGNING SOLUTIONS
SOLVING PROBLEMS
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Acoustic
Thermal
Acoustic
Annual Report and Accounts 2020
autins
Introduction
Solving your
acoustic
and thermal
challenges
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 our breadth of materials,
products and manufacturing processes
and a highly responsive technical
support service, which is valued
by customers.
www.autins.com
Financial Overview
Revenue
Adjusted gross profit1
£21.5m
-20.1%
FY19: £26.9m
£6.0m (28.0%)
-20.0%
FY19: £7.5m (27.9%)
Adjusted EBITDA1
£1.1m
FY19: £0.0m
Operating loss
-£1.3m
FY19: -£1.6m
Cash from Operations2
Earnings per share
£1.5m
FY19: -£1.0m
Net debt3
£1.9m
FY19: £2.3m
-4.35p
FY19: -6.25p
Final dividend
Nil
FY19: Nil
Operational Highlights
• Positive EBITDA achieved, despite significant Covid impact to revenues.
Significant operational productivity and cost improvements were made,
supplemented by £1.0 million of furlough and overseas equivalent income.
• H2 revenues were c.£7.0 million lower than forecast, with customers having
had shutdowns and schedule reductions. We continued winning new OEM
contracts throughout the year which will yield future growth.
• Adjusted gross margin remained stable at 28.0% (FY19: 27.9%) despite
lower recovery of fixed operational costs from lower sales and a disrupted
operating pattern in H2.
• Recurring overheads were reduced by £1.0 million in 2020. This included
the recurring impact of staff redundancies and lay-offs across the group.
• Reported operating cash inflow of £1.5 million (FY19: loss £1.0 million),
£0.9 million was from improved working capital (FY19: -£0.6 million)
together with the impact of the adoption of IFRS16 which increased
reported operating cash flows in FY20 by £0.8 million.
• Liquidity was significantly improved with a £1.5 million loan from the
Midlands Engine Investment Fund (`MEIF') being secured in H1. £3.3 million
additional finance facilities were secured in H2; of which £2.75 million was
under the UK CBILS scheme and Germany similarly secured €0.3 million.
• Neptune total pipeline of £35.0 million (2019: £35.0 million) with £8.0 million
(2019: £5.0 million) of Neptune parts in production (annualised non-Covid
interrupted forecast) and additional work won but not yet in production.
Neptune also generated face mask sales in H2.
• Germany had an excellent performance, and despite Covid, continued
winning automotive business and secured significant growth in flooring
applications. In FY20 revenues increased to £4.6 million (FY19 £4.3 million)
and EBITDA was £0.4 million (FY19 £0.1 million).
1 Adjusted gross profit excludes £0.2 million exceptional inventory impairment, and a
further £0.3 million of exceptional restructuring costs are excluded from EBITDA (FY19:
£0.4 million). The adoption of IFRS 16 in FY20 has improved EBITDA by £1.1 million. Full
details of the impact are set out in note 26 to the financial statements.
The adoption of IFRS16 has improved the reported Cash from Operations by £0.8 million.
Full details of the impact are set out in note 26 to the financial statements
2
3 Cash less bank overdrafts, invoice discounting and hire purchase finance, and excluding
IFRS 16 calculated lease liabilities.
Strategic Report
Governance
Financial Statements
Contents
Strategic Report
At a glance
Technology and innovation
Our markets
Chairman’s statement
Chief Executive Officer’s review
Business model and strategy
Strategy in action
Responsible business
Stakeholder engagement
Financial review
Key performance indicators (‘KPIs’)
Principal risks and uncertainties
Statement of Directors’ responsibilities
Governance
Board of Directors and
senior management
Corporate Governance statement
Directors’ report
Directors’ 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 cash flows
Notes to the financial statements
Directors, secretary, registered office
and advisors
2
4
8
10
12
14
16
20
24
28
32
34
39
40
42
46
50
52
53
58
59
60
61
62
63
64
66
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Autins Group plc Annual Report and Accounts 2020
1
At a glance
Accelerating product
development
Who we are
Our specialist solutions
Acoustic
Our range of nonwoven products are low weight
and designed specifically to provide excellent
acoustic absorption, making them suitable for
various areas in the automotive sector, office
acoustics, and in HVAC applications.
Thermal
Battery life and performance can be extended with
suitable thermal control. Autins provides nonwoven
battery wraps to the automotive sector to aid
thermal management in vehicles with stop-start
technology. Our patented Neptune product has a
low thermal conductivity and offers opportunities
to the construction sector when combined with
reflective foils.
£1.2m
value of PPE supplied
to support Covid 19
c.187
Employees
3
Countries
6
Operating locations
160
Customer locations
What we do
We design
We use our acoustic and thermal
expertise and experience to research, test
and develop bespoke solutions and
products for our customers. 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.
2
Autins Group plc Annual Report and Accounts 2020
Strategic Report
Governance
Financial Statements
Our industries
Where we operate
Other
7
Automotive
68
Customers
Flooring
20
Customers
UK
Tamworth
Materials manufacturing, assembly & conversion operation
Nuneaton
Group technical centre: laboratory & test site (to be vacated in
2021)
Rugby
Group headquarters, new product introduction centre,
assembly & conversion operation
Northampton
Joint venture with Indica Industries (India), materials
manufacturing and assembly
Germany
Dusseldorf
New product introduction centre, assembly &
conversion operation
Sweden
Gothenburg
New product introduction centre, materials manufacturing,
assembly & conversion operation
Autins responded to the UK PPE crisis
rapidly, repurposing its Neptune product
(usually used for insulation in automotive
applications) to create water-repellent,
washable face masks.
(https://www.greatbritaincampaign.com/inspirations)
Autins Group plc Annual Report and Accounts 2020
3
Technology and innovation
Responding to global needs
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 customers’
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.
£0.3m
invested in R&D being 1.5% of
revenues (FY19 £0.4m, 1.5%)
226Unique parts designed and
produced for 25 OEM platforms
4
Autins Group plc Annual Report and Accounts 2020
Responding to global needs
Strategic Report
Governance
Financial Statements
We have designed and filed a
patent for an encapsulation
product for EV’s, that prevents
high frequency noise transmission
in the passenger cabin.
Stefan Janzen
Group Applications Manager
Our electric vehicle solution
The problem – new sources of noise, vibration and harshness
With the removal of the internal combustion engine (‘ICE’) and therefore
engine noise, there is an expectation of a quieter drive in electric
vehicles. In practice the removal of one major noise source uncovers a
range of different noise, vibration and harshness challenges across the
vehicle. Particularly troublesome are continuous high frequency noises
causing irritation to passengers.
The solution – an Autins’ patented encapsulation product
Autins has designed and filed a patent for a new product which
specifically encapsulates high frequency noise sources preventing
transmission to the passenger cabin and outside environment. Typically,
heavy materials are placed around noise sources, even though heavy
products are not desirable. Autins’ solution uses our acoustic and
materials knowledge to achieve a lightweight alternative providing a
superior performance. It is ‘tuned’ to maximise absorption and minimise
weight for targeted frequency ranges. This is a lighter higher performing
improvement for car designers.
Over
25%estimated share of all cars that will be electric
by 2030
Autins Group plc Annual Report and Accounts 2020
5
Technology and innovation continued
Responding to global needs
SOLVING
PROBLEMS
Market-leading technology
Close collaboration shortens development times and increases the
chance of creating balanced solutions in terms of finding the optimum
weight, performance and cost. We use state-of-the-art predictive
software to model acoustic performance when we are trying to solve
a customer problem or develop a new product.
Modelling acoustic performance can be a simple method to tune
product performance, for example making small theoretical
adjustments to reach a specific customer target. We then work
together with our suppliers and manufacturing teams to make the
required product a reality, saving time and avoiding costly trial
and error.
Neptune 80% lighter than traditional decoupling treatments
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Neptune weight 12kg/m3
Traditional weight 60kg/m3
Frequency
6
Autins Group plc Annual Report and Accounts 2020
50+materials modelled
Responding to global needs
Strategic Report
Governance
Financial Statements
At first we looked at replicating
what others do in terms of face masks,
but we couldn’t source the standard
material. Capacity was sold out
everywhere. We always knew Neptune
had filtration properties, now we
had the opportunity to develop
a product.
Dr Kathy Beresford
Group R&D Manager
Product development and innovation
Our dedication to product development 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 to create competitive
advantage and generate premium margins.
Using our skills and Neptune technology
in a crisis
The problem – High-quality PPE shortage
As global demand for PPE soared in 2020 traditionally reliable sources
were unable to keep up. Governments were faced with a shortage of
high-quality PPE and a barrage of substandard materials. This led to a
desire and requirement to onshore manufacturing of vital supplies to
ensure reliable sources closer to home.
The solution – Neptune's filtration properties
With one of the only melt-blown material lines in the UK, Autins
pivoted to help ease the shortage of face masks. In less than four
weeks we designed, developed and received our first orders of a
technical product into a market about which we previously knew
nothing. Over the following months Autins supplied over one hundred
thousand face masks to local markets.
4 weeks
to full production of face masks
to support the Covid crisis
Autins Group plc Annual Report and Accounts 2020
7
Our markets
Identifying opportunities
for future growth
Automotive
Establishment in industry:
Exploratory
Progress
Matured
Automotive market
All automotive markets have been affected by the global
Coronavirus pandemic, suffering widespread plant
closures. Whilst economists hope for a ‘V’ shaped recovery,
we cannot rely on that happening and so we are striving to
make market share gains and outpace the market recovery.
Our customers have emerged from the pandemic determined to find
new ways to reduce their costs, consider new material solutions that
have better performance and economic cost savings. Neptune
exactly meets this requirement, being up to 40% lighter, offering the
same performance and material cost savings.
Autins has increased its share of wallet with current customers,
won new customers in automotive and are continuing to work on
significant new projects.
Consumers want more comfort in their cars and (pre-Covid interruption)
the projected increase in global demand for automotive noise, vibration
and harshness ('NVH') materials was set to grow from $10.8 billion in 2019
to $15.7 billion by 2026, a CAGR of 6.4% between 2020 and 2026.
Therefore we expect demand for NVH materials to grow and the rapid
move to electric vehicles will not affect this trend, because EV’s need as
much NVH treatment as combustion engines. In 2020, UK car sales
dropped by 29%, however demand for specialist sports vehicles
increased by 7%. Autins sales are biased towards luxury vehicles, with a
high proportion going for export into markets such as China.
Commercial vehicles
Autins products are ideal for commercial vehicles, which shares many
of the same challenges and requirements as automobiles. Customers
in this arena rely on SMEs to supply many of their parts, since they are
typically producing smaller volumes, but over a longer period.
Often this market follows different economic cycles to automotive,
as demonstrated this year when commercial vehicles were in high
demand delivering goods throughout the pandemic and home
delivery services came of age.
Strong customers in the commercial vehicle market are located close
to our operations in Sweden, central Europe and the UK and this year
we have seen good progress winning contracts in this area securing
new business with Blatchfords and Scania.
8
Autins Group plc Annual Report and Accounts 2020
Electric vehicle growth
Autins Group has continued to see an increase in EV
enquiries and has received orders for multiple new vehicles.
The content value of NVH in electric vehicles is similar to
that needed in combustion engines, although the solutions
needed are more bespoke and this is where Autins’ technical
expertise is highly valued by OEM engineering design teams.
Electric vehicles represent only 7% of all cars sold today, but this is
forecast to increase to anywhere between 25% and 50% of car sales
by 2030. In April the UK’s best selling cars were the EV Tesla Model 3
and Jaguar I-Pace. With car manufacturers and governments alike
accelerating their plans to transition to more electric based vehicles,
Autins is well positioned to benefit and become an important specialist
supplier of acoustic and thermal solutions in the electric vehicle space.
(https://www2.deloitte.com/uk/en/insights/focus/future-of-mobility/
electric-vehicle-trends-2030.html)
Electric vehicles are a focus area and specialism of Autins.
(https://www.mckinsey.com/industries/automotive-and-assembly/our-insights/
mckinsey-electric-vehicle-index-europe-cushions-a-global-plunge-in-ev-sales#)
Global electric-light-vehicle sales by region, million units
2.5
2.0
1.5
1.0
0.5
0
+9%
+65%
+52%
per annum
2015
2019
Strategic Report
Governance
Financial Statements
Non-automotive
Non-automotive market
Autins has a history of supplying acoustic and thermal
solutions into a wide variety of non-automotive
segments. The only non-auto market which has
consistently grown year on year is the German flooring
business which has a dedicated technical commercial
flooring team.
In order to accelerate our non-automotive sales in new segments in
the UK, an additional dedicated technical sales resource has been
employed post year end.
Flooring
• Our target market are the producers of floor coverings,
especially LVT and other elastic floorings, as these are the fastest
growing markets
• Our business model is based on high volumes and not selling
to end customers, distributors, or DIY markets, which are the
customers of our customers. This is highly appreciated by the
flooring industry
• We offer specific customised solutions to improve footfall sound
reduction, whilst maintaining a fully secure flooring solution
• This is not a standard portfolio, as every single floor covering has
specific requirements. In contrast to other underlay producers
that offer standard ‘off the shelf’ products, we offer a true
consultancy, design and make service solution, which generates
good margins
• We have over 20 years of experience in the flooring market and a
profound knowledge of materials, acoustics, and market trends,
which is well known to decision-makers in the market
Office pods and garden offices
• Office pods are increasingly popular in large companies that
created huge open planned spaces and now realise they need
quiet spaces and privacy to concentrate, with attractive
aesthetics.
• They need to function well and must be very space-efficient, so
walls need acoustic treatment and Neptune, being >40% more
effective than alternative materials, means walls can be thinner for
the same acoustic performance
• There are many companies manufacturing office pods across
Europe, which have until now received limited acoustic upgrades
and this represents a relatively untapped opportunity for Autins
• The office pod designers know furniture and design, but need
acoustic expertise, which Autins can provide
• The garden office concept is an emerging trend driven by more
home working because of Covid. The same principles apply and
Neptune is a good solution for these designers.
Others
• Autins has supplied acoustic or thermal solutions (including
Neptune) into a variety of applications over the years to reduce the
noise in MRI scanners, portable dialysis machines and the HVAC
building market
• The new Business Development Manager will systematically
evaluate these and other markets, to identify which of these
opportunistic sales can be converted into strategic growth
segments
Autins Group plc Annual Report and Accounts 2020
9
Chairman’s statement
Business agility during
the Covid crisis
I am proud of the leadership and business
agility that the Group has shown to navigate
through the past few months. From a low
point in April, when there were widespread
plant shutdowns throughout our core
customer base, we have seen recovering
sales demand in the final quarter.
Adam Attwood
Chairman
People
2020 has been unprecedented. The global Covid pandemic has
significantly affected all geographies of our operations in a way that was
unimaginable as we began the financial year. I must begin this review
with a sincere "thank you" to all of Autins’ staff who have collectively
reacted so well to events and helped to mitigate the consequences of
the pandemic on the business. Our staff have shown critical, key
qualities in the past few months. I have seen decisive leadership across
the Group, enhanced communication (despite workspace restrictions),
a willingness to adapt to change and great resilience (especially from our
many staff who had the uncertainty of being on furlough). Adversity
shines a spotlight on the true calibre of an organisation. I am truly
grateful to all our staff for their understanding, co-operation, support,
patience and ingenuity over the past months. We have a great team at
Autins and that bodes well for our future!
In January 2020, we welcomed Kamran Munir to the Group as Chief
Financial Officer. Kamran has provided additional expertise at cost
control and operational financial management. He has already
proved to be a valuable addition to the executive team, ensuring
heightened financial discipline and securing additional liquidity
during the year.
In light of market conditions, the Board unanimously agreed to take a
20% reduction in salary for the second half of the year both to
conserve cash and to align itself with our wider workforce. At the
peak, we had over 90% of employees across the Group on furlough.
Financial performance
Group sales for the year were £21.5 million, 20% down on FY19. This
was the result of extended and unforeseen shutdowns at the
production plants of our key OEM automotive customers from the
end of March, as a consequence of the global Covid pandemic.
However, sales did start to recover in the final quarter of the year,
although they remained below pre-Covid expectations.
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; and
• Acoustic and thermal problems solver.
Neptune customers
+13to 43 customers
+£1.5m
improved from -£1.0m to +£1.5m1
Cash from operations
1. The adoption of IFRS16 has improved the reported Cash from Operations
by £0.8 million. Full details of are set out in note 26 to the financial statements
10
Autins Group plc Annual Report and Accounts 2020
Strategic Report
Governance
Financial Statements
Our German subsidiary continued to gather momentum during
the period with overall sales of £4.6 million (FY19: £4.3 million).
This represents a very strong performance in light of the market
conditions exceeding prior year for both revenue and EBITDA.
Our focus on operational improvement continued throughout
the period in difficult circumstances. This was evidenced by our
adjusted gross margin remaining consistent at 28.0% (FY19:
27.9%) despite lower volumes and a disrupted operating
pattern. This resulted in reported EBITDA of £1.1 million (2019
£nil), primarily reflecting the impact of the adoption of IFRS 16,
and enabled the Group to report £1.5 million of operating cash
reported in the year.
The operating loss for the Group was £1.3 million for the year
(FY19: loss £1.6 million).
The Board has continued to focus on increasing the Group’s
liquidity and cash balances during the year. In January, we
agreed a £1.5 million Midlands Engine Investment Fund loan
which has been fully drawn down. In addition, by July, the
Group secured CBILS (or other territory equivalents) loans of
£3.0 million. These loans have significantly improved the
Group’s liquidity and working capital position.
Strategy
Despite the uncertainty created from the Covid pandemic, our
overall strategy remains intact. We remain committed to
becoming a leading noise, vibration and harshness (‘NVH’)
specialist to European automotive markets, focusing on the
new NVH challenges arising from the move to electric and
hybrid vehicles. Our proprietary Neptune, melt-blown material
continues to provide opportunities to supply new customers
due to its specific acoustic and thermal performance and its
lighter weight. In the year, we have increased the number of
Neptune material and component customers by 45% to 42, with
27 in UK, 11 in Germany and 4 in Sweden.
We also continue to focus on diversifying our NVH expertise to
non-automotive markets. We were successful in the year in
securing supply of our flooring products to Unilin and IVC,
subsidiaries of the world's largest flooring manufacturer,
Mohawk. Our initiatives to accelerate non-automotive sales
were interrupted by market conditions in the mid-part of the
year, but increased in momentum towards the end of the year.
We have reviewed our Environmental, Social and Governance
framework during the year and are committed to the strategic
importance of continuous improvement in these areas.
We have introduced further effective measurements to
challenge ourselves to minimise the environmental impact
of our business.
Corporate governance
The Board is committed to robust corporate governance and
risk management to ensure the delivery of our strategic
ambitions and the financial health of the Group. We apply the
Quoted Companies Alliance Corporate Governance Code
(the ‘QCA Code’).
The Board undertook an annual review of performance in
September. This was a useful exercise to understand how the
Board can further develop as a team and highlight areas of
governance that can be improved to assist the Group to manage
its risks and adapt to change.
Dividend
In light of the impact that the Covid pandemic has had on this
year’s performance, no final dividend is proposed.
The Board will continue to monitor net earnings, gearing levels
and expected capital requirements with a view to reinstating its
progressive dividend policy at the appropriate time.
Outlook
The Group will continue to focus on operational improvement,
cash conservation, sales growth and diversification of
customers and markets. Notwithstanding the ongoing
uncertainty surrounding Covid, the Group has improved its
liquidity position, and the Board anticipates recovery in sales
volumes and profitability for the Group from FY20 levels, due to
the full year effect of new customer wins and continued
strategic progression and a reduced negative impact from the
Covid pandemic. However, there remains a heightened level of
forward-looking risk until there is more certainty of the impact
of the ongoing effects of the Covid pandemic, with scope for
further lockdowns, and the transitional effects of the recently
announced Brexit deal. Further details of how the Group
complies with the principles of the QCA Code can be found on
pages 42 to 45 of this report.
Adam Attwood
Chairman
Autins Group plc Annual Report and Accounts 2020
11
Chief Executive Officer’s review
Delivering operational improvements
and accelerating diversification
This really was a year of two halves, with
H1 trending on track to meet our full year
expectations in the core auto business; and
H2 proving that Autins has the agility to adapt
to sudden changes in the macro-economy.
Neptune sales
+60%
annualised new revenue (non-Covid)
Non-UK sales
25.4%
up from 22.5% in 2019
Gareth Kaminski-Cook
Chief Executive Officer
Our materials and solutions contribute to a quieter,
safer, cleaner and more energy-efficient world.
Autins is an industry-leading designer, manufacturer and supplier of
acoustic, filtration and thermal management solutions. We apply our
expertise in material technologies to solve complex and challenging
problems to create better and more comfortable environments in a wide
range of industry applications including automotive, flooring, office
furniture and commercial vehicles. We manufacture a range of technical
materials, including our own patented material, Neptune, in our facilities
in the UK, Germany and Sweden, making us a truly European business.
Despite the unprecedented challenges faced this year we have still
delivered on many of the performance targets we set ourselves a year
ago. Although our financial performance has been impacted by these
challenges, this really was a year of two halves: with H1 trending on track
to meet our full year expectations in the core automotive business; and
H2 proving that Autins has the agility to adapt to sudden changes in its
business model and macro-economic circumstances requiring
significant operational and financial adjustments, as well as securing
government support funds. We continue to win new Neptune business
showing it is a winning technology. This all bodes well for 2021.
First half 2020
Last year I wrote that management would focus on three areas:
margin improvement, growing the customer base and leveraging our
unique Neptune technology to expand the business.
In December 2019, I was pleased to announce the appointment of
Kamran Munir as Group CFO. By the half year Kamran’s impact was
already being felt, with operational efficiency improvements
consistently delivering a gross margin above 30% and management
actions to further reduce overheads flowing through to the bottom
line. In the half year we had successfully secured contracts with new
customers across a number of important target industries including
automotive, commercial vehicles and office pods and our Neptune
revenues had increased by £1.6 million to £6.5 million on an
annualised run rate, based on respective customer expectations.
12
Autins Group plc Annual Report and Accounts 2020
Second half year 2020
The second half of the year was dominated by the Coronavirus
pandemic. The impact on the business was immediate with sales to
automotive clients coming to an abrupt halt following the widespread
shut down of car plants for the period from the end of March until
early July. Despite the majority of our staff, more than 90% at the high
point, being furloughed throughout this period, the Covid pandemic
has had a large negative financial impact caused by estimated lost
revenue of c.£7.0 million against internal forecasts.
Autins responded quickly to protect cash and pivoted the business to
develop new solutions; in particular, the development and production
of face masks using our Neptune melt-blown technology and the
production of foam components for face visors. Sales of the Autins'
face mask grew rapidly during the summer PPE shortage, peaking in
June. Autins was also selected to supply cut foam parts to a visor
manufacturer as part of an NHS contract. We began supplying within
one week of the enquiry and subsequently supplied over 7 million parts.
We are proud of how we rapidly leveraged Autins' skills and equipment to
supply essential PPE during a global crisis and generate a new stream of
cash into the business. However, this is a highly competitive market with an
entrenched existing supply chain and therefore we anticipate that PPE will
only provide very limited ongoing sales opportunities for the Group.
Automotive production recovered from July onwards. By year end,
the UK and Sweden were at c.70% pre-Covid levels, whilst Germany
was above 85%. Following a review of staffing requirements, the
Company implemented a restructuring process in August resulting in
a headcount reduction of c.10%.
We have secured government-backed financial support in the UK,
Germany and Sweden, which has given the Group the funding it
needs to protect the business whilst the core markets recover.
All these actions were testament to the good leadership, agility and
creativity throughout the Company and confirms the versatility of
Neptune in new markets. With this in mind, we have since recruited a
New Business Development Manager for the UK, who will bring focus
Strategic Report
Governance
Financial Statements
Review of the year
Oct
Dec
Jan
Mar
H1
• Nine new auto contracts won.
• Kamran Munir appointed CFO on 1 January 2020.
• Operational cost and efficiency improvement targets of
£2 million p.a. 85% achieved.
• £0.5 million Q2 20 vs Q1 20 EBITDA improvement.
• Gross margins improved by 3.8% to 30.9%.
• Cash management improved. Stock and debtors
> £1 million.
• Secured £1.5 million of long-term Midlands Engine
Investment Fund (‘MEIF’) funding to support growth and
working capital.
• Net debt kept consistent, with trade creditors back to terms
• Plants shutdown 24 March.
Apr
Jun
Jul
Sep
H2
• c.90% of staff furloughed as UK auto demand reduced
due to key customer shutdowns.
• CBILS awarded and received beginning July.
• Flooring contract win of £1.2 million to Mohawk Group
• Mask production starts April (30k per week at peak
August.
in June).
• Foam parts production for visors starts June
(800k per week).
• Begin supply to Mini (BMW Group) September.
and expertise to sustain and accelerate our growth into new markets
and new industry segments.
During the summer, our German business won its biggest ever flooring
Decibex contract, to supply into the world's largest flooring manufacturer,
Mohawk Group. In Sweden, via our tier partners we were awarded work
with truck manufacturer Scania – and with Volvo for their new Polestar and
XC90 models. In the UK we were awarded the contract to supply Grupo
Antolin with Neptune product for the Mini, part of the BMW Group, and have
since started making and delivering these parts for running production.
The German business managed to surpass all of its original budget
targets for the year, with new contracts for Neptune, and in flooring
with the Decibex product range, more than offsetting the market
declines in automotive.
This year we are reporting more fully on our approach and performance
regarding ESG (Environment, Social and Governance). We are an
international business operating in the global community and will take
our responsibility to be a good corporate citizen seriously.
In a year that has tested the agility and resilience of leadership, Autins has
shown that it can adapt quickly to protect cash and find new sources of
revenue. Whilst Covid continues to create uncertainty, the announcement
of the Brexit deal has helped to ensure EU trading stability continues.
Sales recovery will be accelerated by recent wins in both the automotive
and non-automotive markets, which will drive better returns from the
improved cost structure, as volumes are able to recover.
The strategy, therefore, does not change. We will leverage Neptune to
win market share in automotive, leverage our acoustic, filtration and
thermal expertise to accelerate growth in non-auto markets and drive
down our operational costs.
Gareth Kaminski-Cook
Chief Executive Officer
Autins Group plc Annual Report and Accounts 2020
13
Business model and strategy
Adding value
responsibly
Our mission
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 help make the world a more
comfortable and quieter place to
live, work and thrive, by reducing
noise, and thermal energy waste.
We will do this by providing specialist
acoustic and thermal solutions to
our customers.
Our business model
Innovative technology
Range of materials:
• Nonwoven PET/PP including
Neptune
• Thermoplastics
• PUR
• Laminates
Range of processes:
• Manufacturing
• Conversion
• Tooling and component
design and testing
Specialist technical support
• Acoustic and thermal experts
• Diagnosis
• Tooling and component
design
• Tailored solutions
• Rigorous programme
management
Continuous innovation
and exceptional service
• Listening to our customers
• Rigorous NPI process
• State-of-the-art development
laboratories
• Fast
• Responsive
• Customer-focused
• Creative culture
Underpinned by our values
Teamwork
Accountability
Expertise
Creativity
Agility
Passion
Our strategy
Strategic pillars
Expand sales in non-automotive sectors
• Leverage our wide range of material technology
and acoustics and thermal competence to win
business in new markets
Accelerate sales in automotive
• Expand our automotive customer base across
Europe, by leveraging the uniqueness of Neptune
and our NVH (Noise, Vibration and Harshness)
expertise and our technical expertise to win new
customers
Deliver best in class quality, service and cost
Progress in 2020
Current focus
£2.5 million new wins in non-automotive
• German flooring business doubles with a €1.2 million win.
Growth, Growth and Growth
We will continue to identify additional
• Autins wins its first commercial contracts to supply Blatchford in UK and Scania
operational cost and overhead
• Autins adds another office pod customer, Spacestor.
• Autins sales of face masks and foam parts for face visors above 7 million pieces and
so that we can derive full benefit from the
in Sweden.
£1 million.
• Dedicated technical sales added in UK for 2021.
29% more business (annualised value) won than prior year
• Won £10 million new life cycle business despite Covid.
• 50% conversion rate remains strong.
• Neptune sales grew 80% to £11.9 million.
• Enquiry pipeline is over £40 million.
Sustainable operating cost and overhead improvements
• Gross margin remained steady despite significant revenue drop in H2.
• Underlying Gross margin cost improvements, offset in FY20 by lower volumes.
• Overheads reduced by £1.0 million.
improvements, but the first priority now is to
grow the volumes going through our plants
cost improvements.
Specifically, we aim to:
• Continue delivering exceptional quality
and customer service to all customers.
• Substantially grow our non-auto business
in the UK.
• Build on the positive momentum which
our German business has created during
2020 in both auto and non-auto.
• Expand the customer base in Sweden.
• Promote Neptune as a premium
technology, which offers VAVE cost-
saving opportunities for our customers.
14
Autins Group plc Annual Report and Accounts 2020
Our business model
Strategic Report
Governance
Financial Statements
Creating value for our stakeholders
• Employees
By striving to create a larger, more profitable company, we aim to create an exciting future where more people are
employed doing work that is motivating. Our staff can expect to work in a safe place where people will be treated fairly
and with respect. Our teams will be challenged and constantly learn, so that we can empower them to be part of
something important.
• Customers
We have a unique product offering, due to our breadth of materials, products and manufacturing processes and a highly
responsive technical support service, which we believe is highly valued by our customers.
• Shareholders
Autins must provide a positive return for our investors, who have entrusted management to deliver profitable growth.
Management is totally committed to delivering superior returns and will work tirelessly to fulfil the full potential of the
Autins Group.
• Suppliers
Our suppliers should share in the benefit of Autins’ success, which will be founded on delivering exceptional service to
our customers, proving our reliability, complete supply chain transparency and a willingness to align as partners.
• Regulators
Autins will observe complete transparency in all dealings with the relevant regulators and in fulfilling its obligations
of governance.
• Communities
Autins proactively engages with its local communities as part of its approach to Social Responsibility. This includes being
aware of our impact on and taking a responsible approach to the environment, the communities we work within and
governance compliance.
Teamwork
Accountability
Expertise
Creativity
Agility
Passion
See page 23 for more information on our values
Our strategy
Strategic pillars
Expand sales in non-automotive sectors
• Leverage our wide range of material technology
and acoustics and thermal competence to win
business in new markets
Accelerate sales in automotive
• Expand our automotive customer base across
Europe, by leveraging the uniqueness of Neptune
and our NVH (Noise, Vibration and Harshness)
expertise and our technical expertise to win new
customers
Deliver best in class quality, service and cost
Progress in 2020
Current focus
£2.5 million new wins in non-automotive
• German flooring business doubles with a €1.2 million win.
• Autins wins its first commercial contracts to supply Blatchford in UK and Scania
in Sweden.
• Autins adds another office pod customer, Spacestor.
• Autins sales of face masks and foam parts for face visors above 7 million pieces and
£1 million.
• Dedicated technical sales added in UK for 2021.
29% more business (annualised value) won than prior year
• Won £10 million new life cycle business despite Covid.
• 50% conversion rate remains strong.
• Neptune sales grew 80% to £11.9 million.
• Enquiry pipeline is over £40 million.
Sustainable operating cost and overhead improvements
• Gross margin remained steady despite significant revenue drop in H2.
• Underlying Gross margin cost improvements, offset in FY20 by lower volumes.
• Overheads reduced by £1.0 million.
Growth, Growth and Growth
We will continue to identify additional
operational cost and overhead
improvements, but the first priority now is to
grow the volumes going through our plants
so that we can derive full benefit from the
cost improvements.
Specifically, we aim to:
• Continue delivering exceptional quality
and customer service to all customers.
• Substantially grow our non-auto business
in the UK.
• Build on the positive momentum which
our German business has created during
2020 in both auto and non-auto.
• Expand the customer base in Sweden.
• Promote Neptune as a premium
technology, which offers VAVE cost-
saving opportunities for our customers.
Autins Group plc Annual Report and Accounts 2020
15
Strategy in action
Leveraging
our regional presence
Germany
Broadening the business base
Since the establishment of our operations in Germany we have strived to maintain a balance
between the industries we serve.
This year’s shutdowns and slow recovery of the world’s automotive markets due to Covid has shown us
how important this strategy is. Our business in the flooring and construction industry has shown
significantly more resistance to the downturn than other industries.
Our specialist flooring sales and technical teams in Germany have secured significant new business for
the Group.
Growth in Germany
16
Autins Group plc Annual Report and Accounts 2020
German flooring set to grow
100%
(full effect of wins for 2021 based
on customer expectations)
Enquiry pipeline
c.£15m+
Doubled the enquiry pipeline
during the year
01,0002,0003,0004,0005,000SalesFY 15/16FY 16/17FY 17/18FY18/19FY19/20 Strategic Report
Governance
Financial Statements
€4.3m
new contracts won in Germany
Enquiry pipeline
c.£15m+
Doubled the enquiry pipeline
during the year
The result of many years of hard
work building a reputation with and
solving the problems of the world’s
leading flooring manufacturers has
borne significant fruit this year,
when we needed it most.
Josh Kimberling
Group Sales Director
Autins Group plc Annual Report and Accounts 2020
17
Strategy in action (continued)
Leveraging
our regional presence
£1.2m
PPE revenue
UK
Innovation during a storm
As the Covid pandemic ripped through the world, a global shortage for PPE
ensued. The call went out for British-made PPE. Autins responded to the crisis
rapidly, repurposing our Neptune material usually used for automotive
insulation to create water-repellent, washable face masks and retooling our
production processes to produce other PPE items.
After closing our factories in line with customers in March, production began again on
Good Friday (April 3) to produce thousands of Neptune based face coverings per
week. Successfully passing BSI (the UK’s national standards body) testing for face
coverings illustrated our commitment to only provide high-quality, reliable products
and subsequently created the opportunity for Autins to supply the UK's leading PPE
distributors. In addition, we were approached to supply foam parts to a Visor
manufacturer. We quickly geared up to supply 800k foam parts per week and
eventually supplied over 7 million parts in support of the NHS until the contract
ended.
Autins received national recognition for our response to the Coronavirus pandemic
by being named as one of the faces of the UK Government’s ‘GREAT Inspirations’
campaign. We are proud to have been able to use our expertise and creativity to
help during a time of national crisis, but anticipate that PPE will only provide very
limited ongoing sales opportunities for the Group.
7.4mvisor parts produced
and distributed
18
Autins Group plc Annual Report and Accounts 2020
£1.2m
PPE revenue
Strategic Report
Governance
Financial Statements
Sweden
Nominated by Volvo on EVs
Our Swedish plant is ideally located to supply Volvo cars and
their Swedish supply base. It is also well positioned to supply
a range of commercial vehicle manufacturers including Penta,
Scania, Volvo Trucks and Buses. This year we have made
significant progress in both automotive and commercial
vehicle markets.
Autins has secured contracts for parts on the next generation of
electric Volvo cars where Neptune is the material of choice due to its
high acoustic absorption and lightweight characteristics.
Additionally, we have won commercial vehicle contracts in Sweden
and have other follow-on projects in the pipeline. The Swedish team
delivered a significant improvement to financial performance
despite the Covid pandemic.
25new parts won
Autins Group plc Annual Report and Accounts 2020
19
Responsible business
Our commitment to ESG
Our future is about sustainable growth
• Autins recognises that ESG should be a central commitment of the business to support
decarbonisation/a better environment, promote our social responsibilities and ensure fairness
and promote diversity.
• We also recognise that it is becoming a more important area for our investors.
• During the year we have therefore developed a range of measures to help quantify, measure
and improve our ESG performance.
• We have decided to adopt the finnCap 15 point model of measurement, because it provides a
clear framework and relevant sector measures against which we can monitor our performance.
Monitoring Strategy for ESG:
i. Measure, monitor and manage continuous improvement of the key environmental datapoints (energy, CO2, water and waste).
ii. Aim to reduce turnover of the permanent staff in the UK.
iii. Roll out the finnCap methodology to include our German and Swedish operations.
iv. Expand the ESG monitoring to include Sweden and Germany.
Environmental
Current measurements of our carbon footprint including, but not limited to, all energy consumption in offices, warehouses, transportation of goods
and business travel, shows a reduced total carbon emission of 3.5% (or cost equivalent) year-on-year and a 4.0% of kgCO2e reduction per million
of revenue. During financial year 2020/21, Management will strategically review how the water and energy consumption can be reduced. A capital
project is already being implemented to convert all UK factory lighting to energy-efficient LED lights.
• Raw material off-cuts returned to
• All internal waste streams recycled
• Year-on-year reduction in waste of
supplier for reuse
Individual components:
Performance: Quartile 4 to all markets – note Q1 best
over 50%
Units
Company
Value
All Markets
Median
mWh/£m
tonnes/£m
m3/£m
tonnes/£m
yes/no
166
58
228
11
yes
42
39
88
2
64%
Energy consumption
CO2 production
Water consumption
Waste production
Has an environmental or sustainability policy?
Case study
Supporting our environment
Our products and solutions are fundamentally
environmentally friendly. For example, Neptune uses
up to 40% less polymer than alternative products and
our heavy layer material is 100% recycled. Our
Purpose, as a company, is to reduce noise and
energy pollution.
Across our factories we aim to use renewable energy
sources and technologies that limit impact on the
environment and our carbon footprint. Through waste
segregation and the use of recyclable materials we
have created reusable waste streams in partnership
with external partners. Metrics of usage are monitored
against targets to reduce waste and resources.
20
Autins Group plc Annual Report and Accounts 2020
-46% reduction in waste in the UK in the year
)
s
n
o
t
(
m
a
e
r
t
s
e
t
s
a
w
d
e
l
c
y
c
e
R
60
50
40
30
20
10
0
2019
2020
Reduction
52
48
46
28
20
25
21
29
23
19
15
Paper
Recycled
Mix
Cardboard
Wood
Metal
4
5
5
0
Strategic Report
Governance
Financial Statements
Social
Autins Group is very proud of its safety record, the quality of our products and services, and the integrity in the way we do business with all our
partners and stakeholders. The way in which we do business is underpinned by a core set of company values and a code of business ethics, which
are set out within our Annual Corporate Responsibility Report.
Staff turnover rate in the UK is too high, driven by high turnover in manufacturing. The whole manufacturing organisation has been reviewed, people
reassessed, and prudent changes made to raise the calibre of supervisor and team leaders. The expectation is this will increase followership and
staff retention.
Individual components:
Performance: Quartile 3 to all markets– note Q1 is best
Employee turnover rate
Has discrimination policy?
Has community outreach policy?
Has ethics policy?
Case study
Investing in our communities
We are committed to promoting a better
understanding of careers in engineering and
manufacturing, by engaging with students at
events such as careers fairs at local schools,
and TeenTech, the organisation formed to help
young people understand the real opportunities
available in the contemporary STEM workplace.
Our people continue to be involved in raising
money for both local and national charities. Staff
have raised funds for Macmillan Cancer Support
and at Christmas support the KidsOut Christmas
Tree appeal that provides toys for children living in
local refuge homes.
We continue 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.
Units
%
yes/no
yes/no
yes/no
Company
Value
(UK only)
Actual or
Estimate
Market
Median
20%
Actual
yes
yes
yes
14%
68%
39%
76%
Autins Group plc Annual Report and Accounts 2020
21
Responsible business continued
Governance
The Autins Board is committed to maintaining the highest possible standards of Corporate Governance as set out in detail in the Investor section of
the company website under the heading ‘Governance’.
www.autins.co.uk/investors/governance/
Individual components:
Performance: Quartile 1 to all markets
% women on Board
% independent Directors on Board
CEO pay as multiple of UK median
Is CEO and Chairman role split?
Adheres to QCA Code for Corporate Governance?
Case study
Enhancing our corporate governance
During the second half of the financial year under report,
the full Board undertook a full QCA Board Effectiveness
Review, which resulted in identified improvement actions.
The full Board has also recently completed external formal
anti-bribery training, along with company management
and staff.
Units
%
%
yes/no
yes/no
Company
Value
(UK only)
Market
Median
0%
60%
8.0
yes
yes
12%
45%
12.5
95%
95%
We are an international business
operating in the global community –
we take our responsibility to be a
good corporate citizen seriously.
Gareth Kaminski-Cook
Chief Executive Officer
22
Autins Group plc Annual Report and Accounts 2020
Strategic Report
Governance
Financial Statements
Our Covid response and our values
Gareth Kaminski-Cook explains below how these values were ‘lived’ during Covid.
Our values
Teamwork
Maintained full engagement of all leadership through daily face-to-face
Zoom calls, weekly telephone contact with furloughed staff and
biweekly letters and video apps to all Autins staff from all the Leadership
team, including the Chairman.
Accountability
We protected the Company’s cash position by maximising furlough income,
minimising cash out, obtaining CBILS and generating new revenue of over £1
million in PPE. We continued to win new business in our core businesses –
c.£10 million (based on annualised, non-Covid interrupted, customer
expectations) across automotive, flooring and commercial vehicles.
Expertise
Three weeks to understand, design, develop, make and find customers
for a range of face masks for the public – using our own Neptune
technology, equipment and people. One week to supply foam parts to a
customer supplying an NHS contract – 7 million made in three months.
Agility and creativity
Within 3 weeks we were able to develop and launch a BSI approved face
covering. The speed of decision-making from Board through to shop
floor was possible because of inherent material expertise, commercial
acumen, trust and effective communication.
Passion
The Autins team loves doing what we do – during Covid our purpose
became about survival, protecting the jobs of our staff and temporarily
providing PPE, which was in short supply. Passion makes a difference
and this year our team made a real difference and in so doing protected
the Group for all our stakeholders.
Living the Autins values has helped us cope well during the Covid crisis. We will continue to adhere to these values to maximise engagement
and motivation of our people to deliver value to our customers and shareholders.
Autins Group plc Annual Report and Accounts 2020
23
Stakeholder engagement
OUR STAKEHOLDERS
The Board believes that to maximise
value and success in the long-term
it must engage and consult with its
stakeholders in order to develop
effective and mutually beneficial
relationships with them and,
ultimately, to make better business
decisions.
You can find our Business model and Strategy
on page 14 and see how well we are executing
on the strategy on pages 11, 16 and 17.
S172 Statement
As required by s172 of the Companies Act 2006,
a director of a company must act in the way he
considers, in good faith, would most likely
promote the success of the company for the
benefit of its shareholders. In so doing, the
director must have regards amongst other
matters to the:
• Likely consequences of any decision in
•
•
•
the long-term
Interests of the company’s employees
Need to foster the company’s business
relationships with suppliers, customers
and others
Impact of the company’s actions on the
community and environment
• Desirability of the company maintaining a
reputation for high standards of business
conduct
• Need to act fairly between members of
the company
Our stakeholders
Material topics
Employees
By striving to create a larger, more profitable
Group, we aim to create an exciting future
where more people are employed doing
work that is motivating. Our staff can expect
to work in a safe place where people will be
treated fairly and with respect. Our teams
will be challenged and constantly learn, so
that we can empower them to be part of
something important.
Customers
We have a unique product offering, due to
our breadth of materials, products and
manufacturing processes and a highly
responsive technical support service, which
we believe is highly valued by our
customers.
Shareholders
Autins must provide a positive return for our
investors, who have entrusted management
to deliver profitable growth. Management is
totally committed to delivering superior
returns and will work tirelessly to fulfil the
full potential of the Autins Group.
Suppliers
Our suppliers should share in the benefit of
Autins’ success, which will be founded on
delivering exceptional service to our
customers, proving our reliability, complete
supply chain transparency and a willingness
to align as partners.
• Live our values everyday;
• Our success is built on the engagement and
motivation of our employees;
• Understand how each person contributes
to the Group strategy and adds value;
• Expect to be challenged and be given the
opportunity to learn and develop;
• Expect to be listened to, trusted and
empowered; and
• Aim to minimise turnover of staff and
increase the average term of service.
If customers win, we win;
•
• We develop solutions, so we need to
build trusted partnerships;
• Bring new technology and innovation;
• Show how we provide more value than
the cost of using our products and
services; and
• We must be agile to create value in a
fast-changing world.
• Financial and operational performance;
• Business strategy and model;
• Leadership;
• Capital allocation;
• Dividend; and
• Governance.
• Competitive offering and innovation;
• Reliability and responsiveness;
• Compliance with anti-bribery and
corruption laws; and
• Prepared to be a supply chain partner.
Regulators
Autins will observe complete transparency
in all dealings with the relevant regulators
and in fulfilling its obligations of
governance.
Communities
Autins proactively engages with its local
communities as part of its approach to
Social Responsibility. This includes being
aware of our impact on and taking a
responsible approach to the environment,
the communities we work within and
governance compliance.
• Compliance with all relevant legislation;
• Openness and transparency; and
• Avoiding conflicts of interest.
• Engage with local and national social
enterprises, charities and school fairs;
• Supporting industry to improve
awareness of opportunities for
students and apprentices; and
• Proactive involvement in industry
associations.
24
Autins Group plc Annual Report and Accounts 2020
• We encourage everyone to try and live the values;
• Regular communication with structured, cascaded
verbal communication, CEO and Leadership
briefings, written and on the video Autins app, ‘all
hands’ meetings;
• Biannual employee survey, followed by feedback
and employee-led improvement action plans; and
• Twice yearly staff appraisals.
• Regular engagement through Commercial teams;
• Peer-to-peer communication from CEO and
functional leaders with customers’ Finance,
Engineering, R&D and Quality departments; and
• Visits to Autins’ factories including audits of
facilities and total management competence.
• Twice yearly results roadshows, meeting on any
governance matters, our AGM, our RNS, our website
and via contact through our advisers; and
• Since Covid all communication has been via phone,
Zoom or Teams.
• Daily engagement through purchasing team;
• Strategic face-to-face meetings between
leadership to develop partnerships
and alignment;
• Discuss respective strategies, priorities and
development opportunities;
• Always seek to resolve any matters of concern
proactively and quickly; and
• Proactively seek help in a structured and
transparent way – e.g. during the Covid crisis we
agreed ‘delayed payment’ plans.
• Generally we engage with regulators through
our advisers to clarify understanding as and
• We contribute to input for online surveys as
when needed; and
they arise.
• Direct contact with local organisations and
agencies as required, supported by communication
• Productive membership of selected industry
on social media; and
bodies e.g. Make UK.
Strategic Report
Governance
Financial Statements
How does the Board balance focus between
short and long-term objectives?
Policy Deployment:
• Policy Deployment (PD) is the methodology we use to execute strategy and is
designed to retain focus on meeting long-term objectives. PD ensures that the
Board can continuously challenge all elements of the strategy; and
• A Policy Deployment methodology is used to break the five-year strategic
objectives into one-year objectives and plans.
Board meetings:
• Executive reports highlight progress, gaps and actions to achieve annual budget
and PD stretch targets, using KPIs aligned to the strategy;
• Part of every Board meeting is allocated to review specific areas of risk and
strategic progress outside of the standard executive reports. The Board also
encourages members of the ALT to present, at least once a year, the key
developments in their specific areas of the business. This provides the Board
with a wider vision of the business and an opportunity to test how governance
measures are being adopted throughout the organisation;
• Standard items of Governance are covered in every meeting and a review of
Board effectiveness is conducted using the NVQ guidelines; and
• The Board also maintains a cadence to review strategic items ranging from
organisational development and the risk register, to regional growth and
technology evaluations.
Strategy development:
• A formal, structured review of the strategy is conducted once a year. The Board
and members of the Senior Leadership Team review all drivers that might affect
the opportunities and risks for the Group and thereby identify any need to
change either the strategy or the execution plan; and
• The broader environment is continuously being monitored and the culture is in
place to respond rapidly if a new opportunity or threat is spotted, as evidenced
during 2020 when the Group pivoted in response to Covid and turned the threat
of closure into a sales opportunity to make PPE.
Autins Group plc Annual Report and Accounts 2020
25
How does the Board ensure
delivery of the strategic
objectives for our shareholders?
• We encourage everyone to try and live the values;
• Regular communication with structured, cascaded
verbal communication, CEO and Leadership
briefings, written and on the video Autins app, ‘all
hands’ meetings;
• Biannual employee survey, followed by feedback
and employee-led improvement action plans; and
• Twice yearly staff appraisals.
• Regular engagement through Commercial teams;
• Peer-to-peer communication from CEO and
functional leaders with customers’ Finance,
Engineering, R&D and Quality departments; and
• Visits to Autins’ factories including audits of
facilities and total management competence.
• Twice yearly results roadshows, meeting on any
governance matters, our AGM, our RNS, our website
and via contact through our advisers; and
• Since Covid all communication has been via phone,
Zoom or Teams.
• Daily engagement through purchasing team;
• Strategic face-to-face meetings between
leadership to develop partnerships
and alignment;
• Discuss respective strategies, priorities and
development opportunities;
• Always seek to resolve any matters of concern
proactively and quickly; and
• Proactively seek help in a structured and
transparent way – e.g. during the Covid crisis we
agreed ‘delayed payment’ plans.
• Generally we engage with regulators through
our advisers to clarify understanding as and
when needed; and
• We contribute to input for online surveys as
they arise.
• Direct contact with local organisations and
agencies as required, supported by communication
on social media; and
• Productive membership of selected industry
bodies e.g. Make UK.
Employees
By striving to create a larger, more profitable
Group, we aim to create an exciting future
where more people are employed doing
work that is motivating. Our staff can expect
to work in a safe place where people will be
treated fairly and with respect. Our teams
will be challenged and constantly learn, so
that we can empower them to be part of
something important.
Customers
We have a unique product offering, due to
our breadth of materials, products and
manufacturing processes and a highly
responsive technical support service, which
we believe is highly valued by our
customers.
Shareholders
Autins must provide a positive return for our
investors, who have entrusted management
to deliver profitable growth. Management is
totally committed to delivering superior
returns and will work tirelessly to fulfil the
full potential of the Autins Group.
Suppliers
Our suppliers should share in the benefit of
Autins’ success, which will be founded on
delivering exceptional service to our
customers, proving our reliability, complete
supply chain transparency and a willingness
to align as partners.
• Live our values everyday;
• Our success is built on the engagement and
motivation of our employees;
• Understand how each person contributes
to the Group strategy and adds value;
• Expect to be challenged and be given the
opportunity to learn and develop;
• Expect to be listened to, trusted and
empowered; and
• Aim to minimise turnover of staff and
increase the average term of service.
•
If customers win, we win;
• We develop solutions, so we need to
build trusted partnerships;
• Bring new technology and innovation;
• Show how we provide more value than
the cost of using our products and
services; and
• We must be agile to create value in a
fast-changing world.
• Financial and operational performance;
• Business strategy and model;
• Leadership;
• Capital allocation;
• Dividend; and
• Governance.
• Competitive offering and innovation;
• Reliability and responsiveness;
• Compliance with anti-bribery and
corruption laws; and
• Prepared to be a supply chain partner.
Regulators
Autins will observe complete transparency
in all dealings with the relevant regulators
and in fulfilling its obligations of
• Compliance with all relevant legislation;
• Openness and transparency; and
• Avoiding conflicts of interest.
governance.
Communities
Autins proactively engages with its local
communities as part of its approach to
Social Responsibility. This includes being
aware of our impact on and taking a
responsible approach to the environment,
the communities we work within and
governance compliance.
• Engage with local and national social
enterprises, charities and school fairs;
• Supporting industry to improve
awareness of opportunities for
students and apprentices; and
• Proactive involvement in industry
associations.
Stakeholder engagement continued
Key Board decisions
Board and Committee activities are organised throughout the year to address the matters reserved for the Board. An overview of the Board’s
principal decisions during the year; including how the Board has taken into account the factors set out in Section 172 of the Companies Act
2006 (“the Act”), is set out below.
Decision
Actions taken
Key stakeholder groups considered
Dealing with the
Covid pandemic
• Regularly reviewed the challenges presented by the
Covid pandemic and government announcements on
social distancing and safety.
•
• Detailed considerations as to how we could continue to
operate safely on sites and in offices, and travel and
accommodation issues for our workers.
Initiated actions to obtain government support in the
form of furlough monies and CBILS loans to provide the
Group with sufficient cash and facility headroom to
withstand potential Covid downside scenarios.
Initiated PPE product development and support
revenue initiatives.
•
Funding and cash
headroom
adequacy for
balance sheet
strengthening, for
growth and
downturn
management.
Setting the annual
Group budget and
subsequent
forecast modelling
following the Covid
outbreak for going
concern purposes.
• Applied for and secured UK CBILS, and overseas
equivalent, loan funding to the value of £3.0 million.
• £2.25 million of the £3.0 million are term loans greater
than 5 years.
• Applied for and secured MEIF growth loan funding of
£1.5 million.
• Reviewed and approved Group budgets for FY20/21
and profit and cash flow forecasts for the next 24
months, all of which were updated regularly for the
impact of Covid.
• Review and scenario modelling of future trading to
support covenant compliance and the going concern
assessment.
• The safety of our workforce remained a primary driver
during this period, together with their and the Group’s
financial security.
• The Board recognised the trade-offs of managing the
financial security of the Group, servicing customers and
the impact of furloughing staff.
• The Board ensured clear communication took place,
through safe platforms to all employees regularly.
• The Board recognised the importance of engaging wider
stakeholders. The Group engaged with the supply chain,
key customers, and the local business community to
ensure support and agreement for key actions.
• The Board is conscious that the actions of the Group
during the Covid period will have an ongoing impact on
future stakeholder relationships.
• The UK public, our staff, and key workers that needed
PPE. We assisted with the provision of face masks and
part cutting for foam based face visors. This gave support
to a key NHS contract provider and subcontract work to
small local suppliers.
• The Board considered the impact on the equity and
value position of the shareholders, against medium
term trading and growth prospects.
• The consideration included assessing the short to
medium term cash headroom to withstand the Covid
downturn, as well as ensuring that growth capital
remained to support key product developments and
sales growth activities.
•
In reviewing the budget and subsequent forecasts, the
Board considered the impact on all stakeholders.
• Setting the budget identified key areas of focus for the
Group, providing development opportunities for
employees, some of which have already been implemented.
• The budgeting process provided key information to take
•
decisions such as manning levels, the design of future value
project streams and capital expenditure.
In setting the budget the Board also gave consideration to
customers and identified opportunities to develop
customer relationships and improve service delivery and
efficiency.
• Consideration was given to suppliers and ensuring their
payments are made on a timely basis.
Restructuring
including the
redundancy of
certain team
members.
• Various roles were evaluated and actioned for
• The Board considered the impact on the wider
redundancy.
workforce and in particular those directly impacted by
the restructure.
• Whilst the decision to restructure the Group was
considered necessary to improve the Group cost
structure, the Board recognises the negative impact the
process had on employees. The Board ensured that the
redundancy process was done fairly and transparently,
with experienced human resources expertise
supporting the process. Employees impacted in the
process were treated ethically, respectfully and fairly.
26
Autins Group plc Annual Report and Accounts 2020
Strategic Report
Governance
Financial Statements
Directors’ Section 172 statement
The Board of Directors consider that they, both individually and collectively, have acted in a way that would be most likely to promote
the success of the Company for the benefits of its members as a whole (having regard to the stakeholders and matters set out in
Section 172(1)(a-f) of the Act) in the decisions they have taken during the year ended 30 September 2020.
In making this statement the Directors considered the longer-term needs of stakeholders and the environment and have taken into
account the following:-
•
•
•
•
•
•
the likely consequences of any decisions in the long term;
the interest of the Company’s employees;
the need to foster the Company’s business relationships with suppliers, customers and others;
the impact of the Company’s operations on the community and the environment;
the desirability of the Company maintaining a reputation for high standards of business conduct; and
the need to act fairly as between members of the Company.
Autins Group plc Annual Report and Accounts 2020
27
Financial review
Strengthening the business core and
(em)bracing the Covid storm
I am delighted to have joined the Autins
team. We have strengthened the business core
using high impact cross-functional techniques.
Operational capacity has been increased at
lower cost and better productivity, enabling
improved volume margins. Overheads have
been reduced £1m. Cash and working capital
are significantly improved. Innovation remains
instrumental in both products and processes,
as we strive for growth against a backdrop of
tough fundamentals.
Kamran Munir
Chief Financial Officer
£5.6 million Group cash headroom as at 30 September 2020.
Positive EBITDA for FY20. Operating cash inflow of £1.5
million. Continuing OEM contract wins. Restructured
balance sheet and improved funding position with lower
net debt.
H2 saw significant disruption. Our key customer had substantive
shutdowns and volume reduction for the majority of the April to
August 2020 period. Other key OEMs followed a similar pattern that
impacted production and sales in UK and Sweden.
The Group’s primary focus in H1 was to continue new contract
growth and simultaneously improve the cost structure by more than
£2.0 million p.a. As reported for H1, the latter was achieved through
volume related improvements in materials, labour productivity, and
reduction in overheads of £1.0 million including restructuring staff
positions. Underlying working capital improvements in stocks and
debtors of more than £1.0 million were also realised. Significant new
Automotive OEM contracts continued to be won in the UK and
Germany, and £1.5 million of long-term MEIF funding was also
secured.
In H2 our diversification journey continued. Significant growth in
non-automotive applications was achieved. New PPE products
achieved £1.2 million of revenues and new flooring sales at a rate of
£1.8 million p.a. were also secured. Critical actions were also needed
to work through Covid trading conditions. Approximately £1.0 million
(UK £0.7 million) of furlough, and overseas equivalent, income was
received. Long-term CBILS, and overseas equivalent, loans of
£3.0 million were successfully obtained. Over the full year, reported
operating cash-flow for the Group was £1.5 million and net debt,
excluding lease liabilities under IFRS16, was improved by £0.4 million.
Revenue
During H1 revenue was £13.2 million (H1 19: £13.6 million). New
automotive contracts were secured and significant additional customer
tooling was sold that will drive future growth. We had additional growth
in Sweden and Germany, and growth in non-automotive markets. This
was offset by a reduction in volumes from our key customer consistent
with the status of the overall automotive market. There was a small
initial adverse impact in March 2020, as volumes started to drop in line
with Covid trading patterns from our key customers.
28
Autins Group plc Annual Report and Accounts 2020
The German business had less disruption with automotive reductions
being much less than UK and Sweden. With new automotive business
wins coupled with non-automotive growth in flooring products,
Germany exceeded budget and was ahead of prior year revenues at
£4.6 million (FY19: £4.3 million).
New PPE products were developed and sold in H2 20. This realised
£1.2 million of short-term revenues in the UK at positive margins. The
new flooring business was secured at a rate of £1.8 million per
annum. With Covid trading conditions impacting the Group, H2
revenues were £7.0 million lower than forecast and H2 revenues at
£8.3 million (H2 19: £13.1 million).
We continued with our strategy to diversify across market sectors and
reduce reliance on our key customer. Non-automotive revenues in
FY20 were 14.4% of Group sales at £3.1 million (FY19: 7.4% and £2.0
million). In the year, we continued winning more OEM contracts and
also had stronger non-automotive sales than before. This will give an
improved combined position as and when OEM production volumes
recover.
Gross margin
Automotive and primary business gross margins improved to 28.0%
(FY19: 27.9%). This was the net result of 3.8% growth in margins to
30.9% as reported pre-Covid in H1 combined with the significant
reduction in volumes in H2 as a result of the Covid pandemic. The H1
improvements were achieved through significant improvements in
materials costs, labour productivity improvements and cost downs in
production running categories. Materials costs improvements in H1
include better sourcing and utilisation of materials, but also
additional use and direct sale of our own manufactured Neptune
material which improved volume overhead absorption for our
Tamworth facility.
Strategic Report
Governance
Financial Statements
As reported in H1, in total these actions combined were showing
through an improved rate of more than £1.0 million per annum. In H2
further cost reductions continued, however, these were offset by
production absorption losses in our main business segments as
revenues were severely impacted as described above by the Covid
trading environment.
There was also some small erosion from certain material price
increases and associated adverse sourcing and import duty impacts
related to material types also used in global PPE applications that
were subject to global supply constraints. Whilst the total value of this
was less than £0.1 million, this still equates to an H2 erosion of 1.2%.
Margins in Germany improved from 24% to 28% year over year, albeit
growth in Germany’s sales are dilutive to the Group's total gross
margin percentage. Gross margins in Sweden improved to be above
40%, increasing from 36% in FY19.
In H2 new PPE products were sold at superior margins. This derived
primarily from our ability to further utilise our own produced Neptune
material. This gave us a ‘speed to market’ and associated flexibility
advantage in our commercial proposition and further improved Neptune
production absorption. NHS-destined PPE component revenues were
derived on a materials free issue basis utilising existing Group equipment
including that from our Swedish facility which gave a significant marginal
absorption advantage. Combined, the PPE revenues resulted in a 1.7% full
year gross margin improvement. All of the above factors combined yielded
a net gross margin of 28.0%, being a narrow improvement over FY19.
Future improvements from automation and improved site layouts are
expected to deliver further savings during FY21. Projects to achieve
this are already in progress. Capital investment has been budgeted
and can be achieved within expected operating cash flows.
The Group should continue to have further success in securing
component contracts using Neptune materials, which will improve
gross margin from volume absorption. Neptune, being a melt-blown
and nonwoven material was used in our PPE and non-automotive
products. Our core strategy remains to grow these volumes. In addition
the Group continues to optimise existing and future component and
materials requirements, both with existing suppliers and newly
identified ones that should help improve sourcing leverage.
EBITDA and operating profit
FY20 EBITDA was £1.1 million (FY19: £0.0 million) after adjusting for
exceptional and non-recurring costs as noted below, with an
adjusted operating loss of £0.6 million (FY19: loss of £0.8 million) also
allowing for the amortisation and impairments relating to intangible
assets described below. The reported statutory operating loss was
£1.3 million (FY19: £1.6 million).
The adjusted measures are stated after excluding items that
management consider to be a result of significant one-off events,
including the restructuring costs associated with the detailed review
of operations, following the new CFO appointment, which included
employee severance costs and the planned scrapping of inventory to
enable improved floor space utilisation and so reduce premises
costs. Exceptional costs relating to restructuring were £0.3 million,
and exceptional inventory impairments were £0.2 million.
Management information used in running the Group is measured with
a focus on the underlying operational 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 are
used to help illustrate underlying business performance and are
informative to users of the accounts.
FY20 EBITDA also benefits from £1.0 million of IFRS16 adjustments, as
compared to FY19. Without the benefit of IFRS16 reporting the adjusted
EBITDA would be narrowly positive at £0.04 million. The Directors also
note that £1.0 million of employment costs were met by income from
the government job retention scheme in the Covid disrupted periods,
and their overseas equivalents in Sweden and Germany.
Exceptional and adjusting items
As noted above, the Group incurred an exceptional cost of sales of
£0.16 million (2019: £nil) and exceptional administrative costs of £0.29
million as a result of a change of Chief Financial Officer (FY19: £0.43
million included other restructuring changes). The former Chief
Financial Officer, James Larner, left on 31 December 2019, and
Kamran Munir was appointed from 1 January 2020.
To be consistent with analysts’ measure of the Group’s performance
amortisation of £0.2 million (FY19: £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
£0.0 million (FY19: £0.1 million) have been excluded from adjusted
operating profit. The adjusted operating loss, allowing for exceptional
costs and amortisation, would be £0.65 million (FY19: £0.8 million).
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 30% to £2.1 million
(FY19: £2.9 million). H1 20 revenues were £1.5 million (H1 19:
£1.5 million), and significant revenue reduction resulted in H2 as
call-offs for existing parts were reduced in the Covid trading period.
Strong margin and overhead cost control actions were taken by
management, and £0.05 million of UK furlough income was received,
helping to generate a profit after tax of £0.2 million (FY19: £0.4 million).
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 Krona 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. The Group
has taken steps to mitigate this risk by establishing alternative sources for
non-patented product which could then also be transacted in Euro. The
Group also has Euro-based purchases for materials and production,
including equipment. As Euro sales are expected to increase from our
German business, this would allow us to manage relative balances in
British Pounds, Euros and US Dollars.
Autins Group plc Annual Report and Accounts 2020
29
Financial review continued
The Group continues to benefit from natural hedging, arising from its
structure and trading balances, which means that the Group’s result
in both years has only been impacted in a limited way as a result of
currency translations.
brought forward losses when profitability increases, will mean that
the effective tax rate will remain below the UK statutory level for the
short to medium term with an unrecognised deferred tax asset of
£0.77 million in the UK (2019: £0.30 million).
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 Neptune grows 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
Finance expense increased to £0.5 million (FY19: £0.2 million) as a result
of the adoption of IFRS 16 and the inclusion of £0.3 million of financing
charges previously presented in operating lease expenses.
Improvements resulted from a deliberate strategy to optimise working
capital, primarily in stocks and debtors and to reduce Invoice Financing
(IF) facility draw-down reliance, yet simultaneously improving the
payment cycle to trade creditors. Short-term overdrafts were also
repaid in the UK January 2020 with a £0.85 million reduction across the
Group. The IF facility was repaid in August 2020, and was not in use as
at September 2020. Negotiations with our Neptune Partner Iksung also
meant that our direct open credit with them was extended for all of
FY20, allowing the bank trade finance facility to be fully repaid. The
Group secured a five-year MEIF £1.5 million loan, at a coupon rate of
7.5% in the year which was fully drawn down by February 2020. CBILS
loan funding of £2.75 million was also received in July 2020 at net £zero
cash interest cost for the first 12-month period. The accounting for this,
results in recognition of the interest waived of £0.1 million as a form of
grant income with an equal expense over the year to July 2021. Car and
equipment finance leases reduced in FY20 as some agreements
completed during the year, with no renewal, which reduced interest
costs. Accordingly, the net finance expense significantly reduced in H2
to c.£70k, compared with c.£120k in H1.
An analysis of the net finance expense is presented in note 8 on page 79.
Taxation
The effective tax rate in the year was below that expected based on
current UK corporation tax levels. Given the quantum of losses
compared to expected profitability in the next two years, the Group has
not recognised the majority of current year losses as a deferred
taxation asset. The balance sheet asset has been reviewed and is
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, improve processes and
develop new products. The Covid trading pattern and significant
disruption to revenues has meant that larger net losses prevail than
were previously expected. Accordingly, the Group has revised its
strategy and will now utilise the additional losses to obtain actual
R&D tax credit refunds to optimise the cash position. A revised R&D
claim for the year ended September 2018 was submitted in FY20 and
a repayment of £0.1 million has subsequently been received. Similarly
the claim for the year ended September 2019 will be revised and
submitted on this basis. Although at a lower level than 2019, R&D has
continued and this, together with recognition and use of available
30
Autins Group plc Annual Report and Accounts 2020
The Group’s overseas subsidiaries continue to have brought forward
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 fully recognised
the remaining losses in Germany as a deferred tax asset and a degree of
those in Sweden. The Group has a further £0.03 million (FY19: £0.13
million) unrecognised tax asset in respect of Swedish tax losses.
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 (FY19:
£0.13 million) unrecognised tax asset in respect of European losses.
Earnings per share
Loss per share was 4.35 pence (FY19: loss per share 6.25 pence) reflecting
the loss in the year. The weighted average number of shares was 39,600,984
in the year (FY19: 17,500,000). 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 80.
Dividends
The Board are not proposing a final dividend for the current year (FY19:
£nil) and no interim dividend (FY19: no interim dividend) was paid.
Net cash/(debt) and working capital
The Group ended the year with net debt of £1.9 million (FY19: £2.3
million) excluding the IFRS16 calculated lease liabilities of £5.8 million
as disclosed in the reconciliation of movements in cash and financing
liabilities on page 65.
The Group secured a £1.5 million five-year term loan from MEIF in H1. £2.75
million of UK CBILS loan funding was received into the Group in July 2020.
Of this £0.75 million is a one-year bullet loan repayable by 30 June 2021 and
a further £2.0 million is a six-year term loan with no repayments until July
2021. There is no interest payable for the first 12 months on either loan.
Germany secured local equivalent Government support loan of €300,000
that is repayable over 10 years with an interest cost of 1.03% p.a.
The Group has £0.3 million (FY19: £0.5 million) of Hire Purchase
agreements in the UK. Long-term asset backed bank loans in Sweden
were substantively repaid in FY20 (FY19: £0.1 million). There were no
new hire purchase agreements in the year and £0.1 million (FY19:
£0.1 million) of the new short-term trade import facility was utilised
for Neptune materials purchases but had been fully repaid at the
year-end.
The Group has focused on working capital optimisation in the year;
this has already been partially described above. Collection of trade
debtors improved in the year with a reduction of overdue balances
from additional focus and applied resource. Bad debt or credit note
provision charge in the year was at £0.0 million (FY19: £0.2 million).
Some of the prior year provision has been retained against residual
overdue invoices which the Group continues to resolve.
Strategic Report
Governance
Financial Statements
Trade creditors have reduced significantly in the year with payments
being made to terms, usually on a weekly cycle. Stocks were reduced
during H1, but then increased in H2 as we held additional buffer
stocks to help ensure supply continuity against the Covid backdrop
which disrupted smooth production flow. New PPE items resulted in
additional stocks of c.£0.2 million.
Going concern
The Board has concluded, on the basis of current and forecast trading
and related expected cash flows and available sources of finance,
that it remains appropriate to prepare these financial statements on
the basis of a Going Concern.
The Group received cash financing inflows of £4.55 million in the year,
of which £3.5 million are long-term loans, and the short-term
overdraft balance was reduced by £0.85 million. Invoice discounting
liabilities of £3.7 million were repaid, but the facility remains fully
available at up to £6.0 million against relevant trade receivables in
addition to an unutilised £0.3 million import loan facility. Despite the
Covid trading backdrop, the Group reported positive operating cash
flows of £1.5 million.
Whilst the operating cash flows benefit from a combination of
improved working capital and cost management, they are also
impacted by the pandemic driven decrease in revenue and associated
net investment in working capital together with the change to the
treatment of operating lease costs on transition to IFRS16. In addition
to the increased focus on working capital management, the Group has
also already made annualised savings of some £1.0 million in overhead
costs and improved operational efficiency, with continuing
programmes in place to make additional improvements.
CBILS loans being secured, sensitised forecasts were reviewed with the
bank and used as a basis for establishing the covenants, which apply to
both of the CBILS loans. At the year-end actual UK trading results were
approximately £1.4 million ahead of the base forecasts at the EBITDA
level. In the next financial year, achievement of the minimum required
UK EBITDA, without significant further unplanned cost or efficiency
improvements, is predicated on minimum revenue levels of £19.2
million. This compares with UK revenues of £16.8 million in FY20 and
£21.3 million in FY19. As commented upon elsewhere in this Annual
Report, significant new contracts have been won since FY19 and,
accordingly, the Board are confident the EBITDA target will be met,
especially having regard to further additional mitigating actions which
remain available to the Group.
The Board continues to review the Group’s banking and funding
arrangements with a view to ensuring that they remain appropriate
for the planned growth within mainland Europe and to allow for the
more volatile demand pattern in the current economic environment.
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 further 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 2020 (both
existing and generated in the year) by reference to discounted cash
flow 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.
At the year end there was £5.6 million of available cash and facility
headroom, with £1.1 million of the loans repayable within 1 year, of
which £0.75 million is the UK CBILS bullet loan repayable in June 2021.
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.
In undertaking their assessment of the future prospects for the Group,
the Directors have prepared trading and cash flow forecasts for the
period to 30 September 2022. These take into consideration the current
and expected future impacts of the Covid pandemic, diversification of
the customer and product ranges and also have regard to the
committed business and enquiry levels from existing customers.
The Directors have also considered the impact of current and future
demand levels for new vehicles, the migration to EV’s and publicly
available forward looking market information regarding market sizes
and dynamics. These forecasts have been compared, together with
considering a range of material but plausible sensitivities, to the
available bank facilities and the related covenant requirements.
The loan repayments and interest costs are expected to be adequately
covered by operating cash generation over the period and the Group
has significant liquidity headroom within its facilities to accommodate
all reasonably foreseeable cash flow requirements in the event of
changes to its demand as a result of Covid, Brexit or other economic
factors, with flexibility also available to favourably manage the cost
base in respect of operating costs, should the need arise.
Capital expenditure
Additions to tangible fixed assets were £0.2 million (FY19: £0.2 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 on an
ongoing basis in FY21 in support of further operational gains.
Research and development costs of £0.13 million (FY19: £0.15 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 a range of projects designed to further enhance the
Group’s current materials and product ranges and improve production
capabilities to derive volume or cost reduction benefits.
Financial risk management
Details of our financial risk management policies are disclosed in note
3 on page 74.
The most sensitive factor impacting the forecast period, and the
continued availability of the current facilities, is the EBITDA covenant in
the UK in relation to the £2.0 million CBILS long term loan. Prior to the
Kamran Munir
Chief Financial Officer
Autins Group plc Annual Report and Accounts 2020
31
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
2020 0.0%
2019 0.0%
2018
2017
2.0%
2016
3.1%
8.1%
(One incident would represent 2.0% for FY20)
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. Given this consistent good performance, management focus daily on
minimising any minor incident and during 2020 has also applied great attention to ensuring that all facilities and behaviour are Covid safe.
Focus
Safety
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%)
(12.6%)
2020
2019
2.8%
2018
2017
2016
1.8%
(Target: CAGR 15-20% over 3-5 years)
30.4%
Comment
Performance reflects the impact of Covid on reduced volumes and revenue.
Focus
Diversification
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
2020
2020
2020
2019
2019
2019
2018
2018
2018
2017
2017
2017
2016 X.X%
2016 X.X%
2016
6.8%
X.X%
X.X%
12.4%
(Target: 35% over 3-5 years)
X.X%
X.X%
24.9%
19.0%
X.X%
X.X%
17.2%
Comment
Whilst full year's sales for the Group declined due to Covid by £5.4 million, sales outside of the UK grew by £1.6 million to £6.7 million and
now represent 24.9% of Group revenue compared with 19.0% in the previous year. The Group strategic target for revenue outside UK is
35% of Group turnover.
Focus
Diversification
32
Autins Group plc Annual Report and Accounts 2020
Strategic Report
Governance
Financial Statements
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
(20%)
(8.1%)
2020
2019
2018
10.9%
2017
2016
1.3%
(Target: CAGR 15-20% over 3-5 years)
26.7%
Comment
Whilst new order intake and pipeline development both increased in the year, absolute revenues fell in the Covid period with significant
reductions in call offs for Sweden and the UK, and from the Group's largest customer. Tooling sales also decreased. However, sales from the
German entity grew by £0.3 million.
Focus
Growth
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
(1.8%)
2020
2019
2018
2017
2016
1.3%
10.9%
(Target: CAGR 15% over 5 years)
30.4%
26.7%
Comment
Performance reflects losses made in the year.
Focus
Growth
New product & customer sales as a % of Group revenue (%)
KPI Definition
New product and customer sales are measured as the combined revenue generated from new 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
2020
2019
2018
2017
2016
12.7%
5.6%
(Target: over 10%)
20.2%
21.4%
18.3%
Comment
The percentage of revenue from new customers or new products won in the last 3 years remained stable at 20%. New wins during the year
had minimal positive impact as Covid suppressed sales related to the new wins which would otherwise have benefited H2.
Focus
Innovation
Autins Group plc Annual Report and Accounts 2020
33
Principal risks and uncertainties
RISK MANAGEMENT
The Autins Board considers risk management a
strategic imperative that will help to ensure
delivery of our long term goals. Whilst risk
management is a daily management process
for control of Health and Safety, quality and
customer service, the company also undertakes
a formal review twice a year to identify risks
and opportunities for delivery of the strategic
objectives.
Approach to risk management
Every function and country reviews their risks and confirm
actions to mitigate the identified risks. The Leadership team
then review all these risks and creates a prioritised risk
register across the Group, based on the potential impact
and likelihood of the risk happening, which is monitored
and managed on a regular frequency in the Leadership
Team meetings. Finally the Board formally reviews the Risk
Register ahead of half and full year results to ensure that a
balanced and appropriate attention has been given to the
safety of our employees and products, our reputation,
or risks that could lead to breaches of laws and regulations
or endanger the future existence of the Group.
Risk Management Process
The risk management process is set out in the Group Risk
Register Guidance Documentation. Risk registers are created
each functional area in each country and subsequently one for
the Group
•
• Describe each risk and how it could affect the business
• Score the Likelihood and Impact (financial, reputation etc.)
Identify the key risks
to give a severity rating
• Prioritise the risks and identify which ones will receive the
highest attention
• Ascribe an owner of the risk to oversee the mitigation plan
and execution
• Monitor progress on each action by date and an overall status
Update since 2019
• Our principal risks are reported, taking into account the
mitigation plans
• The majority of risks are long term in nature and in general do
not change significantly in the short-term
• Brexit and further waves of Covid 19 are the most imminent
risks and receiving due attention. We believe both are being
managed well
IDENTIFY RISKS
ASSESS GROSS RISK
QUANTIFY NET RISK
IDENTIFY EXISTING
MITIGATION
IDENTIFY ANY FURTHER
ACTION REQUIRED
MONITOR AND CONTROL
34
Autins Group plc Annual Report and Accounts 2020
Strategic Report
Governance
Financial Statements
Risk
Description and potential impact
Mitigation
Failing to
successfully
implement our
growth strategies
High Dependence
on automotive
sector and
market cycles
Our future success requires an effective
implementation of the growth and diversification
strategies developed and refined in recent years.
This is essentially to increase market share with our
USP’s and Neptune product, across all automotive
applications and European markets. In addition to
widening applications of Neptune into non-
automotive areas.
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.
The Covid trading backdrop adds additional
uncertainties.
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 the 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 underperformance and allow
actions to be taken to address and improve results.
Additional cost and cash management actions may be required to
offset any sales deviations.
Maximise government Covid support opportunities available to us,
including the job retention scheme and CBILS loans.
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 R&D and operational teams 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
automotive market share growth, acoustic flooring in Europe, and
building and industrial applications to secure new revenues. The
Group has also had success in new flooring products in FY20.
We continue to develop knowledge and seek additional approvals
for Neptune, our class-leading automotive material, to facilitate
further growth in both automotive and non-automotive markets.
Dependence on
key customers
More than half of the Group’s revenues continue to
be derived from one key customer. In addition, both
European sites also have high customer sales
concentration.
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 each 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.
Autins Group plc Annual Report and Accounts 2020
35
Principal risks and uncertainties (continued)
Risk
Description and potential impact
Mitigation
Loan servicing
and covenant
compliance,
finance and
working capital
management
The Group has a primary UK bank with secondary
funders in the UK and Europe. The current structure
includes CBILS short and long-term loans with
HSBC, and a long-term MEIF loan with prevailing
covenants.
Working capital funding is primarily provided by a
flexible Invoice Financing (IF) facility. A Trade
purchases facility has also been renewed by HSBC.
Material short-term demand reductions (such as
that experienced in the Covid trading environment
in FY20) would have an immediate impact on this
facility’s headroom.
It is also likely that this headroom reduction would
be magnified by short-term inventory fluctuations
within the supply chain and an unwind of trade
payables from the lower demand.
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.
The automotive sector has undergone a period of
sustained growth, especially within the UK, which
has reduced the availability of certain skills and
experienced personnel.
Risk is elevated with greater key staff reliance after
having made recent redundancies. The Covid
environment though, has increased available talent
pool.
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, or
supply was interrupted for other reasons.
Dependence on
relationship
with IKSung,
and supply
interruption
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 prior year and FY20 loan
arrangements have provided the Group with significant financial
headroom.
Short-term overdrafts have been reduced and the term loans
provide greater surety in a period of variable market demand. The
Trade and IF facilities are flexible to manage working capital
fluctuations. Stocks and debtors combined are more tightly
managed than before.
Long-term asset-backed finance products are used for capital
investments.
Our supply chain management and relationships were tested in this
Covid period. We were able to achieve co-operative favourable
outcomes to manage stock fluctuations, ensure supply continuity,
and agree flexible payment structures that reduced financial risk.
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. This was enhanced further in FY20 to help secure
retention in key roles.
We have continued to progress staff development to ensure staff
skills remain relevant and reviewed appropriate succession
planning. We support apprenticeships and internal progression, and
support those seeking professional qualifications where
appropriate.
A collegiate, motivating and dynamic workplace provides a good
environment for staff retention.
Alternative suppliers have been secured for all non-patented
materials within Neptune to allow risk mitigation.
The Group has proactively 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 third party material
producer) in the event of IKSung being unable to do so. Alternative
emergency supply sources have been identified.
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 of Neptune.
36
Autins Group plc Annual Report and Accounts 2020
Strategic Report
Governance
Financial Statements
Risk
Description and potential impact
Mitigation
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.
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.
We have also engaged industry experts who can advise offset
guidance.
Risk of competing
materials to
Neptune
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.
Our specialist R&D technicians have focused projects designed to
improve both Neptune and our other existing materials and to
explore new materials applications. We continue to file our own
applications-based patents, such as encapsulation.
The impact of the
EU referendum
(Brexit)
The form of the announced Brexit deal has
significantly reduced the overall risk and uncertainty
that was prevailing for the Group prior to its
announcement.
The location, design and manufacturing capacity of all our
operational facilities are constructed to meet local market demands,
in territory. We have plans to invest in further capacity in Europe as
the need arises.
Potential implications for automotive
manufacturers that related to currency fluctuation
and tariffs with corresponding impact on the cost
and availability of raw materials and labour have
been largely eliminated.
Residual risks include the additional transit time
needed for customs and cross border procedures,
and any associated delivery delays, albeit these are
expected to be transitory. Systems and master data
changes are needed for cross border customers and
suppliers.
Brexit related labour availability issues are relevant
to our business as we have a significant proportion
of European worker, but again the risk is considered
low in the current economic climate with labour
being available in the local market.
We have invested in relationships with supply chain partners in the
year to establish safety stocks whilst also developing secondary
local suppliers to negate cross border trading risks.
We had previously developed cross border manufacturing transition
plans, had the need arisen.
The Group seeks to position itself as an employer of choice whilst
recognising that the market is competitive has taken steps to engage
staff in the year to better understand needs and motivations and
support retention.
Systems master data has been updated to facilitate automatic and /
or simplified documentation needed for EU post Brexit trading
compliance.
Autins Group plc Annual Report and Accounts 2020
37
Principal risks and uncertainties (continued)
Risk
Description and potential impact
Mitigation
IT systems and
software and
cyber-security
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. The
latter could also be impacted by cyber-security
issues, for example if data transfer or integrity was
impacted.
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.
Along with many other businesses, the pandemic
has had far reaching impacts on the business and,
where relevant to previously reported risks, the
responses are incorporated above.
Currency and
foreign exchange
The Covid
pandemic
The future evolution of the pandemic, and
associated Government responses, remains a key
focus for the management team to ensure the
impact of further Covid waves on our supply chain,
customer demand and our people is monitored and
timely, appropriate action is taken.
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 third party IT support and improvement are employed with
multi-layer data backup and storage. Regular updates for malware,
security and virus protection are installed.
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.
Key financial controls, cash management and critical
assets are managed with a restricted list of executives
and qualified/trained personnel with an appropriate segregation of
duties.
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 is sufficiently
significant to have potential for material impacts on the Group’s
results.
Continue applying all current Covid policies, with real time
discussions ongoing with our key customers and suppliers.
Our employee contracts allow us to flex the hours worked with
reduced pay if demand patterns change.
Strong health and safety processes prevail with respect to Covid
control and mitigation throughout our facilities.
The Strategic Report was approved by the Board on [XX] December 2020 and signed by order of the Board by the Chairman.
The Strategic Report was approved by the Board on 19 January 2021 and signed by order of the Board by the Chairman.
Adam Attwood
Chairman
[XX] December 2020
Adam Attwood
Chairman
38
Autins Group plc Annual Report and Accounts 2020
Statement of Directors’ responsibilities
In respect of the Annual Report and Accounts
Strategic Report
Governance
Financial Statements
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
applicable law and International Accounting Standards in conformity
with the requirements of the Companies Act 2006 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 International Accounting Standards
in conformity with the requirements of the Companies Act 2006;
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 2020
39
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. 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 focusing 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 seven years working in local
government in varied roles conducting
educational data analysis, modelling and
interpretation alongside performance and
project management. Kathy joined the
Autins Group in June 2015 to lead research,
development and innovation and to establish
the Group’s technical facilities. In 2020, Kathy
took ownership of the customer projects team
at Autins and now leads both product and
programme management.
Stefan Janzen
Group Applications Manager
Stefan has more than 20 years' experience in
automotive and general acoustic products
and solutions starting at HP Pelzer Group as a
Research and Development Engineer and
joined Autins GmbH as Research and
Development Manager in late 2013. Stefan has
a degree in Biology from Westfälische Wilhelms
University in Münster, Germany and his current
role in Autins is Group Applications Manager.
Matthias Migl
Managing Director, Autins GmbH
Matthias has 25 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.
Joshua Kimberling
Group Sales Director
Joshua has spent his career in the sales and
management of automotive, process control
and healthcare products. Prior to joining
Autins in November 2016 to oversee sales
and marketing, he was Commercial Director
of Flow-Mon Ltd, growing the business’s
global sales of manufactured process control
products; he has worked in both the US and
Germany for Robert Bosch in the sales and
marketing of automotive electronics, having
account management responsibilities for
major OEMs in the US and Europe.
Kamran Munir
Chief Financial Officer and Company Secretary
Kamran is a highly experienced strategic and operational
CFO, with a 20-year background of large corporate and VC
roles in manufacturing, aerospace and technology
companies. Prior to Autins, Kamran worked for Precision
Castparts Corp, as Finance Director for Special Metals
Limited and more recently European Finance Director for
Timet Division, driving integration, culture change and
improvements in profitability and value. Kamran was also
European Financial Controller for SPX Corporation, and CEO
of Spectral Fusion Technologies. On a voluntary basis he
remains CFO for the Coventry Refugee & Migrant Centre, as
well as being the founding trustee and CEO of The Open
Hearts, Open Minds Foundation, which focuses on the relief
of poverty and sickness and the advancement of education.
Kamran holds the ACA qualification, and is a graduate from
the University of Cambridge (MA).
Neil MacDonald
Non-Executive Director
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 and trustee roles in
the private, public and third sectors.
40
Autins Group plc Annual Report and Accounts 2020
Strategic Report
Governance
Financial Statements
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 and
has 30 years of international business
experience in market-leading industrial
organisations across several business
sectors, having worked previously for
Low & Bonar, Saint-Gobain, Rexam, BPB
and Danaher. He has a deep understanding
of the manufacture and application of
technical material-based solutions in
relevant industrial sectors including
automotive, flooring and building
products.
Ian Griffiths
Non-Executive Director
Dean Trappett
Group Engineering 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 was a Non-Executive Director
and Remuneration Committee Chairman
of Renold plc from 2010 until his resignation
in November 2019 and was Chairman of
Hydro International plc from 2014 to 2016.
He was appointed Chairman of
Trackwise Plc in July 2018.
Mark White
UK Operations Manager
Mark joined Autins in April 2019 from Jaguar
Land Rover 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 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 and 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.
Liz Northwood
UK Human Resources Manager
Liz has over 25 years’ experience of people
management from both the financial and
public sector. She joined Autins in February
2013 to set up the Human Resources
Department. She now also leads the training
function in the UK. Liz was involved with the
factory move for Autins back in 2014 and in
several restructures along with recruitment
of many of the current team. Prior to working
for Autins, Liz worked for NatWest bank in
operational and systems improvement. She
has also worked for the Careers Service
within administration and centre re-
organisations.
Autins Group plc Annual Report and Accounts 2020
41
Corporate Governance statement
for the year ended 30 September 2020
The Group has adopted the QCA Corporate Governance Code for Small and Mid-Size Quoted Companies (the ‘QCA Code’) since 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 this Annual Report 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 page 14 of this report.
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 40 to 41) 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% 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 has adopted the finnCap Environmental, Social and Governance (`ESG') framework (as recommended by the QCA) to measure and
improve its ESG policies 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 Group's
commitment to stakeholder engagement is set out on pages 24 to 26. The Group's commitment to effective ESG governance is set out on
pages 20 to 22.
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.
The Group continues to promote Autins Values, as set of six principles designed to influence the way we work together, drive performance and
inform our response to stakeholder needs and the Group’s responsibilities to them. Management launched a bi-annual Group Employee
Engagement Survey in 2019 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. The next review is due in quarter 2, 2021.
42
Autins Group plc Annual Report and Accounts 2020
Strategic Report
Governance
Financial Statements
Financial Statements
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 advisers, 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.
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.
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 delivery of the 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 KPIs, 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 34 to 38 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. During the Covid pandemic, increased remote home working was supported by suitable IT and digital
communication technologies adopted to aid continuous and efficient communication.
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 the day-to-day management and leadership of the Group. This includes guiding the leadership team (details of
whom are on pages 40 to 41), 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 online audio and web conferencing platforms, whichever provides the most efficient, timely, or safe solution at a given
time. Board meetings have been held regularly via teleconference since the start of lockdown measures in March 2020. It is envisaged that this
will remain the case until lockdown restrictions are appropriately eased.
Details of Directors’ attendance at scheduled Board and Committee meetings during the year can be found on page 46 within the
Directors' report.
Autins Group plc Annual Report and Accounts 2020
43
Corporate Governance statement continued
for the year ended 30 September 2020
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 40 to 41.
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. This review
was completed in September 2020 and a number of actions have been adopted to ensure continued improvement in the functioning of the
Board.
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 is 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.
Autins operates its core Values that 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 seeks 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 whistleblowing 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 reapproval 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.
44
Autins Group plc Annual Report and Accounts 2020
Strategic Report
Governance
Financial Statements
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 and is chaired by Neil MacDonald.
The Committee's role is described within the Audit Committee Report set on page 52.
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.
• Confirming 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 comprises the three non-executive directors and 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. The Committee, in
conjunction with the Chief Executive, reviews annually the succession planning strategy for the senior leadership team.
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 Directors' 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 roadshows and
events both at the Group’s and investor’s premises.
The Group’s website has been designed 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 Investors' 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. During 2020 increased
use of social media platforms has been promoted including LinkedIn and Facebook, primarily to promote success stories.
This governance statement was last reviewed and updated on 19 January 2021.
Autins Group plc Annual Report and Accounts 2020
45
Directors’ report
for the year ended 30 September 2020
The Directors present their report and the audited financial statements for the Group for the year ended 30 September 2020 in accordance
with section 415 of the Companies Act 2006. Particulars of important events affecting the Group, together with the factors likely to affect its
future development, performance and position are set out in the Strategic Report on pages 2 to 27 which is incorporated into this report
by reference.
The Directors’ statement on Corporate Governance is set out on pages 42 to 45. This report should be read in conjunction with information
concerning Directors’ remuneration and employee share schemes in the Remuneration report on pages 50 to 51, 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 primarily 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
58 to 59. 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;
•
Ian Griffiths;
• Gareth Kaminski-Cook;
• James Larner (resigned 31 December 2019);
• Kamran Munir (appointed 1 January 2020); and
• Neil MacDonald.
Corporate Governance
The Directors’ statement regarding corporate governance can be found on pages 42 to 45. The Company is a member of the Quoted Company
Alliance (‘QCA’) and has adopted the QCA Corporate Governance Code for Small and Mid-Size Quoted Companies (the QCA Code) (the
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 40 to 41.
The Board has formally delegated certain duties and responsibilities to the Audit, Remuneration and Nomination Committees. These
committees seek advice from the Company’s advisers as the need arises and operated throughout the year. Their roles and membership are
stated on page 45 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:
Director
Number
Attended
Number
Attended
Number
Attended
Number
Attended
Board
Audit Committee
Remuneration Committee
Nomination Committee
Adam Attwood
Ian Griffiths
Gareth Kaminski-Cook
James Larner (resigned
31 December 2019)
Kamran Munir
Neil MacDonald
10
10
10
2*
8*
10
10
10
10
2
8
9
4
4
–
–
–
4
4
4
–
–
–
4
–
3
–
–
3
–
3
–
–
3
2
2
–
–
1
2
2
–
–
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.
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 Group's auditor, BDO LLP did not undertake any non-audit work in the year.
46
Autins Group plc Annual Report and Accounts 2020
Strategic Report
Governance
Financial Statements
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 was formally elected at the AGM in February 2020.
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 2020 were as follows:
Adam Attwood
Ian Griffiths
Gareth Kaminski-Cook
James Larner
Kamran Munir
Neil MacDonald
2p ordinary
shares at
30 September 2020
% of
issued ordinary
share capital
2p ordinary
shares at
1 October 2019
% 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
600,000
14,311
180,228
25,000
–
125,000
1.52
0.04
0.46
0.06
–
0.32
Share capital
Full details of the Company’s authorised and issued share capital are set out in note 20 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
Number of
voting rights as at
30 September 2020
%
voting rights as at
30 September 2020
Number of
voting rights as at
30 September 2019
%
voting rights as at
30 September 2019
Schroders
Fleming Family & Partners (formerly held under Cavendish Asset
8,647,127
21.84%
8,707,702
Management)
Premier Miton Group (formerly Miton Group plc)
Thornbridge Investment Management
Ruffer LLP
Unicorn Asset Management
Jarvis Securities
Toscafund
Kevin Westwood
Karen Holdback
7,850,338
4,530,156
2,500,000
2,490,741
1,769,806
1,607,923
1,340,300
1,275,000
1,275,000
19.82%
11.44%
6.31%
6.29%
4.47%
4.06%
3.38%
3.22%
3.22%
–
6,176,361
2,500,000
2,490,741
1,769,806
1,618,220
1,590,300
2,025,000
2,025,000
21.99%
–
15.60%
6.31%
6.29%
4.47%
4.09%
4.02%
5.11%
5.11%
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 74 to 75 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.
Autins Group plc Annual Report and Accounts 2020
47
Directors' report continued
for the year ended 30 september 2020
Research and 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. During the year a patent was applied for relating to an encapsulation acoustic product and, in response to the Covid crisis, the
team developed a face mask to meet a UK shortage for face covering in the UK.
The high level of success in the year led 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.
During 2020 an increased level of attention was given to knowledge and awareness around mental health in the workplace, which included
external training for the Group H&S Manager and UK HR Manager.
In response to the Covid pandemic, risk assessments and Covid safe working practice policies were prepared for all sites and implemented
rigorously. Travel was minimised and social distancing and adoption of PPE was made mandatory.
Charitable and political donations in the year
The Company did not make any political or charitable donations during the year.
Going concern
Going concern has been discussed within the Financial Review on page 31.
Auditor
BDO LLP, the Company’s independent auditor, has expressed its willingness to continue in office. As recommended by the Audit Committee
and pursuant to section 487 of the Companies Act 2006, the Company will propose a resolution at the AGM to reappoint BDO LLP as auditor
and authorise the Directors to agree its remuneration.
Audit information
The Directors who were in office on the date of approval of the Directors’ Report have confirmed that, so far as they are aware, there is no
relevant audit information of which the Company’s auditor is unaware. Each of the Directors has confirmed they have taken all the reasonable
steps that 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.
48
Autins Group plc Annual Report and Accounts 2020
Strategic Report
Governance
Financial Statements
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 11am on 12 March 2021 at the Company's main offices at Central Point One, Central Park Drive, Rugby,
Warwickshire, CV23 0WE.
The Directors’ Report has been approved by the Board of Directors on 19 January 2021.
By order of the Board.
Kamran Munir
Company Secretary
19 January 2021
Autins Group plc
Central Point One
Central Park Drive
Rugby
Warwickshire CV23 0WE
Company number: 08958960
Autins Group plc Annual Report and Accounts 2020
49
Directors’ 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 directors 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 outperformance, 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.
Directors’ interests – interests in shares
Adam Attwood
Ian Griffiths
Gareth Kaminski-Cook
James Larner (resigned 31 December 2019)
Kamran Munir (appointed 1 January 2020)
Neil MacDonald
2p ordinary
shares at
30 September 2020
% of
issued ordinary
share capital
2p ordinary
shares at
1 October 2019
% 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
600,000
14,311
180,228
25,000
–
125,000
1.52
0.04
0.46
0.06
–
0.32
Directors’ interests – interests in share options (unaudited)
Details of options held by Directors who were in office at 30 September 2020 are set out below. The Company’s option schemes are set out in
more detail in notes 21 and 24 to the financial statements.
Kamran Munir
Gareth Kaminski-Cook
Date of grant
Number
Exercise price
Expiry date
–
29 March 2019
–
279,070
–
£0.02
–
29 March 2029
The market price of the Company’s shares at 30 September was 16.5 pence. The range of market prices during the year was 7.5 pence to 22
pence.
Contracts of service
The executive directors, Gareth Kaminski-Cook and Kamran Munir, each have a service agreement containing one year’s and six months’
notice respectively, and claw back and malus clauses with regard to any paid or unpaid bonuses.
The non-executive directors, Adam Attwood, Ian Griffiths and Neil MacDonald, have a service agreement with a three-month notice period.
50
Autins Group plc Annual Report and Accounts 2020
Strategic Report
Governance
Financial Statements
Salaries and benefits
The Remuneration Committee meets at least twice per year in order to consider, 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 they 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 2020
G Kaminski-Cook
J Larner
K Munir
A Attwood
I Griffiths
N MacDonald
By order of the Board.
Salary
£000
230
41
116
54
41
41
523
Benefits
£000
Pension
£000
Compensation for
loss of office
£’000
Total FY20
£000
Total FY19
£000
25
4
4
–
–
–
33
10
3
10
–
–
–
23
–
105
–
–
–
–
105
265
153
130
54
41
41
684
296
164
–
60
51
9
580
Ian Griffiths
Non-Executive Director and Chair of the Remuneration Committee
19 January 2021
Autins Group plc Annual Report and Accounts 2020
51
Audit Committee report
Members of the Audit Committee
The Committee currently consists of all serving non-executive directors. The Committee was chaired by Neil MacDonald during the year.
The Board is satisfied that as Chair of the Committee in the period, Neil MacDonald had relevant and recent financial experience as well as
being a Chartered Accountant who has 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. There were also several informal meetings with the external auditors.
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 normal 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 FY20 audit plan and audit engagement letter;
• Review of the interim results and associated presentation for investors; and
• Meetings with the auditor with and without management present.
In addition the Committee spent time on the following:
• Reviewing the terms and conditions of the loan from MEIF and the associated forecasts and covenants;
• Reviewing the terms and conditions of the CBILS loan from HSBC and the associated forecasts and covenants; and
• Reviewing revised forecasts and projections necessitated by the Covid situation.
Role of the auditor
The Audit Committee monitors the relationship with the auditor, BDO LLP, to ensure that auditor independence and objectivity is maintained.
The Committee therefore monitors the provision of any non-audit services by the external auditor (if any). During the year no non-audit
services have been provided to the Company by the auditor.
The Audit Committee recommends BDO LLP be reappointed 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 judgement that are routinely
discussed and disclosed in its 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 43 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. In
response to the Covid pandemic, a new risk has been added. Systems updates and staff training also occurred in readiness for the new Brexit deal.
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
19 January 2021
52
Autins Group plc Annual Report and Accounts 2020
Independent Auditor’s report to the members of Autins Group plc
Strategic Report
Governance
Financial Statements
Opinion
We have audited the financial statements of Autins Group Plc (the ‘parent company’) and its subsidiaries (the ‘Group’) for the year ended
30 September 2020 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 cash flows 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 Accounting Standards in conformity with the requirements of the Companies Act 2006. 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 2020 and
of the Group’s loss for the year then ended;
the Group financial statements have been properly prepared in accordance with International Accounting Standards in conformity with the
requirements of the Companies Act 2006;
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.
Autins Group plc Annual Report and Accounts 2020
53
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
Impairment risks
The Group has goodwill, other intangibles, property, plant and
equipment and right of use assets of £18.4 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. The existence of continuing operating losses, the
unprecedented and potentially unquantifiable impacts of the Covid
pandemic and the Group’s market value being lower than the
consolidated net assets, provide further indicators that impairments
may be present.
We have reviewed and challenged the judgements made 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 the associated revenue, costs and assets to CGUs. This included
reconciling the information used in the value in use models to the
underlying accounting records and the budgets and forecasts for
the Group It also include considering whether the responses to the
Covid pandemic impacted any of the judgements;
In addition, property, plant and equipment within the NVH CGU
includes the Neptune production facility with a net book value of £6.0
million. This facility was completed and brought into use in 2018 and
whilst volumes continue to increase, it is currently still operating
below full capacity and continued to generate losses in the year
ended 30 September 2020.
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 13.
We consider there to be a significant risk in relation to the
achievement of the forecast future trading and cash flows used to
determine the value in use supporting the carrying value of the
goodwill, other intangible assets, property, plant and equipment and
right of use assets in the NVH CGU and the Neptune facility within the
NVH CGU.
No other CGU’s have any material assets which could be subject to
impairment.
• The calculation of the discount rate used to discount the cash
flows in each CGU and changes made to incorporate the new
financing structure and risks in the business and sector;
• The assumptions used by management in their budgets and
forecasts of the future trading performance and cash generation of
each CGU. This included comparison with the information used to
assess the going concern assumption and 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 by reference to historic
evidence and other internal and third party evidence;
• The appropriateness of the sensitivities applied by management,
with specific consideration of the impacts of the Covid pandemic
and the structural changes in the automotive sector in the UK and
internationally. We also reviewed the stress testing undertaken by
management 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 engaged our internal valuation experts, working with them to
confirm the appropriateness of the models used by management
to calculate the value in use for each CGU, with particular
consideration of the impact of the adoption of IFRS 16, and the
calculation of the discount rates; 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, property, plant and equipment or right of use assets, either in
respect of the Neptune facility or the wider NVH CGU.
54
Autins Group plc Annual Report and Accounts 2020
Strategic Report
Governance
Financial Statements
Key audit matter
How we addressed the key audit matter in our audit
Going concern
As disclosed in Note 1, the financial review on page 31 and the
principal risks and uncertainties on pages 34 to 38, the financial
statements have been prepared on a going concern basis.
The Covid pandemic has had a major effect on the Group, industry
and wider economy. The uncertainty created by the pandemic has
increased the level of estimation and judgement involved in relation
to going concern assessments and increased the risk of material
uncertainties being present.
Management have prepared detailed budgets and forecasts covering
the period to 30 September 2022. These include consideration of all
reasonably foreseeable events and circumstances and show that the
Group can continue to operate within its existing liquidity resources.
Management have also performed reverse stress testing on these
forecasts.
The most significant factor which underpins management’s
assessment relates to continued compliance with the covenants in
the UK banking facilities as the failure to meet these could reduce the
facilities currently available to the Group. This is primarily driven by
the achievability of the UK revenue forecasts, which materially
depend on the volumes of business with the major automotive
manufacturers, including the Group’s key customer. This was a key
area of focus during our audit and going concern is accordingly
considered to be a key audit matter.
We critically assessed management’s trading and cash flow budgets
and forecasts, which cover the period to 30 September 2022. This
included challenging the key estimates and judgements and the
evidence underpinning them. In doing so, we specifically considered
the principal trading and cash flow assumptions, the quantum of the
banking facilities used in the calculation of the available headroom
and the impact of covenants on these facilities. Our challenge of the
revenue assumptions included consideration of customer enquiries,
current order levels and information from customers regarding
expected future volumes and included information available up to
the date of issuance of our report.
We tested the various scenarios and sensitivities performed by
management in respect of the key assumptions underpinning the
budgets and forecasts and challenged the sensitivities to ensure they
reflected all reasonably foreseeable events and circumstances. We
also reviewed the reverse stress testing performed by management
and considered the headroom between the budgets and forecasts
and the reverse stress test assumptions, together with considering
the likelihood that unforeseen events and circumstances might occur
resulting in the reverse stress test becoming a reality.
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 relevant in relation to Covid and the impact of
the agreement reached in December 2020 in relation to trading with
the EU after 1 January 2021, we have challenged management’s
assessment of their impacts, including consideration of external
information, as part of our assessment of the trading and cash flow
budgets and forecasts.
In assessing the Group’s compliance with the covenants on its UK
banking facilities, in addition to the procedures referred to above, we
have considered the information provided to management by their
major customers relating to future activity levels and the previous
experience of these commitments being met.
Key observations
Our observations are set out in the conclusions relating to going concern section above.
Autins Group plc Annual Report and Accounts 2020
55
Independent Auditor’s report to the members of Autins Group plc continued
Our application of materiality
We apply the concept of materiality both in planning and performing our audit and in evaluating the effect of misstatements on the audit and
forming our opinions.
Materiality
Materiality is assessed as 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 2020
FY 2019
Group materiality
Basis for materiality
£215,000
£270,000
Materiality based on 1% of Group turnover
Materiality based on 1% of Group turnover
At this stage of the Group’s development we concluded that turnover was the most relevant basis for establishing materiality. This was based on
the needs of users of the financial statements with the losses in the year reflecting the continued impact of the Neptune production facility
becoming fully established.
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 £151,000 (2019: £191,000) which represents 70% (2019 – 71%) 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 £190,000 (2019: £237,000), capped by reference to Group materiality.
Performance materiality for the parent company was set at £133,000 (2019: £178,000) which represents 70% (2019 – 75%) of the above
materiality levels.
Our audit work on the significant components of the Group, and for determining and evaluating the specific targeted procedures on other
components, was executed at levels of materiality applicable to the individual entity which were lower than Group materiality. Financial
statement materiality applied to these components of the Group was in the range of £190,000 to £200,000.
Reporting threshold
We agreed with the Audit Committee that we would report to them all uncorrected audit differences in excess of £10,750 (2019: £12,750) as well
as differences below this threshold that, in our view, warranted reporting on qualitative grounds.
An overview of the scope of our audit
Our Group audit was scoped by obtaining an understanding of the Group and its environment, including the Group’s system of internal control,
and assessing the risks of material misstatement in the financial statements. We also addressed the risk of management override of internal
controls, including assessing whether there was evidence of bias by the directors that may have represented a risk of material misstatement.
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, and the parent company, Autins Group
plc. Specific targeted procedures were performed on the other components that were not considered to be individually financially significant,
which are Solar Nonwovens Limited and Autins GmbH. The procedures on Solar Nonwovens Limited were undertaken by the Group
engagement team, with BDO Germany undertaking the work on Autins GmbH, under the direction and supervision of the Group engagement
team. Our work was focused on these entities given their significance to the Group’s financial position and performance.
The work over the significant components, combined with the specific targeted procedures on Solar Nonwovens Limited and Autins GmbH,
gave us coverage of 92% (2019: 83%) 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.
56
Autins Group plc Annual Report and Accounts 2020
Strategic Report
Governance
Financial Statements
Other information
The directors are responsible for the 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. Our opinion on the financial statements does not cover the other
information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether
the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be
materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether
there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have
performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
•
the information given in the strategic report and the directors’ report for the financial year for which the financial statements are prepared is
consistent with the financial statements; and
the strategic report and the directors’ report have been prepared in accordance with applicable legal requirements.
•
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Group and the parent company and its environment obtained in the course of the audit,
we have not identified 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 more fully in the statement of directors’ responsibilities, the directors are responsible for the preparation of the financial
statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to
enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Group’s and the parent company’s ability to continue as a
going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors
either intend to liquidate the Group or the parent company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
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
19 January 2021
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
Autins Group plc Annual Report and Accounts 2020
57
Consolidated income statement
for the year ended 30 September 2020
Revenue
Cost of sales excluding exceptional costs
Exceptional cost of sales
Total cost of sales
Gross profit
Other operating income
Distribution expenses
Administrative expenses excluding exceptional costs and amortisation
Exceptional administrative expenses
Amortisation of acquired intangible assets
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 66 to 91 form part of these financial statements.
Note
2020
£000
2019
£000
4
5
5
5
5
5
8
14
9
10
10
21,517
26,860
(15,472)
(164)
(15,636)
(19,403)
–
(19,403)
5,881
787
(650)
(6,780)
(292)
(238)
(7,310)
(1,292)
(523)
55
(1,760)
37
(1,723)
7,457
–
(734)
(7,608)
(433)
(237)
(8,278)
(1,555)
(192)
203
(1,544)
45
(1,499)
(4.35)p
(4.35)p
(6.25)p
(6.25)p
58
Autins Group plc Annual Report and Accounts 2020
Consolidated statement of comprehensive income
for the year ended 30 September 2020
Strategic Report
Governance
Financial Statements
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 66 to 91 form part of these financial statements.
2020
£000
2019
£000
(1,723)
(1,499)
18
(15)
(1,705)
(1,514)
Autins Group plc Annual Report and Accounts 2020
59
Consolidated statement of financial position
as at 30 September 2020
Non-current assets
Property, plant and equipment
Right-of-use assets
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
Loans and borrowings
Lease liabilities
Total current liabilities
Non-current liabilities
Trade and other payables
Loans and borrowings
Lease 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
Currency differences reserve
Profit and loss account
Total equity
The notes on pages 66 to 91 form part of these financial statements.
Note
2020
£000
2019
£000
11
12
13
14
19
15
16
17
18
12
17
18
12
19
20
22
22
22
22
10,082
5,001
3,322
147
149
18,701
1,938
4,339
2,974
9,251
27,952
3,151
1,027
917
5,095
117
3,847
4,970
74
9,008
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
14,103
13,849
10,379
16,103
792
15,866
1,886
(127)
(4,568)
13,849
792
15,883
1,886
(145)
(2,313)
16,103
The financial statements were approved and authorised for issue by the Board and were signed on its behalf on 19 January 2021.
Kamran Munir
Chief Financial Officer
Autins Group plc
Registered number: 08958960
60
Autins Group plc Annual Report and Accounts 2020
Parent company statement of financial position
as at 30 September 2020
Strategic Report
Governance
Financial Statements
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
Loans and borrowings
Total current liabilities
Non-current liabilities
Loans and borrowings
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
Note
13
14
16
17
18
18
20
22
22
22
2020
£000
2019
£000
57
16,239
16,296
10,031
1,390
11,421
27,717
8,389
729
9,118
3,378
3,378
12,496
15,221
792
15,866
1,886
(3,323)
15,221
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
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 £1,996,000 (2019: loss of £1,358,000).
The notes on pages 66 to 91 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 19 January 2021.
Kamran Munir
Chief Financial Officer
Autins Group plc
Registered number: 08958960
Autins Group plc Annual Report and Accounts 2020
61
Consolidated statement of changes in equity
for the year ended 30 September 2020
At 30 September 2019
Effect of adoption of IFRS 16 (note 1)
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 issue expenses (re August 2019 placing)
Share based payment
Total contributions by and distributions to owners
Share
capital
£000
792
–
Share
premium
account
£000
15,883
–
Cumulative
currency
differences
reserve
£000
(145)
–
Other
reserves
£000
1,886
–
–
–
–
–
–
–
–
–
–
(17)
–
(17)
–
–
–
–
–
–
–
18
18
–
–
–
Profit
and loss
account
£000
(2,313)
(517)
Total
equity
£000
16,103
(517)
(1,723)
–
(1,723)
18
(1,723)
(1,705)
–
(15)
(15)
(17)
(15)
(32)
At 30 September 2020
792
15,866
1,886
(127)
(4,568)
13,849
At 30 September 2018
Comprehensive income 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
Share
premium
account
£000
12,938
–
–
–
3,150
(205)
–
2,945
Cumulative
currency
differences
reserve
£000
Profit
and loss
account
£000
Total
equity
£000
(130)
(824)
14,312
Other
reserves
£000
1,886
–
–
–
–
–
–
–
–
(15)
(15)
–
–
–
–
(1,499)
–
(1,499)
–
–
10
10
(1,499)
(15)
(1,514)
3,500
(205)
10
3,305
15,883
1,886
(145)
(2,313)
16,103
Share
capital
£000
442
–
–
–
350
–
–
350
792
The cumulative currency differences reserve may be reclassified subsequently to profit and loss.
62
Autins Group plc Annual Report and Accounts 2020
Parent company statement of changes in equity
for the year ended 30 September 2020
Strategic Report
Governance
Financial Statements
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
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
Share issue expenses (re August 2019 placing)
Share based payment
Total contributions by and distributions to owners
At 30 September 2020
Share
capital
£000
Share
premium
account
£000
442
12,938
Other
reserves
£000
1,886
Profit
and loss
account
£000
Total
equity
£000
36
15,302
–
–
350
–
350
792
–
–
–
–
–
–
–
3,150
(205)
2,945
–
–
–
–
–
(1,358)
(1,358)
–
–
10
10
(1,358)
(1,358)
3,500
(205)
10
3,305
15,883
1,886
(1,312)
17,249
–
–
(17)
–
(17)
–
–
–
–
–
(1,996)
(1,996)
(1,996)
(1,996)
–
(15)
(15)
(17)
(15)
(32)
792
15,866
1,886
(3,323)
15,221
Autins Group plc Annual Report and Accounts 2020
63
2020
£000
2019
£000
(1,723)
(1,499)
(37)
523
(15)
(109)
836
851
317
(55)
588
2,296
23
(1,426)
893
1,482
(5)
1,476
(154)
(125)
125
(154)
(421)
–
(17)
4,523
(66)
(213)
(549)
(168)
(3,716)
(627)
695
2,125
2,820
(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
2020
£000
2019
£000
2,974
(154)
2,820
3,132
(1,007)
2,125
Consolidated statement of cash flows
for the year ended 30 September 2020
Operating activities
Loss after tax
Adjustments for:
Income tax
Finance expense
Employee share based payment (credit)/charge
Non-cash element of other income
Depreciation of property, plant and equipment
Depreciation of right-of-use assets
Amortisation and impairment of intangible assets
Share of post-tax profit of equity accounted joint ventures
Decrease in trade and other receivables
Decrease in inventories
Decrease in trade and other payables
Cash generated from/(used in) operations
Income taxes (paid)/received
Net cash flows 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
Loan issue expenses paid
Bank loans repaid
Payment of lease liabilities
Hire purchase and finance leases repaid
(Decrease)/increase in invoice discounting
Net cash (used in)/generated from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Cash and cash equivalents comprise:
Cash balances
Bank overdrafts
64
Autins Group plc Annual Report and Accounts 2020
Strategic Report
Governance
Financial Statements
Reconciliation of movements in net cash/financing liabilities
Year ended 30 September 2020
Cash and cash equivalents
Cash balances
Bank overdrafts
Financing liabilities
Invoice discounting
Bank loans
Hire purchase liabilities
Lease liabilities
Year ended 30 September 2019
Cash and cash equivalents
Cash balances
Bank overdrafts
Financing liabilities
Invoice discounting
Bank loans
Hire purchase liabilities
Opening
£000
Cash flows
£000
Non-cash
movements
£000
Closing
£000
2,974
(154)
2,820
–
(4,383)
(337)
(5,887)
(158)
853
695
3,716
(4,244)
168
549
–
–
–
–
77
-
(6,436)
3,132
(1,007)
2,125
(3,716)
(216)
(505)
–
(4,437)
(2,312)
189
884
(6,359)
(10,607)
(6,359)
(7,787)
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
–
–
–
–
–
–
–
–
Closing
£000
3,132
(1,007)
2,125
(3,716)
(216)
(505)
(4,437)
(2,312)
Material non cash transactions
Financing liabilities now include lease liabilities, primarily in respect of property leases, following the adoption of IFRS 16. These were
previously only disclosed in operating lease commitments and the discounted liability at the transition date of 1 October 2019 of £6,422,000 is
shown in non-cash movements above together with a £14,000 foreign exchange movement.
Autins Group plc Annual Report and Accounts 2020
65
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.
Supply is primarily to the automotive industry, but there has been growth into flooring, office pods and PPE applications. 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 and International Accounting Standards in
conformity with the requirements of the Companies Act 2006. 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 International Accounting Standards in conformity with the requirements of the Companies Act 2006. The following FRS 101 disclosure
exemptions have been taken in respect of the parent company only information:
•
•
•
IAS 7 Statement of cash flows;
IFRS 7 Financial instruments disclosures;
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 cash flows and available sources of finance, that it
remains appropriate to prepare these financial statements on the basis of a Going Concern.
The Group received financing inflows of £4.55 million in the year, of which £3.5 million are long term loans, and the short term overdraft
balance was reduced by £0.85 million. Invoice discounting liabilities of £3.7 million were repaid but the facility remains fully available at up to £6
million against relevant trade receivables in addition to an unutilised £0.3 million import loan facility. Despite the Covid trading backdrop, the
Group reported positive operating cash flows of £1.5 million. Whilst the operating cash flows benefit from a combination of improved working
capital and cost management, they are also impacted by the pandemic driven decrease in revenue and associated net investment in working
capital together with the change to the treatment of operating lease costs on transition to IFRS16. In addition to the increased focus on
working capital management, the Group has also already made annualised savings of some £1.0 million in overhead costs and improved
operational efficiency, with continuing programmes in place to make additional improvements.
At the year end there was £5.6 million of available cash and facility headroom, with £1.1 million of the loans repayable within 1 year, of which
£0.75 million is the UK CBILS bullet loan repayable in June 2021.
In undertaking their assessment of the future prospects for the Group, the Directors have prepared trading and cash flow forecasts for the
period to 30 September 2022. These take into consideration the current and expected future impacts of the Covid pandemic, diversification of
the customer and product ranges and also have regard to the committed business and enquiry levels from existing customers. The Directors
have also considered the impact of current and future demand levels for new vehicles, the migration to EV’s and publically available forward
looking market information regarding market sizes and dynamics. These forecasts have been compared, together with considering a range of
material but plausible sensitivities, to the available bank facilities and the related covenant requirements.
The loan repayments and interest costs are expected to be adequately covered by operating cash generation over the period and the Group
has significant liquidity headroom within its facilities to accommodate all reasonably foreseeable cash flow requirements in the event of
changes to its demand as a result of Covid, Brexit or other economic factors, with flexibility also available to favourably manage the cost base
in respect of operating costs, should the need arise.
The most sensitive factor impacting the forecast period, and the continued availability of the current facilities, is the EBITDA covenant in the
UK in relation to the £2 million CBILS long term loan. Prior to the CBILS loans being secured, sensitised forecasts were reviewed with the bank
and used as a basis for establishing the covenants, which apply to both of the CBILS loans. At the year-end actual UK trading results were
approximately £1.4 million ahead of the base forecasts at the EBITDA level. In the next financial year, achievement of the minimum required UK
EBITDA, without significant further unplanned cost or efficiency improvements, is predicated on minimum revenue levels of £19.2 million. This
compares with UK revenues of £16.8 million in FY20 and £21.3 million in FY19. As commented upon elsewhere in this Annual Report, significant
new contracts have been won since FY19 and, accordingly, the Board are confident the EBITDA target will be met, especially having regard to
further additional mitigating actions which remain available to the Group.
The Board continues to review the Group’s banking and funding arrangements with a view to ensuring that they remain appropriate for the
planned growth within mainland Europe and to allow for the more volatile demand pattern in the current economic environment.
66
Autins Group plc Annual Report and Accounts 2020
Strategic Report
Governance
Financial Statements
Composition of the Group
A list of the subsidiary undertakings and joint ventures is given in note 14 to the financial statements.
Changes in accounting policies
These financial statements have been prepared in accordance with International Accounting Standards in conformity with the requirements of
the Companies Act 2006 for periods beginning on or after 1 October 2019 and the following new standards have been adopted in these financial
statements.
New accounting standards applicable to the year
The Group has adopted the following new standard as of 1 October 2019 in these financial statements:
International Financial Reporting Standard (“IFRS 16”) Leases. IFRS 16 is effective for accounting periods beginning on or after 1 January 2019
and impacts the group results for the year ending 30 September 2020. It sets out the principles for the recognition, measurement, presentation
and disclosure of leases and replaces IAS 17 Leases and IFRIC 4 determining whether an arrangement contains a lease. Instead of recognising an
operating expense for operating lease payments, the Group instead recognises and presents right of use assets and lease liabilities in accordance
with the accounting policy set out below.
On transition to IFRS 16 at 1 October 2019, the Group has adopted the modified retrospective approach applying certain practical expedients,
excluding leases with duration of less than one year and applying the same discount rate to leases with similar characteristics. The net present
value of the future lease payments at this date is recognised as an opening transition liability of £6.42 million with the right-of-use assets
recorded as £5.84 million, measured primarily by reference to the net present value at the inception of each lease, depreciated to the date of
transition. This resulted in a £0.52 million charge taken directly to retained earnings at 1 October 2019 under the modified approach, reflecting
the difference between the finance charges arising in the initial years of the lease terms prior to the transition date determined using an effective
interest rate of 5% and the straight line depreciation of the assets. Prepaid rent and lease incentive accruals previously recognised are removed
and incorporated in the calculation of the IFRS 16 balances. Depreciation of £0.85 million has been charged in respect of the assets in the year
and finance charges of £0.31 million incurred compared with £1.08 million of operating lease rentals that would have been charged under the
previous basis, an increase of £0.08 million in the total charges included in the income statement (see tables in note 26 for details of the full
impact on the financial statements). The comparatives for the year ended 30 September 2019 have not been adjusted and are presented in
accordance with IAS17.
New accounting standards applicable to future periods
There are no new standards, interpretations and amendments which are not yet effective in these financial statements, expected to have a
material effect on the Group’s future financial statements. After Brexit, the UK will continue to apply International Accounting Standards in
conformity with the requirements of the Companies Act 2006.
Basis of consolidation
The consolidated financial statements incorporate the results of business combinations using the acquisition method. In the statement of
financial position, the acquiree's identifiable assets (both tangible and intangible), liabilities and contingent liabilities are initially recognised at
their fair values at the acquisition date.
The consolidated financial statements present the results of the Company and its subsidiaries ("the Group") as if they formed a single entity.
Intercompany transactions and balances between Group companies are therefore eliminated in full.
Subsidiaries are all entities over which the Group has control. The Group controls an entity when it is exposed to, or has rights to, variable
returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully
consolidated from the date on which control is transferred to the Group and cease to be consolidated from the date on which control is
transferred out of the Group. Any non-controlling interest in a subsidiary entity is recognised at a proportionate share of the subsidiary’s net
assets or liabilities. On acquisition of a non-controlling interest, the difference between the consideration paid and the non-controlling interest
at that date is taken to equity reserves.
Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable 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.
Autins Group plc Annual Report and Accounts 2020
67
Notes to the financial statements continued
1. Accounting policies continued
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 and represents the residual
amount remaining after taking account of the fair values attributed to the identifiable assets, liabilities and contingent liabilities that existed at the
date of acquisition, reflecting their condition at that date. Adjustments are also made to align the accounting policies of acquired businesses with
those of the Group. This is applied either on initial acquisition or where control is gained over a previously equity accounted interest in an entity. A
fair value is measured for the entire holding on taking control and in respect of all assets and liabilities resulting in a gain or loss on a previously
held and equity accounted investment.
Goodwill is assigned an indefinite useful economic life. Impairment reviews are performed annually, or more frequently if events or changes in
circumstances indicate that the carrying value may not be recoverable.
Where the goodwill calculation results in a negative amount (bargain purchase) this amount is taken to the income statement in the period in
which is it derived.
Impairment of non-financial assets
Impairment tests on goodwill are undertaken annually at the financial year end. All other individual non-financial assets or cash-generating
units are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.
An impairment loss is recognised for the amount by which the carrying value exceeds the recoverable amount of the asset or cash-generating
unit. The recoverable amount is the higher of fair value, reflecting market conditions less costs to sell, and value in use based on an internal
discounted cash flow evaluation.
Impairment charges are included in profit or loss, except to the extent they reverse gains previously recognised in other comprehensive income.
An impairment loss recognised for goodwill is not reversed.
Intangible assets acquired as part of a business combination
Intangible assets acquired in a business combination are identified and recognised separately from goodwill where they are separable from the
acquired entity or give rise to other contractual/legal rights. Amounts assigned to intangibles acquired as part of a business combination are
arrived at by using an appropriate valuation technique for the asset concerned.
All intangible assets acquired through a business combination are amortised on a straight line basis over their estimated useful lives.
The intangibles currently recognised by the Group; their useful economic lives and the methods used to determine the separable cost of the
intangibles acquired in business combinations are as follows:
Intangible asset
Useful economic life Valuation method
Tooling intellectual property
Key customer relationships
10 years Estimated discounted cash flow of post tax royalty earnings potential
7 years Estimated discounted cash flow
Subsequent to initial recognition, intangible assets acquired in a business combination are reported at cost less accumulated amortisation and
impairment losses.
Property, plant and equipment
Items of property, plant and equipment are initially recognised at cost. As well as the purchase price, cost includes directly attributable costs,
pre-production plant commissioning costs and interest incurred during the course of construction.
Depreciation is provided on all items of property, plant and equipment so as to write off their cost, less expected residual value over the
expected useful economic lives. It is provided at the following rates:
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
68
Autins Group plc Annual Report and Accounts 2020
Strategic Report
Governance
Financial Statements
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.
Right-of-use assets
Until the end of the September 2019 financial year, leases of property, plant and equipment were classified as either finance leases or operating
leases. From 1 October 2019, under IFRS 16, leases are recognised as right-of-use assets, presented as a separate category in the statement of
financial position, and with a corresponding lease liability from the date at which the leased asset is available for use by the company.
Assets and liabilities arising from a lease are initially measured at the present value of the lease payments and payments to be made under
reasonably certain extension options are also included in the measurement of the liability. The lease payments are discounted using the
interest rate implicit in the lease or the incremental borrowing rate that the individual lessee would have to pay to borrow the funds necessary
to obtain an asset of similar value to the right-of-use asset in a similar economic environment with similar terms, security and conditions.
Lease payments are allocated between principal, presented as a separate category within liabilities, and finance cost. The finance cost is
charged to the statement of comprehensive income over the lease period so as to produce a constant periodic rate of interest on the remaining
balance of the liability for each period. Right-of-use assets are measured at cost comprising the amount of the initial measurement of lease
liability, any lease payments made at or before the commencement date less any lease incentives received and any initial direct costs.
Depreciation is charged on a straight line basis over the period of the lease and assets are subject to impairment reviews where circumstances
indicate their value may not be recoverable or if they are not being utilised.
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 assets
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.
It is technically feasible to complete the development such that it will be available for use, sale or licence;
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:
•
• There is an intention to complete the development;
• The method by which probable future economic benefits will be generated is known;
• There are adequate technical, financial and other resources required to complete the development;
• There are reliable measures that can identify the expenditure directly attributable to the project during its development.
The amount recognised is the expenditure incurred from the date when the project first meets the recognition criteria listed above. Expenses
capitalised consist of employee costs incurred on development and an apportionment of appropriate overheads.
Where the above criteria are not met, development expenditure is charged to the consolidated income statement in the period in which it is incurred.
The expected life of internally generated intangible assets varies based on the anticipated useful life, currently ranging from five to ten years.
Subsequent to initial recognition, internally generated intangible assets are reported at cost less accumulated amortisation and impairment losses.
Amortisation is charged on a straight-line basis over the estimated period in which the intangible asset has economic benefit from the
commencement of 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 2020
69
Notes to the financial statements continued
1. Accounting policies continued
Revenue based grants
Revenue based grants, including those related to government coronavirus job and business support schemes, 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 liabilities
Hire purchase agreements where the Group has substantially all the risks and rewards of ownership and retains the asset at the end of the
payment term are classified as hire purchase liabilities within loans and borrowings. Assets are capitalised at the agreement’s commencement
at the lower of the fair value of the related asset and the present value of the minimum lease payments.
Each payment is allocated between the liability and finance charges. The remaining future rental obligations, net of finance charges, are
included in hire purchase obligations in current or non-current liabilities. 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 hire purchase contracts is depreciated over the useful life of the asset.
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 leases
From 1 October 2019 IFRS 16 was applied with additional right-of-use-assets and related liabilities recognised as set out in the policy above.
Payments associated with short-term leases of property, plant and equipment and leases of low-value assets continue to be recognised on a
straight-line basis as an expense. Short-term leases are leases with a lease term of 12 months or less. Until 1 October 2019, 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 were charged to the consolidated statement of comprehensive income on a straight-line basis over the lease term. The aggregate benefit
of lease incentives was 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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Financial Statements
Invoice discounting
The Group has an agreement with HSBC whereby its trade receivables are discounted, with recourse after 120 days. On the basis that the
benefits and risks attaching to the debts remained with the Group, the gross debts are included as an asset within trade receivables (net of any
provisions and discounts) and the proceeds received are included within current liabilities as short-term borrowings under invoice discounting
facilities. The net cash advances or repayments are presented as financing cash flows.
Charges and interest are recognised in the finance expense in the consolidated statement of comprehensive income as they accrue.
Investments in subsidiaries
Investments in subsidiaries are stated at cost or at the fair value of shares issued as consideration less provision for any impairment.
Investments in joint ventures
A joint venture is an arrangement in which the Group has joint control, whereby the Group has rights to the net assets of the arrangement,
rather than rights to its assets and obligations for its liabilities. Joint control is the contractually agreed sharing of control of an arrangement,
which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control.
The Group accounts for its interests in joint ventures using the equity method. Under the equity method, an investment in a joint venture is
initially recognised in the consolidated statement of financial position at cost and adjusted thereafter to recognise the Group’s share of the
profit or loss and other comprehensive income of the joint venture.
When the Group’s share of losses of a joint venture exceeds the Group’s interest in that joint venture (which includes any long-term interests
that, in substance, form part of the Group’s net investment in the joint venture), the Group discontinues recognising its share of further losses,
unless and only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the joint venture for
those losses.
Any premium paid for an investment in a joint venture above the fair value of the Group's share of the identifiable assets, liabilities and
contingent liabilities acquired is capitalised and included in the carrying amount of the investment in the joint venture. Where there is objective
evidence that the investment in a joint venture has been impaired the carrying amount of the investment is tested for impairment in the same
way as other non-financial assets.
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.
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, lease liabilities 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.
Autins Group plc Annual Report and Accounts 2020
71
Notes to the financial statements continued
1. Accounting policies continued
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:
•
• 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
the same taxable Group company; or
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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Financial Statements
2. Critical accounting estimates and judgements
The Group makes certain estimates and assumptions regarding the future. Estimates and judgements are continually evaluated based on
historical experience and other factors, including the expectations of future events that are believed to be reasonable under the circumstances
and any further evidence that arises relevant to judgements taken. In the future, actual experience may differ from these estimates and
assumptions. The estimates and judgements that have a significant risk of causing a material adjustment to the carrying amounts of assets and
liabilities within the next financial year are discussed below.
Property, plant and equipment and right-of-use assets (Notes 11 and 12)
Judgement
Depreciation commences once an asset is considered to be capable of operating in the manner intended and to the specification set by
management when ordering the equipment. Judgement is applied based on testing of the equipment and trial products which impacts the
commencement and charge in a period. Depreciation on right-of-use property assets commences from the start of the lease.
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 method 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.
In respect of right-of-use leased assets a key estimate is the incremental borrowing rate used to discount the total cash flows and derive both
the opening asset value and lease liability as well as the consequential depreciation and financing charges. Assessment of the rate, particularly
for property, takes account of the group’s borrowing rates, financial position and factors specific to leases, including property yields. If the rate
applied had been 1% lower at 4%, it would have increased the transition asset by £350,000, the transition liability by £280,000 and reduced the
debit to retained earnings by £70,000. The depreciation charge for the year ended 30 September 2020 would have been £35,000 higher and
financing charges £48,000 lower with a net £13,000 impact on the profit and loss account.
The carrying values are tested for impairment when there is an indication that the value of the assets might not be realisable or impaired. When
carrying out impairment tests these are based upon future cash flow forecasts and these forecasts include management estimates for sales
pricing and volumes informed by external market forecasts and experience. Future events or changes in the market could cause the
assumptions to change, therefore this could have an adverse effect on the future results of the Group.
Other intangible assets (Note 13)
As set out in the policy in note 1, intangible assets acquired in a business combination are capitalised and amortised over their estimated useful
lives which may be impacted by future events.
Estimate
Both initial valuations and subsequent impairment tests for intangible assets are based on risk adjusted future cash flows discounted using
appropriate discount rates. These future cash flows will be based on forecasts for the individual assets or, where the specific cash flows cannot
be separately identified, the CGU to which the assets are attributable which include estimated factors and are inherently judgemental. Future
events could cause the assumptions to change which could have an adverse effect on the future results of the Group.
Judgement
The capitalisation of development costs is also subject to a degree of judgement in respect of the viability of new products, supported by the
results of testing and customer trials, and by forecasts for the overall value and timing of sales which may be impacted by other future factors
which could impact the assumptions made.
Trade receivables (Note 16)
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 2020
73
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
• Fixed and floating rate bank loans
• Floating rate overdrafts
• Fixed rate hire purchase agreements
• Fixed rate lease liabilities
• Floating rate invoice discounting facilities
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
Lease liabilities
Total financial liabilities
Financial assets at amortised cost
2020
£000
2,974
4,078
7,052
2019
£000
3,132
6,193
9,325
Financial liabilities at amortised cost
2020
£000
2,620
4,874
5,887
13,381
2019
£000
4,044
5,444
–
9,488
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 the current 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 2020 the Group has net trade receivables of
£3,925,000 (2019: £5,709,000).
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 16. Having assessed the recoverability of past due invoices, including
consideration of time elapsed and associated commercial documents, the directors have made provision, using the Expected Credit Loss
methodology, of £144,000 at 30 September 2020 (2019: £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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Governance
Financial Statements
Liquidity risk
Liquidity risk arises from the Group’s management of working capital and the continued availability of its other funding facilities. It is the risk
that the Group will encounter difficulty in meeting its financial obligations as they fall due. The Group actively manages its cash generation and
maintains sufficient cash holdings to cover its immediate obligations. Cash and cash equivalents at the year end were £2.8 million (2019: £2.1
million). There was an unutilised invoice discounting facility at 30 September 2020 of up to £6 million subject to eligible receivables, and an
unutilised £0.3 million import loan facility (2019: £6 million discounting facility with £3.7 million utilised, a £1.25 million overdraft and £0.6
million import loan facility) together with the existing undrawn hire purchase facilities of £0.4 million (2019: up to £0.5 million) for capex. The
parent company has drawn down new term loan facilities of £3.5 million and a short term Coronavirus Business Interruption Loan (‘CBIL’) of
£0.75 million during the year in order to improve the overall liquidity and has loaned this to subsidiary companies where required for their
working capital requirements.
The tables below set out the maturities of the Group’s financial liabilities, including interest payments:
At 30 September 2020
Overdrafts
Trade and other payables
Bank loans
Hire purchase liabilities
Lease liabilities
Total
At 30 September 2019
Overdrafts
Trade and other payables
Bank loans
Hire purchase liabilities
Invoice discounting
Total
Up to 1 year
£000
1 to 2 years
£000
2 to 5 years
£000
Over 5 years
£000
154
2,620
835
167
1,192
4,968
–
–
983
105
925
2,013
–
–
2,574
87
2,106
4,767
–
–
572
-
2,993
3,565
Up to 1 year
£000
1 to 2 years
£000
2 to 5 years
£000
Over 5 years
£000
1,007
4,038
216
267
3,716
9,244
–
–
–
119
–
119
–
–
–
180
–
180
–
–
–
–
–
–
Foreign exchange risk
Foreign exchange risk is the risk that movements in exchange rates adversely affect the profitability or cash flows of the business.
The majority of the Group’s financial assets are held in Sterling but movements in the exchange rate of the Euro, the US Dollar and the Swedish
Krona against Sterling have an impact on both the result for the year and equity. The Group considers its most significant exposure is to
movements in the Euro, although 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 at 30 September 2020.
Interest rate risk
The Group’s exposure to market risk for changes in interest rates relates primarily to cash and external borrowings (including overdrafts and
invoice discounting arrangements).
The Group is exposed to cash flow interest rate risk on its 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 Bank of England base rate, ranging from 1.75% to 3.99%.
Invoice discounting
Overdrafts
CBIL term loan
Import goods bank loan facility
Asset backed bank loans
Total floating rate debt
2020
£000
–
154
1,913
–
3
2,070
2019
£000
3,716
121
–
127
89
4,053
Autins Group plc Annual Report and Accounts 2020
75
Notes to the financial statements continued
3. Financial instruments – risk management continued
Interest rate risk continued
Borrowings under asset finance/hire purchase arrangements are at a fixed interest rate over their term, a fixed rate of 7.5% applies to the £1.5
million MEIF growth funding loan and 1.03% to a German bank loan of £0.3 million both advanced in the year. A fixed rate of interest of 4.5%
applied to the UK overdraft facility which was repaid in the year. Lease liabilities have been derived by applying an incremental borrowing rate
of 5%.
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 £20,000.
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
2020
£000
20,192
1,325
21,517
2019
£000
25,411
1,449
26,860
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 together with PPE in the current year, as they individually do not have a significant impact on the Group result.
These segments have no material 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, personal protective equipment (‘PPE’) and office equipment products, are
included within the others segment.
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Strategic Report
Governance
Financial Statements
Segmental analysis for the year ended 30 September 2020
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 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 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
Automotive
NVH
£000
18,446
1,600
301
(1,504)
279
27,805
14,103
Automotive
NVH
£000
24,841
800
280
(1,584)
384
26,265
217
26,482
10,379
Others
£000
3,071
–
16
212
–
–
–
–
Others
£000
2,019
72
29
2020
Total
£000
21,517
(1,292)
(524)
55
(1,761)
279
27,805
147
27,952
14,103
2019
Total
£000
26,860
(1,555)
(192)
203
(1,544)
384
26,265
217
26,482
10,379
Revenues from one customer in 2020 totals £10,895,000 (2019: £15,187,000). This customer purchases goods from Autins 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
2020
£000
16,063
322
3,197
1,913
22
21,517
2019
£000
20,826
989
3,707
1,291
47
26,860
The only material non-current assets in any location outside of the United Kingdom are £899,000 (2019: £937,000) of fixed assets and £551,000
(2019: £581,000) of goodwill in respect of the Swedish subsidiary. £775,000 of cash balances were held in Germany which will be partly utilised
to repay intercompany debt owed to a UK group company.
Autins Group plc Annual Report and Accounts 2020
77
Notes to the financial statements continued
5. Loss from operations
The operating loss is stated after charging/(crediting):
Foreign exchange losses
Depreciation of property, plant and equipment
Depreciation of right-of-use assets
Amortisation of intangible assets
Impairment of intangible assets
Cost of inventory sold
Impairment of trade receivables
Government job retention scheme income
Other government assistance and grants
Employee benefit expenses (see note 6)
Lease payments (2020 short term leases only)
Auditors’ remuneration:
Fees for audit of the Group
Additional fees in respect of prior year audit
Exceptional inventory provisions
Exceptional restructuring costs in respect of:
Restructuring programme, inc severance costs
Legal and professional fees
Change of Chief Financial Officer
2020
£000
11
836
851
317
–
14,573
17
(672)
(115)
6,822
120
85
–
164
132
–
160
292
2019
£000
57
800
–
280
72
18,454
–
–
–
7,479
1,338
60
40
–
364
69
–
433
Current year exceptional costs
Overhead and operational restructuring programme
Following a detailed operational review initiated by the change of Chief Financial Officer and in preparation for the rationalisation of the UK
premises, the Group reviewed its inventory and identified £164,000, primarily in respect of materials that were being held for development or
aftermarket service purposes, which are to be scrapped to allow floor space rationalisation and an associated reduction in future premises costs.
The Group also incurred exceptional administrative costs of £160,000 in the year in respect of the change of CFO, including recruitment fees
and compensation costs. As part of the operational review initiated by the new CFO and in response to Covid, which necessitated further
operational changes and cost reductions, the Group incurred a further £132,000 of severance related costs.
Prior year exceptional costs
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.
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Autins Group plc Annual Report and Accounts 2020
Strategic Report
Governance
Financial Statements
6. Staff costs
Wages and salaries
Social security costs
Share based payment
Other pension costs
The average monthly number of employees during each year was as follows:
Directors
Administrative and development
Production
Group
Company
2020
£000
5,932
754
(15)
151
6,822
2019
£000
6,440
879
10
150
7,479
2020
£000
1,287
148
(15)
44
1,464
2019
£000
1,332
162
10
41
1,545
2020
Number
2019
Number
2020
Number
2019
Number
5
60
147
212
5
68
153
226
5
13
–
18
5
13
–
18
Group key personnel are considered to be the directors and senior management team of Autins Group plc and Autins 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 2020
A Attwood
G Kaminski-Cook
K Munir
J Larner
I Griffiths
N MacDonald
Year ended 30 September 2019
A Attwood
G Kaminski-Cook
J Larner
T Garthwaite
I Griffiths
N MacDonald
8. Finance expense
Bank interest
Amortisation of loan issue costs
Right-of-use asset financing charges
Interest element of hire purchase agreements
Salary
£000
Benefits
£000
Pension
£000
Compensation
£’000
54
230
116
41
41
41
523
Salary
£000
60
259
142
23
51
9
544
–
25
4
4
–
–
33
–
10
10
3
–
–
23
–
–
–
105
–
–
105
Benefits
£000
Pension
£000
Compensation
£’000
–
26
14
–
–
–
40
–
11
8
–
–
–
19
–
–
–
–
–
–
–
2020
£000
180
7
305
31
523
Total
£000
54
265
130
153
41
41
684
Total
£000
60
296
164
23
51
9
603
2019
£000
128
–
–
64
192
Autins Group plc Annual Report and Accounts 2020
79
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
Total current tax
Deferred tax credit
Origination and reversal of timing differences
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
2020
£000
–
–
(37)
(37)
(37)
2020
£000
(37)
16
(21)
2019
£000
–
–
(45)
(45)
(45)
2019
£000
(45)
51
6
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 2020 (2019: 19%)
Expenses not deductible for tax purposes
Enhanced R&D tax relief
Impact of different tax rates
Tax losses not recognised
Total tax including joint ventures
2020
£000
(1,723)
(21)
(1,744)
(331)
3
(19)
63
263
(21)
2019
£000
(1,499)
6
(1,493)
(284)
18
(9)
10
271
6
The Finance Act 2016 included legislation to reduce the main rate of corporation tax from 19% to 17% from 1 April 2020. A change to the main
rate of corporation tax announced in the 2020 Budget was substantively enacted on 17 March 2020. The rate from 1 April 2020 remains at 19%
rather than the previously enacted reduction to 17%. The rate of 19% is accordingly applied to UK deferred taxation balances at 30 September
2020 (2019: 17%).
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)
2020
£000
(1,723)
39,601
39,601
(4.35)p
(4.35)p
2019
£000
(1,499)
23,971
23,971
(6.25)p
(6.25)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 524,204 (2019: 633,657) shares that were anti-dilutive at the year end but which may dilute future earnings per share.
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Governance
Financial Statements
11. Property, plant and equipment
Group
Cost
At 1 October 2018
Additions
Reclass from intangible fixed assets
Foreign exchange movement
At 30 September 2019
Additions
Foreign exchange movement
At 30 September 2020
Depreciation
At 1 October 2018
Charge for year
Foreign exchange movement
At 30 September 2019
Charge for year
Foreign exchange movement
At 30 September 2020
Net book value
At 30 September 2020
At 30 September 2019
At 30 September 2018
Net book value of assets held under hire purchase contracts are as follows:
At 30 September 2020
At 30 September 2019
Plant and
machinery
£000
Leasehold
improvements
£000
Fixtures and
fittings
£000
13,221
226
52
(49)
13,450
144
56
13,650
2,465
739
(10)
3,194
778
19
3,991
9,659
10,256
10,756
178
–
–
–
178
3
–
181
31
13
–
44
12
–
56
125
134
147
559
6
–
–
565
7
–
572
180
48
–
228
46
–
274
298
337
379
Plant and
machinery
£000
Leasehold
improvements
£000
Fixtures and
fittings
£000
612
1,530
–
–
–
–
Total
£000
13,958
232
52
(49)
14,193
154
56
14,403
2,676
800
(10)
3,466
836
19
4,321
10,082
10,727
11,282
Total
£000
612
1,530
Depreciation of £55,000 was charged on these assets in the year (2019: £137,000).
The Neptune plant and equipment represents £5.0 million (2019: £5.0 million) of the net book value. The Directors, having prepared both a
discounted cash flow assessment for the NVH segment within which the goodwill is allocated (note13) and the Neptune facility as a standalone
cash generating unit, are satisfied that the carrying values remain appropriate. Whilst losses continued in the current year, with results
materially impacted by the Covid pandemic, these were reduced and £1.6 million of revenue was earned in this unpredictable economic
environment. The cost actions already taken and prevailing margins mean that the overall carrying value of the Neptune plant and equipment
is supported at an annual revenue level of £4 million, with our current annualised sales volumes already at this value. Latest sales enquiry levels
and actual conversion into orders indicate that even a slow recovery provides opportunities to exceed £5 million sales per annum. Accordingly,
the achievement of profitable trading is expected in the foreseeable future.
The Company has no fixed assets.
Autins Group plc Annual Report and Accounts 2020
81
Notes to the financial statements continued
12. Right-of-use assets
The right-of-use assets are as follows:
Group
On transition at 1 October 2019
Foreign exchange movements
Depreciation charge for the year
At 30 September 2020
The lease liabilities relating to these are:
Group
On transition at 1 October 2019
Foreign exchange movements
Lease payments
Financing charge for the year
At 30 September 2020
Current
Non-current
13. Intangible assets
Group
Cost
At 1 October 2018
Additions
Reclassification to tangible
Foreign currency differences
At 30 September 2019
Additions
Foreign currency differences
At 30 September 2020
Amortisation and impairment
At 1 October 2018
Charge for the year
Impairment in the year
At 30 September 2019
Charge for the year
At 30 September 2020
Net book value
At 30 September 2020
At 30 September 2019
At 30 September 2018
Property
£’000
5,651
14
(777)
4,888
Plant and
machinery
£’000
187
–
(74)
113
Goodwill
£000
Development
costs
£000
Customer
relationships
£000
Tooling
intellectual
property
£000
2,218
–
–
(22)
2,196
–
21
2,217
–
–
–
–
–
–
2,217
2,196
2,218
714
152
(52)
–
814
125
–
939
27
43
72
142
79
221
718
672
687
1,079
–
–
–
1,079
–
–
1,079
680
154
–
834
155
989
90
245
399
830
–
–
–
830
–
–
830
367
83
–
450
83
533
297
380
463
Total
£000
5,838
14
(851)
5,001
£000
6,422
14
(854)
305
5,887
917
4,970
Total
£000
4,841
152
(52)
(22)
4,919
125
21
5,065
1,074
280
72
1,426
317
1,743
3,322
3,493
3,767
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 of the automotive NVH segment.
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 are based on projected three-year (2019: three-year) discounted cash flows, together with a terminal value which assumes a
1% (2019: 1%) long term growth rate. The cash flows have been discounted at pre-tax rates of 11.2% (2019: 11.8%) reflecting the Group’s
weighted average cost of capital adjusted for country-specific tax rates and risks.
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Autins Group plc Annual Report and Accounts 2020
Strategic Report
Governance
Financial Statements
Whilst acknowledging the loss in the current year, the Directors have reviewed a range of reasonably foreseeable trading forecasts for future
periods, as described further under “going concern” in note 1. The key assumption which underpins these forecasts relates to the rate of
revenue growth and reflects trading experience, as adjusted for the expected recovery from the Covid pandemic. Prior to Covid, in H1, we had
secured new contracts with strong growth potential and also restructured the cost base, improving operational efficiency and eliminating
approximately £1 million from the recurring cost base. Accordingly, with revenue expected to recover in FY21 and with the continued
diversification of the customer and product ranges driving subsequent growth, combined with the streamlined cost base and improved
operating efficiencies which have already been achieved, a return to profitability and cash generation is expected in the foreseeable future.
Recurring revenues from automotive NVH need to recover to a level of some £25 million a year, lower than is projected, in order to support the
carrying value of the goodwill. These revenues were at £25 million in FY19 including the impact of shut down periods at the major customer
and £27 million in FY18.
The Company had a closing net book value of £50,000 (2019: £50,000) for goodwill and £7,000 (2019: £7,000) for development costs in intangible
assets.
14. Fixed asset investments
Company
Cost and net book value
At 30 September 2019 and 2020
Investments in
subsidiaries
£000
16,239
The Directors have considered the carrying value of the investments and consider that this remains supported by the projections and
impairment tests referred to in notes 11 and 13 in respect of the trading prospects and value in use of the subsidiaries.
The subsidiaries of the Company, which have all been included in the consolidated financial statements based on their results to 30 September
2020, 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 2020
and 2019
Ownership %
100
100
100
100
100
100
100
100
The Group has agreed 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 2020
and 2019
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.
Autins Group plc Annual Report and Accounts 2020
83
Notes to the financial statements continued
14. Fixed asset investments continued
Group
Cost and net book value
At 30 September 2018
Share of profit for the year
Dividend paid by JV
Net book value at 30 September 2019
Share of profit for the year
Dividend paid by JV
Net book value at 30 September 2020
The Group’s share of joint venture profit in each year was as follows:
Profit before tax
Taxation
Profit after tax
Interest in
joint ventures
£000
204
203
(190)
217
55
(125)
147
2019
£000
254
(51)
203
2020
£000
71
(16)
55
Summarised aggregated financial information in relation to the joint ventures is presented below and includes the impact of IFRS16 transition
in 2020 with the addition of right-of-use assets and lease liabilities:
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
Right-of-use asset depreciation
Interest expense
Income tax expense
15. Inventories
Group
Raw materials
Work in progress
Finished goods
2020
£000
1,097
335
(653)
(485)
373
(352)
(475)
294
147
2020
£’000
2,104
110
110
55
38
81
16
30
2020
£000
1,525
47
366
1,938
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
Inventory is stated net of impairment provisions of £331,000 (2019: £nil) with £164,000 of the £331,000 being regarded as an exceptional cost.
The Company has no inventories.
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Autins Group plc Annual Report and Accounts 2020
Strategic Report
Governance
Financial Statements
16. Trade and other receivables
Trade receivables
Provisions for impairment
Trade receivables net
Amounts owed by subsidiaries
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
Total trade and other receivables
The analysis of trade receivables is as follows:
Not yet due gross amount
Past due gross amount
Past due impairment loss allowance
Group
2020
£000
4,069
(144)
3,925
–
10
53
90
4,078
29
232
4,339
4,286
217
(144)
3,925
Group
2019
£000
5,927
(218)
5,709
–
94
276
114
6,193
24
512
6,729
5,429
498
(218)
5,709
Company
2020
£000
–
–
–
10,012
10
–
–
10,022
–
9
10,031
–
–
–
–
Company
2019
£000
–
–
–
5,987
22
–
–
6,009
–
67
6,076
–
–
–
–
With the exception of one customer which accounts for 53% (2019: 63%) 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 £17,000 (2019: £nil) has been charged
in respect of specific trade receivables for the year ended 30 September 2020. 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 2020 were £nil (2019: £3,716,000). 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
The movement in the tooling contract assets balances 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
2020
£000
218
17
(91)
144
2020
£000
276
790
(1,013)
53
68
2019
£000
218
–
–
218
2019
£000
231
1,029
(984)
276
435
Autins Group plc Annual Report and Accounts 2020
85
Notes to the financial statements continued
17. 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
Group
2020
£000
1,366
–
410
844
2,620
525
6
3,151
117
No interest is payable on the amounts owed to the company or by the company to its subsidiaries.
18. Borrowings
Bank loans and overdrafts
Unamortised issue costs
Hire purchase liabilities
Invoice discounting
Total borrowings
Bank overdrafts
Bank loans
Hire purchase liabilities
Invoice discounting
Current
Bank loans – instalments due in 2 to 5 years
Bank loans – instalments due in more than 5 years
Hire purchase liabilities due in 2 to 5 years
Non-current
Group
2020
£000
4,596
(59)
337
–
4,874
154
732
141
–
1,027
3,090
562
196
3,847
Group
2019
£000
2,696
–
696
652
4,044
583
8
4,635
115
Group
2019
£000
1,223
–
505
3,716
5,444
1,007
216
204
3,716
5,143
–
–
301
301
Company
2020
£000
Company
2019
£000
166
7,850
–
203
8,219
170
–
8,389
–
189
7,879
–
6
8,074
124
–
8,198
–
Company
2020
£000
Company
2019
£000
4,166
(59)
–
–
4,107
–
729
–
–
729
2,978
400
–
3,378
–
–
–
–
–
–
–
–
–
–
–
–
–
–
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:
Nominal Currency
Conditions
Bank loans
Bank working capital CBIL
Bank term CBIL
MEIF term loan
German bank loan
SEK
GBP
GBP
GBP
Euro
Secured
Secured
Secured
Secured
Repayable by instalments
Repayable a year from draw down
Repayable by quarterly instalments
Repayable by instalments
Repayable by instalments
Rate % Year of Maturity
Base rate + 3.75% Up to 2020
2021
Base rate + 3.49%
2026
Base rate + 3.99%
2024
7.50% fixed rate
2030
1.03% fixed rate
The CBIL loan terms include no interest being payable for a year as part of the government assistance. This is recognised in other income with
the loans stated net of this amount at draw down and a financing charge made in the income statement over the first year.
Net obligations under hire purchase contracts are denominated in sterling and secured on the assets to which they relate.
Advances under the Group’s invoice discounting facility were secured against certain trade receivable balances. The facility of up to £6 million,
subject to eligible receivables, remained in place at 30 September 2020 but with no amounts drawn down.
Details of financing facilities are also included in note 3, liquidity risk.
86
Autins Group plc Annual Report and Accounts 2020
Strategic Report
Governance
Financial Statements
Hire purchase liabilities
The future minimum lease payments in respect of hire purchase 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
2020
£000
167
192
359
(22)
337
2019
£000
267
299
566
(61)
505
19. Deferred tax
Deferred tax is calculated in full on temporary differences under the liability method using a tax rate of 19% (2019:17%) for the UK, 21% (2019:
21%) for Sweden and 30% for Germany (2019: 30%). 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
Deferred tax on intangible assets
On fair valued assets
Closing liability
2020
£000
(38)
(37)
–
(75)
2020
£000
460
(709)
100
(149)
74
–
74
2019
£000
8
(45)
(1)
(38)
2019
£000
32
(316)
61
(223)
109
76
185
The Group’s deferred tax balances have 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 asset recognised is £nil (2019: £nil). The company has an unrecognised deferred tax asset of approximately £540,000
(2019: £74,000) in respect of losses carried forward.
The Group has an unrecognised deferred tax asset of approximately £800,000 at 30 September 2020 (2019: £400,000) 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.
Autins Group plc Annual Report and Accounts 2020
87
Notes to the financial statements continued
20. Share capital
Allotted, issued and fully paid ordinary shares of £0.02 each
At 30 September 2019 and 2020
Number
39,600,984
£’000
792
21. 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.
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.
The performance based options are not currently expected to vest or be exercisable and a credit arises in the year as a result of an employee
leaving and reversing the prior year charges on market based options.
There were 524,204 of unexpired options in place at 30 September 2020 with an average exercise price of £0.22 (2019: 633,657 and £0.22) and a
remaining average exercise period of 5.3 years (2019: 6.2 years).
22. 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 Autins Limited (formerly 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 prior year and £205,000 of issue expenses were deducted from
this balance. A further £17,000 of late costs relating to these shares was deducted from this account in the current year.
23. 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, property rentals with an annual rolling renewal for certain overseas properties through to 15 year terms for the
principal UK manufacturing sites, which are subject to three yearly rent reviews. The total value of minimum lease payments due until the end
of the leases at 30 September 2019 were 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
88
Autins Group plc Annual Report and Accounts 2020
2019
£000
1,071
3,046
3,604
100
122
7,943
Strategic Report
Governance
Financial Statements
Following the adoption of IFRS 16, where appropriate, these commitments are now included in lease liabilities at 30 September 2020.
The commitments of £7.9 million at 30 September 2019, after excluding short term commitments of £0.2 million, have been discounted by £1.6
million and increased by £0.3 million following agreement in the year of a retrospective rent review effective from before the transition date,
resulting in the lease liability recognised at transition of £6.4 million.
The Group had capital commitments at 30 September 2020 of £nil (2019: £nil).
The Company had no lease or capital commitments.
24. Related party transactions
Share options
Directors and other key management members hold the following unexpired share options (see note 20) which are all subject to meeting
EPS targets.
At 30 September 2020
G Kaminski-Cook
Other senior management
At 30 September 2019
J Larner
G Kaminski-Cook
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
279,070
215,967
495,037
Number
81,395
279,070
244,025
604,490
2019
£000
1,778
36
10
1,824
2019
£000
92
2,352
94
(696)
2020
£000
1,516
40
(15)
1,541
2020
£000
86
1,775
10
(420)
Autins Group plc Annual Report and Accounts 2020
89
Notes to the financial statements continued
26. Impact of transition to IFRS 16
The tables below present the main statements as reported and as they would have been reported without IFRS 16, consistent with the 2019
comparatives, in order to show the impact on line items and in total.
Impact on the Consolidated Statement of Comprehensive Income
Year ended 30 September 2020
Revenue
Cost of sales
Gross profit
Other operating income
Distribution expenses
Administrative expenses
Operating loss
Finance expense
Share of post-tax profit of equity accounted joint ventures
Loss before tax
Tax expense
Loss after tax for the year
Loss per share
Basic and diluted earnings per share
Impact on the Consolidated Statement of Financial Position
As at 30 September 2020
Non-current assets
Property, plant and equipment
Right-of-use assets
Intangible assets
Investments in equity-accounted joint ventures
Deferred tax asset
Total non-current assets
Current assets
Inventories
Trade and other receivables
Cash in hand and at bank
Total current assets
Total assets
Current liabilities
Trade and other payables
Loans and borrowings
Lease liabilities
Total current liabilities
Non-current liabilities
Trade and other payables
Loans and borrowings
Lease 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
Currency differences reserve
Retained earnings
Total equity
90
Autins Group plc Annual Report and Accounts 2020
As reported
£000
IFRS 16
adjustments
£000
Amounts
without adoption
of IFRS 16
£000
21,517
(15,472)
6,045
787
(650)
(7,474)
(1,292)
(523)
55
(1,760)
37
(1,723)
–
(53)
(53)
–
(171)
(224)
305
–
81
–
81
21,517
(15,525)
5,992
787
(650)
(7,645)
(1,516)
(218)
55
(1,679)
37
(1,642)
(4.35)p
0.20p
(4.15)p
As reported
£000
IFRS 16
adjustments
£000
Amounts
without adoption
of IFRS 16
£000
10,082
5,001
3,322
147
149
18,701
1,938
4,339
2,974
9,251
27,952
3,151
1,027
917
5,095
117
3,847
4,970
74
9,008
14,103
13,849
792
15,866
1,886
(127)
(4,568)
13,849
–
(5,001)
–
–
–
(5,001)
–
98
–
98
10,082
–
3,322
147
149
13,700
1,938
4,437
2,974
9,349
(4,903)
23,049
388
–
(917)
(529)
–
–
(4,970)
–
(4,970)
(5,499)
596
–
–
–
–
596
596
3,539
1,027
–
4,566
117
3,847
–
74
4,038
8,604
14,445
792
15,866
1,886
(127)
(3,972)
14,445
Impact on the Consolidated Statement of Cash Flows
Year ended 30 September 2020
Cash flows from operating activities
Loss after tax
Adjustments for:
Income tax
Finance expense
Employee share-based payment (credit)/charge
Other non-cash income
Depreciation of property, plant and equipment
Depreciation of right-of-use assets
Amortisation of intangible assets
Share of post-tax profit of equity accounted joint ventures
Decrease in trade and other receivables
Decrease in inventories
Decrease in trade and other payables
Cash from operations
Income taxes paid
Net cash flows from operating activities
Investing activities
Purchase of property, plant and equipment
Purchase of intangible assets
Dividend received from equity accounted joint venture
Net cash used in investing activities
Financing activities
Interest paid
Share issue expenses paid
Bank loans advanced
Loan issue expenses paid
Bank loan repaid
Payment of lease liabilities
Hire purchase capital payments
Decrease in invoice discounting
Net cash (used in)/from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of year
Strategic Report
Governance
Financial Statements
As reported
£000
IFRS 16
adjustments
£000
Amounts
without adoption
of IFRS 16
£000
(1,723)
(37)
523
(15)
(109)
836
851
317
(55)
588
2,296
23
(1,426)
1,482
(5)
1,476
(155)
(125)
125
(155)
(421)
(17)
4,523
(66)
(213)
(549)
(168)
(3,716)
(627)
695
2,125
2,820
81
–
(305)
–
–
–
(851)
–
–
(1,075)
–
–
221
(764)
–
(764)
–
–
–
–
305
–
–
–
–
549
–
–
854
–
–
–
(1,642)
(37)
218
(15)
(109)
836
–
317
(55)
(487)
2,296
23
(1,204)
628
(5)
623
(155)
(125)
125
(155)
(116)
(17)
4,523
(66)
(213)
–
(168)
(3,716)
227
695
2,125
2,820
Autins Group plc Annual Report and Accounts 2020
91
Directors, secretary, registered office and advisors
Directors
Adam Attwood, Non-Executive Chairman
Gareth Kaminski-Cook, Chief Executive Officer
James Larner (Resigned 31 December 2019)
Kamran Munir, Chief Financial Officer (Appointed 1 January 2020)
Neil MacDonald, Non-Executive Director
Ian Griffiths, Non-Executive Director
Company Secretary
Kamran Munir
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
92
Autins Group plc Annual Report and Accounts 2020
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Autins Group plc
Central Point One Central Park Drive Rugby
CV23 0WE
T: +44 (0)1788 578 300
W: www.autins.com
autins