27 November 2024
Autins Group
plc
("Autins"
the "Company" or the "Group")
Interim
Results
Autins Group plc (AIM: AUTG), the UK
and European based manufacturer of the patented Neptune melt-blown
material and specialist in the design, manufacture, and supply of
acoustic and thermal insulation solutions, announces its unaudited
interim results for the six months ended 30 September 2024 and,
following the change of year end to 31 March, also provides detail
on the twelve month performance to 30 September 2024.
Financial Summary (six months ended 30 September
2024)
· Revenue in H2 24 decreased by 17.3% to £9.79m (H2 23:
£11.84m)
· Gross profit in H2 24 decreased by 15.9% to £3.04m (H2 23:
£3.62m)
· Gross margins increased by 0.5% to 31.1% (H2 23:
30.6%)
· Adjusted EBITDA1 decreased 45.6% to £0.44m (H2 23:
£0.81m)
· Loss after tax of £0.79m (H2 23: loss of £0.01m)
· Loss per share of 1.45p (H2 23: loss of 0.026p)
· Operating cashflow was a £0.58m net inflow (H2 23: £1.71m net
inflow)
· Net debt2 excluding IFRS16 lease liabilities
decreased to £1.18m (H2 23: £1.60m)
· Cash and cash equivalents were £1.68m
at the period end (H2 23: £2.09m)
· Group cash headroom3 was
£3.47m (H2 23: £3.90m)
1: EBITDA is stated on an IFRS 16
basis and before exceptional items.
2. Net debt is cash less bank overdrafts,
loans, invoice discounting, hire purchase finance and excludes
right of use lease liabilities.
3.
Sum of net cash at bank and residual invoice financing
capacity.
Financial Summary (twelve months ended 30 September
2024)
· Revenue decreased by 5.5% to £21.44m (FY23:
£22.68m)
· Gross profit unchanged at £6.68m (FY23: £6.68m)
· Gross margins increased by 1.7% to 31.2% (FY23:
29.5%)
· Adjusted EBITDA1 increased 7.7% to £1.26m (FY23:
£1.17m)
· Loss after tax of £1.25m (FY23: loss of £0.91m)
· Loss per share of 2.28p (FY23: loss of 1.67p)
· Operating cashflow unchanged at £2.00m net inflow (FY23:
£2.00m net inflow)
Operational Highlights
· Contract wins in Germany and UK, commencing in financial year
2026 and valued at in excess of £7.5m over lifetime with peak
annual sales above £1.5m per annum predominantly for our Neptune
based products. These again demonstrate that Neptune is the
material of choice for a number of EU based OEM's.
· Gross margins increased as a result of continued operational
efficiency and material usage improvements. Particular
improvements have been seen in our German facility.
· Repayments continued on our CBILS loan and we were pleased to
commence repayment of our MEIF loan.
· Our flooring business showed a 17% sales improvement period on
period. We believe we are seeing the start of the recovery of this
business although it is unlikely to return to COVID-enhanced
levels.
· The mid-term prospects for Autins (FY27 onwards) look very
strong. However, the business is facing some short-term challenges
due to current automotive demand levels.
Post
Period End
· Following the resignation of Kamran Munir as Chief Financial
Officer announced on 18 November 2024, Des Dimitrov, Group
Financial Controller is now attending Board meetings to report on
Group financial matters.
Andy Bloomer, Chief Executive, said:
"In my first
six months as CEO of Autins Group plc, I have spent time getting to
know the business and the people who work here. I have found
an organisation full of talented people who work incredibly hard to
deliver products which solve our customers problems.
I have spent significant time with
the team working on our go to market strategy and our AuDuct,
AuTrim and new Neptune products will provide significant
differentiation and cost savings in the future.
Like all automotive businesses, we
are currently dealing with the uncertainty of reduced demand and
delayed new vehicle introduction from OEM's. We have
continued to manage our costs through headcount, procurement and
operational efficiencies. We believe we are well placed to
weather this storm."
Adam
Attwood, Chairman said:
"Looking at the longer term, we
believe that the automotive market is showing initial signs of
improvement. OEM's are finalising platform strategies and
beginning to source for their future programmes. With the
hard work done to ensure our Neptune material is specified,
there are significant opportunities for Autins to
gain more market share going forward. In particular, our key
UK OEM will be introducing its new all electric platform by
2027."
For
further information please contact:
|
Autins Group plc
Andy Bloomer, Chief
Executive
|
Via SEC Newgate
|
|
Singer Capital Markets
(Nominated Adviser and Broker)
Sandy Fraser / Asha
Chotai
|
Tel: 020 7496 3000
|
|
SEC
Newgate
(Financial PR)
Bob Huxford
Molly Gretton
|
Tel: 020 7653 9850
|
About Autins
Autins is a UK and continental
Europe based industrial materials technology business that
specialises in the design, manufacture, and supply of acoustic and
thermal products. Its key markets are automotive, flooring, office
furniture and commercial vehicles where it supplies products and
services to more than 160 customer locations across
Europe.
Autins is the UK and European
manufacturer of the patented Neptune melt-blown material and
specialises in the design, manufacture, and supply of acoustic and
thermal insulation solutions.
Chair's Statement
As we have changed our financial year
end to 31 March, it is a year since our last Annual Report and
Accounts, and I would like to take this opportunity to provide a
full strategic update to clearly set out both the exciting
opportunities that the business has, as well as the short-term
challenges that we face.
The
European automotive market
Over the past few years, the European
automotive market, like many industries, has faced macro headwinds
(such as Covid and high inflationary costs). It has also
suffered from industry specific pressures such as semi-conductor
shortages but, most impactful, delays in new platform launches, as
OEM manufacturers grapple with the generational move to electric
vehicles where consumer demand has not yet caught up with
Governmental enthusiasm.
The automotive market is a long-term
business. For suppliers, there is the opportunity to win
contracts with longevity of supply (typically 6+ years), subject to
actual build volumes. However, the uncertainty created in
recent years from macro and micro factors, has meant that there has
been a reduced opportunity to make step changes for a business such
as Autins.
Looking at the longer term, we
believe that the automotive market is showing initial signs of
improvement. OEM's are finalising platform strategies and
beginning to source for their future programmes. With the
hard work done to ensure our Neptune material is specified,
there are significant opportunities for Autins to
gain more market share moving forward. In particular, our key
UK OEM will be introducing its new all electric platform by
2027.
Autins journey since flotation
Autins floated on the AIM market in
2016, following the successful award of high value per car
nominations for two new car models that were forecast to sell over
100,000 vehicles per annum for each model. In the event, the
OEM's expectations turned out to be significantly overstated, which
placed the business on the backfoot, compounded by the market
factors stated above.
This resulted in us having to deploy
a more defensive strategy in recent years, with efficiency and cost
control becoming key to ensure our survival. However, despite
the headwinds that we have faced, we have expanded strongly in
three areas; production of our patented Neptune material,
development of our European operations and expansion of our
customer base.
Our flotation enabled us to purchase
machinery to start the development and manufacture of an exclusive,
patented material, Neptune, for noise, vibration and harshness
(NVH) and acoustics absorption. Having the capability to
develop and manufacture our own material was thought to be, and has
proven to be, a key differentiator for the business, compared to
its competitors. This is especially true in our European
markets.
The business has successfully grown
in European markets, particularly in Germany. This organic
growth strategy has resulted in our German business growing
six-fold since flotation, to the €7.2m business that it is today,
despite the market challenges. Our Neptune material has been
key to this growth and has now been specified by a number of
well-known European OEMs as their NVH material of choice. This
specification work is what will drive our European business growth
in the coming years.
Our Swedish business also continues
to trade well, growing 19% since 2020 and maintaining strong levels
of profitability.
We have sought to diversify our
customer base and now supply 75
customers across the UK and Europe. This
diversification spreads our risk and eases our reliance on any
single customer.
Germany is also the location of our
flooring business. Whilst this part of the business has
struggled with the economic downturn since the high COVID demand,
we now see the business stabilising and have a number of new
developments in the pipeline that will provide modest growth in the
coming years.
These achievements mean that the
Group now has a much stronger and more balanced operating platform
from which to develop and grow into the future.
New
products for Autins
The strategic ambition for the Group
has always been to move to higher value, more complex components
for the automotive industry. Despite the financial headwinds
that we have faced, we have always considered research &
development (R&D) and new product development to be critical to
our future and we have continued to dedicate resources to product
innovation. In recent years, we have concentrated on the
development of products that either can be protected by
intellectual property (IP) rights or that can widen our addressable
market. As a result of this investment, we are now
introducing a number of new and exciting products to the
market.
AuDuct
A mono material automotive
ducting system used to reduce energy consumption, improve acoustic
and thermal performance and significantly reduce OEM warranty
costs. We have been developing this product for over two
years. We believe that AuDuct is a patentable product, and we
are currently progressing our IP rights. We believe that
AuDuct opens up a £60m+ potential addressable annual market to the
business. We are in discussions with a key OEM customer which
could lead to future nominations impacting from FY27 onwards but
could also lead to more immediate revenue streams. We have
also had strong interest from a Tier 1 customer to supply a similar
solution to a prestige OEM. This would also be for FY27
supply.
AuTrim
Currently our products are hidden from the cabin
of a vehicle, as they are under bonnet / body, in-boot or in-door
solutions. We believe that there is a growing opportunity to
apply our skills and materials to A surface (in-cabin)
components. AuTrim enables our customers to achieve required
NVH benefits for the cabin with an integrated, in-cabin
component. We are at an early stage of introducing this
product to our OEM customers, but we believe that it will open up
considerable new sales opportunities on future
platforms.
Neptune products
We have channelled
considerable R&D resources into our Neptune production line
over the past three years. We are now confident of finalising
two key developments by the end of this financial year.
Firstly, we believe that we can
improve the production process of our core product to enable
significant efficiency improvements.
Secondly, we have also developed a new, mono-material version of
Neptune made from 100% polypropylene. This product will be
branded Neptune-R. It will have all the performance
capability of our current Neptune material but will be fully
recyclable whilst containing up to 30% recycled content. We
believe this is the first material of its type and will be of
particular interest to our OEM customers who are looking to
increase the recyclable content of their vehicles.
Short term challenges for Autins
Largely as a result of the success of
our R&D initiative, the mid-term prospects for Autins (FY27
onwards) look very strong based on nominations received, the new
platforms that we are being invited to quote on and the new
products that we are introducing. However, the business is
facing some short-term challenges.
We have had to absorb a significant
reduction of volumes from our major customer that has required us
to continue to focus on cost reductions to meet our banking
covenants. We have already had significant success in
controlling operating costs and reducing the costs of trading on
AIM and we are now actively considering changes to our operating
footprint which could deliver further significant savings without
inhibiting our planned future growth. In particular, we are looking
at ways to recover significant fixed cost overheads at our UK
sites.
Board composition, plc costs and other plc
matters
There have been two recent Board
changes. Qu Li joined the Board in September 2024 to
represent the interests of our largest shareholder Braveheart
Investment Group plc (Braveheart). Her salary costs are met
by Braveheart . In November 2024, our CFO Kamran Munir left
the business. In the short term, the Board is confident that
we can absorb this role within our existing finance team whilst we
assess our options. Des Dimitrov, who has acted as Group
Financial Controller since 2021, will attend Board meetings to
report on Group financial matters.
Over the past 18 months, we have
actively sought to reduce Board salary costs as it became
increasingly clear that the original salary structure of the Board
had become inappropriate for the current circumstances of the
business. As a result of this initiative the forecast
annualised run rate of Board salary costs has reduced by £150k
compared to 2023 calendar year. A reduction of over
28%.
As well as Board salary costs, we
have put a focus on reducing other costs directly related to our
AIM-listed status. Working with all of our advisers, we have
reduced the forecast annualised run rate of plc costs by £100k
compared to 2023. This has required additional work from all
members of the Board and I thank them for their on-going support
and commitment.
In 2020, we withdrew forecasts from
the market due to the turbulence within the automotive
market. We understand that this is an unsustainable position
for an AIM listed company and intend to reintroduce market guidance
in tandem with an update on the outcome for the financial period
ending 31 March 2025. We hope that this step and the positive
outlook from FY27 onwards will allow us to reengage with the market
so that we can start using our market listing as an accelerant for
further growth.
Employees
As ever, I must thank our work force
across the Group for their commitment, resilience and willingness
to embrace the changes that we have needed to introduce to adapt
the business to the changing market conditions. We are truly
lucky to have such a dedicated workforce.
I am also grateful to our CEO, Andy
Bloomer, for the energy, empathy and leadership he has shown since
he assumed his role in April 2024. Andy's in-depth knowledge
of both the automotive industry and advanced materials has brought
more focus and clarity to the workforce as a whole.
Merger & Acquisition opportunities and growth by
acquisition
We believe that the automotive supply
chain will undergo significant restructuring in the coming
years. As part of our business-wide reviews over the past
couple of years we have considered the potential impact that this
could have on Autins. We have looked at opportunities for us
to consolidate but this has proved difficult based on our current
share price and the lack of liquidity in the market.
We very much hope that this position
will change in the coming months and that with re-engagement with
the market, we can find opportunities to accelerate our growth
through acquisition, particularly in Europe.
Outlook
The Group believes that its core
automotive market is stabilising and that this will provide a
period of stability to bed in the new initiatives set out in this
statement and to ensure that it maximises the opportunities that
new platforms offer from 2027 onwards.
The Board is comfortable that we can
meet our banking commitments as they fall due and remain covenant
compliant, assuming that build volumes do not deteriorate
significantly from the levels currently forecast by our OEM
customers.
We expect our net losses to increase
in the period to 31 March 2025. Profitability is then
expected to improve in H1 FY26 as new, major contracts begin and we
would expect the business to return to on-going net profitability
in H2 FY26.
In the next 6-12 months, the Group
will be focussed on maximising new sales opportunities on
forthcoming OEM platforms, with the additional impetus from our new
AuDuct, AuTrim and Neptune-R products. The improved forward
revenue visibility associated with recent contract wins and
pipeline opportunities has informed the Board's intention to
reintroduce market guidance in tandem with an update on the outcome
for the financial period ending 31 March 2025.
CEO review
Initial 6 months - Creating a
strategy, making decisions
Since my appointment in April 2024,
I have worked with the Autins leadership team and the board of
directors to create our "Survive then Thrive" strategy. This
strategy is about making the right choices today to ensure we are
well placed for our future growth aspirations.
We have made a number of decisions
about the day-to-day operation of the business and the strategic
direction moving forward. We have worked on refining our go
to market strategy, engaging with our customers to understand their
needs and wants from a company like Autins and determining the best
way for us to meet these needs in the future.
Significant efforts have been taken
in improving our current Neptune materials from both a cost and
performance perspective. In addition, we have continued to refine
the next generation of Neptune, a fully recyclable version with
significant recycled content. Our AuDuct and AuTrim products
have continued development with several OEM's engaged in testing
both products for future applications.
We have also spent time looking at
our cost base, including people, procurement, PLC costs and current
footprint. Savings have been made in all these areas to
improve profit margins even after the volume reductions
seen.
Difficult market conditions but
margins improving due to careful cost control
Supply and demand issues persist
for the UK and EU automotive industry. During the last trading
period, our largest UK customer had a significant supply chain
issue. This affected our revenues (£500k+ reduction) as the
customer was unable to source key components to build its vehicles,
changing builds and reducing volumes at very short notice also left
it difficult for us to manage our costs.
As is well publicised, the
automotive industry continues to struggle with the issues of low
demand and technology uncertainty. Several of our customers
have announced delays to new platforms as they determine whether to
move to all electric or continue producing internal combustion
engine vehicles. In the meantime, the vehicles being produced
are no longer new and together with current economic uncertainty
this is affecting demand for new vehicles.
Autins is well placed to win on new
platforms as they are sourced and the £1.5m per annum in wins since
our last trading update demonstrates that we are both competitive
and manufacture products our customers want to buy.
In the automotive industry it is
rare for new business to start immediately but we have several
transfer opportunities we are working on which would make an
immediate impact, we expect to have further news on these at our
next trading update.
Continuing to invest
Despite the current issues we are
seeing, in preparation for supplying the business we have already
won, we have continued to invest in our German facility with new
machinery valued at £250k due for delivery in December.
Our people making the
difference
Since I have joined, I have
continued to be surprised and delighted with the commitment,
ingenuity and flexibility our people at Autins have shown.
All employees have made me feel very welcome, been receptive to
change and contributed their own thoughts and opinions. In my
opinion, a company is made or broken by culture and I am proud to
report that we have a very positive culture within
Autins.
Financial Review
Revenue
Sales across the Group decreased by
17.3% to £9.79m (H2 23: £11.84m) driven by a drop in production
activity in the key automotive customers in the UK and
Germany. On a twelve-month basis the
reduction of revenue was 5.5% to £21.44m (FY23:
£22.68m).
Sales through the European
operations accounted for 37% of Group turnover in the second
six-month period of the current financial period, slightly down
from 38% in the comparative period in FY23. On a twelve-month basis
they decreased from 39% to 35%, primarily due to the reduction in
the flooring business in Germany.
Automotive sales decreased by 14.1%
to £9.1m (H2 2023: £10.6m). On a
twelve-month basis Group automotive revenue was marginally higher
than FY23 (FY24: £20.23m; FY23: £20.10m), a sign of improving
stability in the industry.
Revenue in the UK in the second six
months decreased by 16.2% to £6.2m (H2 2023: £7.4m), with component
revenue continuing to dominate as tooling remains at low levels
with OEMs continuing to delay new projects due to uncertain demand
and electrification legislation. On a twelve-month basis our
UK business was unchanged with sales at £13.9m.
Within our German entity automotive
sales decreased by 8.0% to £2.3m (H2 23: £2.5m), and flooring sales
declined by 46.2% to £0.7m (H2 23: £1.3m). Overall sales of our
German subsidiary declined by 21.1% to £3.0m (H2 23: £3.8m). On a
twelve-month basis the automotive revenue of the German business
remained at the same level as FY23, however the flooring revenue
was down by 53% for the same period. The reduction in flooring
sales is driven by a drop in flooring demand which was partly due
to the volatility of the construction sector in Europe. Monthly
sales demand for flooring is now running at much less than the run
rate of the prior year and, whilst we don't see additional
reductions coming, we expect current demand to persist for the
foreseeable future.
Sweden automotive sales were at the
same level as the comparative six-month period at £0.70m (H2 23:
£0.70m). On a twelve-month basis our Swedish business grew its
revenue by 15.4% to £1.5m (FY23: £1.3m).
Sales concentration of our largest
customer decreased from 34.4% last year to 31.7% in H2 24, driven
primarily by the reduction in demand from that customer. For the
twelve months it was an increase from 33.7% in FY23 to 34.4%.
Looking forward, contract wins were
secured in Germany and the UK valued in aggregate at in excess of
£7.5m over lifetime with peak annual sales above £1.5m per annum
predominantly for our Neptune based products. Commencing in 2026,
these again demonstrate that Neptune is the material of choice for
a number of European based OEM's. We also expect to see our
previously announced win (€2m per annum in Germany) with a
well-known EV manufacturer starting production in March
2025.
Gross margin
The actions taken to improve
operational efficiencies and lower material purchasing costs have
continued to improve margins with an increase of 0.5 percentage
points to 31.1% for H2 24 compared to the prior year period.
These actions had a more pronounced impact on a twelve-month basis
with an increase of 1.7% to 31.2%.
Adjusted EBITDA and operating profit
The H2 24 adjusted EBITDA was 45.6%
lower at £0.44m (H2 23: adjusted EBITDA of £0.81m) and
adjusted operating loss of £0.56m (H2 23: adjusted operating loss
of £0.1m) are prior to exceptional costs. Exceptional costs relate
to the replacement of the CEO. On a twelve-month basis,
EBITDA was 7.6% higher at £1.26m (FY23: £1.17m) and the adjusted
operating loss was £0.62m (FY23 adjusted operating loss of
£0.75m).
Net
finance expense
There is a gradual reduction in the
bank interest expense as we continue repaying our loans.
Taxation
Given the continuing economic
conditions, none of the losses carried forward are recognised in
deferred tax balances, consistent with the judgement made in
September 2023.
Dividends
The Board continues to believe that
during the current period of economic uncertainty a suspension in
dividend payments remains appropriate. As such, no interim
dividend is proposed.
Net
debt and financing
The Group ended the period with net
debt (being the net of cash and cash equivalents and the Group's
loans and borrowings, excluding right of use lease liabilities) of
£1.18m (FY23 £1.60m). Including £6.11m (FY23 £5.17m) arising
from IFRS 16 lease liabilities, the Group's net debt would be
£7.29m (FY23 £6.77m). Net debt has reduced as a result of the
trading inflows including a significant reduction in working
capital balances. Cash and cash equivalents at the period end were
£1.68m (FY23: £2.09m).
The Group's UK HSBC facilities
provided up to £3.5m (H2 23: £3.5m) of invoice financing facility
(subject to available accounts receivable balances). Group cash
headroom, being the sum of net cash at bank and residual invoice
financing capacity, was £3.47m (H2 23 £4.1m) at the period end. The
HSBC CBILS loan is being repaid quarterly, in accordance with its
agreed terms and is due to be fully repaid by July 2026. Maven
Capital Partners, providers of the MEIF loan, agreed in June 2024
to a revised repayment profile, being £0.25m in each of July
2024, December 2024 and July 2025 with the remaining £0.75m being
deferred until January 2026. The HSBC CBILS loan agreement contains
financial covenants which have been adhered to since they were
renegotiated in June 2024.
Capital expenditure
The Group invested, excluding IFRS16
additions , £0.10m (H2 23: £0.45m) in its operating facilities
during the period. The Group has planned further investment for
replacement of ageing equipment, as and where required, and
production performance enhancement. Over the coming twelve months,
this is expected to be up to £0.5m across the Group as we increase
our production capabilities for new volumes and new
products.
Employees
In the UK, we continue working with
a banked hours scheme to align surety of workers' pay against
volatile customer demand patterns.
Production pay rates have been
improved by more than 7.5% (linked to UK minimum wage increases)
and overtime rates have also been strengthened to improve net take
home pay, with pay banding and related multi-skilling also being
improved.
Productivity and teamwork have
improved, which has had a positive impact on quality, customer
service, and net cost in the factories. This has been
critically important during a period where the availability of
labour has become a key challenge for manufacturers.
In Germany and Sweden, we have also
worked hard to ensure excellent stable and committed
teams.
Going Concern
In approving this Interim Financial
Information, the Board has considered current and future trading
and profit and cash flow forecasts through to March 2027 and
assessed existing borrowings and available sources of finance.
Lender covenants and repayment profiles were renegotiated in June
2024 as noted above. The Group's liquidity remains healthy, with
cash headroom being in excess of £3.1m as at 31 October, shortly
prior to the reporting date.
The trading forecasts take into
consideration:
·
the current and expected demand schedules from the
Group's key automotive customers, changes in expected demand for
flooring products in Germany and the levels of enquiries for new
business;
·
the impact of current and future expected demand
levels for new vehicles, the migration to EVs and publicly
available forward looking market information on market sizes and
dynamics;
·
the current cost structure of the Group and an
allowance for known increases, for example in relation to
additional investment and resources required to fulfil new product
and customer sales, and various projects to improve efficiency in
the operational and procurement processes; and
·
the latest agreed lender repayment profiles
together with a consideration of the latest covenant
requirements.
The key sensitivities in the trading
forecasts are automotive revenue levels, end market vehicle sales
mix and the timing of orders placed by customers. These
sensitivities have been factored into the forecasts, and reasonable
contingency has also been modelled.
Having due regard to all the matters
described above, the Board has a reasonable expectation that the
Group will continue to have adequate resources to remain in
operation for at least 12 months after the release of this Interim
Financial Information. The Board has therefore concluded to adopt
the going concern basis in preparing this Interim Financial
Information.