TIDMRNO

RNS Number : 8612R

Renold PLC

10 November 2021

Renold plc

Interim results for the half year ended 30 September 2021

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

Significant revenue growth...Record orderbook...Strong cash generation

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 2021.

Financial highlights

 
                                                                        Half year ended 
                                           ---------------------------------------------  -------------- 
                                                     30 September           30 September        Increase 
                                                             2021                   2020    / (decrease) 
                                                             GBPm                   GBPm               % 
 Adjusted results at constant exchange 
  rates(1) 
-----------------------------------------  ----------------------  ---------------------  -------------- 
 Revenue at constant exchange rates                          95.3                   78.1             22% 
-----------------------------------------  ----------------------  ---------------------  -------------- 
 Adjusted operating profit at constant 
  exchange rates                                              8.2                    5.5             49% 
-----------------------------------------  ----------------------  ---------------------  -------------- 
 Return on sales(2) at constant exchange 
  rates                                                      8.6%                   7.0% 
-----------------------------------------  ----------------------  ---------------------  -------------- 
 Adjusted earnings per share                                 2.3p                   1.1p            109% 
-----------------------------------------  ----------------------  ---------------------  -------------- 
 Net debt(3)                                                 13.9                   26.4           (47%) 
-----------------------------------------  ----------------------  ---------------------  -------------- 
 
 Results at actual exchange rates 
-----------------------------------------  ----------------------  ---------------------  -------------- 
 Revenue                                                     95.3                   81.5             17% 
-----------------------------------------  ----------------------  ---------------------  -------------- 
 Adjusted operating profit                                    8.2                    5.8             41% 
-----------------------------------------  ----------------------  ---------------------  -------------- 
 Return on sales(2)                                          8.6%                   7.1% 
-----------------------------------------  ----------------------  ---------------------  -------------- 
 Operating profit                                             8.2                    5.3             55% 
-----------------------------------------  ----------------------  ---------------------  -------------- 
 Profit before tax                                            6.2                    2.8            121% 
-----------------------------------------  ----------------------  ---------------------  -------------- 
 Basic earnings per share                                    2.3p                   0.9p            156% 
-----------------------------------------  ----------------------  ---------------------  -------------- 
 
   --      Revenue up 17% to GBP95.3m (22% at constant exchange rates). 

-- Adjusted operating profit up 41% (49% at constant exchange rates) to GBP8.2m (2020: GBP5.8m).

-- Excluding one-off items adjusted operating profit of GBP7.0m(4) up 21% and return on sales of 7.4% up 30bps.

-- Net debt GBP13.9m, GBP4.5m reduction in the period; ratio to adjusted EBITDA 0.6x (31 March 2021: 0.9x).

   --      Adjusted EPS 2.3p (2020: 1.1p); Excluding one-off items Adjusted EPS 2.0p 

Business highlights

-- The Group's markets recovered strongly during the first half, as activity levels rebounded from Covid impact, returning to 96% of pre-pandemic level.

-- Strong cash generation, with continuing focus on working capital and cost control, but allowing for inventory increases due to lengthened supply chains and a gradual restoration of capital expenditure.

-- Group order intake in the period GBP113.0m, up 48.8% YoY as reported (54.9% at constant exchange rates).

-- Orderbook at 30 September 2021, GBP72.1m, is a record high for the Group (30 September 2020: GBP46.5m).

-- Completed bolt-on acquisition of the conveyor chain business of Brooks Ltd, which is performing ahead of expectations.

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

(2) Adjusted operating profit divided by revenue

(3) See Note 9 for a reconciliation of net debt which excludes lease liabilities

(4) Non-recurring items include GBP1.7m of US Payroll Protection Program (PPP) loan forgiveness offset by GBP0.5m of dilapidation charges relating to closed sites

Robert Purcell, Chief Executive of Renold plc, said:

" The strong trading momentum experienced in the fourth quarter of the last financial year has continued into the first half, resulting in growth of both revenues and profitability. Despite the widely reported global supply chain and inflationary pressures that remain present, particularly with respect to materials, transport and energy costs, Renold continues to benefit from geographic, customer and market sector diversity. With a record order book at the period end, coupled with the strategic initiatives previously implemented, we approach the second half with confidence, but cognisant of the very volatile and inflationary world we operate in. "

Reconciliation of reported, constant exchange rate and adjusted results

 
                                        Revenue          Operating profit        Earnings per 
                                                                                     share 
                                 --------------------  --------------------  -------------------- 
                                        H1         H1         H1         H1         H1         H1 
                                   2021/22    2020/21    2021/22    2020/21    2021/22    2020/21 
                                      GBPm       GBPm       GBPm       GBPm      pence      pence 
-------------------------------  ---------  ---------  ---------  ---------  ---------  --------- 
 Reported at actual exchange 
  rates                               95.3       81.5        8.2        5.3        2.3        0.9 
 Amortisation of acquired 
  intangible assets                      -          -          -        0.5          -        0.2 
-------------------------------  ---------  ---------  ---------  ---------  ---------  --------- 
 Adjusted                             95.3       81.5        8.2        5.8        2.3        1.1 
 Exchange impact                         -      (3.4)          -      (0.3)          -          - 
-------------------------------  ---------  ---------  ---------  ---------  ---------  --------- 
 Adjusted at constant exchange 
  rates                               95.3       78.1        8.2        5.5        2.3        1.1 
-------------------------------  ---------  ---------  ---------  ---------  ---------  --------- 
 

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 on their website at: www.renold.com

Chief Executive's Statement

The Group's markets recovered strongly during the first half, as activity levels continued to rebound in the aftermath of the Covid-19 pandemic. Group order intake during the period was GBP113.0m, an increase of 48.8% on a reported basis and 54.9% at constant exchange rates, over the comparative prior year period. Excluding the recently announced GBP11.0m long term military contract, order intake for the period increased by 34.2% or 39.7% at constant exchange rates. The resultant order book of GBP72.1m, represents a record high for the Group (30 September 2020: GBP46.5m).

Conversion of orders into sales was also encouraging, with Group revenue for the period of GBP95.3m, an increase of 16.9% on a reported basis and 22.0% at constant exchange rates, over the comparative prior year period.

Adjusted operating profit increased to GBP8.2m (2020: GBP5.8m) with an adjusted operating profit margin of 8.6% (2020: 7.1%). Operating profit increased to GBP8.2m (2020: GBP5.3m), with operating profit margins increasing from 6.5% to 8.6%.

 
                                                   Adjusted 
                                      External    operating      Return 
                                       revenue       profit    on sales 
 Half year ended 30 September 2021        GBPm         GBPm           % 
-----------------------------------  ---------  -----------  ---------- 
 Reported                                 95.3          8.2         8.6 
 US PPP Loan forgiveness                     -        (1.7)           - 
 Costs relating to closed sites              -          0.5           - 
-----------------------------------  ---------  -----------  ---------- 
 Reported excluding non-recurring 
  items                                   95.3          7.0         7.4 
-----------------------------------  ---------  -----------  ---------- 
 

During the period the Group benefitted from the forgiveness of GBP1.7m of loans received under the US Government's Payroll Protection Program, offsetting this, the Group also incurred GBP0.5m of non-recurring costs relating to closed sites, including repair and maintenance expenditure. Excluding these one-off items adjusted operating profit from continuing operations increased to GBP7.0m (2020: GBP5.8m), with corresponding operating profit margins rising to 7.4% (2020: 7.0%) despite the impact of the widely reported industry headwinds, including the impact experienced on the supply chain, raw material availability and inflation.

The Group continued to benefit from the impact of the significant efforts undertaken in the current and previous years to lower the fixed cost base, increasing flexibility and operational leverage. The Group has successfully managed a period of significant supply chain disruption to materials and transportation, both in terms of availability, lead times and increased prices, and whilst price increases have been passed through to customers, the Group expects further pressure on materials, energy and transportation to continue into the second half of the year.

Renold continues to make every effort to increase performance through specific projects aimed at better operational efficiency, through improved design and standardisation of products, better utilisation of machinery and workforce, including more flexible working practices, and leveraging the benefits of improved procurement strategies.

The Group reduced net debt by GBP4.5m during the period, to GBP13.9m (31 March 2021: GBP18.4m).

Acquisition

On 8 April 2021 Renold completed the acquisition of the conveyor chain business of Brooks Ltd ("Brooks") in Manchester, UK, for a total consideration of GBP0.7m, including GBP0.4m of deferred consideration. The business has been fully integrated into the Renold UK Service centre in Manchester. At the time of the acquisition, for the full year Brooks was expected to contribute incremental sales and Group operating profit of c.GBP1.0m and c.GBP0.2m respectively. Pleasingly, Brooks is performing ahead of these expectations.

Business and Financial Review

 
                                   Revenue            Adjusted operating      Adjusted operating 
                             at constant exchange      profit at constant      margin at constant 
                                    rates                exchange rates          exchange rates 
------------------------  ------------------------  ----------------------  ---------------------- 
                              2021/22      2020/21     2021/22     2020/21     2021/22     2020/21 
 Six month period                GBPm         GBPm        GBPm        GBPm           %           % 
 Chain                           76.6         60.7         9.0         5.5        11.7         9.1 
 Torque Transmission             20.6         19.8         1.8         2.4         8.7        12.1 
 Head office costs/ 
  Intra group sales 
  elimination                   (1.9)        (2.4)       (3.8)       (2.4)           -           - 
------------------------  -----------  -----------  ----------  ----------  ----------  ---------- 
 Total excluding 
  non-recurring items            95.3         78.1         7.0         5.5         7.4         7.0 
 Non-recurring items(1)             -            -         1.2           -           -           - 
------------------------  -----------  -----------  ----------  ----------  ----------  ---------- 
 Total                           95.3         78.1         8.2         5.5         8.6         7.0 
------------------------  -----------  -----------  ----------  ----------  ----------  ---------- 
 

(1) Non-recurring items have been added back to the underlying business segments, these include to GBP1.7m of PPP loan forgiveness in the Chain division and GBP0.5m of dilapidation charges on closed sites in Head office costs.

Chain

The Chain division's revenue at constant exchange rates increased by 26.2% (GBP15.9m) to GBP76.6m.

Revenue recovered strongly in most regions:

-- Europe, recorded a 41.1% increase driven by strong domestic demand and being our main production centre also benefited from increased demand in other geographies, especially from the US.

-- The Americas, increased by 30.9%, with strong demand from the US OEM markets, especially for fork lift truck chain.

-- Australasia's revenue was broadly unchanged, as the business benefitted greatly last year from the Australian markets move to more domestically produced manufactured goods, which largely offset the impact of Covid.

-- India recovered strongly, and despite being subject to a pandemic related lock down in the current half year, recorded 64.2% revenue growth over the prior year comparator.

-- Domestic sales revenue in China increased by 22.5%, albeit from a low base, while strong demand from Europe, the US and notably India, resulted in an overall increase in revenue of 36.9%. Significant progress continues to be made in improving the performance of the new factory in Jintan.

Divisional adjusted operating profit before non-recurring items was GBP9.0m, GBP3.5m higher than the prior year at constant exchange rates. The adjusted operating profit margin before non-recurring items was 11.7% (2020: 9.1%). Including the impact of non-recurring items, adjusted operating profit and margins were GBP10.7m and 13.9% respectively.

Order intake at constant exchange rates increased by 49.8% to GBP83.3m, resulting in book to bill (ratio of orders to sales) for the first half of the year of 108.8% (2020: 91.7%).

Torque Transmission

Divisional revenues of GBP20.6m were GBP0.8m higher than in the prior first half year mainly due to increasing activity on the contract to supply couplings for the Royal Navy. The Group announced it had secured an GBP11m order for the second phase of this contract in July.

Divisional profit reduced by GBP0.6m to GBP1.8m mainly because of the one-off benefit of UK government Covid support of GBP0.7m in the first half of last financial year. Excluding this, divisional operating profit advanced by GBP0.1m relative to the first half of last year, reflecting the higher revenues.

Momentum in this division, which has a later trading cycle than our Chain business, continues to be positive.

Cash Flow and Net Debt

 
                                                   2021/22   2020/21 
 Half year to 30 September                            GBPm      GBPm 
------------------------------------------------  --------  -------- 
 Adjusted operating profit(1)                          8.2       5.3 
 Add back depreciation and amortisation                4.9       5.7 
------------------------------------------------  --------  -------- 
 Adjusted EBITDA                                      13.1      11.0 
 Movement in working capital                           0.5       3.7 
 Net capital expenditure                             (1.3)     (1.0) 
 Operating cash flow                                  12.3      13.7 
 Income taxes                                        (1.3)       1.0 
 Pensions cash costs                                 (2.4)     (1.1) 
 Restructuring spend                                     -         - 
 Repayment of principal under lease liabilities      (1.4)     (1.7) 
 Financing costs paid                                (1.0)     (1.8) 
 Consideration paid for acquisition                  (0.3)         - 
 Employee Benefit Trust share purchases              (1.8)         - 
 Other movements/share-based payments                  0.4       0.1 
------------------------------------------------  --------  -------- 
 Change in net debt(1)                                 4.5      10.2 
 Closing net debt(1)                                (13.9)    (26.4) 
------------------------------------------------  --------  -------- 
 

(1) Adjusted operating profit and the change in net debt in the period ended 30 September 2021 include the US PPP loan forgiveness of GBP1.7m.

Cash generation in the first half was strong, with net debt reducing by GBP4.5m from the position at 31 March 2021, to GBP13.9m.

A continued and disciplined focus on working capital saw a GBP6.3m increase in inventory driven by lengthening supply chains and material cost increases , being offset by a significant increase in payables. Receivables also increased, but at a rate in line with the recovery of turnover. Further inflationary pressures on materials, together with a significant lengthening of the time to supply product between operating sites, will continue to result in increased levels of inventory in the second half year. This coupled with higher input prices will result in a modest increase in working capital.

Net capital expenditure at GBP1.3m remains well below pre-pandemic levels as supply chain issues have increased lead times for machinery purchases. The spend on improving production capabilities in prior years means that lower levels of maintenance capex will not impact operational performance. However, the delay does postpone the significant operational benefits expected from planned projects. Strategic investments in improved heat treatment, other production capabilities and the standardised IT system for the Group continue and are expected to gather pace during the second half of the year.

Corporation tax payments on account increased to more normal levels, with a total GBP1.3m tax paid in the first half of the year. Significant efforts were made last year to review payments on account, which led to a recovery of GBP1.3m and resulted in a net tax cash inflow of GBP1.0m in the prior half year.

The Group acquired the conveyor chain business of Brooks Ltd in Manchester, UK, during the period, for a total consideration of GBP0.7m, with GBP0.3m paid on completion and GBP0.4m deferred.

Cash financing costs reduced from GBP1.8m in the prior half year to GBP1.0m this half year, due to the significant reduction in the average net debt.

During the period the Group acquired shares in the employee benefit trust, totalling GBP1.8m. This will ensure no dilution when when share awards vest.

Pensions

The Group has a number of closed defined benefit pension schemes (accounted for in accordance with IAS 19R 'Employee benefits'). During the pandemic, the Group negotiated a GBP2.8m one-off reduction in annual contribution levels with the UK pension scheme trustees. Accordingly, contribution levels returned to normal levels during the period. The future repayment of the deferred contributions will commence on 1 April 2022, at approximately GBP0.6m per annum, for a period of five years, until April 2027.

Cash pension costs are sustainable, having remained consistent at approximately GBP5.5m for several years. The Group's IAS 19R retirement benefit obligation decreased from GBP102.4m at 31 March 2021 to GBP100.3m at 30 September 2021.

 
                                        At 30 September 2021           At 31 March 2021 
                                                Overseas                          Overseas 
                                   UK Schemes    Schemes     Total   UK Schemes    Schemes     Total 
                                         GBPm       GBPm      GBPm         GBPm       GBPm      GBPm 
--------------------------------  -----------  ---------  --------  -----------  ---------  -------- 
 Total retirement benefit 
  obligations                          (75.6)     (24.7)   (100.3)       (77.5)     (24.9)   (102.4) 
 Net deferred tax asset                  18.9        3.6      22.5         14.7        3.7      18.4 
--------------------------------  -----------  ---------  --------  -----------  ---------  -------- 
 Retirement benefit obligations 
  net of deferred tax asset            (56.7)     (21.1)    (77.8)       (62.8)     (21.2)    (84.0) 
--------------------------------  -----------  ---------  --------  -----------  ---------  -------- 
 
 

The ongoing subdued levels of corporate bond yields, which determine discount rates, have resulted in the continuing high levels of the deficits in the key UK and German schemes. In the UK, discount rates remained stable at 2.0% (31 March 2021: 2.0%) while the increase in the CPI inflation assumption, increasing to 2.9% (31 March 2021: 2.7%), has the effect of increasing the present value of future liabilities by GBP5.2m. Strong asset returns helped to mitigate the impact of the change in the financial assumptions, with the net UK deficit decreasing by GBP1.9m to GBP75.6m.

Pension liabilities in non-UK schemes reduced by GBP0.2m to GBP24.7m.

The net financing expense (a non-cash item) was GBP0.9m (2020: GBP1.0m).

Dividend

In light of the widely reported economic headwinds, including the impact on its supply chain, raw material availability, inflation and continuing investment in equipment and revenue expenditure to improve the performance of the business, 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.

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 uncertainty as to the future impact on the Group of the Covid-19 pandemic, alongside the resilient half year trading performance of the Group, have been considered as part of the adoption of the going concern basis. During the first half of the year, manufacturing facilities in Western Europe, the USA, China and Australia remained open. Facilities in China and Malaysia were shut down for a period of time due to national restrictions, but had fully reopened prior to September 2021, and have remained open since. Across the Group, public health measures advised by governments are being followed. The Group continues to closely monitor operating costs, and capital expenditure and other cash demands are being managed effectively.

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, and 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 principal risks and uncertainties affecting the business activities of the Group, as well as the risk mitigating controls put in place, remain those detailed on pages 40-46 of the 2020/21 Annual Report and Accounts. These include macro-economic and political uncertainty risks as well as various risks relating to Group treasury activities. Key operational risks are raw material prices, energy and other input cost prices.

During the period, risks relating to macro-economic factors and political uncertainty have continued, especially with regard to the impact of the global Covid-19 pandemic. The sustained effect of uncertainty has the potential to reduce demand in end-markets for the Group's products. Renold benefits from its geographic, customer and sector diversity which helps to mitigate the impact of localised issues, but cannot fully mitigate the effects of widespread reductions in demand.

The valuation of retirement benefit obligations can be significantly impacted by changes to the yields on corporate bonds and inflation prospects. The schemes' investment strategies provide a partial hedge against these risks, and other de-risking strategies are employed where sensible. However, it should be noted that the actual cash flows to support the pension scheme are quite stable and subject to long term funding plans which are reviewed every three years. The next triennial valuation will have an effective date of 5 April 2022.

Summary

Overall, activity in the first half was strong and in line with expectations, 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 global supply chain issues are continuing to cause margin pressure, with significant inflationary trends being experienced, particularly with respect to materials, transport and energy costs. The Company is working to mitigate these headwinds as far as possible and the Group 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 well positioned as markets continue to recover from the effects of the pandemic.

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 2021. 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 
   10 November 2021                                 10 November 2021 

Condensed Consolidated Income Statement

for the six months ended 30 September 2021

 
                                                                First half    Full year 
                                                                   2020/21      2020/21 
                                                 First half    (unaudited)    (audited) 
                                                    2021/22 
                                                (unaudited) 
                                        Note           GBPm           GBPm         GBPm 
-------------------------------------  -----  -------------  -------------  ----------- 
 Revenue                                 3             95.3           81.5        165.3 
 Operating costs before adjusting 
  items                                              (87.1)         (75.7)      (154.1) 
-------------------------------------  -----  -------------  -------------  ----------- 
 Adjusted(1) operating profit                           8.2            5.8         11.2 
-------------------------------------  -----  -------------  -------------  ----------- 
 Adjusting items 
 Amortisation of acquired intangible 
  assets                                 4                -          (0.5)        (0.7) 
 Operating profit                                       8.2            5.3         10.5 
                                       -----  -------------  ------------- 
 Net financing costs                     5            (2.0)          (2.5)        (4.6) 
-------------------------------------  -----  -------------  -------------  ----------- 
 Profit before tax                                      6.2            2.8          5.9 
 Taxation                                6            (1.2)          (0.8)        (2.1) 
-------------------------------------  -----  -------------  -------------  ----------- 
 Profit for the period                                  5.0            2.0          3.8 
-------------------------------------  -----  -------------  -------------  ----------- 
 Attributable to: 
 Owners of the parent                                   5.0            2.0          3.8 
-------------------------------------  -----  -------------  -------------  ----------- 
 Earnings per share from continuing 
  operations                             7 
 Basic                                                 2.3p           0.9p         1.7p 
 Diluted                                               2.1p           0.9p         1.6p 
 
 Basic adjusted earnings per share                     2.3p           1.1p         2.0p 
 Diluted adjusted earnings per share                   2.1p           1.1p         1.9p 
-------------------------------------  -----  -------------  -------------  ----------- 
 

(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 15 to the financial statements.

Condensed Consolidated Statement of Comprehensive Income

for the six months ended 30 September 2021

 
                                                                       First half    Full year 
                                                                          2020/21      2020/21 
                                                        First half    (unaudited)    (audited) 
                                                           2021/22 
                                                       (unaudited) 
                                                              GBPm           GBPm         GBPm 
---------------------------------------------  ----  -------------  -------------  ----------- 
 Profit for the period                                         5.0            2.0          3.8 
 Other comprehensive income/(expense): 
 Items that may be reclassified to 
  the income statement in subsequent 
  periods: 
 Exchange differences on translation 
  of foreign operations                                        1.1            0.3        (5.8) 
 Gain/(loss) on hedges of the net investment 
  in foreign operations                                      (0.1)            0.2          0.7 
 Cash flow hedges: 
  Fair value gain/(loss) arising on 
   cash flow hedges during the period                        (0.3)            0.1        (0.1) 
  Less: Cumulative gain arising on cash 
   flow hedges reclassified 
   to profit and loss                                          0.1            0.3          0.3 
 Income tax relating to items that 
  may be reclassified subsequently to 
  profit or loss                                               0.1          (0.3)            - 
---------------------------------------------------  -------------  -------------  ----------- 
                                                               0.9            0.6        (4.9) 
 --------------------------------------------------  -------------  -------------  ----------- 
 Items not to be reclassified to the 
  income statement in subsequent periods: 
 Re-measurement gains/(losses) on retirement 
  benefit obligations                                          1.0         (17.1)        (5.6) 
 Tax on re-measurement losses/(gains) 
  on retirement benefit obligations 
  - excluding impact of statutory rate 
  change                                                     (0.2)            3.4          1.0 
 Effect of changes in statutory tax 
  rate on deferred tax assets                                  4.0              -            - 
---------------------------------------------  ----  -------------  -------------  ----------- 
                                                               4.8         (13.7)        (4.6) 
 --------------------------------------------------  -------------  -------------  ----------- 
 Other comprehensive income/(expense) 
  for the period, net of tax                                   5.7         (13.1)        (9.5) 
---------------------------------------------------  -------------  -------------  ----------- 
 Total comprehensive income/(expense) 
  for the period, net of tax                                  10.7         (11.1)        (5.7) 
---------------------------------------------------  -------------  -------------  ----------- 
 Attributable to: 
 Owners of the parent                                         10.7         (11.1)        (5.7) 
---------------------------------------------------  -------------  -------------  ----------- 
 

Condensed Consolidated Statement of Financial Position

as at 30 September 2021

 
                                                                                 31 March 
                                                 30 September   30 September 
                                                         2021           2020         2021 
                                                  (unaudited)    (unaudited)    (audited) 
                                          Note           GBPm           GBPm         GBPm 
---------------------------------------  -----  -------------  -------------  ----------- 
 Assets 
  Non-current assets 
 Goodwill                                                22.2           23.5         21.7 
 Other intangible fixed assets                            6.3            7.3          6.1 
 Property, plant and equipment                           46.7           52.0         47.8 
 Right-of-use assets                                     10.8           11.4         10.1 
 Deferred tax assets                                     25.3           24.2         21.0 
                                                        111.3          118.4        106.7 
---------------------------------------  -----  -------------  -------------  ----------- 
 Current assets 
 Inventories                                             44.7           41.8         37.7 
 Trade and other receivables                             37.8           31.5         30.3 
 Current tax                                              0.1            0.1          0.2 
 Derivative financial instruments                           -            0.1            - 
 Cash and cash equivalents                   9           11.5           19.6         19.9 
---------------------------------------  -----  -------------  -------------  ----------- 
                                                         94.1           93.1         88.1 
---------------------------------------  -----  -------------  -------------  ----------- 
 Total assets                                           205.4          211.5        194.8 
---------------------------------------  -----  -------------  -------------  ----------- 
 Liabilities 
 Current liabilities 
 Borrowings                                  9          (0.1)          (0.1)        (2.3) 
 Trade and other payables                              (45.5)         (32.5)       (31.5) 
 Lease liabilities                                      (2.2)          (3.4)        (2.5) 
 Current tax                                            (2.9)          (1.6)        (2.3) 
 Derivative financial instruments                       (0.3)              -        (0.1) 
 Provisions                                             (0.2)          (0.7)        (1.4) 
---------------------------------------  -----  -------------  -------------  ----------- 
                                                       (51.2)         (38.3)       (40.1) 
---------------------------------------  -----  -------------  -------------  ----------- 
 Net current assets                                      42.9           54.8         48.0 
---------------------------------------  -----  -------------  -------------  ----------- 
 Non-current liabilities 
 Borrowings                                  9         (24.8)         (45.4)       (35.5) 
 Preference stock                            9          (0.5)          (0.5)        (0.5) 
 Trade and other payables                               (5.7)          (5.2)        (5.4) 
 Lease liabilities                                     (13.3)         (13.3)       (12.9) 
 Deferred tax liabilities                               (4.2)          (4.7)        (4.1) 
 Retirement benefit obligations              8        (100.3)        (115.6)      (102.4) 
 Provisions                                             (2.1)              -            - 
                                                      (148.8)        (184.7)      (160.8) 
---------------------------------------  -----  -------------  -------------  ----------- 
 Total liabilities                                    (201.9)        (223.0)      (200.9) 
---------------------------------------  -----  -------------  -------------  ----------- 
 Net assets/(liabilities)                                 3.3         (11.5)        (6.1) 
---------------------------------------  -----  -------------  -------------  ----------- 
 Equity 
 Issued share capital                       10           11.3           11.3         11.3 
 Share premium                                              -           30.1         30.1 
 Capital reserve                                            -           15.4         15.4 
 Currency translation reserve                             7.9           12.1          6.8 
 Other reserves                                         (2.1)            0.1        (0.1) 
 Retained earnings                                     (13.8)         (80.5)       (69.6) 
---------------------------------------  -----  -------------  -------------  ----------- 
 Total shareholders' surplus/(deficit)                    3.3         (11.5)        (6.1) 
---------------------------------------  -----  -------------  -------------  ----------- 
 

Condensed Consolidated Statement of Cash Flows

for the six months ended 30 September 2021

 
                                                First half     First half 
                                                                             Full year 
                                                   2021/22        2020/21      2020/21 
                                               (unaudited)    (unaudited)    (audited) 
                                                      GBPm           GBPm         GBPm 
-------------------------------------------  -------------  -------------  ----------- 
 Cash flows from operating activities 
 Cash generated by operations (Note 
  9)                                                  10.1           13.7         26.0 
 Income taxes refunded/(paid)                        (1.3)            1.0          0.7 
-------------------------------------------  -------------  -------------  ----------- 
 Net cash flows from operating activities              8.8           14.7         26.7 
-------------------------------------------  -------------  -------------  ----------- 
 Cash flows from investing activities 
 Proceeds from property disposals                      0.1            0.2          0.2 
 Purchase of property, plant and equipment           (0.8)          (1.0)        (2.3) 
 Purchase of intangible assets                       (0.6)          (0.2)        (0.8) 
 Consideration paid for acquisition                  (0.3)              -            - 
-------------------------------------------  -------------  -------------  ----------- 
 Net cash flows from investing activities            (1.6)          (1.0)        (2.9) 
-------------------------------------------  -------------  -------------  ----------- 
 Cash flows from financing activities 
 Repayment of principal under lease 
  liabilities                                        (1.4)          (1.7)        (3.2) 
 Financing costs paid                                (0.8)          (1.8)        (2.0) 
 Own shares purchased                                (1.8)              -            - 
 Proceeds from borrowings                                -            2.8          2.8 
 Repayment of borrowings                             (9.2)          (9.0)       (19.9) 
-------------------------------------------  -------------  -------------  ----------- 
 Net cash flows from financing activities           (13.2)          (9.7)       (22.3) 
-------------------------------------------  -------------  -------------  ----------- 
 Net (decrease)/increase in cash and 
  cash equivalents                                   (6.0)            4.0          1.5 
 Net cash and cash equivalents at 
  beginning of period                                 17.3           15.1         15.1 
 Effects of exchange rate changes                    (0.1)              -          0.7 
-------------------------------------------  -------------  -------------  ----------- 
 Net cash and cash equivalents at 
  end of period                                       11.2           19.1         17.3 
-------------------------------------------  -------------  -------------  ----------- 
 

Condensed Consolidated Statement of Changes in Equity

for the six months ended 30 September 2021

 
                                                  Share                   Currency       Capital 
                                       Share    premium    Retained    translation    redemption       Other     Total 
                                     capital    account    earnings        reserve       reserve    reserves    equity 
                                        GBPm       GBPm        GBPm           GBPm          GBPm        GBPm      GBPm 
---------------------------------  ---------  ---------  ----------  -------------  ------------  ----------  -------- 
 At 1 April 2020                        11.3       30.1      (68.8)           11.9          15.4       (0.3)     (0.4) 
 Profit for the year                       -          -         3.8              -             -           -       3.8 
 Other comprehensive 
  income/(expense)                         -          -       (4.6)          (5.1)             -         0.2     (9.5) 
---------------------------------  ---------  ---------  ----------  -------------  ------------  ----------  -------- 
 Total comprehensive 
  income/(expense) 
  for the year                             -          -       (0.8)          (5.1)             -         0.2     (5.7) 
 Share-based payments                      -          -           -              -             -           -         - 
---------------------------------  ---------  ---------  ----------  -------------  ------------  ----------  -------- 
 At 31 March 2021                       11.3       30.1      (69.6)            6.8          15.4       (0.1)     (6.1) 
 Profit for the period                     -          -         5.0              -             -           -       5.0 
 Other comprehensive 
  income/(expense)                         -          -         4.8            1.1             -       (0.2)       5.7 
---------------------------------  ---------  ---------  ----------  -------------  ------------  ----------  -------- 
 Total comprehensive 
  income/(expense) 
  for the period                           -          -         9.8            1.1             -       (0.2)      10.7 
 Own shares purchased                      -          -           -              -             -       (1.8)     (1.8) 
 Capital reorganisation (Note 11)          -     (30.1)        45.5              -        (15.4)           -         - 
 Share-based payments                      -          -         0.5              -             -           -       0.5 
 At 30 September 2021                   11.3          -      (13.8)            7.9             -       (2.1)       3.3 
---------------------------------  ---------  ---------  ----------  -------------  ------------  ----------  -------- 
 At 1 April 2020                        11.3       30.1      (68.8)           11.9          15.4       (0.3)     (0.4) 
 Profit for the period                     -          -         2.0              -             -           -       2.0 
 Other comprehensive 
  income/(expense)                         -          -      (13.7)            0.2             -         0.4    (13.1) 
---------------------------------  ---------  ---------  ----------  -------------  ------------  ----------  -------- 
 Total comprehensive 
  income/(expense) 
  for the period                           -          -      (11.7)            0.2             -         0.4    (11.1) 
 Share-based payments                      -          -           -              -             -           -         - 
---------------------------------  ---------  ---------  ----------  -------------  ------------  ----------  -------- 
 At 30 September 2020                   11.3       30.1      (80.5)           12.1          15.4         0.1    (11.5) 
---------------------------------  ---------  ---------  ----------  -------------  ------------  ----------  -------- 
 

Included in retained earnings is GBP1.3m (31 March 2021: GBP0.8m) relating to a share option reserve.

The other reserves are stated after deducting GBP1.8m (31 March 2021: GBP0.035m) 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 when issuance of new shares is not appropriate.

At 30 September 2021 the Renold Employee Benefit Trust held 7,622,509 (31 March 2021: 199,790) ordinary shares of 5p each and, following recommendations by the employer, are provisionally allocated to satisfy awards under employee incentive schemes. At 30 September 2021 the market value of these shares was GBP1.9m (31 March 2021: GBP0.035m).

Notes to the Interim Condensed Consolidated Financial Statements

   1.   Corporate information 

The interim condensed consolidated financial statements for the six months to 30 September 2021 were approved by the Board on 10 November 2021. 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 2021 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 2021 have been prepared in accordance with the Disclosure and Transparency Rules of the Financial Services Authority and with IAS 34 'Interim Financial Reporting' as adopted by the European Union. It does not include all of the information and disclosures required in the annual consolidated financial statements and should be read in conjunction with the Group's annual consolidated financial statements for the year ended 31 March 2021.

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 2021, 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 amended standards adopted by the Group

The same accounting policies, presentation and methods of computation are followed in the condensed set of financial statements as applied in the Group's latest annual audited financial statements.

As a result of the Covid-19 pandemic, the Group has utilised GBPnil (31 March 2021: GBP4.0m; 30 September 2020: GBP2.3m) of government assistance across its units in the form of employee support schemes. In line with IAS 20, this income was recognised in the income statement at the date at which the conditions attached to receipt of such assistance have been met, in the period it becomes receivable.

New standards and interpretations not yet effective and not adopted

At the date of publishing these interim condensed consolidated financial statements, a number of new and revised standards and interpretations have been issued by the International Accounting Standards Board (IASB). The relevant standards which are deemed to apply to Renold are documented below.

During April 2021 a finalised decision by the IFRS Interpretations Committee regarding configuration and customisation costs in Cloud Computing Arrangements (Software as a Service, 'SaaS') under IAS 38 was made. This new announcement offers clarification of the treatment of how a customer should account for the costs of configuring or customising the supplier's application software in a SaaS arrangement that is determined to be a service contract. The Group intends to perform an assessment by year end to determine which costs should continue to be capitalised, and those which should be expensed.

Going concern

The condensed consolidated financial statements have been prepared on a going concern basis. In determining the appropriate basis of preparation of the condensed consolidated financial statements, the Directors are required to consider whether the Group can continue in operational existence for the foreseeable future. The business and financial review included in these Interim results provides a summary of the Group's financial position, cash flows, liquidity position and borrowings.

The current and plausible future impact of Covid-19 on the Group's activities and performance, in addition to other factors and risks, has been considered by the Board of Directors in preparing its going concern assessment. The Group has modelled potential severe but plausible impacts on revenues, profits and cash flows in its assessment. In preparing its assessment, the Directors have considered the actual impact that Covid-19 has had on the business since the beginning of the outbreak and the related decline in revenues.

The key covenants attached to the Group's multi-currency revolving credit facility relate to leverage (net debt to EBITDA) and interest cover, which are measured on a pre-IFRS 16 basis. The maximum leverage ratio permitted under the covenants is 2.5x and the minimum interest cover ratio permitted is 4.0x. In the severe but plausible downside scenario modelled, the Group continues to maintain sufficient liquidity and meets its gearing and interest cover covenants under the facility with substantial headroom.

In addition to the above scenarios, management has performed reverse stress testing over the model to determine the extent of downturn which would result in a breach of covenants. Assuming similar levels of cash conversion as seen in recent months, a monthly revenue decline compared with the year ended 31 March 2019, well in excess of the maximum decline experienced in any month over the last 18 months would need to persist throughout the going concern period for a covenant breach to occur, which is considered very unlikely. This stress test also does not incorporate additional mitigating actions or cash preservation responses, which the Group would implement in the event of a severe and extended revenue decline.

Following this assessment, the Directors have formed a judgement, at the time of approving the condensed consolidated financial statements, that there are no material uncertainties that cast doubt on the Group's going concern status and that it is a reasonable expectation that the Group has adequate resources to continue in operational existence for at least the next 12 months. For this reason, the Directors continue to adopt the going concern basis in preparing the condensed consolidated financial statements.

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 2021, namely:

-- taxation

-- retirement benefit obligations

-- right-of-use assets

Prior to the adoption of IFRS 16 'Leases', the Group had previously assessed operating lease arrangements at the Bredbury (UK) facility as onerous, with an onerous lease provision recorded in the Group's balance sheet accordingly. On adoption of IFRS 16 the onerous lease provision, GBP2.7m on transition date for this site, was reclassified as a reduction to the opening value of the associated right-of-use asset. During the six months ended 30 September 2021, GBP0.6m of the original onerous lease provision has been reclassified from the right-of-use asset to provisions, representing the element of the GBP2.7m brought forward onerous lease provision relating to expected remediation costs at the site. At the end of the current reporting period, the resulting value of the Bredbury right-of-use asset is based on assumptions upon future sub-let income streams and the discount rate used.

-- 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 2021.

   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 2021 were as follows:

 
 
                                                                         Head office 
                                                          Torque            costs(1) 
   Period ended 30 September            Chain(2)    Transmission    and eliminations   Consolidated 
   2021                                     GBPm            GBPm                GBPm           GBPm 
-------------------------------------  ---------  --------------  ------------------  ------------- 
 Revenue 
 External customer                          76.2            19.1                   -           95.3 
 Inter-segment                               0.4             1.5               (1.9)              - 
-------------------------------------  ---------  --------------  ------------------  ------------- 
 Total revenue                              76.6            20.6               (1.9)           95.3 
-------------------------------------  ---------  --------------  ------------------  ------------- 
 
 Adjusted operating profit/(loss)           10.7             1.8               (4.3)            8.2 
 Amortisation of acquired 
  intangible assets                            -               -                   -              - 
-------------------------------------  ---------  --------------  ------------------  ------------- 
 Operating profit/(loss)                    10.7             1.8               (4.3)            8.2 
 Net financing costs                                                                          (2.0) 
-------------------------------------  ---------  --------------  ------------------  ------------- 
 Profit before tax                                                                              6.2 
 Taxation                                                                                     (1.2) 
 Profit after tax                                                                               5.0 
-------------------------------------  ---------  --------------  ------------------  ------------- 
 
 Other disclosures 
 Working capital                            32.5             8.0               (3.5)           37.0 
 Capital expenditure                         0.5             0.4                 0.4            1.3 
 
 Depreciation and amortisation 
  included in adjusted operating 
  profit/(loss)                              3.1             0.9                 0.9            4.9 
 Amortisation of acquired 
  intangibles                                  -               -                   -              - 
-------------------------------------  ---------  --------------  ------------------  ------------- 
 Total depreciation and amortisation         3.1             0.9                 0.9            4.9 
-------------------------------------  ---------  --------------  ------------------  ------------- 
 

(1) The head office operating loss includes non-recurring costs of GBP0.5m relating to dilapidations charges on closed sites.

(2) Chain operating profit includes non-recurring income of GBP1.7m relating to US PPP loan forgiveness.

The segment results for the period ended 30 September 2020 were as follows:

 
                                                                      Head office 
                                                       Torque               costs 
   Period ended 30 September            Chain    Transmission    and eliminations   Consolidated 
   2020                                  GBPm            GBPm                GBPm           GBPm 
-------------------------------------  ------  --------------  ------------------  ------------- 
 Revenue 
 External Customer                       62.5            19.0                   -           81.5 
 Inter-segment                            0.8             1.6               (2.4)              - 
-------------------------------------  ------  --------------  ------------------  ------------- 
 Total revenue                           63.3            20.6               (2.4)           81.5 
-------------------------------------  ------  --------------  ------------------  ------------- 
 
 Adjusted operating profit/(loss)         5.7             2.5               (2.4)            5.8 
 Amortisation of acquired 
  intangible assets                     (0.5)               -                   -          (0.5) 
-------------------------------------  ------  --------------  ------------------  ------------- 
 Operating profit/(loss)                  5.2             2.5               (2.4)            5.3 
 Net financing costs                                                                       (2.5) 
-------------------------------------  ------  --------------  ------------------  ------------- 
 Profit before tax                                                                           2.8 
 Taxation                                                                                  (0.8) 
 Profit after tax                                                                            2.0 
-------------------------------------  ------  --------------  ------------------  ------------- 
 
 Other disclosures 
 Working capital                         29.0             9.7                 2.1           40.8 
 Capital expenditure                      0.7             0.6                 0.3            1.6 
 
 Depreciation and amortisation 
  included in adjusted operating 
  profit/(loss)                           3.4             0.9                 0.9            5.2 
 Amortisation of acquired 
  intangibles                             0.5               -                   -            0.5 
-------------------------------------  ------  --------------  ------------------  ------------- 
 Total depreciation and amortisation      3.9             0.9                 0.9            5.7 
-------------------------------------  ------  --------------  ------------------  ------------- 
 

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 15 to the interim condensed consolidated financial statements. Constant exchange rate results are retranslated to current year exchange rates and therefore only the prior year comparatives are an alternative performance measure. A reconciliation is provided below and in Note 15.

 
                                                                   Head office 
                                                    Torque               costs 
   Period ended 30 September         Chain    Transmission    and eliminations   Consolidated 
   2020                               GBPm            GBPm                GBPm           GBPm 
----------------------------------  ------  --------------  ------------------  ------------- 
 Revenue 
 External revenue                     62.5            19.0                   -           81.5 
 Inter-segment                         0.8             1.6               (2.4)              - 
 Foreign exchange retranslation      (2.6)           (0.8)                   -          (3.4) 
----------------------------------  ------  --------------  ------------------  ------------- 
 Total revenue at constant 
  exchange rates                      60.7            19.8               (2.4)           78.1 
----------------------------------  ------  --------------  ------------------  ------------- 
 Adjusted operating profit/(loss) 
  at constant exchange rates           5.7             2.5               (2.4)            5.8 
 Foreign exchange retranslation      (0.2)           (0.1)                   -          (0.3) 
----------------------------------  ------  --------------  ------------------  ------------- 
 Adjusted operating profit/(loss) 
  at constant exchange rates           5.5             2.4               (2.4)            5.5 
----------------------------------  ------  --------------  ------------------  ------------- 
 

The segment results for the year ended 31 March 2021 were as follows:

 
                                                                      Head office 
                                                       Torque               costs 
                                        Chain    Transmission    and eliminations   Consolidated 
   Year ended 31 March 2021              GBPm            GBPm                GBPm           GBPm 
-------------------------------------  ------  --------------  ------------------  ------------- 
 Revenue 
 External Customer                      128.9            36.4                   -          165.3 
 Inter-segment                            1.1             2.7               (3.8)              - 
-------------------------------------  ------  --------------  ------------------  ------------- 
 Total revenue                          130.0            39.1               (3.8)          165.3 
-------------------------------------  ------  --------------  ------------------  ------------- 
 
 Adjusted operating profit/(loss)        13.3             5.0               (7.1)           11.2 
 Amortisation of acquired 
  intangible assets                     (0.7)               -                   -          (0.7) 
-------------------------------------  ------  --------------  ------------------  ------------- 
 Operating profit/(loss)                 12.6             5.0               (7.1)           10.5 
 Net financing costs                                                                       (4.6) 
-------------------------------------  ------  --------------  ------------------  ------------- 
 Profit before tax                                                                           5.9 
 Taxation                                                                                  (2.1) 
 Profit after tax                                                                            3.8 
-------------------------------------  ------  --------------  ------------------  ------------- 
 
 Other disclosures 
 Working capital                         29.5             7.8               (0.8)           36.5 
 Capital expenditure                      1.7             0.7                 0.6            3.0 
 
 Depreciation and amortisation 
  included in adjusted operating 
  profit/(loss)                           6.5             1.9                 1.8           10.2 
 Amortisation of acquired 
  intangibles                             0.7               -                   -            0.7 
-------------------------------------  ------  --------------  ------------------  ------------- 
 Total depreciation and amortisation      7.2             1.9                 1.8           10.9 
-------------------------------------  ------  --------------  ------------------  ------------- 
 

The prior year results have been restated using this year's exchange rates as follows:

 
                                                                   Head office 
                                                    Torque               costs 
                                     Chain    Transmission    and eliminations   Consolidated 
   Year ended 31 March 2021           GBPm            GBPm                GBPm           GBPm 
----------------------------------  ------  --------------  ------------------  ------------- 
 Revenue 
 External revenue                    128.9            36.4                   -          165.3 
 Inter-segment                         1.1             2.7               (3.8)              - 
 Foreign exchange retranslation      (4.2)           (1.0)                   -          (5.2) 
----------------------------------  ------  --------------  ------------------  ------------- 
 Total revenue at constant 
  exchange rates                     125.8            38.1               (3.8)          160.1 
----------------------------------  ------  --------------  ------------------  ------------- 
 Adjusted operating profit/(loss)     13.3             5.0               (7.1)           11.2 
 Foreign exchange retranslation      (0.4)           (0.1)                   -          (0.5) 
----------------------------------  ------  --------------  ------------------  ------------- 
 Adjusted operating profit/(loss) 
  at constant exchange rates          12.9             4.9               (7.1)           10.7 
----------------------------------  ------  --------------  ------------------  ------------- 
 
   4.   Adjusting items 

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 15 to the interim condensed consolidated financial statements.

 
                                            First half        Full year 
                                         2021/22    2020/21     2020/21 
                                            GBPm       GBPm        GBPm 
-------------------------------------  ---------   --------  ---------- 
 Included in operating costs: 
 Amortisation of acquired intangible 
  assets (Note 8)                               -       0.5         0.7 
-------------------------------------  ----------  --------  ---------- 
 Adjusting items in operating profit            -       0.5         0.7 
-------------------------------------  ----------  --------  ---------- 
 

Amortisation of acquired intangible assets

Acquisition related intangible asset amortisation costs of GBP0.04m (2020: GBP0.5m) were recognised in the current period. This is considered to be an adjusting item on the basis that these charges result from acquisition accounting and do not relate to current trading activity.

On the 8 April 2021 Renold completed the acquisition of the conveyor chain business of Brooks Ltd in Manchester, UK, for a total consideration of GBP0.7m, including GBP0.4m of deferred consideration. In the period ended 30 September 2021 the business generated additional sales for the Group of GBP0.4m and added GBP0.2m to Group operating profit. The business has been integrated into the Renold UK Service centre in Manchester. The Group recognised GBP0.4m of acquired intangibles on acquisition of the Brooks business. The acquired intangibles are being amortised over a period of five years.

   5.   Net financing costs 
 
                                            First half       Full year 
                                         2021/22   2020/21     2020/21 
                                            GBPm      GBPm        GBPm 
--------------------------------------  --------  --------  ---------- 
 Financing costs: 
 Interest payable on bank loans and 
  overdrafts                               (0.6)     (0.9)       (1.6) 
 Interest paid on lease liabilities        (0.2)     (0.3)       (0.5) 
 Amortised financing costs                 (0.2)     (0.2)       (0.2) 
 Loan financing costs                      (1.0)     (1.4)       (2.3) 
--------------------------------------  --------  --------  ---------- 
 
 Net IAS 19R financing costs               (0.9)     (1.0)       (2.2) 
 Discount unwind on non-current trade 
  and other payables                       (0.1)     (0.1)       (0.1) 
 Net financing costs                       (2.0)     (2.5)       (4.6) 
--------------------------------------  --------  --------  ---------- 
 
   6.   Taxation 
 
                                         First half       Full year 
                                      2021/22   2020/21     2020/21 
                                         GBPm      GBPm        GBPm 
-----------------------------------  --------  --------  ---------- 
 Current tax: 
 - UK                                       -         -           - 
 - Overseas                             (1.5)     (0.9)       (2.2) 
-----------------------------------  --------  --------  ---------- 
 Current income tax charge              (1.5)     (0.9)       (2.2) 
 Deferred tax: 
 - UK                                   (0.2)         -         0.2 
 - Overseas                             (0.1)       0.1       (0.1) 
 - Effects of changes in corporate 
  tax rates                               0.6         -           - 
 Total deferred tax charge                0.3       0.1         0.1 
-----------------------------------  --------  --------  ---------- 
 Total income tax expense               (1.2)     (0.8)       (2.1) 
-----------------------------------  --------  --------  ---------- 
 

Factors affecting current and future tax charges

The increase in overseas current corporate tax is driven by the improved trading in the first six months of the year. The deferred tax movement relates solely to pensions with the GBP0.6m credit arising in respect of the restatement of UK deferred tax balances at the new 25% substantively enacted rate (previously tax effected at 19%).

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 .

   7.   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 
                                       2021/22              2020/21              2020/21 
                                                 Per                  Per                  Per 
                                               share                share                share 
                                  Earnings    amount   Earnings    amount   Earnings    amount 
                                      GBPm   (pence)       GBPm   (pence)       GBPm   (pence) 
-------------------------------  ---------  --------  ---------  --------  ---------  -------- 
 Basic EPS from continuing 
  and discontinued operations 
 Profit attributed to ordinary 
  shareholders                         5.0      2.3p        2.0      0.9p        3.8      1.7p 
-------------------------------  ---------  --------  ---------  --------  ---------  -------- 
 Basic EPS from continuing 
  operations                           5.0      2.3p        2.0      0.9p        3.8      1.7p 
 Effect of adjusting items, 
  after tax: 
  Amortisation of acquired 
   intangible assets                     -         -        0.5      0.2p        0.7      0.3p 
 Adjusted EPS                          5.0      2.3p        2.5      1.1p        4.5      2.0p 
-------------------------------  ---------  --------  ---------  --------  ---------  -------- 
 
 
                                                    First half          Full year 
                                                 2021/22      2020/21      2020/21 
                                               Thousands    Thousands    Thousands 
-------------------------------------------  -----------  -----------  ----------- 
 Weighted average number of ordinary 
  shares: 
 For the purpose of calculating basic 
  earnings per share                             219,458      225,418      225,418 
 Effect of dilutive potential ordinary 
  shares: 
  Shares subject to performance conditions        14,195        6,210        7,293 
-------------------------------------------  -----------  -----------  ----------- 
 For the purpose of calculating diluted 
  earnings per share                             233,653      231,628      232,711 
-------------------------------------------  -----------  -----------  ----------- 
 
 
                                                        First half               Full year 
                                                  2021/22         2020/21          2020/21 
                                                  (pence)         (pence)          (pence) 
----------------------------------------------  ---------  ---  ---------  ---  ---------- 
 Diluted EPS from continuing and discontinued 
  operations                                         2.1p            0.9p             1.6p 
 Diluted EPS from continuing operations              2.1p            0.9p             1.6p 
 Diluted adjusted EPS                                2.1p            1.1p             1.9p 
----------------------------------------------  ---------  ---  ---------  ---  ---------- 
 

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.

   8.   Retirement benefit obligations 

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

 
                                              At 30        At 30     At 31 
                                          September    September     March 
                                               2021         2020      2021 
                                               GBPm         GBPm      GBPm 
--------------------------------------  -----------  -----------  -------- 
 
 Funded plan obligations                    (233.5)      (242.8)   (230.5) 
 Funded plan assets                           156.1        153.8     151.2 
--------------------------------------  -----------  -----------  -------- 
 Net funded plan obligations                 (77.4)       (89.0)    (79.3) 
 Unfunded obligations                        (22.9)       (26.6)    (23.1) 
--------------------------------------  -----------  -----------  -------- 
 Total retirement benefit obligations       (100.3)      (115.6)   (102.4) 
--------------------------------------  -----------  -----------  -------- 
 

Analysed as follows:

 
 Non-current liabilities: Retirement 
  benefit obligations                   (100.3)   (115.6)   (102.4) 
 Net deferred tax asset                    22.5      20.9      18.4 
 Retirement benefit obligation net 
  of deferred tax                        (77.8)    (94.7)    (84.0) 
-------------------------------------  --------  --------  -------- 
 

The increase in the Group's net pre-tax deficit from GBP102.4m at 31 March 2021 to GBP100.3m at 30 September 2021 primarily reflects employer contributions made in the period.

   9.   Additional Cashflow Information 

Reconciliation of operating profit to net cash flows from operations:

 
                                                First half       Full year 
                                             2021/22   2020/21     2020/21 
                                                GBPm      GBPm        GBPm 
------------------------------------------  --------  --------  ---------- 
 Cash generated from operations: 
 Operating profit from continuing and 
  discontinued operations                        8.2       5.3          10.5 
 Depreciation of property, plant and 
  equipment - owned assets                       2.7       3.2           5.5 
 Depreciation of property, plant and 
  equipment - right-of-use-assets                1.4       1.4           2.8 
 Amortisation of intangible assets               0.8       1.1           2.6 
 Loss on disposals of plant and equipment          -         -           0.1 
 US PPP loan forgiveness                       (1.7) 
 Equity share plans                              0.5         -             - 
 (Increase)/decrease in inventories            (6.3)       4.9           6.3 
 (Increase)/decrease in receivables            (7.1)       4.6           4.2 
 Increase/(decrease) in payables                13.6     (5.8)         (5.0) 
 Increase in provisions                          0.3         -           0.7 
 Cash contribution to pension schemes          (2.4)     (1.1)         (2.1) 
 Pension current service cost (non-cash)         0.1       0.1           0.1 
 Pension past service cost (non-cash)              -         -           0.3 
 Cash generated from operations                 10.1      13.7          26.0 
------------------------------------------  --------  --------  ------------ 
 

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

 
                                                First half       Full year 
                                             2021/22   2020/21     2020/21 
                                                GBPm      GBPm        GBPm 
------------------------------------------  --------  --------  ---------- 
 
 (Decrease)/increase in cash and cash 
  equivalents                                  (6.0)       4.0         1.5 
 Change in net debt resulting from 
  cash flows                                     9.2       6.4        17.1 
 US PPP loan forgiveness                         1.7         -           - 
 Foreign Currency translation differences      (0.2)         -       (0.2) 
 Non-cash movement on capitalised finance 
  costs                                        (0.2)     (0.2)       (0.2) 
 Change in net debt during the period            4.5      10.2        18.2 
 Net debt at start of period                  (18.4)    (36.6)      (36.6) 
------------------------------------------  --------  --------  ---------- 
 Net debt at end of period                    (13.9)    (26.4)      (18.4) 
------------------------------------------  --------  --------  ---------- 
 

Net debt comprises:

 
                              At 30 September   At 30 September 
                                         2021              2020     At 31 March 
                                         GBPm              GBPm            2021 
                                                                           GBPm 
---------------------------  ----------------  ----------------  -------------- 
 Cash and cash equivalents               11.5              19.6            19.9 
 Total debt                            (25.4)            (46.0)          (38.3) 
                                       (13.9)            (26.4)          (18.4) 
---------------------------  ----------------  ----------------  -------------- 
 
 
                                  At 30 September   At 30 September 
                                             2021              2020     At 31 March 
                                                                               2021 
 Net cash and cash equivalents               GBPm              GBPm            GBPm 
-------------------------------  ----------------  ----------------  -------------- 
 Cash and cash equivalents                   11.5              19.6            19.9 
 Less: Overdrafts                           (0.3)             (0.5)           (2.6) 
 Net cash and cash equivalents               11.2              19.1            17.3 
-------------------------------  ----------------  ----------------  -------------- 
 
 
                           At 30 September   At 30 September 
                                      2021              2020     At 31 March 
                                                                        2021 
 Total debt                           GBPm              GBPm            GBPm 
------------------------  ----------------  ----------------  -------------- 
 Borrowings: 
 Overdrafts                          (0.3)             (0.5)           (2.6) 
 Capitalised costs                     0.2               0.4             0.3 
------------------------  ----------------  ----------------  -------------- 
 Current borrowings                  (0.1)             (0.1)           (2.3) 
 Bank Loans                         (25.0)            (45.7)          (35.7) 
 Capitalised costs                     0.2               0.3             0.2 
------------------------  ----------------  ----------------  -------------- 
 Non-current borrowings             (24.8)            (45.4)          (35.5) 
------------------------  ----------------  ----------------  -------------- 
 Total borrowings                   (24.9)            (45.5)          (37.8) 
 Preference stock                    (0.5)             (0.5)           (0.5) 
 Total debt                         (25.4)            (46.0)          (38.3) 
------------------------  ----------------  ----------------  -------------- 
 

10. Called up share capital

 
                                    At 30        At 30    At 31 
                                September    September    March 
                                     2021         2020     2021 
                                     GBPm         GBPm     GBPm 
----------------------------  -----------  -----------  ------- 
 
 Ordinary shares of 5p each          11.3         11.3     11.3 
----------------------------  -----------  -----------  ------- 
 

At 30 September 2021, the issued ordinary share capital comprised 225,417,740 ordinary shares of 5p each (30 September 2020: 225,417,740 shares).

11. Capital reorganisation

As part of its long-term financial planning Renold plc, the Company, has reorganised its balance sheet and reserves through the cancellation of the entire amount of its share premium account and capital redemption reserve. The share premium account and capital redemption reserve were non-distributable reserves and accordingly, the purposes for which the Company could use these were extremely restricted. The reduction of capital creates sufficient distributable reserves to provide the Board with greater flexibility with regard to how it manages its capital resources. This provided flexibility in such matters as making payments to the holders of Preference Stock, commencing a share buy-back programme consistent with the authority granted by Shareholders at the last annual general meeting, in order to, inter alia, fund employee share schemes, thereby avoiding dilution for existing Shareholders or, should the Board determine it appropriate to do so in the future, make dividend distributions to Shareholders.

The order of the High Court confirming the above capital reorganisation became effective on 27 May 2021, increasing distributable reserves by GBP45.5m.

12. Capital commitments

At 30 September 2021 capital expenditure contracted for but not provided for in these accounts amounted to GBP0.3m (30 September 2020: GBP1.0m).

13. Related party transactions

Transactions between the Company and its wholly owned subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed.

14. 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), including the presentation of the income statement with 'Adjusted' measures shown separately from statutory items. Amortisation of acquired intangibles, restructuring costs, discontinued operations and material one-off items or remeasurements are identified separately as management seek to present a measure of performance which is not impacted by material non-recurring items or items considered non-operational. See Note 4 for a breakdown and explanation of the items excluded from adjusted profit. 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 comparative to current period 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 
  at constant exchange rates          F 
                                                 -------------------------------------- 
 -- adjusted operating profit         G 
  margin at constant exchange rates 
-----------------------------------  ----------  -------------------------------------- 
 -- EBITDA                            H           EBITDA is a widely utilised 
                                                   measure of profitability, 
                                                   adjusting to remove non-cash 
                                                   depreciation and amortisation 
                                                   charges 
                                                 -------------------------------------- 
 -- adjusted EBITDA                   H 
                                                 -------------------------------------- 
 -- operating cash flow               H 
-----------------------------------  ----------  -------------------------------------- 
 -- net debt                                      Net debt, leverage and gearing 
                                        I          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 
-----------------------------------  ----------  -------------------------------------- 
 

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

(A) Adjusted operating profit

 
                                                  First half       Full year 
                                               2021/22   2020/21     2020/21 
                                                  GBPm      GBPm        GBPm 
--------------------------------------------  --------  --------  ---------- 
 Statutory operating profit from continuing 
  operations                                       8.2       5.3        10.5 
 Add back: 
  Amortisation of acquired intangible 
   assets                                            -       0.5         0.7 
 Adjusted operating profit                         8.2       5.8        11.2 
--------------------------------------------  --------  --------  ---------- 
 

(B) Adjusted profit before taxation

 
                                             First half       Full year 
                                          2021/22   2020/21     2020/21 
                                             GBPm      GBPm        GBPm 
---------------------------------------  --------  --------  ---------- 
 Statutory profit before taxation from 
  continuing operations                       6.2       2.8         5.9 
 Add back: 
  Amortisation of acquired intangible 
   assets                                       -       0.5         0.7 
 Adjusted profit before taxation              6.2       3.3         6.6 
---------------------------------------  --------  --------  ---------- 
 

(C) Adjusted earnings per share

Adjusted EPS is reconciled to statutory EPS in Note 7.

(D) Return on sales and operating profit gearing

 
                                 First half       Full year 
                              2021/22   2020/21     2020/21 
                                 GBPm      GBPm        GBPm 
---------------------------  --------  --------  ---------- 
 Adjusted operating profit        8.2       5.8        11.2 
 Revenue                         95.3      81.5       165.3 
 Return on sales %               8.6%      7.1%        6.8% 
---------------------------  --------  --------  ---------- 
 
 
                                                            Head office 
                                             Torque               costs 
                              Chain    Transmission    and eliminations   Consolidated 
 Period ended 30 September 
  2021                         GBPm            GBPm                GBPm           GBPm 
---------------------------  ------  --------------  ------------------  ------------- 
 Adjusted operating profit     10.7             1.8               (4.3)            8.2 
 Total revenue (including 
  inter-segment sales)         76.6            20.6               (1.9)           95.3 
---------------------------  ------  --------------  ------------------  ------------- 
 Adjusted operating profit 
  margin %                    14.0%            8.7%                 n/a           8.6% 
---------------------------  ------  --------------  ------------------  ------------- 
 
 
                                                            Head office 
                                             Torque               costs 
                              Chain    Transmission    and eliminations   Consolidated 
 Period ended 30 September 
  2020                         GBPm            GBPm                GBPm           GBPm 
---------------------------  ------  --------------  ------------------  ------------- 
 Adjusted operating profit      5.7             2.5               (2.4)            5.8 
 Total revenue (including 
  inter-segment sales)         63.3            20.6               (2.4)           81.5 
---------------------------  ------  --------------  ------------------  ------------- 
 Adjusted operating profit 
  margin %                     9.0%           12.1%                 n/a           7.1% 
---------------------------  ------  --------------  ------------------  ------------- 
 
 
                                                            Head office 
                                             Torque               costs 
                              Chain    Transmission    and eliminations   Consolidated 
 Year ended 31 March 2021      GBPm            GBPm                GBPm           GBPm 
---------------------------  ------  --------------  ------------------  ------------- 
 Adjusted operating profit     13.3             5.0               (7.1)           11.2 
 Total revenue (including 
  inter-segment sales)        130.0            39.1               (3.8)          165.3 
---------------------------  ------  --------------  ------------------  ------------- 
 Adjusted operating profit 
  margin %                    10.2%           12.8%                 n/a           6.8% 
---------------------------  ------  --------------  ------------------  ------------- 
 
 
                                                                    Head office 
                                                     Torque               costs 
                                      Chain    Transmission    and eliminations   Consolidated 
 Period ended 30 September 
  2021                                 GBPm            GBPm                GBPm           GBPm 
-----------------------------------  ------  --------------  ------------------  ------------- 
 Year-on-year change in adjusted 
  operating profit                      5.0           (0.7)               (1.9)            2.4 
 Year-on-year change in total 
  revenue (including inter-segment 
  sales)                               13.3               -                 0.5           13.8 
-----------------------------------  ------  --------------  ------------------  ------------- 
 Operating profit gearing 
  %                                     38%              -%                 n/a            17% 
-----------------------------------  ------  --------------  ------------------  ------------- 
 

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

 
                                                                 Head office 
                                                  Torque               costs 
                                   Chain    Transmission    and eliminations   Consolidated 
 Six months ended 30 September 
  2020                              GBPm            GBPm                GBPm           GBPm 
--------------------------------  ------  --------------  ------------------  ------------- 
 External revenue                   62.5            19.0                   -           81.5 
 Inter-segment                       0.8             1.6               (2.4)              - 
 Foreign exchange retranslation    (2.6)           (0.8)                   -          (3.4) 
--------------------------------  ------  --------------  ------------------  ------------- 
 Revenue at constant exchange 
  rates                             60.7            19.8               (2.4)           78.1 
--------------------------------  ------  --------------  ------------------  ------------- 
 Adjusted operating profit           5.7             2.5               (2.4)            5.8 
 Foreign exchange retranslation    (0.2)           (0.1)                   -          (0.3) 
--------------------------------  ------  --------------  ------------------  ------------- 
 Adjusted operating profit 
  at constant exchange rates         5.5             2.4               (2.4)            5.5 
--------------------------------  ------  --------------  ------------------  ------------- 
 Adjusted operating profit 
  margin %                          9.1%           12.1%                   -           7.0% 
--------------------------------  ------  --------------  ------------------  ------------- 
 
 
                                                                 Head office 
                                                  Torque               costs 
                                   Chain    Transmission    and eliminations   Consolidated 
 Year ended 31 March 2021           GBPm            GBPm                GBPm           GBPm 
--------------------------------  ------  --------------  ------------------  ------------- 
 External revenue                  128.9            36.4                   -          165.3 
 Inter-segment                       1.1             2.7               (3.8)              - 
 Foreign exchange retranslation    (4.2)           (1.0)                   -          (5.2) 
--------------------------------  ------  --------------  ------------------  ------------- 
 Revenue at constant exchange 
  rates                            125.8            38.1               (3.8)          160.1 
--------------------------------  ------  --------------  ------------------  ------------- 
 Adjusted operating profit          13.3             5.0               (7.1)           11.2 
 Foreign exchange retranslation    (0.4)           (0.1)                   -          (0.5) 
--------------------------------  ------  --------------  ------------------  ------------- 
 Adjusted operating profit 
  at constant exchange rates        12.9             4.9               (7.1)           10.7 
--------------------------------  ------  --------------  ------------------  ------------- 
 Adjusted operating profit 
  margin %                         10.3%           12.9%                   -           6.7% 
--------------------------------  ------  --------------  ------------------  ------------- 
 

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

 
                                                  First half       Full year 
                                               2021/22   2020/21     2020/21 
                                                  GBPm      GBPm        GBPm 
--------------------------------------------  --------  --------  ---------- 
 Statutory operating profit from continuing 
  operations                                       8.2       5.3        10.5 
 Depreciation and amortisation                     4.9       5.7        10.9 
--------------------------------------------  --------  --------  ---------- 
 EBITDA and Adjusted EBITDA                       13.1      11.0        21.4 
--------------------------------------------  --------  --------  ---------- 
 Inventories (Note 9)                            (6.3)       4.9         6.3 
 Trade and other receivables (Note 
  9)                                             (7.1)       4.6         4.2 
 Trade and other payables (Note 9)                13.6     (5.8)       (5.0) 
 Provisions (Note 9)                               0.3         -         0.7 
 Less: Restructuring cash spend                      -         -         0.2 
--------------------------------------------  --------  --------  ---------- 
 Movement in working capital                       0.5       3.7         6.4 
--------------------------------------------  --------  --------  ---------- 
 Purchase of property, plant and equipment       (0.8)     (1.0)       (2.3) 
 Purchase of intangible assets                   (0.6)     (0.2)       (0.8) 
 Proceeds from property disposals                  0.1       0.2         0.2 
--------------------------------------------  --------  --------  ---------- 
 Net capital expenditure                         (1.6)     (1.0)       (2.9) 
--------------------------------------------  --------  --------  ---------- 
 Operating cash flow                              12.3      13.7        24.9 
--------------------------------------------  --------  --------  ---------- 
 

(I) Net debt

Net debt is reconciled to the statutory balance sheet in Note 9.

(J) Leverage ratio

 
                                           At 30        At 30       At 31 
                                       September    September       March 
                                            2021         2020        2021 
                                            GBPm         GBPm        GBPm 
-----------------------------------  -----------  -----------  ---------- 
 Net debt (see Note 9)                      13.9         26.4        18.4 
 
 H2 2019/20 Adjusted EBITDA                    -         11.1           - 
 H1 2020/21 Adjusted EBITDA                    -         11.0        11.0 
 H2 2020/21 Adjusted EBITDA                 10.4            -        10.4 
 H1 2021/22 Adjusted EBITDA                 13.1            -           - 
-----------------------------------  -----------  -----------  ---------- 
 12 months rolling adjusted EBITDA          23.5         22.1        23.9 
-----------------------------------  -----------  -----------  ---------- 
 Leverage ratio                        0.6 times    1.2 times   0.9 times 
-----------------------------------  -----------  -----------  ---------- 
 

(K) Gearing ratio

 
                                                At 30        At 30    At 31 
                                            September    September    March 
                                                 2021         2020     2021 
                                                 GBPm         GBPm     GBPm 
----------------------------------------  -----------  -----------  ------- 
 Net debt (see Note 9)                           13.9         26.4     18.4 
 
  Equity attributable to equity holders 
   of the parent                                  3.3       (11.5)    (6.1) 
  Net debt (see Note 9)                          13.9         26.4     18.4 
----------------------------------------  -----------  -----------  ------- 
 Total capital plus net debt                     17.2         14.9     12.3 
----------------------------------------  -----------  -----------  ------- 
 Gearing ratio %                                  81%         177%     150% 
----------------------------------------  -----------  -----------  ------- 
 

(L) Legacy pension cash costs

 
                                               First half       Full year 
                                            2021/22   2020/21     2020/21 
                                               GBPm      GBPm        GBPm 
-----------------------------------------  --------  --------  ---------- 
 Cash contributions to pension schemes          1.8       0.5         0.8 
 Pension payments in respect of unfunded 
  schemes                                       0.6       0.6         1.3 
 Scheme administration costs                    0.3       0.4         0.5 
                                                2.7       1.5         2.6 
-----------------------------------------  --------  --------  ---------- 
 

Ends

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(END) Dow Jones Newswires

November 10, 2021 02:00 ET (07:00 GMT)

Renold (LSE:RNO)
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