Autins : Presentation of Interim Results to 31 March 2021

Autins Group plc

Interim Results for the six months ended

31 March 2021

30 June 2021

Autins Group plc

(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 results for the six months ended 31 March 2021.

Financial Summary

• Revenue increased by 3.7% to £13.71m (H1 20: £13.22m)
• Gross profit increased by 1.8% to £3.91m (H1 20: £3.84m)
• Gross margins decreased by 0.5% to 28.5% (H1 20: 29.0%)
• EBITDA including IFRS 16 adjustments increased by 66.2% to £1.18m (H1 20: £0.71m)
• Adjusted EBITDA1 of £0.66m (H1 20: EBITDA of £0.27m)
• Profit after tax of £0.01m (H1 20: loss of £0.64m)
• Earnings per share of 0.025p (H1 20: loss of 1.62p)
• Operating cashflow increased to £0.87m (H1 20: £0.62m)
• Net debt2 excluding IFRS16 lease liabilities improved to £1.84m (H1 20: £2.34m)

1. EBITDA adjusted for IFRS 16, is stated on a consistent basis to H1 20. The H1 20 measure is therefore stated before adding back £0.16m of non-recurring costs in respect of the change in CFO.
   2. Net debt is cash less bank overdrafts, loans, invoice discounting, hire purchase finance and right of use lease liabilities.

Operational Highlights

• Neptune sales continue to progress well with sales growing by 33%.
• 29 new projects won during H1 21, with on-going expected annual value of £3.9m.
• 46% of new business (£1.8m) has been won in Europe, 20% of all wins are in non-automotive applications.
• Germany sales grew by 81% to £3.9m (H1 20: £2.1m) with significant growth in the flooring business.
• OEM car production in H1 21 impacted initially by Covid-19 and latterly by global shortage of semi- conductors.
• Strong cash and working capital management actions have been taken. Cash and cash equivalents improved to £2.9m at the period end (H1 20 £1.9m) and cash headroom significantly improved to £6.1m (H1 20 £1.5m).

Post Period End

• Semi-conductorshortages continue to significantly suppress auto OEM production levels during Q3, despite the underlying growth in demand for new cars so that we expect H2 automotive revenue to be lower than H1.
• Neptune production continues to grow steadily with further new projects with DAF, Scania and office pods due to commence towards the end of the calendar year.
• The Company has engaged in constructive discussions with its lenders regarding covenant and headroom assessments. This has resulted in the Company securing a 3-year CBILS invoice finance
  extension facility with its primary bankers HSBC (which supports up to £0.47m of additional cash drawdown) and a waiver of the EBITDA covenant for 30th September 2021.

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Gareth Kaminski-Cook, Chief Executive, said:

"I am pleased to report that sales across the Group are up 3.7% compared to H1 20 and EBITDA including IFRS 16 adjustments increased by 66% to £1.18m. Growth has been driven by market share growth in Europe and in non-automotive sectors of flooring and commercial vehicles.

During Q2 and Q3, our sales have been significantly impacted by the well-publicisedsemi-conductor supply issues. However, the strong underlying demand for cars and reassuring statements from semiconductor manufacturers that they will begin to meet automotive demand during the summer suggests that we should start to see a recovery later this calendar year.

"In the meantime, we continue to successfully execute our strategy to diversify outside the UK and into new sectors. Sales in the flooring business more than doubled during H1 and by leveraging the unique qualities of our Neptune technology we have won 29 new projects in the first half, notably to supply new customers such as Volvo for the all-electric Polestar and Scania and DAF trucks in Sweden and Germany respectively.

"Despite the challenges posed to our auto customers by the global semi-conductor shortage and the likely impact on automotive revenues in H2, we remain positive on the outlook for the medium to long term."

For further information please contact:
Autins Group plc
Gareth Kaminski-Cook, Chief Executive	Via Newgate
Kamran Munir, CFO
N+1 Singer Advisory LLP	Tel: [phone]
(Nominated Adviser and Broker)
Mark Taylor / Asha Chotai
Newgate Communications	Tel: [phone]
(Financial PR)
Adam Lloyd
Tom Carnegie

About Autins

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.

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Overview

H1 21 showed a solid improvement compared to H1 20, with sales increasing through our German business and lower operating costs resulting in EBITDA increasing by £0.47m to £1.18m (H1 20: £0.71m).

The Neptune facility has continued to see increasing production and external sales volumes. With further growth anticipated because of recent contract wins, production capacity will need to be increased by c.30% in the short term and several capital projects are already underway with plans to add additional capacity, as required, over the next year.

A key objective of the Group's on-going operational improvement programme is to increase the flexibility of the business so that its cost base can be adjusted quickly when faced with volatile demand and customer shutdowns. During the period, additional incremental productivity increases, and value engineering initiatives were implemented. Overhead costs were also reduced with the relocation of our R&D facility to the head office in Rugby, which facilitated the release of the rented MIRA facility in Nuneaton.

Although gross profit increased in absolute value against H1 20, H1 21 gross margin reduced by 0.5% against H1 20. There was underlying improvement in materials, labour, and production costs. However, reduced UK manufacturing volumes reduced the absorption of fixed production costs which negatively affected gross margin percentage. Furlough working patterns remain an ongoing feature within the UK.

Germany has secured volume increases in both the flooring and automotive market, but Sweden experienced some volume losses with associated low levels of redundancies being implemented to mitigate the impact.

Revenue

Sales across the Group increased by 3.7% to £13.71m (H1 20: £13.22m) driven by market share growth in the automotive sector in Europe and growth in non-automotive sectors of flooring and commercial vehicles.

Sales through the European operations now account for 33% of Group turnover, up from 23% last year. Automotive sales declined by 8.3% to £11.5m, driven by reduced OEM production caused primarily by semi-conductor shortages and some cost reduction actions by the Group's major customer. Revenue in the UK decreased by 11% to £9.5m, with component revenue reducing by 3.5% and tooling reducing by 81% as the OEMs focused less on releasing new projects and more on cost cutting.

German automotive sales grew by 3.7% to £1.5m, whilst Sweden auto sales reduced by 16.2% to £0.9m.

It is pleasing to note that during H1 we began to supply directly to Volvo for the all-electric Polestar and the Swedish team has reached the late stage of negotiations to supply significant near-term volumes.

By leveraging the unique qualities of our Neptune technology, we have won 29 new projects in the first half year, notably to supply new customers such as Volvo for the all-electric Polestar and Scania and DAF trucks in Sweden and Germany respectively.

Non-auto sales grew by 283% to £2.4m, driven primarily by sales into flooring which grew year on year by 311.8% to £2.3m. In the UK we have won business with new customers in the workspace market of office pods. This is a nascent market set to grow over the coming years and for which the Neptune product is uniquely suitable for thin walls and roof spaces. Non-auto sales now count for 17% of Group turnover, up from 7% a year ago.

Sales concentration of our largest customer reduced from 50.5% last year to 46.2% in H1 21, driven primarily by the growing European flooring activities and depressed UK auto market. This should reduce further as new contracts to supply commercial vehicles and office pods start later this year, though we expect this will be partially offset by recovery of the UK auto market.

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Gross margin

The Group's component gross margin decreased to 28.5% (H1 20: 29.0%). Focus was maintained on further improving material buying and usage, supply chain costs, manufacturing efficiency and labour productivity to mitigate the impact of current market conditions. Increased utilisation of the Neptune line as noted above is also having a positive impact, with increased dilution of fixed labour and operational costs associated with that manufacturing facility. Lower fixed overhead absorption from reduced UK and Sweden sales volumes and lower pricing on some Germany products offset the improvements made.

EBITDA and operating profit

The reported H1 21 EBITDA of £1.18m (H1 20: EBITDA profit of £0.71m) and reported operating profit of

£0.15m (H1 20: loss of £0.78m) do not reflect any exceptional costs (H1 20: £0.16m). Excluding IFRS16

impacts, EBITDA for H1 21 is £0.66m (H1 20: EBITDA of £0.27m).

The reported operating profit is also stated after recognising £0.12m (H1 20: £0.12m) relating to amortisation arising on intangibles which were created at the Group's IPO.

Joint venture

The Group's share of joint venture activities relates solely to Indica Automotive, a UK based foam conversion business.

Turnover at Indica Automotive increased 0.7% to £1.47m (H1 20: £1.46m), with a profit after tax of

£0.21m (H1 20: £0.14m). The Group remains the largest customer of the joint venture, and the ratio of sales to the Group as a percentage of total sales has not changed significantly from H1 20.

Net finance expense

Net finance expense for the period marginally increased to £0.27m (H1 20: £0.26m) including IFRS 16 charges of £0.14m (H1 20 £0.15m). The interest element of hire purchase agreements is £0.01m (H1 20: £0.02m) with interest charged on bank borrowings of £0.13m (H1 20: £0.09m). This latter increase relates to the MEIF loan funding secured in January 2020 at 7.5% p.a.

Taxation

Given the continuing economic conditions, a relatively small proportion of the losses carried forward are recognised in deferred tax balances, consistent with the judgement made at September 2020. The net credit in the period arises as a result of a refund from an enhanced R&D claim made in respect of prior year expenditure.

We would expect the effective rate for full year profits to be lower than the headline rates due to both the utilisation of brought forward losses in the UK and Sweden as well as a degree of enhanced R&D claims. Germany is likely to move into a tax paying position as it has now largely utilised its losses brought forward against profits in FY20 and FY21 to date.

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 £1.84m (H1 20 £2.34m). Including £5.34m (H1 20 £5.68m) arising from IFRS 16 lease liabilities the Group's net debt would be £7.18m (H1 20 £8.02m). Net debt has continued to show a reduction with improved cash generation. Cash and cash equivalents at the period end were £2.9m (H1 20: £1.9m; FY20: £2.9m).

At 31 March 2021, the Group's UK HSBC facilities provided up to £6.0m (H1 20: £6.0m) of invoice

financing facility (subject to available accounts receivable balances) and £0.5m (H1 20: £0.5m) of asset finance facilities. At the end of the period, none of the invoice financing facility had been utilised (H1

1. £2.33m) with £0.4m used from the asset finance facility (H1 20: £0.4m, FY20: £0.4m). Group cash headroom significantly improved to £6.1m (H1 20 £1.5m).

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