TIDMRNO

RNS Number : 5150G

Renold PLC

16 November 2022

Renold plc

Interim results for the half year ended 30 September 2022

("Renold", the "Company" or, together with its subsidiaries, the "Group")

Strong performance, strategic chain acquisition and significant increase in earnings

Renold (AIM: RNO), a leading international supplier of industrial chains and related power transmission products, announces its interim results for the six month period ended 30 September 2022.

 
Financial summary                      Half year ended 
                                                                             Change % 
                                                  Restated(1)               (Constant 
                                 30 September    30 September 
 GBPm                                    2022            2021   Change %    currency) 
Revenue                                 116.3            95.3     +22.0%       +14.3% 
Adjusted operating profit(2)              9.6             7.2     +33.3%       +20.8% 
Return on sales(3)                       8.3%            7.5%     +80bps       +50bps 
Adjusted profit before tax(3)             7.3             5.2     +40.4% 
Net debt(4)                              34.0            13.9 
Adjusted earnings per share              2.7p            1.9p     +42.1% 
 
Additional statutory measures 
Operating profit                          8.8             8.7      +1.1% 
Profit before tax                         6.5             6.7     (3.0)% 
Basic earnings per share                 2.3p            2.6p    (11.5)% 
 
 

Financial highlights

-- Revenue up 22.0% (14.3% at constant exchange rates) to GBP116.3m driven by strong growth in Chain (2021: GBP95.3m)

-- Adjusted operating profit up 33.3% (20.8% at constant exchange rates) to GBP9.6m (2021: GBP7.2m)

-- Return on sales increased by 80bps, (50bps at constant exchange rates) to 8.3% (2021: 7.5%). Price increases offset input cost and supply chain challenges

-- Net debt as at 30 September 2022 GBP34.0m (1.2x rolling 12 month EBITDA), higher primarily due to EUR20.0m initial cash consideration for the acquisition of Industrias YUK, S.A.

   --      Adjusted EPS up 42.1% to 2.7p (2021: 1.9p) 
   --      IAS 19 pension deficit reduced by 29.6% to GBP61.3m (31 March 2022: GBP87.1m) 

Business highlights

-- Strong first half performance as markets continued to recover, despite cost inflation, economic uncertainty and global supply chain disruption

-- Group order intake in the period GBP121.3m, up 18.9%, excluding prior year long term military contract (11.0% at constant exchange rates)

-- Order book at 30 September 2022 GBP99.0m, continues at record high (30 September 2021: GBP72.1m)

-- Acquisition of Industrias YUK, S.A. ("YUK") for EUR24m, increases the Group's access to the Iberian Chain and wider European CVC markets. The integration process is well progressed and the business is performing ahead of expectations

-- Good progress on capital investment, productivity improvements and cost reduction programmes, accelerating the integration of Group-wide supply chain and increasing capabilities

(1) See Note 12 for details of the prior period restatements.

(2) See below for reconciliation of actual rate, constant exchange rate and adjusted figures.

(3) See Note 11 for definitions of adjusted measures and the differences to statutory measures.

(4) See Note 8 for a reconciliation of net debt which excludes lease liabilities.

Robert Purcell, Chief Executive of Renold plc, said:

" The strong trading momentum experienced in the second half of the last financial year has continued in the first half, with the Group continuing to successfully manage significant inflation and supply chain disruption, resulting in growing sales and record orders. Whilst we are mindful that global markets continue to be uncertain, with ongoing labour and energy cost inflation and supply chain challenges, the Group's trading momentum continues to be positive. The Group has record order books and the acquisition of YUK provides opportunities for synergies and further growth."

Reconciliation of reported, constant exchange rate and adjusted results

 
                                      Revenue             Operating profit            Earnings per 
                                                                                          share 
                               ---------------------  ------------------------  ------------------------ 
                                                                   Restated(1)                 Restated(1) 
                                       H1         H1          H1            H1          H1              H1 
                                  2022/23    2021/22     2022/23       2021/22     2022/23         2021/22 
                                     GBPm       GBPm        GBPm          GBPm       pence           pence 
-----------------------------  ----------  ---------  ----------  ------------  ----------  -------------- 
 Statutory at actual 
  exchange rates                    116.3       95.3         8.8           8.7         2.3             2.6 
 Adjust for non-recurring 
  items: 
 US PPP loan forgiveness                -          -           -         (1.7) 
 Dilapidation costs for 
  closed sites                          -          -           -           0.2 
 Acquisition costs                      -          -         0.6             - 
 Amortisation of acquired 
  intangible assets                     -          -         0.2             - 
-----------------------------  ----------  ---------  ----------  ------------  ----------  -------------- 
 Adjusted at actual exchange 
  rates                             116.3       95.3         9.6           7.2         2.7             1.9 
 Exchange impact                    (7.4)          -       (0.9)             - 
-----------------------------  ----------  ---------  ----------  ------------ 
 Adjusted at constant 
  exchange rates                    108.9       95.3         8.7           7.2 
-----------------------------  ----------  ---------  ----------  ------------ 
 
 

(1) See Note 12 for details of the prior period restatements

Investor Presentation

The Company will conduct a live presentation and Q&A session for investors at 5:30 pm GMT today, 16 November 2022. The presentation is open to all existing and potential shareholders. Those wishing to attend should register via the following link and they will be provided with log in details:

https://us02web.zoom.us/webinar/register/WN_6WUx953NTUmetFUprlFHSA

There will be the opportunity for participants to ask questions at the end of the presentation. Questions can also be emailed to renold@investor-focus.co.uk ahead of the presentation.

ENQUIRIES:

 
 Renold plc                            IFC Advisory Limited 
 Robert Purcell, Chief Executive       Tim Metcalfe 
 Jim Haughey, Group Finance Director   Graham Herring 
                                       renold@investor-focus.co.uk 
 
 0161 498 4500                         020 3934 6630 
 
 
 Nominated Adviser and Joint Broker   Joint Broker 
 Peel Hunt LLP                        F innCap Limited 
 Mike Bell                            Ed Frisby / Tim Harper (Corporate 
                                       Finance) 
 Ed Allsopp                           Andrew Burdis / Harriet Ward 
                                       (ECM) 
 
 020 7418 8900                        020 7220 0500 
 

Cautionary statement regarding forward-looking statements

Some of the information in this document may contain projections or other forward-looking statements regarding future events or the future financial performance of Renold plc and its subsidiaries. You can identify forward-looking statements by terms such as "expect", "believe", "anticipate", "estimate", "intend", "will", "could", "may" or "might", the negative of such terms or other similar expressions. Renold plc (the Company) wishes to caution you that these statements are only predictions and that actual events or results may differ materially. The Company does not intend to update these statements to reflect events and circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events. Many factors could cause the actual results to differ materially from those contained in projections or forward-looking statements of the Group, including among others, general economic conditions, the competitive environment as well as many other risks specifically related to the Group and its operations. Past performance of the Group cannot be relied on as a guide to future performance.

NOTES FOR EDITORS

Renold is a global leader in the manufacture of industrial chains and also manufactures a range of torque transmission products which are sold throughout the world to a broad range of original equipment manufacturers, distributors and end-users. The Company has a reputation for quality that is recognised worldwide. Its products are used in a wide variety of industries including manufacturing, transportation, energy, metals and mining.

Further information about Renold can be found at: www.renold.com

Chief Executive's statement

The Group has continued to successfully manage a period of sustained cost inflation and supply chain disruption. Materials, energy, labour and transportation costs have all increased substantially, however, selling price increases have been implemented, and margins have been robust. The Group expects to experience further cost pressures through the second half of the year but we are confident that these will again be managed successfully.

Renold continues to focus efforts on driving and optimising performance through identified projects, some requiring capital investment, targeting better operational efficiency, improved design and standardisation of products, better asset utilisation, more flexible working practices, and leveraging improved procurement strategies.

The Group performed well in the first half, delivering an increase in revenues of 22.0% to GBP116.3m (2021: GBP95.3m). At constant exchange rates, revenues increased 14.3%. Order intake continues to run ahead of sales, totalling GBP121.3m for the period. Excluding the impact of the GBP11.0m long term military contract announced on 13 July 2021, this represents an increase of 18.9% over the prior year equivalent period, or 11.0% at constant exchange rates.

Order books as at 30 September 2022 of GBP99.0m again represent a record high for the Group, and are 37.3% higher than the prior year equivalent; 24.3% at constant exchange rates.

Adjusted operating profit increased to GBP9.6m (2021: GBP7.2m, excluding the impact of non-recurring items, notably the benefit of US PPP loan forgiveness of GBP1.7m and GBP0.2m of costs relating to closed sites) with return on sales of 8.3% (2021: 7.5%), driven by productivity enhancements and the benefit of increased volumes and pricing. Statutory operating profit increased to GBP8.8m (2021: GBP8.7m), with statutory operating profit margin for the period of 7.6% (2021: 9.1%).

Net debt increased during the period by GBP20.2m to 34.0m (31 March 2022: GBP13.8m) due to the acquisition of Industrias YUK, S.A. and an investment in inventory.

M&A

On 3 August 2022 the Group acquired Industrias YUK, S.A. ("YUK") based in Valencia, Spain, a manufacturer and distributor of high quality conveyor chain ("CVC") and ancillary products.

The acquisition will allow Renold to leverage YUK's strong CVC market position in Spain and Portugal to expand sales of the Group's existing range of premium European transmission chain ("TRC") products, and enable sales of YUK products throughout Renold's extensive European sales network. Opportunities exist for significant manufacturing synergies between YUK and Renold's current international operations.

During the period in which Renold has owned YUK, which includes the August holiday period, YUK has traded ahead of our initial expectations. Since acquisition YUK recorded sales of GBP2.2m, operating profit of GBP0.2m, and an initial return on sales of 9.1%.

The initial cash consideration was EUR20.0 million, with two deferred cash payments of EUR2.0 million each, payable 12 months and 24 months from the date of acquisition.

There remains an active pipeline of acquisition opportunities which the Group continues to review as part of its growth strategy. The Board adopts a disciplined approach to M&A focussed on complementary, earnings enhancing acquisitions to supplement organic growth, whilst maintaining a conservative level of leverage.

Business and financial review

 
                                                   Adjusted operating 
                                  Revenue                profit              Return on sales 
-------------------------  -------------------  -----------------------  ----------------------- 
                                                            Restated(1)              Restated(1) 
                             2022/23   2021/22    2022/23       2021/22    2022/23       2022/21 
  Six month period              GBPm      GBPm       GBPm          GBPm          %             % 
 Chain                          89.2      76.6       11.7           9.2       13.1          12.0 
 Torque Transmission            21.5      20.6        1.4           1.8        6.5           8.7 
 Head office costs/ 
  Inter segment sales 
  elimination                  (1.8)     (1.9)      (4.4)         (3.8)          -             - 
-------------------------  ---------  --------  ---------  ------------  ---------  ------------ 
 Total Adjusted at 
  constant rates               108.9      95.3        8.7           7.2        8.0           7.5 
 Impact of foreign 
  exchange                       7.4         -        0.9             - 
-------------------------  ---------  --------  ---------  ------------  ---------  ------------ 
 Total Adjusted at 
  actual rates                 116.3      95.3        9.6           7.2        8.3           7.5 
 Adjusting items: 
 US PPP loan forgiveness           -         -          -           1.7 
 Dilapidation costs 
  for closed sites                 -         -          -         (0.2) 
 Amortisation of 
  acquired intangibles             -         -      (0.2)             - 
 Acquisition costs                 -         -      (0.6)             - 
-------------------------  ---------  --------  ---------  ------------  ---------  ------------ 
 Statutory                     116.3      95.3        8.8           8.7        7.6           9.1 
-------------------------  ---------  --------  ---------  ------------  ---------  ------------ 
 

(1) See Note 12 for details of the prior period restatements

Chain

The Chain division's revenue at constant exchange rates increased by 16.4% (GBP12.6m) to GBP89.2m.

Revenue increased across all regions:

-- Europe increased turnover 8.6% at constant currency rates. Demand was robust driven by strong OEM and end user activity. The integration of the YUK business is proceeding as planned with the Group already starting to substitute externally sourced products, sell increased CVC product throughout Europe, and increase TRC sales in Spain.

-- The Americas increased constant currency revenues by 19.2%, driven by the need to recover costs through pricing, new aftermarket business in transmission chain and strong demand for capital equipment in the food processing, ethanol and mining industries.

-- Australasian revenues increased by 27.6% at constant exchange rates, as the business continued to benefit from execution of its growth strategy, targeting the move in Australia to more domestically manufactured goods, continuing strong demand from the Australian mining sector and notable increases in activity in both Indonesia and Malaysia. A new machining centre was installed in the Melbourne factory and progress was made in the development of chains for the cement and coal industries.

-- India achieved first half constant currency revenue growth of 13.9% as activity levels recovered. An expansion of the domestic dealer network and an increase in the number of local warehouses is underway, to enhance geographic coverage and service.

-- Revenue in China was up 15.4% (at constant exchange rates) as a result of higher demand from Europe and the USA. Significant progress continues to be made in enhancing the performance of the factory in Jintan. As a result of a programme of standardisation and improvement projects, including the commissioning of new equipment, the factory is increasingly able to manufacture higher specification products.

Divisional adjusted operating profit at constant exchange rates was GBP11.7m, GBP2.5m higher than the prior year. Return on sales increased by 110bps to 13.1% (2021: 12.0%).

Order intake at constant exchange rates increased by 12.4% to GBP93.7m, resulting in a book to bill (ratio of orders to sales) for the first half of the year of 105.0% (2021: 108.7%).

Torque Transmission

Divisional revenues at constant exchange rates of GBP21.5m were GBP0.9m higher than in the prior year. This was due to increased demand for couplings in Australia and further recovery in North America, along with increased activity in the Gears business.

However, timing of the long-term military contracts resulted in some temporary reduction in revenue. Additionally, a number of key customers with long term supply arrangements in Eastern Europe were impacted by the war in Ukraine.

Divisional operating profit at constant currency reduced by GBP0.4m to GBP1.4m due to the timing of the military contract, and a weaker product mix between higher margin spare parts and lower margin OEM business.

Momentum in this division is expected to improve in the second half of the year, underpinned by an increase of 27.1% in order intake compared to the prior year (at constant exchange rates), excluding the benefit of the latest military contract.

Cash flow and net debt

 
                                                             Restated(1) 
                                                   2022/23       2021/22 
 Half year to 30 September                            GBPm          GBPm 
------------------------------------------------  --------  ------------ 
 Adjusted operating profit                             9.6           7.2 
 Add back: Depreciation and amortisation               4.9           4.7 
             Share-based payments                      0.5           0.5 
------------------------------------------------  --------  ------------ 
 Adjusted EBITDA                                      15.0          12.4 
 Movement in working capital                         (7.6)             - 
 Net capital expenditure                             (2.2)         (1.3) 
 Operating cash flow                                   5.2          11.1 
 Income taxes                                        (1.3)         (1.3) 
 Pensions cash costs                                 (3.1)         (2.4) 
 Repayment of principal under lease liabilities      (1.2)         (1.4) 
 Financing costs paid                                (1.3)         (0.8) 
 Consideration paid for acquisition(2)              (17.8)         (0.3) 
 Own shares purchased                                    -         (1.8) 
 US PPP loan forgiveness                                 -           1.7 
 Other movements                                     (0.7)         (0.3) 
------------------------------------------------  --------  ------------ 
 Change in net debt                                 (20.2)           4.5 
 Closing net debt                                   (34.0)        (13.9) 
------------------------------------------------  --------  ------------ 
 

(1) See Note 12 for details of the prior period restatements

(2) Includes GBP0.1m deferred consideration in relation to the acquisition of the conveyor chain business of Brooks Ltd in the prior year and GBP0.6m of acquisition costs for Industrias YUK, S.A.

Net Debt increased during the period by GBP20.2m to GBP34.0m, largely due to the acquisition of Industrias YUK, S.A. for cash consideration of EUR20.0m in the period, along with associated costs of GBP0.6m.

Working capital increased during the period. Inflation has increased inventory value, though this was partly offset by a corresponding increase in creditors. In addition, stocks of raw materials and finished goods have been temporarily increased in Germany in case energy supplies are disrupted this winter. A focus on customer terms and collections has seen debtor days improve, which largely offsets the effect of increased selling prices on receivables.

Further inflationary pressures on materials, together with a continuation of extended shipment times in supplying product between operating sites, will result in the increased levels of inventory being maintained in the second half year. This coupled with higher input prices will result in modest further increases in working capital.

Net capital expenditure was GBP2.2m representing an increase over the prior half year, but remained below historic levels as delays in the shipment of capital equipment continue. Strategic investments in production capabilities, including improved heat treatment and a roll-out of a standardised IT system continued and are expected to gather pace during the second half of the year.

Corporation tax payments on account (GBP1.3m) were at normal levels.

Cash financing costs increased in the half year, due both to the additional borrowing resulting from the YUK acquisition, and the increase in interest rates over the period. Further increases in interest rates are expected within the second half of the year.

Pensions

The Group has a number of closed defined benefit pension schemes (accounted for in accordance with IAS 19 'Employee Benefits'). During the pandemic, the Group negotiated a GBP2.8m one-off deferment in contributions with the UK pension scheme trustees. Contributions have now returned to normal levels, but in addition, the first of five annual deferred payments of c.GBP0.6m was made.

As a result of arrangements agreed with the UK pension scheme trustees and approved by the Pension Regulator, pension cash costs are known and stable, though increasing by RPI capped at 5%.

The Group's IAS 19 deficit decreased from GBP100.3m at 30 September 2021 to GBP61.3m at 30 September 2022.

 
                                        At 30 September 2022                At 31 March 2022 
                                                Overseas                          Overseas 
                                   UK schemes    schemes     Total   UK schemes    schemes       Total 
                                         GBPm       GBPm      GBPm         GBPm       GBPm        GBPm 
--------------------------------  -----------  ---------  --------  -----------  ---------  ---------- 
 IAS 19 retirement benefit 
  obligations                          (41.2)     (20.1)    (61.3)       (64.1)     (23.0)      (87.1) 
 Net deferred tax asset                   2.3        2.4       4.7          7.8        3.2        11.0 
--------------------------------  -----------  ---------  --------  -----------  ---------  ---------- 
 Retirement benefit obligations 
  net of deferred tax asset            (38.9)     (17.7)    (56.6)       (56.3)     (19.8)      (76.1) 
--------------------------------  -----------  ---------  --------  -----------  ---------  ---------- 
 
 

The yield on corporate bonds increased sharply during the period. Consequently the discount rates used for the UK scheme rose from 2.75% to 5.45%, and resulted in a net reduction in UK pension liabilities of GBP22.9m. The long term expectation for CPI inflation remained broadly stable at 3.20% (3.25% prior year). Asset returns fell sharply during the period as both the value of gilts and equities fell. The scheme has insurance assets linked directly to the benefits of certain scheme members. As the liability to these members reduces, for example with an increase in discount rate, so does the value of the corresponding insurance asset.

Pension liabilities in non-UK schemes reduced by GBP2.9m to GBP20.1m, due in the main to an increase in discount rates.

The net financing expense (a non-cash item) was GBP1.0m (2021: GBP0.9m).

Dividend

In line with recent policy based on enhancing Group performance through focussed investment in new equipment and earnings enhancing acquisitions the Board has decided not to declare an interim dividend. The dividend policy will remain under review as margin and cash flow performance continues to develop.

Summary

Demand in the first half was strong, showing a good recovery as the worst effects of the pandemic receded. Whilst this performance is expected to continue, supported by the record order book at the period end, the widely reported challenging global market and supply chain conditions are continuing, with significant inflationary trends being experienced, particularly with respect to materials, transport and energy costs. The Group is working to mitigate these headwinds as far as possible and it enjoys significant geographic, customer and sector diversity. With the Group benefiting from the strategic initiatives previously implemented, we are well placed for the future, with a robust business that is well positioned for the coming period.

Going concern

The interim condensed consolidated financial statements have been prepared on a going concern basis. In determining the appropriate basis of preparation of the financial statements, the Directors are required to consider whether the Group can continue in operational existence for the foreseeable future.

The ongoing macro-economic uncertainty, together with the impact of the war in Ukraine and the ongoing impact of Covid-19, alongside the continued improvement in the half year trading performance of the Group have been considered as part of the adoption of the going concern basis. The Group continues to closely monitor operating costs, and capital expenditure and other cash demands are being managed carefully.

As part of its assessment, the Board has considered downside scenarios that reflect the current uncertainty in the global economy, including significant material and energy supply issues, transport delays, and continuing inflationary pressures.

The Directors believe that the Group is well placed to manage its business risks and, after making enquiries including a review of forecasts and predictions, taking account of reasonably possible changes in trading performances and considering the existing banking facilities, including the available liquidity and covenant structure, have a reasonable expectation that the Group has adequate resources to continue in operational existence for the 12 months following the date of approval of the interim financial statements. Accordingly, they continue to adopt the going concern basis in preparing the consolidated financial statements.

Risks and uncertainties

The Directors have reviewed the principal risks and uncertainties of the Group. The Directors consider that the principal risks and uncertainties of the Group published in the Annual Report for the year ended 31 March 2022 remain appropriate. The risks and associated mitigation processes can be found on pages 48-55 of the 2022 Annual Report, which is available at www.renold.com.

The risks referred to and which could have a material impact on the Group's performance for the remainder of the current financial year relate to:

-- Macroeconomic and geopolitical volatility, including potential energy supply disruption in Germany;

   --      Strategy execution; 
   --      Corporate transactions / business development; 
   --      Health and safety in the workplace; 
   --      Security and effective deployment and utilisation of IT systems; 
   --      Prolonged loss of a major manufacturing site; 
   --      People and change; 
   --      Liquidity, foreign exchange and banking arrangements; 
   --      Pension deficit; and 

Legal, financial and regulatory compliance.

Responsibility statement

The Directors confirm that to the best of their knowledge:

-- the condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting;

-- the interim management report includes a fair review of the information required by DTR 4.2.7R (indication of important events and their impact during the first six months of the financial year and description of principal risks and uncertainties for the remaining six months of the financial year); and

-- the interim management report includes a fair review of the information required by DTR 4.2.8R (disclosure of related parties' transactions and changes therein).

The Directors of Renold plc are listed in the Annual Report for the year ended 31 March 2022. A list of current Directors is maintained on the Group website at www.renold.com.

By order of the Board

   Robert Purcell                                         Jim Haughey 
   Chief Executive                                       Group Finance Director 
   16 November 2022                                 16 November 2022 

Condensed consolidated income statement

for the six months ended 30 September 2022

 
                                                                 Restated(2) 
                                                                  First half     Full year 
                                                                     2021/22       2021/22 
                                                        First    (unaudited)     (audited) 
                                                 half 2022/23 
                                                  (unaudited) 
                                         Note            GBPm           GBPm          GBPm 
--------------------------------------  -----  --------------  -------------  ------------ 
 Revenue                                  3             116.3           95.3         195.2 
 Operating costs                                      (107.5)         (86.6)       (179.0) 
--------------------------------------  -----  --------------  -------------  ------------ 
 Operating profit                                         8.8            8.7          16.2 
--------------------------------------  -----  --------------  -------------  ------------ 
 
 Net financing costs                      4             (2.3)          (2.0)         (3.8) 
--------------------------------------  -----  --------------  -------------  ------------ 
 Profit before tax                                        6.5            6.7          12.4 
 Taxation                                 5             (1.7)          (1.1)         (2.2) 
--------------------------------------  -----  --------------  -------------  ------------ 
 Profit for the period                                    4.8            5.6          10.2 
--------------------------------------  -----  --------------  -------------  ------------ 
 
 Earnings per share                       6 
 Basic                                                   2.3p           2.6p          4.7p 
 Diluted                                                 2.1p           2.4p          4.4p 
 
 Basic adjusted(1) earnings per share                    2.7p           1.9p          4.3p 
 Diluted adjusted earnings per share                     2.4p           1.8p          4.0p 
--------------------------------------  -----  --------------  -------------  ------------ 
 

(1) Adjusted: In addition to statutory reporting, the Group reports certain financial metrics on an adjusted basis. Definitions of adjusted measures and information about the differences to statutory metrics are provided in Note 11 to the financial statements.

(2) See Note 12 for details of the prior period restatements.

All results are from continuing operations

Condensed consolidated statement of comprehensive income

for the six months ended 30 September 2022

 
                                                                    Restated(1) 
                                                                     First half     Full year 
                                                                        2021/22       2021/22 
                                                           First    (unaudited)     (audited) 
                                                    half 2022/23 
                                                     (unaudited) 
                                                            GBPm           GBPm          GBPm 
-------------------------------------------  ---  --------------  -------------  ------------ 
 Profit for the period                                       4.8            5.6          10.2 
 Items that may be reclassified to 
  the income statement in subsequent 
  periods: 
 Exchange differences on translation 
  of foreign operations                                      9.3            1.1           3.2 
 Loss on hedges of the net investment 
  in foreign operations                                    (1.2)          (0.1)         (0.3) 
 Cash flow hedges: 
  Fair value loss arising on cash flow 
   hedges during the period                                (1.4)          (0.3)         (0.5) 
  Less: Cumulative gain arising on cash 
   flow hedges reclassified 
   to profit and loss                                        0.7            0.1           0.1 
 Income tax relating to items that 
  may be reclassified subsequently to 
  profit or loss                                             0.2            0.1           0.1 
------------------------------------------------  --------------  -------------  ------------ 
                                                             7.6            0.9           2.6 
 -----------------------------------------------  --------------  -------------  ------------ 
 Items not to be reclassified to the 
  income statement in subsequent periods: 
 Re-measurement gains on retirement 
  benefit obligations                                       24.7            1.0          12.3 
 Tax on re-measurement gains on retirement 
  benefit obligations - excluding impact 
  of statutory rate change                                 (6.4)          (2.1)         (3.1) 
 Effect of changes in statutory tax 
  rate on deferred tax assets                                  -            4.0           2.3 
------------------------------------------------  --------------  -------------  ------------ 
                                                            18.3            2.9          11.5 
 -----------------------------------------------  --------------  -------------  ------------ 
 Other comprehensive income for the 
  period, net of tax                                        25.9            3.8          14.1 
------------------------------------------------  --------------  -------------  ------------ 
 Total comprehensive income for the 
  period, net of tax                                        30.7            9.4          24.3 
------------------------------------------------  --------------  -------------  ------------ 
 

(1) See Note 12 for details of the prior period restatements.

Condensed consolidated balance sheet

as at 30 September 2022

 
                                                                 Restated(1)     31 March 
                                                30 September    30 September 
                                                        2022            2021         2022 
                                                 (unaudited)     (unaudited)    (audited) 
                                        Note            GBPm            GBPm         GBPm 
-------------------------------------  -----  --------------  --------------  ----------- 
 Assets 
  Non-current assets 
 Goodwill                                               30.0            22.2         22.7 
 Other intangible fixed assets                          10.3             5.3          5.1 
 Property, plant and equipment                          57.3            47.0         49.3 
 Right-of-use assets                                    17.6            10.8          8.0 
 Deferred tax assets                                    13.3            17.7         15.4 
                                                       128.5           103.0        100.5 
-------------------------------------  -----  --------------  --------------  ----------- 
 Current assets 
 Inventories                                            70.8            44.7         48.4 
 Trade and other receivables                            43.5            37.8         35.7 
 Current tax                                             0.1             0.1            - 
 Derivative financial assets                             0.1               -            - 
 Cash and cash equivalents                 8            15.7            11.5         10.5 
-------------------------------------  -----  --------------  --------------  ----------- 
                                                       130.2            94.1         94.6 
-------------------------------------  -----  --------------  --------------  ----------- 
 Total assets                                          258.7           197.1        195.1 
-------------------------------------  -----  --------------  --------------  ----------- 
 Liabilities 
 Current liabilities 
 Borrowings                                8           (2.9)           (0.1)        (1.0) 
 Trade and other payables                             (63.7)          (45.5)       (48.5) 
 Lease liabilities                                     (2.6)           (2.2)        (2.8) 
 Current tax                                           (3.2)           (2.9)        (2.8) 
 Derivative financial liabilities                      (1.5)           (0.3)        (0.5) 
 Provisions                                                -           (0.2)        (0.2) 
-------------------------------------  -----  --------------  --------------  ----------- 
                                                      (73.9)          (51.2)       (55.8) 
-------------------------------------  -----  --------------  --------------  ----------- 
 Net current assets                                     56.3            42.9         38.8 
-------------------------------------  -----  --------------  --------------  ----------- 
 Non-current liabilities 
 Borrowings                                8          (46.3)          (24.8)       (22.8) 
 Preference stock                          8           (0.5)           (0.5)        (0.5) 
 Trade and other payables                              (6.8)           (5.7)        (4.7) 
 Lease liabilities                                    (18.8)          (13.3)        (9.2) 
 Deferred tax liabilities                             (10.1)           (4.2)        (5.4) 
 Retirement benefit obligations            7          (61.3)         (100.3)       (87.1) 
 Provisions                                            (4.0)           (3.7)        (3.8) 
                                                     (147.8)         (152.5)      (133.5) 
-------------------------------------  -----  --------------  --------------  ----------- 
 Total liabilities                                   (221.7)         (203.7)      (189.3) 
-------------------------------------  -----  --------------  --------------  ----------- 
 Net assets/(liabilities)                               37.0           (6.6)          5.8 
-------------------------------------  -----  --------------  --------------  ----------- 
 Equity 
 Issued share capital                      9            11.3            11.3         11.3 
 Currency translation reserve                           18.1             7.9          9.8 
 Other reserves                                        (6.1)           (2.1)        (5.4) 
 Retained earnings/(deficit)                            13.7          (23.7)        (9.9) 
-------------------------------------  -----  --------------  --------------  ----------- 
 Total shareholders' funds/(deficit)                    37.0           (6.6)          5.8 
-------------------------------------  -----  --------------  --------------  ----------- 
 

(1) See Note 12 for details of the prior period restatements.

Condensed consolidated statement of changes in equity

for the six months ended 30 September 2022

 
                          Share              Restated(1)                                                   Restated(1) 
                        capital      Share      Retained       Currency       Capital                            Total 
                          (Note    premium      earnings    translation    redemption       Other        shareholders' 
                             9)    account    /(deficit)        reserve       reserve    reserves      funds/(deficit) 
                           GBPm       GBPm          GBPm           GBPm          GBPm        GBPm                 GBPm 
--------------------  ---------  ---------  ------------  -------------  ------------  ----------  ------------------- 
 At 1 April 2021           11.3       30.1        (78.2)            6.8          15.4       (0.1)               (14.7) 
 Profit for the year          -          -          10.2              -             -           -                 10.2 
 Other comprehensive 
  income/(expense)            -          -          11.5            3.0             -       (0.4)                 14.1 
--------------------  ---------  ---------  ------------  -------------  ------------  ----------  ------------------- 
 Total comprehensive 
  income/(expense) 
  for the year                -          -          21.7            3.0             -       (0.4)                 24.3 
 Own shares 
  purchased                   -          -             -              -             -       (4.9)                (4.9) 
 Capital 
  reorganisation              -     (30.1)          45.5              -        (15.4)           -                    - 
 Share-based 
  payments                    -          -           1.1              -             -           -                  1.1 
--------------------  ---------  ---------  ------------  -------------  ------------  ----------  ------------------- 
 At 31 March 2022          11.3          -         (9.9)            9.8             -       (5.4)                  5.8 
 Profit for the 
  period                      -          -           4.8              -             -           -                  4.8 
 Other comprehensive 
  income/(expense)            -          -          18.3            8.3             -       (0.7)                 25.9 
--------------------  ---------  ---------  ------------  -------------  ------------  ----------  ------------------- 
 Total comprehensive 
  income/(expense) 
  for the period              -          -          23.1            8.3             -       (0.7)                 30.7 
 Share-based 
  payments                    -          -           0.5              -             -           -                  0.5 
 At 30 September 
  2022                     11.3          -          13.7           18.1             -       (6.1)                 37.0 
--------------------  ---------  ---------  ------------  -------------  ------------  ----------  ------------------- 
 At 1 April 2021           11.3       30.1        (78.2)            6.8          15.4       (0.1)               (14.7) 
 Profit for the 
  period                      -          -           5.6              -             -           -                  5.6 
 Other comprehensive 
  income/(expense)            -          -           2.9            1.1             -       (0.2)                  3.8 
--------------------  ---------  ---------  ------------  -------------  ------------  ----------  ------------------- 
 Total comprehensive 
  income/(expense) 
  for the period              -          -           8.5            1.1             -       (0.2)                  9.4 
 Own shares 
  purchased                   -          -             -              -             -       (1.8)                (1.8) 
 Capital 
  reorganisation              -     (30.1)          45.5              -        (15.4)           -                    - 
 Share-based 
  payments                    -          -           0.5              -             -           -                  0.5 
--------------------  ---------  ---------  ------------  -------------  ------------  ----------  ------------------- 
 At 30 September 
  2021 (Restated)(1)       11.3          -        (23.7)            7.9             -       (2.1)                (6.6) 
--------------------  ---------  ---------  ------------  -------------  ------------  ----------  ------------------- 
 

(1) See Note 12 for details of the prior period restatements.

Included in retained earnings is GBP2.4m (31 March 2022: GBP1.9m) relating to a share option reserve.

The other reserves are stated after deducting GBP4.9m (31 March 2022: GBP4.9m) relating to shares held in the Renold plc Employee Benefit Trust. The Renold Employee Benefit Trust holds Renold plc shares and satisfies awards made under various employee incentive schemes.

At 30 September 2022 the Renold Employee Benefit Trust held 18,422,509 (31 March 2022: 18,422,509) ordinary shares of 5p each and, following recommendations by the employer, are provisionally allocated to satisfy awards under employee incentive schemes. At 30 September 2022 the market value of these shares was GBP4.2m (31 March 2022: GBP3.7m).

Condensed consolidated statement of cash flows

for the six months ended 30 September 2022

 
                                                      First 
                                                       half     First half 
                                                                              Full year 
                                                    2022/23        2021/22      2021/22 
                                                (unaudited)    (unaudited)    (audited) 
                                                       GBPm           GBPm         GBPm 
-------------------------------------------  --------------  -------------  ----------- 
 Cash flows from operating activities 
 Cash generated by operations (Note 
  8)                                                    3.7           10.1         21.0 
 Income taxes paid                                    (1.3)          (1.3)        (1.7) 
-------------------------------------------  --------------  -------------  ----------- 
 Net cash flows from operating activities               2.4            8.8         19.3 
-------------------------------------------  --------------  -------------  ----------- 
 Cash flows from investing activities 
 Proceeds from property disposals                       0.3            0.1          0.2 
 Purchase of property, plant and equipment            (1.9)          (0.8)        (4.1) 
 Purchase of intangible assets                        (0.6)          (0.6)        (1.2) 
 Consideration paid for acquisitions                 (17.2)          (0.3)        (0.5) 
-------------------------------------------  --------------  -------------  ----------- 
 Net cash flows from investing activities            (19.4)          (1.6)        (5.6) 
-------------------------------------------  --------------  -------------  ----------- 
 Cash flows from financing activities 
 Repayment of principal under lease 
  liabilities                                         (1.2)          (1.4)        (4.2) 
 Financing costs paid                                 (1.1)          (0.8)        (1.5) 
 Own shares purchased                                     -          (1.8)        (4.9) 
 Proceeds from borrowings                              23.3              -          4.7 
 Repayment of borrowings                              (1.2)          (9.2)       (16.0) 
-------------------------------------------  --------------  -------------  ----------- 
 Net cash flows from financing activities              19.8         (13.2)       (21.9) 
-------------------------------------------  --------------  -------------  ----------- 
 Net increase/(decrease) in cash 
  and cash equivalents                                  2.8          (6.0)        (8.2) 
 Net cash and cash equivalents at 
  beginning of period                                   9.5           17.3         17.3 
 Effects of exchange rate changes                       0.5          (0.1)          0.4 
-------------------------------------------  --------------  -------------  ----------- 
 Net cash and cash equivalents at 
  end of period                                        12.8           11.2          9.5 
-------------------------------------------  --------------  -------------  ----------- 
 

Notes to the interim condensed consolidated financial statements

   1.   Corporate information 

The interim condensed consolidated financial statements for the six months ended 30 September 2022 were approved by the Board on 16 November 2022. These statements have not been audited or reviewed by the Group's auditor pursuant to the Auditing Practices Board guidance on the Review of Interim Financial Information.

Renold plc is a limited liability company, incorporated and registered under the laws of England and Wales, whose shares are publicly traded. The principal activities of the Company and its subsidiaries are described in Note 3.

These interim condensed consolidated financial statements do not constitute statutory accounts of the Group within the meaning of Section 434 of the Companies Act 2006. The statutory accounts for the year ended 31 March 2022 have been filed with the Registrar of Companies. The auditor's report on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under Section 498(2) or Section 498(3) of the Companies Act 2006.

   2.   Accounting policies 

Basis of preparation

The interim condensed consolidated financial statements for the six months ended 30 September 2022 have been prepared in accordance with the UK adopted International Accounting Standard 34, 'Interim financial reporting' and the Disclosure Guidance and Transparency Rules sourcebook of the UK's Financial Conduct Authority (FCA).

These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements for the year ended 31 March 2022, which were prepared in accordance with UK-adopted international accounting standards and with the requirements of the Companies Act 2006 as applicable to companies reporting under these standards.

The accounting policies, presentation and methods of computation applied by the Group in these interim condensed consolidated financial statements are the same as those applied in the Group's latest audited annual consolidated financial statements for the year ended 31 March 2022, except as noted below.

The excess of the consideration transferred, the amount of any non-controlling interest and the acquisition date fair value of any previously held equity interest in the acquired entity as compared with the Group's share of the identifiable net assets are recognised as goodwill. Where the Group's share of identifiable net assets acquired exceeds the total consideration transferred, a gain from a bargain purchase is recognised immediately in the income statement after the fair values initially determined have been reassessed.

New and revised accounting standards adopted by the Group

During the period, the International Accounting Standards Board and International Financial Reporting Interpretations Committee have issued the following standards, amendments and interpretations, which are considered relevant to the Group. Their adoption has not had any significant impact on the amounts or disclosures reported in these financial statements.

   --      Amendments to IAS 16 (Property, Plant and Equipment - Proceeds before Intended Use) 
   --      Annual Improvements to IFRS 2018-2020 

-- Conceptual Framework (Amendments to References to the Conceptual Framework in IFRS Standards)

   --      Amendments to IAS 37 (Onerous contracts - Cost of fulfilling a contract) 

New and revised accounting standards and interpretations which were in issue but were not yet effective and have not been adopted early by the Group

The IASB published a number of amendments to IFRSs, new standards and interpretations which are not yet effective, and of which some have been endorsed for use in the EU. An impact assessment has been performed for each of these, with no significant financial impact being identified for the consolidated financial statements of the Group and the separate financial statements of Renold plc. The amendments, new standards and interpretations will be adopted in accordance with their effective dates.

-- Applying IFRS 9 'Financial Instruments' with IFRS 4 'Insurance Contracts' (Amendments to IFRS 4)

   --      Amendments to IAS 1 (Classification of Liabilities as Current or Non-Current) 
   --      IFRS 17 'Insurance Contracts' 
   --      Amendments to IAS 1 and IFRS Practice Statement 2 (Disclosure of accounting policies) 

-- Amendments to IAS 12 (Deferred Tax related to Assets and Liabilities arising from a single transaction)

   --      Amendments to IAS 8 (Definition of Accounting Estimates) 
   --      Lease Liability in a Sale and Leaseback (Amendments to IFRS 16) 

Significant accounting judgements, estimates and assumptions

In the course of preparing these interim condensed consolidated financial statements, no judgements have been made in the process of applying the Group's accounting policies that have had a significant effect on the amounts recognised in the financial statements, other than those involving estimation uncertainty. The key sources of estimation uncertainty are those which applied in the annual consolidated financial statements for the year ended 31 March 2022, namely:

   --      Taxation 
   --      Retirement benefit obligations 
   --      Right-of-use assets 
   --      Inventory valuation 
   --      Impairment of non-financial assets 

Financial risk management

The Group's financial risk management objectives and policies are consistent with those disclosed in the consolidated financial statements for the year ended 31 March 2022.

   3.   Segmental information 

For management purposes, the Group is organised into two operating segments according to the nature of their products and services and these are considered by the Directors to be the reportable operating segments of Renold plc as shown below:

-- The Chain segment manufactures and sells power transmission and conveyor chain and also includes sales of torque transmission products through Chain National Sales Companies (NSCs); and

-- The Torque Transmission segment manufactures and sells torque transmission products, such as gearboxes and couplings .

No operating segments have been aggregated to form the above reportable segments.

The Chief Operating Decision Maker (CODM) for the purposes of IFRS 8 'Operating Segments' is considered to be the Board of Directors of Renold plc. Management monitor the results of the separate reportable operating segments based on operating profit and loss which is measured consistently with operating profit and loss in the consolidated financial statements. The same segmental basis applies to decisions about resource allocation. Disclosure has not been included in respect of the operating assets of each segment as they are not reported to the CODM on a regular basis. However, Group net financing costs, retirement benefit obligations and income taxes are managed on a Group basis and therefore are not allocated to operating segments. Transfer prices between operating segments are on an arm's length basis in a manner similar to transactions with third parties.

The segment results for the period ended 30 September 2022 were as follows:

 
                                                                                Head 
                                                                              office 
                                                          Torque            costs(1) 
   Period ended 30 September            Chain(2)    Transmission    and eliminations   Consolidated 
   2022                                     GBPm            GBPm                GBPm           GBPm 
-------------------------------------  ---------  --------------  ------------------  ------------- 
 Revenue 
 External customer - transferred 
  at a point in time                        94.7            21.0                   -          115.7 
 External customer - transferred 
  over time                                    -             0.6                   -            0.6 
 Inter-segment                               0.4             1.4               (1.8)              - 
-------------------------------------  ---------  --------------  ------------------  ------------- 
 Total revenue                              95.1            23.0               (1.8)          116.3 
-------------------------------------  ---------  --------------  ------------------  ------------- 
 Operating profit/(loss)                    12.3             1.5               (5.0)            8.8 
 Financing costs                                                                              (2.3) 
-------------------------------------  ---------  --------------  ------------------  ------------- 
 Profit before tax                                                                              6.5 
 Taxation                                                                                     (1.7) 
 Profit after tax                                                                               4.8 
-------------------------------------  ---------  --------------  ------------------  ------------- 
 
 Other disclosures 
 Working capital                            49.7            10.4               (9.5)           50.6 
 Capital expenditure                         0.9             1.6                 0.5            3.0 
 Total depreciation and amortisation         3.3             0.8                 1.0            5.1 
-------------------------------------  ---------  --------------  ------------------  ------------- 
 

(1) The head office operating loss includes non-recurring costs of GBP0.6m relating to the acquisition of the YUK business.

(2) Chain operating profit includes costs of GBP0.2m relating to amortisation of acquired intangibles.

The segment results for the period ended 30 September 2021 were as follows:

 
                                                                            Restated(1) 
                                                                            Head office 
                                        Restated(1)          Torque               costs     Restated(1) 
   Period ended 30 September                  Chain    Transmission    and eliminations    Consolidated 
   2021                                        GBPm            GBPm                GBPm            GBPm 
-------------------------------------  ------------  --------------  ------------------  -------------- 
 Revenue 
 External customer- transferred 
  at a point in time                           76.2            18.3                   -            94.5 
 External customer - transferred 
  over time                                       -             0.8                   -             0.8 
 Inter-segment                                  0.4             1.5               (1.9)               - 
-------------------------------------  ------------  --------------  ------------------  -------------- 
 Total revenue                                 76.6            20.6               (1.9)            95.3 
-------------------------------------  ------------  --------------  ------------------  -------------- 
 Operating profit/(loss)                       10.9             1.8               (4.0)             8.7 
 Net financing costs                                                                              (2.0) 
-------------------------------------  ------------  --------------  ------------------  -------------- 
 Profit before tax                                                                                  6.7 
 Taxation                                                                                         (1.1) 
 Profit after tax                                                                                   5.6 
-------------------------------------  ------------  --------------  ------------------  -------------- 
 
 Other disclosures 
 Working capital                               32.5             8.0               (3.5)            37.0 
 Capital expenditure                            0.5             0.4                 0.4             1.3 
 Total depreciation and amortisation            2.9             0.9                 0.9             4.7 
-------------------------------------  ------------  --------------  ------------------  -------------- 
 

(1) See Note 12 for details of the prior period restatements.

In addition to statutory reporting, the Group reports certain financial metrics on an adjusted basis (alternative performance measures, APMs). Definitions of adjusted measures, and information about the differences to statutory metrics are provided in Note 11 to the interim condensed consolidated financial statements. Constant exchange rate results are current period results retranslated using prior year exchange rates. A reconciliation is provided below and in Note 11.

 
                                                                  Head office 
                                                   Torque               costs 
   Period ended 30 September        Chain    Transmission    and eliminations   Consolidated 
   2022                              GBPm            GBPm                GBPm           GBPm 
---------------------------------  ------  --------------  ------------------  ------------- 
 Revenue 
 External customer- transferred 
  at a point in time                 94.7            21.0                   -          115.7 
 External customer - transferred 
  over time                             -             0.6                   -            0.6 
 Inter-segment                        0.4             1.4               (1.8)              - 
 Foreign exchange retranslation     (5.9)           (1.5)                   -          (7.4) 
---------------------------------  ------  --------------  ------------------  ------------- 
 Total revenue at constant 
  exchange rates                     89.2            21.5               (1.8)          108.9 
---------------------------------  ------  --------------  ------------------  ------------- 
 Operating profit/(loss)             12.3             1.5               (5.0)            8.8 
 Foreign exchange retranslation     (0.8)           (0.1)                   -          (0.9) 
---------------------------------  ------  --------------  ------------------  ------------- 
 Operating profit/(loss) 
  at constant exchange rates         11.5             1.4               (5.0)            7.9 
---------------------------------  ------  --------------  ------------------  ------------- 
 

The segment results for the year ended 31 March 2022 were as follows:

 
                                                                      Head office 
                                                       Torque               costs 
                                        Chain    Transmission    and eliminations   Consolidated 
   Year ended 31 March 2022              GBPm            GBPm                GBPm           GBPm 
-------------------------------------  ------  --------------  ------------------  ------------- 
 Revenue 
 External customer - transferred 
  at a point in time                    158.2            35.6                   -          193.8 
 External customer - transferred 
  over time                                 -             1.4                   -            1.4 
 Inter-segment                            1.0             3.4               (4.4)              - 
-------------------------------------  ------  --------------  ------------------  ------------- 
 Total revenue                          159.2            40.4               (4.4)          195.2 
-------------------------------------  ------  --------------  ------------------  ------------- 
 Operating profit/(loss)                 20.5             4.1               (8.4)           16.2 
 Net financing costs                                                                       (3.8) 
-------------------------------------  ------  --------------  ------------------  ------------- 
 Profit before tax                                                                          12.4 
 Taxation                                                                                  (2.2) 
 Profit after tax                                                                           10.2 
-------------------------------------  ------  --------------  ------------------  ------------- 
 
 Other disclosures 
 Working capital                         30.0             9.0               (3.4)           35.6 
 Capital expenditure                      3.4             2.0                 0.9            6.3 
 Total depreciation and amortisation      6.2             1.9                 1.4            9.5 
-------------------------------------  ------  --------------  ------------------  ------------- 
 
   4.   Net financing costs 
 
                                             First half       Full year 
                                          2022/23   2021/22     2021/22 
                                             GBPm      GBPm        GBPm 
---------------------------------------  --------  --------  ---------- 
 Financing costs: 
 Interest payable on bank loans and 
  overdrafts                                (0.9)     (0.6)       (1.1) 
 Interest expense on lease liabilities      (0.2)     (0.2)       (0.5) 
 Amortised financing costs                  (0.2)     (0.2)       (0.3) 
 Loan financing costs                       (1.3)     (1.0)       (1.9) 
---------------------------------------  --------  --------  ---------- 
 
 Net IAS 19 financing costs                 (1.0)     (0.9)       (1.8) 
 Discount unwind on non-current trade 
  and other payables                            -     (0.1)       (0.1) 
 Net financing costs                        (2.3)     (2.0)       (3.8) 
---------------------------------------  --------  --------  ---------- 
 
   5.   Taxation 
 
                                              First half               Full year 
                                                     Restated(1) 
                                       2022/23           2021/22         2021/22 
                                          GBPm              GBPm            GBPm 
-----------------------------------  ---------      ------------      ---------- 
 Current tax: 
 - UK                                        -                 -             0.1 
 - Overseas                              (1.5)             (1.5)           (2.1) 
 - Adjustments in respect of prior 
  periods                                  0.3                 -               - 
-----------------------------------  ---------      ------------      ---------- 
 Current income tax charge               (1.2)             (1.5)           (2.0) 
-----------------------------------  ---------      ------------      ---------- 
 Deferred tax: 
 - UK                                        -             (0.2)           (0.1) 
 - Overseas                              (0.5)             (0.1)           (0.1) 
 - Effects of changes in corporate 
  tax rates                                  -               0.6             0.5 
 - Adjustments in respect of prior 
  periods                                    -               0.1           (0.5) 
 Total deferred tax charge               (0.5)               0.4           (0.2) 
-----------------------------------  ---------      ------------      ---------- 
 Total income tax expense                (1.7)             (1.1)           (2.2) 
-----------------------------------  ---------      ------------      ---------- 
 

(1) See Note 12 for details of the prior period restatements.

Factors affecting current and future tax charges

The decrease in the current tax charge for the period is attributable to the recognition of a receivable for the carry back of tax losses against prior year taxable profits.

The UK tax rate change from 19% to 25% was substantively enacted in the prior year, resulting in a credit to the income statement on remeasurement of the opening deferred tax asset balance in the prior period.

The Group's tax charge in future years will be affected by the profit mix, effective tax rates in the different countries where the Group operates, and utilisation of tax losses. No deferred tax is recognised on the unremitted earnings of overseas subsidiaries in accordance with IAS 12.39.

   6.   Earnings per share 

Earnings per share (EPS) is calculated by reference to the earnings for the period and the weighted average number of shares in issue during the period as follows:

 
                                                   First half                             Full year 
                                                               Restated(1) 
                                        2022/23                   2021/22                  2021/22 
                                                 Per                       Per                       Per 
                                               share                     share                     share 
                                  Earnings    amount        Earnings    amount        Earnings    amount 
                                      GBPm   (pence)            GBPm   (pence)            GBPm   (pence) 
-------------------------------  ---------  --------  ---  ---------  --------  ---  ---------  -------- 
 Basic EPS - Profit attributed 
  to ordinary shareholders             4.8      2.3p             5.6      2.6p            10.2      4.7p 
 Effect of adjusting items, 
  after tax: 
 Amortisation of acquired 
  intangible assets                    0.2      0.1p               -         -             0.1      0.1p 
 Acquisition costs                     0.6      0.3p               -         -               -         - 
 US PPP loan forgiveness                 -         -           (1.7)    (0.8p)           (1.7)    (0.8p) 
 Dilapidations on closed 
  sites                                  -         -             0.2      0.1p               -         - 
 New lease arrangements 
  on sublet properties                   -         -               -         -             0.7      0.3p 
 Adjusted EPS                          5.6      2.7p             4.1      1.9p             9.3      4.3p 
-------------------------------  ---------  --------  ---  ---------  --------  ---  ---------  -------- 
 

(1) See Note 12 for details of the prior period restatements.

 
                                                    First half           Full year 
                                                 2022/23      2021/22      2021/22 
                                               Thousands    Thousands    Thousands 
-------------------------------------------  -----------  -----------  ----------- 
 Weighted average number of ordinary 
  shares: 
 For the purpose of calculating basic 
  earnings per share                             206,995      219,458      214,795 
 Effect of dilutive potential ordinary 
  shares: 
  Shares subject to performance conditions        23,737       14,195       16,909 
-------------------------------------------  -----------  -----------  ----------- 
 For the purpose of calculating diluted 
  earnings per share                             230,732      233,653      231,704 
-------------------------------------------  -----------  -----------  ----------- 
 
 
                                First half              Full year 
                           2022/23        2021/22         2021/22 
                           (pence)        (pence)         (pence) 
----------------------  ----------      ---------      ---------- 
 Diluted EPS                  2.1p           2.4p            4.4p 
 Diluted adjusted EPS         2.4p           1.8p            4.0p 
----------------------  ----------      ---------      ---------- 
 

The adjusted EPS numbers have been provided to give a useful indication of underlying performance by the exclusion of adjusting items. Due to the existence of unrecognised deferred tax assets there were no associated tax credits on some of the adjusting items and in these instances adjusting items are added back in full.

   7.   Retirement benefit obligations 

The Group's retirement benefit obligations are summarised as follows:

 
                                                      Restated(1) 
                                              At 30         At 30     At 31 
                                          September     September     March 
                                               2022          2021      2022 
                                               GBPm          GBPm      GBPm 
--------------------------------------  -----------  ------------  -------- 
 
 Funded plan obligations                    (160.7)       (233.5)   (214.4) 
 Funded plan assets                           118.8         156.1     149.8 
--------------------------------------  -----------  ------------  -------- 
 Net funded plan obligations                 (41.9)        (77.4)    (64.6) 
 Unfunded obligations                        (19.4)        (22.9)    (22.5) 
--------------------------------------  -----------  ------------  -------- 
 Total retirement benefit obligations        (61.3)       (100.3)    (87.1) 
--------------------------------------  -----------  ------------  -------- 
 

Analysed as follows:

 
 Non-current liabilities: Retirement 
  benefit obligations                   (61.3)   (100.3)   (87.1) 
 Net deferred tax asset                    4.1      14.3     11.0 
 Retirement benefit obligation net 
  of deferred tax                       (57.2)    (86.0)   (76.1) 
-------------------------------------  -------  --------  ------- 
 

(1) See Note 12 for details of the prior period restatements.

The decrease in the Group's net pre-tax deficit from GBP87.1m at 31 March 2022 to GBP61.3m at 30 September 2022 primarily reflects changes in the underlying assumptions, such as the discount rate, plus employer contributions made in the period.

   8.   Additional cash flow information 

Reconciliation of operating profit to net cash flows from operations:

 
                                                     First half               Full year 
                                                            Restated(1) 
                                              2022/23           2021/22         2021/22 
                                                 GBPm              GBPm            GBPm 
------------------------------------------  ---------      ------------      ---------- 
 Cash generated from operations: 
 Operating profit                                 8.8               8.7                16.2 
 Depreciation of property, plant and 
  equipment - owned assets                        2.9               2.7                 5.3 
 Depreciation of property, plant and 
  equipment - right-of-use-assets                 1.2               1.4                 2.6 
 Amortisation of intangible assets                1.0               0.6                 1.6 
 Loss on disposals of plant and equipment           -                 -               (0.9) 
 Impairment of right-of-use-asset                   -                 -                 1.7 
 US PPP loan forgiveness                            -             (1.7)               (1.7) 
 Equity share plans                               0.5               0.5                 1.1 
 Increase in inventories                       (10.9)             (6.3)               (9.5) 
 Increase in receivables                        (0.9)             (7.1)               (4.5) 
 Increase in payables                             4.2              13.6                13.7 
 Increase in provisions                             -                 -                 0.1 
 Cash contribution to pension schemes           (3.1)             (2.4)               (4.8) 
 Pension current service cost (non-cash)            -               0.1                 0.1 
 Cash generated from operations                   3.7              10.1                21.0 
------------------------------------------  ---------      ------------      -------------- 
 

(1) See Note 12 for details of the prior period restatements.

Reconciliation of net change in cash and cash equivalents to movement in net debt:

 
                                                First half       Full year 
                                             2022/23   2021/22     2021/22 
                                                GBPm      GBPm        GBPm 
------------------------------------------  --------  --------  ---------- 
 
 Increase/(decrease) in cash and cash 
  equivalents                                    2.8     (6.0)       (8.2) 
 Change in net debt resulting from 
  cash flows 
 - Proceeds from borrowings                   (23.3)         -       (4.7) 
 - Repayment of borrowings                       1.2       9.2        16.0 
 US PPP loan forgiveness                           -       1.7         1.7 
 Foreign currency translation differences      (0.7)     (0.2)         0.1 
 Non-cash movement on capitalised finance 
  costs                                        (0.2)     (0.2)       (0.3) 
 Change in net debt during the period         (20.2)       4.5         4.6 
 Net debt at start of period                  (13.8)    (18.4)      (18.4) 
------------------------------------------  --------  --------  ---------- 
 Net debt at end of period                    (34.0)    (13.9)      (13.8) 
------------------------------------------  --------  --------  ---------- 
 

Net debt comprises:

 
                                   At 30   At 30 September 
                               September              2021     At 31 March 
                                    2022              GBPm            2022 
                                    GBPm                              GBPm 
---------------------------  -----------  ----------------  -------------- 
 Cash and cash equivalents          15.7              11.5            10.5 
 Total debt                       (49.7)            (25.4)          (24.3) 
 Net debt                         (34.0)            (13.9)          (13.8) 
---------------------------  -----------  ----------------  -------------- 
 
 
                                       At 30   At 30 September 
                                   September              2021     At 31 March 
                                        2022                              2022 
 Net cash and cash equivalents          GBPm              GBPm            GBPm 
-------------------------------  -----------  ----------------  -------------- 
 Cash and cash equivalents              15.7              11.5            10.5 
 Less: Overdrafts                      (2.9)             (0.3)           (1.0) 
 Net cash and cash equivalents          12.8              11.2             9.5 
-------------------------------  -----------  ----------------  -------------- 
 
 
                                At 30   At 30 September 
                            September              2021     At 31 March 
                                 2022                              2022 
 Total debt                      GBPm              GBPm            GBPm 
------------------------  -----------  ----------------  -------------- 
 Borrowings: 
 Overdrafts                     (2.9)             (0.3)           (1.0) 
 Capitalised costs                  -               0.2               - 
------------------------  -----------  ----------------  -------------- 
 Current borrowings             (2.9)             (0.1)           (1.0) 
 Bank Loans                    (46.3)            (25.0)          (22.8) 
 Capitalised costs                  -               0.2               - 
------------------------  -----------  ----------------  -------------- 
 Non-current borrowings        (46.3)            (24.8)          (22.8) 
------------------------  -----------  ----------------  -------------- 
 Total borrowings              (49.2)            (24.9)          (23.8) 
 Preference stock               (0.5)             (0.5)           (0.5) 
 Total debt                    (49.7)            (25.4)          (24.3) 
------------------------  -----------  ----------------  -------------- 
 
   9.   Called up share capital 
 
                                             At 30        At 30    At 31 
                                         September    September    March 
                                              2022         2021     2022 
                                              GBPm         GBPm     GBPm 
-------------------------------------  -----------  -----------  ------- 
 
 Ordinary shares of 5p each - issued 
  and fully paid                              11.3         11.3     11.3 
-------------------------------------  -----------  -----------  ------- 
 

At 30 September 2022, the issued ordinary share capital comprised 225,417,740 ordinary shares of 5p each (30 September 2021: 225,417,740 shares).

10. Acquisition of businesses

During the period the Group completed the acquisition of 100% of the ordinary share capital of Industrias YUK, S.A. for the total consideration of EUR24m, of which EUR20m was paid on the date of the acquisition and the remaining EUR4m is deferred. Of the deferred consideration, EUR2m will be paid on 3 August 2023 and EUR2m on 3 August 2024. YUK is a Valencia-based, manufacturer and distributor of high quality conveyor chain ("CVC") and ancillary products.

The transaction has been accounted for as a business combination under IFRS 3 and is summarised below:

 
                                            Provisional 
                                               as at 30 
                                              September 
                                                   2022 
                                                   GBPm 
-----------------------------------------  ------------ 
 Fair value of net assets acquired: 
 Other intangible assets                            5.4 
 Property, plant and equipment                      5.3 
 Right-of-use-assets                                9.5 
 Inventories                                        7.4 
 Trade and other receivables                        4.4 
 Deferred tax asset                                 0.2 
 Trade and other payables                         (5.7) 
 Lease liabilities                                (9.5) 
 Net identifiable assets and liabilities           17.0 
 Goodwill                                           3.5 
-----------------------------------------  ------------ 
 Total consideration                               20.5 
-----------------------------------------  ------------ 
 
 Consideration 
 Cash paid                                         17.1 
 Deferred consideration                             3.4 
-----------------------------------------  ------------ 
 Total consideration                               20.5 
-----------------------------------------  ------------ 
 

Acquisition related costs amounted to GBP0.6m and have been included in the condensed consolidated income statement.

The gross contractual value of the trade and other receivables was GBP4.4m. The best estimate at the acquisition date of the contractual cash flows not expected to be collected was GBPnil.

Deferred consideration of EUR4m is payable within 2 years.

The goodwill arising on acquisition is expected to be deductible for tax purposes and is attributable to:

-- the anticipated profitability of the distribution of the Group's services in new markets; and

-- the synergies that can be achieved in the business combination including management, processes and maximising site capacities.

The business was acquired on 3 August 2022 and contributed GBP2.2m revenue and GBP0.2m headline operating profit for the period between the date of acquisition and the balance sheet date.

If the acquisition had been completed on the first day of the financial period, the acquisition would have contributed GBP8.4m to Group revenue, GBP1.2m to Group operating profit and GBP1.9m adjusted operating profit (after adding back GBP0.1m for amortisation of acquired intangibles and GBP0.6m acquisition costs).

11. Alternative performance measures

In order to provide users of the accounts with a clear and consistent presentation of the performance of the Group's ongoing trading activity, the Group uses various alternative performance measures (APMs). Amortisation of acquired intangibles, restructuring costs, discontinued operations and material one-off items or remeasurements are added back / (deducted) as adjusting items as management seek to present a measure of performance which is not impacted by material non-recurring items or items considered non-operational. Performance measures for the Group's ongoing trading activity are described as 'Adjusted' and are used to measure and monitor performance as management believe these measures enable users of the financial statements to better assess the trading performance of the business. In addition, the Group reports sales and profit measures at constant exchange rates. Constant exchange rate metrics exclude the impact of foreign exchange translation, by retranslating the current year results using prior year exchange rates.

The APMs used by the Group include:

 
 APM                                  Reference   Explanation of APM 
-----------------------------------  ----------  -------------------------------------- 
 -- adjusted operating profit         A           Adjusted measures are used 
                                                   by the Group as a measure 
                                                   of underlying business performance, 
                                                   adding back items that do 
                                                   not relate to underlying performance 
                                                 -------------------------------------- 
 -- adjusted profit before taxation   B 
                                                 -------------------------------------- 
 -- adjusted EPS                      C 
 -- return on sales                   D 
 -- operating profit gearing          D 
-----------------------------------  ----------  -------------------------------------- 
 -- revenue at constant exchange      E           Constant exchange rate metrics 
  rates                                            adjust for constant foreign 
                                                   exchange translation and are 
                                                   used by the Group to better 
                                                   understand year-on-year changes 
                                                   in performance 
                                                 -------------------------------------- 
 -- adjusted operating profit         F 
  at constant exchange rates 
                                                 -------------------------------------- 
 -- return on sales at constant       G 
  exchange rates 
-----------------------------------  ----------  -------------------------------------- 
 -- EBITDA                            H           EBITDA is a widely utilised 
                                                   measure of profitability, 
                                                   adjusting to remove non-cash 
                                                   depreciation, amortisation 
                                                   charges and share-based payment 
                                                   charge 
                                                 -------------------------------------- 
 -- adjusted EBITDA                   H 
                                                 -------------------------------------- 
 -- operating cash flow               H 
-----------------------------------  ----------  -------------------------------------- 
 -- net debt                          I           Net debt, leverage and gearing 
                                                   are used to assess the level 
                                                   of borrowings within the Group 
                                                   and are widely used in capital 
                                                   markets analysis 
                                                 -------------------------------------- 
 -- leverage ratio                    J 
                                                 -------------------------------------- 
 -- gearing ratio                     K 
-----------------------------------  ----------  -------------------------------------- 
 -- legacy pension cash costs         L           The cost of legacy pensions 
                                                   is used by the Group as a 
                                                   measure of the cash cost of 
                                                   servicing legacy pension schemes 
-----------------------------------  ----------  -------------------------------------- 
 -- average working capital ratio     M           Working capital as a ratio 
                                                   of rolling 12 month revenue 
                                                   is used to measure cash performance 
                                                   and balance sheet strength 
-----------------------------------  ----------  -------------------------------------- 
 

APMs are defined and reconciled to the IFRS statutory measures as follows:

(A) Adjusted operating profit

 
                                                     Period ended 30 September 2022 
                                         ----------------------------------------------------- 
                                                                    Head office 
                                                         Torque       costs and 
                                          Chain    Transmission    eliminations   Consolidated 
                                           GBPm            GBPm            GBPm           GBPm 
---------------------------------------  ------  --------------  --------------  ------------- 
 Operating profit                          12.3             1.5           (5.0)            8.8 
 Add back/(deduct): 
   Amortisation of acquired intangible 
    assets                                  0.2               -               -            0.2 
   Acquisition costs                          -               -             0.6            0.6 
---------------------------------------  ------  --------------  --------------  ------------- 
 Adjusted operating profit                 12.5             1.5           (4.4)            9.6 
---------------------------------------  ------  --------------  --------------  ------------- 
 
 
                                        Period ended 30 September 2021 (Restated(1) 
                                                              ) 
                                   ----------------------------------------------------- 
                                                              Head office 
                                                   Torque       costs and 
                                    Chain    Transmission    eliminations   Consolidated 
                                     GBPm            GBPm            GBPm           GBPm 
---------------------------------  ------  --------------  --------------  ------------- 
 Operating profit                    10.9             1.8           (4.0)            8.7 
 Add back/(deduct): 
   US PPP loan forgiveness          (1.7)               -               -          (1.7) 
   Dilapidation costs for closed 
    sites                               -               -             0.2            0.2 
---------------------------------  ------  --------------  --------------  ------------- 
 Adjusted operating profit            9.2             1.8           (3.8)            7.2 
---------------------------------  ------  --------------  --------------  ------------- 
 

(1) See Note 12 for details of the prior period restatements.

 
                                                        Year ended 31 March 2022 
                                         ----------------------------------------------------- 
                                                                    Head office 
                                                         Torque       costs and 
                                          Chain    Transmission    eliminations   Consolidated 
                                           GBPm            GBPm            GBPm           GBPm 
---------------------------------------  ------  --------------  --------------  ------------- 
 Operating profit                          20.5             4.1           (8.4)           16.2 
 Add back/(deduct): 
   Amortisation of acquired intangible 
    assets                                  0.1               -               -            0.1 
   US PPP loan forgiveness                (1.7)               -               -          (1.7) 
   New lease arrangements on sublet 
    properties                                -               -             0.7            0.7 
---------------------------------------  ------  --------------  --------------  ------------- 
 Adjusted operating profit                 18.9             4.1           (7.7)           15.3 
---------------------------------------  ------  --------------  --------------  ------------- 
 

(B) Adjusted profit before taxation

 
                                                 First half               Full year 
                                                        Restated(1) 
                                          2022/23           2021/22         2021/22 
                                             GBPm              GBPm            GBPm 
--------------------------------------  ---------      ------------      ---------- 
 Profit before taxation                       6.5               6.7            12.4 
 Add back/(deduct): 
  Amortisation of acquired intangible 
   assets                                     0.2                 -             0.1 
  US PPP loan forgiveness                       -             (1.7)           (1.7) 
  Acquisition costs                           0.6                 -               - 
  Dilapidation costs for closed sites           -               0.2               - 
  Property related costs                        -                 -             0.7 
 Adjusted profit before taxation              7.3               5.2            11.5 
--------------------------------------  ---------      ------------      ---------- 
 

(1) See Note 12 for details of the prior period restatements.

(C) Adjusted earnings per share

Adjusted EPS is reconciled to statutory EPS in Note 6.

(D) Return on sales and operating profit gearing

 
                                                                   Head 
                                                                 office 
                                             Torque               costs 
                              Chain    Transmission    and eliminations   Consolidated 
 Period ended 30 September 
  2022                         GBPm            GBPm                GBPm           GBPm 
---------------------------  ------  --------------  ------------------  ------------- 
 Adjusted operating profit     12.5             1.5               (4.4)            9.6 
 Total revenue (including 
  inter-segment sales)         95.1            23.0               (1.8)          116.3 
---------------------------  ------  --------------  ------------------  ------------- 
 Return on sales %            13.1%            6.5%                 n/a           8.3% 
---------------------------  ------  --------------  ------------------  ------------- 
 
 
                                                                  Restated(1) 
                                                                  Head office 
                              Restated(1)          Torque               costs     Restated(1) 
                                    Chain    Transmission    and eliminations    Consolidated 
 Period ended 30 September 
  2021                               GBPm            GBPm                GBPm            GBPm 
---------------------------  ------------  --------------  ------------------  -------------- 
 Adjusted operating profit            9.2             1.8               (3.8)             7.2 
 Total revenue (including 
  inter-segment sales)               76.6            20.6               (1.9)            95.3 
---------------------------  ------------  --------------  ------------------  -------------- 
 Return on sales %                  12.0%            8.7%                 n/a            7.5% 
---------------------------  ------------  --------------  ------------------  -------------- 
 

(1) See Note 12 for details of the prior period restatements.

 
                                                            Head office 
                                             Torque               costs 
                              Chain    Transmission    and eliminations   Consolidated 
 Year ended 31 March 2022      GBPm            GBPm                GBPm           GBPm 
---------------------------  ------  --------------  ------------------  ------------- 
 Adjusted operating profit     18.9             4.1               (7.7)           15.3 
 Total revenue (including 
  inter-segment sales)        159.2            40.4               (4.4)          195.2 
---------------------------  ------  --------------  ------------------  ------------- 
 Return on sales %            11.9%           10.1%                 n/a           7.8% 
---------------------------  ------  --------------  ------------------  ------------- 
 
 
                                                                           Head 
                                                                         office 
                                                     Torque               costs 
                                      Chain    Transmission    and eliminations   Consolidated 
 Period ended 30 September 
  2022                                 GBPm            GBPm                GBPm           GBPm 
-----------------------------------  ------  --------------  ------------------  ------------- 
 Year-on-year change in adjusted 
  operating profit                      3.3           (0.3)               (0.6)            2.4 
 Year-on-year change in total 
  revenue (including inter-segment 
  sales)                               18.5             2.4                 0.1           21.0 
-----------------------------------  ------  --------------  ------------------  ------------- 
 Adjusted operating profit 
  gearing %                             18%            -13%                 n/a            11% 
-----------------------------------  ------  --------------  ------------------  ------------- 
 

(E),(F) & (G) Revenue, adjusted operating profit and adjusted return on sales at constant exchange rates

 
                                                                        Head 
                                                                      office 
                                                  Torque               costs 
                                   Chain    Transmission    and eliminations   Consolidated 
 Six months ended 30 September 
  2022                              GBPm            GBPm                GBPm           GBPm 
--------------------------------  ------  --------------  ------------------  ------------- 
 External revenue - transferred 
  at a point in time                94.7            21.0                   -          115.7 
 External revenue - transferred 
  over time                            -             0.6                                0.6 
 Inter-segment                       0.4             1.4               (1.8)              - 
 Foreign exchange retranslation    (5.9)           (1.5)                   -          (7.4) 
--------------------------------  ------  --------------  ------------------  ------------- 
 Revenue at constant exchange 
  rates                             89.2            21.5               (1.8)          108.9 
--------------------------------  ------  --------------  ------------------  ------------- 
 Adjusted operating profit          12.5             1.5               (4.4)            9.6 
 Foreign exchange retranslation    (0.8)           (0.1)                   -          (0.9) 
--------------------------------  ------  --------------  ------------------  ------------- 
 Adjusted operating profit 
  at constant exchange rates        11.7             1.4               (4.4)            8.7 
--------------------------------  ------  --------------  ------------------  ------------- 
 Return on sales at constant 
  exchange rates %                 13.1%            6.5%                 n/a           8.0% 
--------------------------------  ------  --------------  ------------------  ------------- 
 

(H) EBITDA, adjusted EBITDA (earnings before interest, taxation, depreciation and amortisation) and operating cashflow

 
                                                      First half               Full year 
                                                             Restated(1) 
                                               2022/23           2021/22         2021/22 
                                                  GBPm              GBPm            GBPm 
-------------------------------------------  ---------      ------------      ---------- 
 Operating profit                                  8.8               8.7            16.2 
 Depreciation and amortisation                     5.1               4.7             9.5 
 Share-based payments                              0.5               0.5             1.1 
-------------------------------------------  ---------      ------------      ---------- 
 EBITDA(2)                                        14.4              13.9            26.8 
 Add back/(deduct): 
  US PPP loan forgiveness                            -             (1.7)           (1.7) 
  Acquisition costs                                0.6                 -               - 
  Dilapidation costs for closed properties           -               0.2               - 
  Property related costs                             -                 -             0.7 
-------------------------------------------  ---------      ------------      ---------- 
 Adjusted EBITDA(2)                               15.0              12.4            25.8 
-------------------------------------------  ---------      ------------      ---------- 
  Inventories                                   (10.9)             (6.3)           (9.5) 
  Trade and other receivables                    (0.9)             (7.1)           (4.5) 
  Trade and other payables                         4.2              13.6            13.7 
  Provisions                                         -             (0.2)             0.1 
-------------------------------------------  ---------      ------------      ---------- 
 Movement in working capital                     (7.6)                 -           (0.2) 
-------------------------------------------  ---------      ------------      ---------- 
 Purchase of property, plant and equipment       (1.9)             (0.8)           (4.1) 
 Purchase of intangible assets                   (0.6)             (0.6)           (1.2) 
 Proceeds from property disposals                  0.3               0.1             0.2 
-------------------------------------------  ---------      ------------      ---------- 
 Net capital expenditure                         (2.2)             (1.3)           (5.1) 
-------------------------------------------  ---------      ------------      ---------- 
 Operating cash flow                               5.2              11.1            20.5 
-------------------------------------------  ---------      ------------      ---------- 
 

(1) See Note 12 for details of the prior period restatements.

(2) The calculation of EBITDA, adjusted EBITDA and operating cash flow includes the add back for the non-cash share-based payment charge of GBP0.5m for the period ended 30 September 2022 (2021: GBP0.5m).

(I) Net debt

Net debt is reconciled to the statutory balance sheet in Note 8.

(J) Leverage ratio

 
                                           At 30        At 30       At 31 
                                       September    September       March 
                                            2022         2021        2022 
                                            GBPm         GBPm        GBPm 
-----------------------------------  -----------  -----------  ---------- 
 Net debt (see Note 8)                      34.0         13.9        13.8 
 
 H2 2020/21 Adjusted EBITDA                    -         10.4           - 
 H1 2021/22 Adjusted EBITDA                    -         12.4        12.4 
 H2 2021/22 Adjusted EBITDA                 13.4            -        13.4 
 H1 2022/23 Adjusted EBITDA                 15.0            -           - 
-----------------------------------  -----------  -----------  ---------- 
 12 months rolling adjusted EBITDA          28.4         22.8        25.8 
-----------------------------------  -----------  -----------  ---------- 
 Leverage ratio                        1.2 times    0.6 times   0.5 times 
-----------------------------------  -----------  -----------  ---------- 
 

(K) Gearing ratio

 
                                                       Restated(1) 
                                               At 30         At 30    At 31 
                                           September     September    March 
                                                2022          2021     2022 
                                                GBPm          GBPm     GBPm 
---------------------------------------  -----------  ------------  ------- 
 Net debt (see Note 8)                          34.0          13.9     13.8 
 
 Equity attributable to equity holders 
  of the parent                                 37.0         (6.6)      5.8 
 Net debt (see Note 8)                          34.0          13.9     13.8 
---------------------------------------  -----------  ------------  ------- 
 Total capital plus net debt                    71.0           7.3     19.6 
---------------------------------------  -----------  ------------  ------- 
 Gearing ratio %                                 48%          190%      70% 
---------------------------------------  -----------  ------------  ------- 
 

(1) See Note 12 for details of the prior period restatement.

(L) Legacy pension cash costs

 
                                               First half       Full year 
                                            2022/23   2021/22     2021/22 
                                               GBPm      GBPm        GBPm 
-----------------------------------------  --------  --------  ---------- 
 Cash contributions to pension schemes          2.5       1.8         3.7 
 Pension payments in respect of unfunded 
  schemes                                       0.6       0.6         1.1 
 Scheme administration costs                    0.4       0.3         0.7 
-----------------------------------------  --------  --------  ---------- 
                                                3.5       2.7         5.5 
-----------------------------------------  --------  --------  ---------- 
 

( M) Average working capital ratio

 
                                               First half       Full year 
                                            2022/23   2021/22     2021/22 
                                               GBPm      GBPm        GBPm 
-----------------------------------------  --------  --------  ---------- 
 Inventories                                   70.8      44.7        48.4 
 Trade and other receivables                   43.5      37.8        35.7 
 Trade and other payables                    (63.7)    (45.5)      (48.5) 
-----------------------------------------  --------  --------  ---------- 
 Total working capital                         50.6      37.0        35.6 
 Average working capital(1) (a)                43.8      38.9        36.1 
 12 months rolling revenue (b)                216.2     179.1       195.2 
 Average working capital ratio ((a)/(b))        20%       22%         18% 
-----------------------------------------  --------  --------  ---------- 
 

(1) Calculated as a simple average of the previous 12 months' working capital.

12. Prior period adjustments

The Group has changed its accounting policy related to the capitalisation of certain software costs, this change follows the IFRIC Interpretation Committee's agenda decision published in April 2021, which clarifies the accounting treatment of the costs of configuring or customising software under software as a service (SaaS) arrangements. Previously capitalised SaaS costs have now been written off at the point they were originally incurred, and the related subsequent amortisation of these costs in the prior year has now been reversed and added back to profit.

In addition, prior period adjustments have been recorded relating to the following:

- Dilapidations provision - The prior period adjustment records an increased dilapidations provision for certain leased properties across the Group. The adjustment arose following changes to sublease arrangements on previously closed sites which prompted a global review of dilapidations across the Group's property portfolio. The adjustment includes the reclassification of GBP0.6m of dilapidations provision that had been incorrectly netted against the opening right-of-use asset cost on adoption of IFRS 16. Dilapidation provisions have been increased; with property, plant and equipment increased to the extent the group has incurred capital cost to modify lease properties alongside a corresponding obligation to remove the modification and restore the property on surrender of the lease. The adjustment to the income statement reflects the extent to which dilapidations were charged in the period to 30 September 2021, but related to obligations which arose in previous financial periods.

- Deferred taxation - The prior period adjustment reduces the value of the deferred tax asset (DTA) recognised in respect of UK pensions (reduction of GBP8.4m at 30 September 2021) and increases the value of deferred tax recognised in respect of UK losses (increase of GBP0.8m at 30 September 2021). The adjustment to the pensions DTA arose in respect of a deemed contribution of GBP40m that was made to the UK pension scheme in 2014. The contribution formed part of the Group's 25-year asset-backed partnership structure (the Scottish Limited Partnership, 'SLP'). At the inception of the partnership structure the GBP40m contribution was recorded as an allowable deduction in the tax computations of the Group's UK subsidiaries. This upfront tax deduction reduces the future tax deductions that are available over the remainder of the 25-year agreement. The gross pension DTA has historically been assumed to equal the IAS 19 deficit for the UK scheme, multiplied by the future expected tax rate, however, due to the upfront deduction taken at the inception of the scheme the UK pension DTA has been reduced to cap the implied future available deductions at each balance sheet date. The reduction in the UK pensions DTA resulted in the recognition of a DTA for UK losses. Previously no forecast UK taxable profits were available for loss recognition due to the assumption that the annual deductions expected on the pension contributions would be significantly higher than those now calculated as part of this review. Consequently, due to the lower level of allowable pension deductions expected each year in the forecast period used to assess taxable profits available for loss recognition, headroom now remains and accordingly a DTA for losses has been recognised at 30 September 2021.

The impact, on a line item basis for those affected, on the Condensed consolidated statement of comprehensive income for the period ended 30 September 2021 and the Condensed consolidated balance sheet as at 30 September 2021 is as follows:

 
 Condensed consolidated statement 
  of comprehensive income for                                                                Change              First 
  the period ended 30 September          As previously   Dilapidations    Deferred    in accounting       half 2021/22 
  2021                                        reported       provision    taxation           policy         (restated) 
                                                  GBPm            GBPm        GBPm             GBPm               GBPm 
--------------------------------------  --------------  --------------  ----------  ---------------  ----------------- 
 Revenue                                          95.3               -           -                -               95.3 
 Operating costs                                (87.1)             0.3           -              0.2             (86.6) 
--------------------------------------  --------------  --------------  ----------  ---------------  ----------------- 
 Operating profit                                  8.2             0.3           -              0.2                8.7 
--------------------------------------  --------------  --------------  ----------  ---------------  ----------------- 
 Profit before tax                                 6.2             0.3           -              0.2                6.7 
 Taxation                                        (1.2)               -         0.1                -              (1.1) 
--------------------------------------  --------------  --------------  ----------  ---------------  ----------------- 
 Profit for the financial year                     5.0             0.3         0.1              0.2                5.6 
--------------------------------------  --------------  --------------  ----------  ---------------  ----------------- 
 Tax on remeasurement gains/losses 
  on retirement benefit obligations              (0.2)               -       (1.9)                -              (2.1) 
--------------------------------------  --------------  --------------  ----------  ---------------  ----------------- 
 Other comprehensive income/(expense) 
  for the year, net of tax                         5.7               -       (1.9)                -                3.8 
--------------------------------------  --------------  --------------  ----------  ---------------  ----------------- 
 Total comprehensive income/(expense) 
  for the year, net of tax                        10.7             0.3       (1.8)              0.2                9.4 
--------------------------------------  --------------  --------------  ----------  ---------------  ----------------- 
 Earnings per share 
 Basic earnings per share                         2.3p            0.2p           -             0.1p               2.6p 
 Diluted earnings per share                       2.1p            0.2p           -             0.1p               2.4p 
--------------------------------------  --------------  --------------  ----------  ---------------  ----------------- 
 Condensed consolidated balance                                                              Change 
  sheet                                  As previously   Dilapidations    Deferred    in accounting       30 September 
  as at 30 September 2021                     reported       provision    taxation           policy    2021 (restated) 
                                                  GBPm            GBPm        GBPm             GBPm               GBPm 
--------------------------------------  --------------  --------------  ----------  ---------------  ----------------- 
 ASSETS 
 Non-current assets 
 Property, plant and equipment                    46.7             0.3           -                -               47.0 
 Other intangible fixed assets                     6.3               -           -            (1.0)                5.3 
 Deferred tax assets                              25.3               -       (7.6)                -               17.7 
 Other non-current assets                         33.0               -           -                -               33.0 
                                                 111.3             0.3       (7.6)            (1.0)              103.0 
--------------------------------------  --------------  --------------  ----------  ---------------  ----------------- 
 TOTAL ASSETS                                    205.4             0.3       (7.6)            (1.0)              197.1 
--------------------------------------  --------------  --------------  ----------  ---------------  ----------------- 
 LIABILITIES 
 Non-current liabilities 
 Provisions                                      (2.1)           (1.6)           -                -              (3.7) 
 Other non-current liabilities                 (148.8)               -           -                -            (148.8) 
--------------------------------------  --------------  --------------  ----------  ---------------  ----------------- 
                                               (150.9)           (1.6)           -                -            (152.5) 
--------------------------------------  --------------  --------------  ----------  ---------------  ----------------- 
 TOTAL LIABILITIES                             (202.1)           (1.6)           -                -            (203.7) 
--------------------------------------  --------------  --------------  ----------  ---------------  ----------------- 
 NET LIABILITIES                                   3.3           (1.3)       (7.6)            (1.0)              (6.6) 
--------------------------------------  --------------  --------------  ----------  ---------------  ----------------- 
 EQUITY 
 Other equity items                               17.1               -           -                -               17.1 
 Retained earnings                              (13.8)           (1.3)       (7.6)            (1.0)             (23.7) 
--------------------------------------  --------------  --------------  ----------  ---------------  ----------------- 
 TOTAL SHAREHOLDERS' EQUITY                        3.3           (1.3)       (7.6)            (1.0)              (6.6) 
--------------------------------------  --------------  --------------  ----------  ---------------  ----------------- 
 

Ends

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November 16, 2022 02:00 ET (07:00 GMT)

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