REG - Tyman PLC - Final Results
02/03/2023 07:00
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RNS Number : 5956R Tyman PLC 02 March 2023
TYMAN PLC
RESULTS FOR THE YEAR ENDED 31 DECEMBER 2022
Tyman plc (TYMN.L) announces results for the year ended 31 December 2022.
Summary Group Results
£m unless stated 2022 2021 Change LFL((1))
Revenue 715.5 635.7 +13% +5%
Adjusted operating profit* 94.6 90.0 +5% -3%
Adjusted operating margin* 13.2% 14.2% -100bps -100bps
Operating profit 70.7 73.1 -3%
Adjusted profit before taxation* 85.8 81.5 +5%
Profit before taxation 61.4 64.0 -4%
Adjusted EPS* 34.7p 32.1p +8%
Basic EPS 24.6p 25.4p -3%
Dividend per share 13.7p 12.9p +6%
Leverage((2)) 1.0x 0.9x +0.1x
Return on capital employed* 13.3% 14.5% -120bps
* Alternative performance measures. These "Adjusted" metrics are before
amortisation of acquired intangible assets, impairment of acquired intangible
assets, impairment of goodwill, and adjusting items. These measures provide
additional information to shareholders on the underlying performance of the
business and are used consistently through the statement. Further details
can be found on page 39.
(1) LFL = constant currency like-for-like (see APMs on page 40).
(2) Leverage is calculated in accordance with the debt covenant
methodology (see APMs on page 42).
Highlights:
• Performance at upper end of expectations despite challenging
macroeconomic backdrop
• Revenue growth of 13%, with LFL growth of 5% reflecting successful
pricing actions and share gains, partially offset by lower market volumes,
including the exit from Russia
• Adjusted operating profit growth of 5%, with a LFL decline of 3%
reflecting lower volumes, including the exit from Russia; operating profit
decline of 3%
• Adjusted operating margin decline principally reflects the
dilutive impact of the pass-through of cost inflation
• Good progress with our strategic initiatives:
• Share gains, driven by innovation, market expansion and executing
well with customers
• Structural margin enhancement activities, including further
footprint optimisation, ERP upgrade, factory automation and process
enhancement projects
• Further external recognition of our sustainability credentials;
90% of funding now linked to sustainability performance following successful
debt refinancing
• Full year dividend increase of 6%, reflecting growth in adjusted
EPS of 8% and confidence in the Group's future growth prospects
Jo Hallas, Chief Executive Officer, commented: "The Group delivered a solid
trading performance in 2022 against increasingly challenging market
conditions. Our continued focus on share gains and improving our operational
platform, together with successful implementation of pricing actions and
strong cost control, enabled us to deliver full year adjusted operating profit
at the upper end of market expectations.
We made further progress on our sustainability roadmap and the issuance of new
sustainability-linked financing bolsters the Group's commitments to a more
sustainable world. Pleasingly, this progress has been recognised by external
agencies, most recently with Tyman's inclusion in the FTSE4Good UK Index.
In 2023, pricing carryover, self-help measures and benefits from strategic
initiatives are expected to partially mitigate lower volumes and ongoing cost
inflation as we navigate the near-term economic challenges. The underlying
fundamentals of the markets the Group operates in remain strong. Building on
our portfolio of differentiated products, market-leading brands, deep customer
relationships and sustainability credentials, together with our agile and
resilient business model, Tyman is well positioned to take advantage of the
positive structural industry growth drivers as housing market conditions
improve."
2 March 2023
Enquiries
Tyman plc 020 7976 8000
Jo Hallas - Chief Executive Officer investor.relations@tymanplc.com
Jason Ashton - Chief Financial Officer
Matt Jones - Head of Investor Relations
MHP 020 3128 8613
Reg Hoare / Rachel Farrington / Matthew Taylor tyman@mhpgroup.com
Analyst and investor presentation
Tyman will host an analyst and investor presentation at 9.00a.m. today,
Thursday 2 March 2023, at the offices of Numis Securities, 45 Gresham Street,
London, EC2V 7BF.
The presentation will be webcast at:
https://stream.brrmedia.co.uk/broadcast/63c11b57ddbb3277238ea92c
(https://stream.brrmedia.co.uk/broadcast/63c11b57ddbb3277238ea92c)
The audio conference call details are:
Number +44 (0) 33 0551 0200
Confirmation code 7511641
Notes to editors
Tyman (TYMN: LSE) is a leading international supplier of engineered
fenestration components and access solutions to the construction industry. The
company designs and manufactures products that enhance the comfort,
sustainability, security, safety and aesthetics of residential homes and
commercial buildings. Tyman's portfolio of leading brands serve their markets
through three divisions: Tyman North America, Tyman UK & Ireland and Tyman
International. Headquartered in London, the Group employs approximately 3,700
people with facilities in 16 countries worldwide. Further information is
available at www.tymanplc.com (http://www.tymanplc.com/) .
Overview of results
Performance in 2022
Tyman delivered a solid trading performance in 2022 against a strong
comparative period and despite increasingly challenging market conditions.
Revenue for the year of £715.5 million (2021: £635.7 million) grew by 13%
compared to 2021, reflecting like-for-like (LFL) growth of 5% together with 8%
growth from foreign exchange movements. LFL revenue growth reflected the
benefit of pricing actions implemented to recover cost inflation, and share
gains, partially offset by lower volumes. In addition, the Group discontinued
business with Russia and Belarus from February 2022 in response to the war in
Ukraine, and this impacted LFL revenue growth by 1 percentage point.
Underlying demand in most of the Group's major markets began the year
strongly, driven by favourable structural industry trends and a continuation
of the post-COVID rebound in RMI activity, some of which was supported by
government fiscal stimulus. Whilst the positive long-term structural trends
remain intact, underlying demand levels began to moderate in the summer of
2022 as sharp increases in consumer inflation fed through to rapid rises in
interest rates, the combination of which has caused a cost-of-living crisis
across most major economies and led to a reduction in residential RMI and
housebuilding activity. This moderation in demand became significantly more
pronounced during the latter part of the year. Nevertheless, our scale and
agility enabled us to win market share, notably in our North American and
International divisions.
Input cost inflation remained a challenge in 2022 as, whilst many commodity
prices and freight rates moderated as the year progressed, the conflict in
Ukraine put upwards pressure on energy prices and raw material conversion
costs. In addition, labour markets have remained highly competitive for the
past 18 months, especially in the US, which has resulted in wage inflation
above long-term averages. We have reacted with agility to these challenges and
successfully passed on rising input cost inflation to customers in the form of
general price increases and temporary surcharges, although there is an
inevitable lag in recovery due to the size and frequency of these increases,
as well as some backward-looking customer pricing mechanisms.
The Group responded to the moderation in demand in the second half of the year
with adjustments to production shifts, reductions in temporary labour and
various tactical cost-saving actions. The improving supply chain environment
allowed the Group to implement inventory reduction plans, although these have
been constrained to some extent by lower shipments. We are continuing to
closely monitor developments in our supply chains, especially given heightened
geopolitical tensions in many parts of the world. The Group also progressed
structural cost-saving initiatives, including the exit of three manufacturing
facilities in the UK and Germany which will complete in early 2023 and deliver
annualised benefits of c. £3 million.
The Group's self-help measures partially mitigated the lower volumes,
including the impact of the exit from Russia and Belarus (these markets
contributed £3 million to adjusted operating profit in 2021). Adjusted
operating profit for the year of £94.6 million (2021: £90.0 million) grew by
5% on a reported basis compared to 2021, reflecting a LFL decline of 3% and
foreign exchange benefit of 8%. The pass-through of input cost inflation had a
dilutive effect on adjusted operating profit margins due to the higher revenue
base. Inflation and foreign exchange movements, together with the marked
reduction in volumes shipped towards the end of the year, had a significant
impact on inventory levels, in turn leading to a reduction in return on
capital employed by 120bps to 13.3%. This also resulted in adjusted operating
cash conversion of 64% (2021: 64%) remaining below the target average of 90%.
Health and safety
The health and safety of our people is the Group's top priority and is being
embedded across our culture through our 'Safety is our First Language'
programme. Pleasingly, the Group achieved a lost time incident frequency rate
(LTIFR), excluding COVID-19 cases, of 1.4 in 2022, a 26% improvement on 2021
and a 71% improvement versus the 2018 baseline LTIFR of 4.8. Specific safety
improvement plans were implemented at four locations with the highest incident
rates in 2021; this led to lost time incidents and other recordables at these
sites more than halving to 20 in 2022 (2021: 42).
Whilst the Group is yet to achieve its ambitious goal of a LTIFR of less than
1.0, the downward trend in work-related injuries and positively trending
leading indicators give us confidence that the Group now has the solid
foundations in place to deliver world-class levels of safety performance.
Strategic progress
The Group has continued to progress its Focus, Define, Grow strategy, which is
underpinned by the three sustainability pillars of Sustainable Operations,
Sustainable Culture and Sustainable Solutions.
The Focus activities seek to improve operational efficiency and structurally
improve the cost base by optimising footprint, enhancing systems and processes
and reducing complexity. Examples of such activity in 2022 included the exit
of three manufacturing facilities in the UK and Germany, the optimisation of
the distribution network for the western US market, investment in factory
automation in Italy and the UK, and the continuation of a multi-year programme
to roll out a global ERP template. The North American product portfolio
harmonisation project made further progress, with work moving to the hinged
patio door and casement product groups during the year. The Sustainable
Operations activities included transitioning the Group's largest manufacturing
facility in Europe to use 80% recycled aluminium content and installing solar
panels at a major UK site. The Group has defined its Science Based Targets and
submitted these to the SBTi for validation, with Scope 1 and 2 targets in line
with a 1.5(o)C pathway and Scope 3 targets in line with a 'well below 2(o)C'
pathway.
The Define strategic pillar, which aims to build cultural cohesion to
facilitate ongoing synergy extraction, has continued to gain momentum through
embedding the 'One Tyman' culture and expanding the 'Tyman Excellence System'
for the development and deployment of best practice. Under Lean Excellence,
the Group held its first cross-divisional Kaizen week at its Budrio site in
Italy, creating stronger awareness and engagement with lean across site
representatives from around the world, with more such events to be conducted
in 2023. As part of the Sustainability Excellence work, a database was
developed to facilitate groupwide sharing of best practice for reducing
energy, water and waste, designing sustainable products, and transitioning to
sustainable packaging. This has already helped to drive the development of
sustainable packaging for retail customers seeking to eliminate single-use
plastic.
Under Sustainable Culture, a groupwide employee engagement survey was
conducted, followed up with focus groups to define local and cross-site action
plans. An ethics leadership course was deployed to provide senior leaders with
the skills to create an environment of psychological safety, further embedding
the Group's Code of Business Ethics.
The Grow activities aim to deliver organic share gains through excellent
customer service, new product development (NPD) and market expansion. In North
America, there were net customer wins of c. US$9 million in 2022, in part
reflecting the recent investment to expand Q-Lon capacity. In our
international markets, strong progress was made with system houses, growing
this channel by 26%, whilst in the UK there was further market penetration
with innovative commercial access solutions products. The recent reduction in
demand levels and moderation of supply chain disruption is enabling greater
emphasis on innovation and NPD, and a series of new products were launched in
2022, with a strong pipeline of launches scheduled for 2023. In the US,
shipments have begun from the new distribution centre in Phoenix which will
enable greater market penetration in the western US, whilst new casement
hardware designed for the Canadian market is aimed at strengthening share in
2023.
Enabling customers to innovate through more Sustainable Solutions is a key
area of differentiation for the Group. Across Europe and the Middle East,
sustainability is an enabler of share gains with system houses. In North
America, the Group initiated high-level sustainability workshops with several
of its largest customers during the second half of the year to understand
their sustainability priorities and investigate ways to share insights and
collaborate on new solutions. During 2023, the Group will be working with at
least two of these customers to develop new returnable packaging solutions to
eliminate transit packaging at their plants, enabling them to enhance their
own sustainability credentials.
Tyman's commitment to achieving its sustainability targets is now linked to
nearly 90% of its funding. During 2022 the Group successfully completed the
refinancing of both US$75 million of US private placement notes and its
syndicated revolving credit facility (providing £210 million of committed
funding together with an accordion option of up to £100 million). In both
cases, the financing included economic incentives for the achievement of
sustainability performance targets which align with Tyman's sustainability
roadmap.
It has been particularly pleasing that the Group's progress on its
sustainability roadmap is leading to further external recognition. During 2022
MSCI awarded Tyman an "AA" leader rating and both S&P Global and
Sustainalytics rank Tyman in the top 20% of building products peers globally.
Tyman completed its first Carbon Disclosure Project (CDP) submission in 2022
and in December 2022 Tyman became a constituent of the FTSE4Good UK Index.
The Group is prepared for a disciplined return to M&A and has a good
pipeline of targets that meet our commercial and strategic objectives. The
strengthened platform and Tyman Excellence System should facilitate greater
synergy extraction from acquired businesses in the future.
Outlook
The underlying fundamentals of the markets the Group operates in remain
strong. For much of the last decade, housing supply has failed to keep pace
with demand in most of the Group's key markets, causing a structural housing
deficit. There are also positive structural growth drivers for residential RMI
spending, including ageing housing stock, increased focus on the energy
efficiency of buildings, strengthening building codes and a desire for greater
comfort and flexibility of the home. Taken together, these factors are
expected to provide an ongoing stimulus to the replacement and upgrade of
windows and doors.
Nevertheless, the near-term outlook remains challenging, given high levels of
inflation and interest rates are constraining housing market affordability and
activity. The industry has limited forward visibility and it is difficult to
quantify the amount of customer destocking that took place in the latter half
of 2022, but the weakness in volumes experienced in the second half of 2022 is
expected to continue at least during the first half of 2023, which will also
be particularly impacted by a strong comparator.
The Group will continue to drive market share gains through executing well
with customers, launching innovative new products, and expanding its channels
and markets. In 2023, the Group is expected to benefit from new product
launches in all its core markets, continued share gains with system houses,
greater penetration of the western US and Canadian markets and pricing
carryover. Activities to strengthen operational efficiency will be progressed,
including supply chain improvements to reduce cost and enhance resilience.
Together with the previously announced c. £3 million benefit from the
structural cost-savings initiatives in the UK and Germany, these self-help
measures are expected to partially mitigate lower volumes and ongoing wage and
other cost inflation. Operating margins will remain under pressure given the
volume impact as well as a continuing elevated level of inflation.
Tyman is well positioned to navigate the near-term macroeconomic challenges
and take advantage of the positive structural industry growth drivers as
housing market conditions improve. Our agile and resilient business model,
together with our strategic initiatives, continues to position Tyman well for
future growth, building on our portfolio of differentiated products,
market-leading brands, deep customer relationships and sustainability
credentials. We remain confident in our ability to deliver our margin targets
over the medium term in a more normalised market environment.
Jo Hallas
Chief Executive Officer
Tyman North America
£m except where stated 2022 2021 Change LFL
Revenue 471.9 397.7 +19% +7%
Adjusted operating profit 66.9 65.1 +3% -8%
Adjusted operating margin 14.2% 16.4% -220bps -220bps
Markets
The US residential housing market began 2022 robustly, but as rising inflation
and interest rates took hold in the middle of the year, demand for both the
RMI and new build segments of the market started to soften. This softening
picked up pace towards the end of the year as 30-year fixed mortgage rates hit
7%, double the level at the beginning of the year. According to the US Census
Bureau, US housing starts decreased by 3.1% to 1.555 million units in 2022,
whilst single family housing starts, to which the division has proportionally
higher exposure, decreased by 10.6%. The NAHB forecasts there was a 6.9%
reduction (adjusted for inflation) in private residential improvement spending
activity in 2022. In Canada, single family housing starts declined by 5.9% in
2022, as the Canadian housing market was also affected by rising inflation and
interest rates.
The US commercial building sector has been more resilient in 2022, driven by
domestic manufacturing and commercial building investment. The recently passed
government infrastructure spend legislation will provide some degree of
stimulus to the public infrastructure market in the coming years.
Business performance and developments
LFL revenue grew by 7% in 2022, despite the strong LFL growth recorded in the
comparative period. Reported revenue growth of 19% reflected the impact of
foreign exchange. LFL revenue growth benefitted from pricing actions and net
customer wins, which more than offset a decline in volumes in the full-year
period resulting from the challenging market backdrop. Volumes began to
decline from the middle of the year as the US residential housing market
slowed, with the pace of decline quickening as the second half of the year
progressed.
The rapid change in market conditions provided operational challenges but,
nevertheless, the division made good progress during 2022 with its strategic
initiatives aimed at driving share gains, reducing cost and complexity, and
improving operational resilience. Central to this is the implementation of a
new ERP system to enable more streamlined ordering and logistics processes for
customers, drive further back-office efficiencies and improve the business's
decision support capabilities; this multi-year programme is progressing well.
Optimisation of the distribution footprint to provide enhanced service levels
is also a key component of the strategy, and this progressed with the
conversion of the Sioux Falls facility predominantly to distribution, together
with the addition of a new distribution site in Phoenix to service the western
US market. Shipments from Phoenix began in late 2022 as planned.
These enhancements, along with the launch of a new website, the ongoing
portfolio harmonisation activity and new products, are enabling the business
to go to market with an improved service level and more consistent customer
experience. Coupled with ongoing close customer engagement and
customer-specific projects, these activities have enabled further share gains.
During 2022, the division achieved new net customer wins of c. US$9 million
annualised revenue. Further success with the entry-price point sliding patio
door solution for the US market and a new entry-price point casement lock
solution for the Canadian market are expected to help drive additional net
customer wins in 2023.
Labour availability and retention continued to be a challenge throughout the
US manufacturing sector in 2022, particularly in certain locations, although
the situation steadily improved as the year progressed. The division
implemented a series of actions to alleviate the situation, including wage
increases, recruitment programmes, retention and hiring incentive schemes, and
flexible working patterns. The resultant workforce stabilisation helped to
drive improvements in operational efficiency and a reduction in overtime.
Across the division there is an emphasis on developing continuous improvement
and lean management capabilities to further improve efficiency and reduce
working capital. A series of supply chain resiliency projects, aimed at risk
mitigation and reducing cost, were also initiated during 2022, including both
dual sourcing and insourcing initiatives. Collectively, these self-help
measures assisted in offsetting the adverse impact from the challenging market
conditions.
Input cost inflation remained at elevated levels throughout 2022, and whilst
there was an easing in the price of certain commodities and freight during the
second half this was largely offset by an increase in energy conversion costs.
The division successfully implemented a series of price increases and
surcharges during the year to pass on the input cost inflation experienced in
2021 and 2022. Nevertheless, there was a natural lag in the recovery of input
cost inflation via pricing actions given the quantum and frequency of such
actions and reflecting the backward-looking indexation programmes with some of
our largest customers. Along with the significant volume decline at the end of
the year, this was the primary driver of the 8% decline in LFL adjusted
operating profit (3% increase in adjusted operating profit on a reported
basis, reflecting the impact of foreign exchange). The self-help measures
noted above partially offset the negative operating leverage effect of lower
volumes, administrative cost inflation and the operational inefficiencies that
arose during the work to optimise the footprint. The pass-through of cost
inflation had a dilutive impact on the adjusted operating margin, leading to a
LFL adjusted operating margin decrease of 220 bps to 14.2%.
Outlook
The underlying fundamentals of the US residential housing market are strong,
with years of supply lagging demand creating a significant housing deficit.
Nevertheless, the near-term outlook remains challenging given high levels of
inflation and interest rates are continuing to constrain housing market
activity. The NAHB forecasts further double-digit declines in single family
housing starts in 2023 to below 2019 levels. Having shown resilience in 2022,
the commercial market is forecast to become more challenging in 2023,
reflecting the more difficult economic environment in the US.
The division will maintain focus on gaining market share, notably in the
western US, Canada and via its distribution partners whilst growing its new
product pipeline. The benefits of prior-year pricing actions will help
mitigate the adverse impact of lower volumes and continued cost inflation.
Moreover, work to structurally improve the fixed cost base and return
operational efficiencies across the network to normalised levels will remain a
focus in 2023, through driving procurement benefits and continuous improvement
from lean projects. In addition, a plan has been developed to consolidate two
manufacturing sites into one in Owatonna, which is also expected to support
profitability.
Tyman UK & Ireland
£m except where stated 2022 2021 Change LFL
Revenue 103.3 105.8 -2% -2%
Adjusted operating profit 14.5 14.8 -2% -2%
Adjusted operating margin 14.0% 14.0% - -
Markets
Residential RMI, to which the UK&I division is predominantly exposed,
softened as 2022 progressed, as household affordability was negatively
impacted by rising inflation and interest rates. This was exacerbated by
customer destocking, following the higher-than-normal levels of inventory
built during the post-pandemic rebound and associated supply chain challenges.
The latest CPA forecast expected spending in the residential RMI market to
have shrunk by 4% in 2022 (having begun the year expecting flat growth),
following 17% growth in 2021.
The commercial and public infrastructure segments were more resilient in 2022,
supported by the continued growth in warehousing and government spending on
transport projects such as HS2. The CPA estimates that spending on
infrastructure new build grew by 5% and non-residential new build spend grew
by 2% in 2022.
Overall, having signalled modest growth during the first five months of the
year, the UK construction PMI has been at or around the neutral 50 level since
June, indicating flat activity levels across the construction sector.
Business performance and developments
Revenue decreased by 2% in 2022 on a LFL and reported basis against a very
strong comparative in 2021. The benefit of pricing actions to pass on input
cost inflation was offset by a decline in hardware volumes, reflecting the
softening in the residential RMI market.
As customers increasingly require products and solutions that meet ever more
stringent environmental and safety regulations, with its expertise in
certification requirements and in-house testing capabilities, the hardware
business is well placed to benefit from these trends. In 2022, new business
was secured with a major UK distributor as a result of the division's agility
in developing a retail packaging solution using recyclable cardboard rather
than plastic clam shells. Incremental revenue will flow from this contract
from the middle of 2023.
The business also made good progress on its new product development plans. A
key launch during the second half of 2022 was Touchkey®, an innovative smart
security door locking system that can be accessed via fingerprint, Bluetooth,
smartphone app, voice control or by traditional key method. Touchkey® is the
first product of this type on the market with multi-operational 'smart'
opening solution, allowing users to access their home without the need for a
key, which is especially beneficial for residents with restricted mobility or
where there is a need to give controlled temporary access, via encrypted
electronic keys. The product is the only solution on the market whose IoT
Kitemark certification includes fingerprint access.
In Access 360, the division's commercial access solutions business, sales grew
modestly in the first half, reflecting the return of the two re-certified core
product lines suspended in 2021. Work continues to optimise the business, with
an integrated ERP system launched in the first half. A project to consolidate
the three heritage Access 360 brands (Profab, Howe Green and Bilco) into a
single highly automated facility is well-progressed, with the majority of
operations transferred to the new site by the end of 2022.
LFL and reported adjusted operating profit decreased by 2%, reflecting lower
hardware volumes offset by the benefit of pricing actions and close control of
operating costs.
Outlook
The CPA currently expects the residential RMI segment to decline a further 9%
in 2023, whilst both the industrial and infrastructure new build segments are
expected to continue to be more resilient and show slight growth, supported by
investment in government transport and warehousing projects. High levels of
input cost inflation, including that caused by adverse foreign exchange
movements, will continue to create headwinds in 2023, albeit to a lesser
extent than those seen in 2022.
The division will continue to implement pricing actions as required to offset
input cost inflation. Other key priorities are to gain share with the recent
new product launches and strong pipeline of new products in place for launch
in 2023.
Tyman International
£m except where stated 2022 2021 Change LFL
Revenue 140.3 132.2 +6% +6%
Adjusted operating profit 21.3 19.5 +10% +11%
Adjusted operating profit margin 15.2% 14.7% +50bps +70bps
Markets
Market demand was strong during the first half of the year across the
division's key geographies. However, momentum slowed in the middle of the year
as the uncertain macroeconomic environment began to weigh on consumer
confidence, most notably in Europe. Demand levels continued to reduce
significantly as the second half of the year progressed. This was evidenced by
the decline in the Eurozone construction PMI, which began the year at a
healthy level of 56.6 but then faded to 42.6 by the end of the year.
The construction PMI for Italy, the division's largest market, has remained
above the Eurozone average throughout the period and peaked at a record high
of 68.5 in February 2022, boosted by government fiscal stimulus programmes.
However, since May this has also slowed markedly as the funding for these
programmes was reduced, remaining below 50 for much of the second half of the
year.
Outside of Europe the picture was mixed. Demand across the GCC territories
remained buoyant throughout the year due to the benefit of high oil prices.
However, the Chinese market was significantly impacted by the regional
lockdowns that were in place for most of the year as the government responded
to the resurgence of COVID-19.
Business performance and developments
Revenue grew by 6% in 2022 on both a LFL and reported basis against a strong
comparative period, driven by pricing actions and share growth in key markets.
During 2022, volumes were broadly unchanged year over year; however, this
masked a significant change from the first half of the year, when market
conditions were buoyant, to the second half, when the macroeconomic backdrop
became increasingly challenging. As previously reported, business with Russia
and Belarus was discontinued from February 2022 in response to the war in
Ukraine; these markets comprised c. 5% of divisional revenue in 2021.
Share growth was achieved through continued momentum with both systems houses
and distribution partners, as well as delivery of the NPD pipeline. Revenue
from system houses grew by 26% in 2022, with this channel now representing 16%
of the division's revenue. Greater penetration has been driven with the system
houses by establishing partnerships to develop solutions incorporating Tyman
products in their custom systems. The Giesse CHIC concealed hinge range has
been a particular success to date and there is a developing pipeline of system
house products employing Tyman's innovative pull and slide system that will be
delivered to the market from 2023 onwards.
There has been good progress with the strategic initiative to optimise and
enhance the division's seals manufacturing business. A third Q-Lon urethane
line was installed in the UK at the start of 2022 and the German seals
manufacturing facility was closed at the end of 2022, with production moving
to the UK. Once commissioning has been completed at the Aycliffe site, this
consolidation will drive economies of scale and concentration of seals
expertise, delivering structural improvements to profitability and enhanced
customer service levels. Progress has also continued with the programme to
drive greater levels of automation in the Budrio hardware manufacturing
facility, which will lead to improvements in safety, efficiency and
throughput.
Sustainability remains at the core of how the business operates, and during
the year there was further progress with improving the energy efficiency of
the division's own operations and developing a pipeline of new products with a
reduced carbon footprint. Work has continued towards eliminating the lead
content in hinges, increasing the recycled content of aluminium used across
the hardware range and reformulating the chemical composition of Q-Lon
urethane products. Having the expertise and capability to demonstrate and
deliver strong sustainability credentials is an increasingly important
differentiator for the business in the marketplace. New sustainable solutions
include the Champion Plus Microvent locking solution for aluminium windows or
sliding doors to help improve the ventilation of living and working spaces,
and fire-retardant Q-Lon urethane seals that are certified to European
standards for use in fire door applications.
Pricing actions were successfully implemented during the year to recover input
cost inflation. Together with the structural actions to improve margins, the
negative effect on fixed cost absorption from flat volumes and the exit of the
business in Russia and Belarus (which contributed c. £3 million to adjusted
operating profit in 2021) was more than offset. As a result, LFL adjusted
operating profit grew 11%. On a reported basis adjusted operating profit
increased by 10%, reflecting the impact of foreign exchange.
Outlook
The market environment in 2023 is expected to remain challenging; Globaldata
currently forecasts the European construction sector will decline by 4% in
2023. Prospects for the GCC markets are more positive, buoyed by high oil
prices, but the near-term outlook for the Chinese market remains highly
uncertain.
The priorities for the division remain to protect and grow market share
through new product launches and further penetration of system houses in
Europe and the GCC. Work will also continue to optimise margins through
completing the seals manufacturing footprint consolidation and further
automation of hardware manufacturing.
Financial review
Income statement
Revenue and profit
Revenue for the year increased by 12.6% to £715.5 million (2021: £635.7
million), reflecting significant price increases of £54.2 million and tariffs
and surcharges of £25.8 million to recover input cost inflation, as well as
favourable foreign exchange movements of £44.5 million. This was offset by a
decrease in volume and mix of £44.7 million driven by a significant weakening
of global macroeconomic conditions in the second half of the year and the exit
of business with Russia and Belarus. On a LFL basis, which excludes the
foreign exchange benefit, revenue increased 5.2% compared to 2021.
Selling, general and administrative expenses increased to £151.2 million
(2021: £138.5 million), predominantly due to foreign exchange movements of
£7.2 million, and a charge relating to restructuring programmes of £6.3
million (2021: £0.6 million credit), with cost inflation being largely offset
by tight cost management. Adjusted selling, general and administrative costs,
increased to £127.3 million (2021: £121.7 million), largely due to of
foreign exchange. On a LFL basis, adjusted selling, general and administrative
expenses were broadly flat against 2021.
Operating profit decreased by 3.3% to £70.7 million (2021: £73.1 million).
This was driven by lower sales volumes contributing a reduction of £14.2
million, and a charge relating to restructuring programmes of £6.3 million
(2021: £0.6 million credit), partially offset by productivity improvements of
£7.1 million due to continuous improvement initiatives and efficiency gains
from better workforce stability, and favourable foreign exchange movements of
£7.0 million. Pricing recovered significant material, freight and other
inflation of £80.0 million and further benefits are to be realised in 2023
due to some of the customer pricing mechanisms being based on a look-back
indexation. Adjusted operating profit, which excludes the restructuring charge
and amortisation of acquired intangibles, increased by 5.1% to £94.6 million
(2021: £90.0 million). Operating margin decreased by 162 bps to 9.9% (2021:
11.5%) and adjusted operating margin decreased by 94 bps to 13.2% (2021:
14.2%), largely as a result of the lower volumes and dilutive effect of
pass-through pricing to recover cost inflation. On a LFL basis, excluding the
benefit of foreign exchange, adjusted operating profit decreased 3.2%.
Profit before taxation decreased by 4.1% to £61.4 million (2021: £64.0
million), as a result of the lower operating profit and a marginal increase in
net finance costs. Adjusted profit before tax increased by 5.3% to £85.8
million (2021: £81.5 million), as a result of the higher adjusted operating
profit. On a LFL basis, excluding the foreign exchange benefit, this decreased
by 1.8%.
Materials and input costs
£m except where stated FY 2022 Average((2)) Spot((3))
Materials((1))
Aluminium 21.5 +42% +3%
Polypropylene 45.2 +1% -26%
Stainless steel 80.2 +45% +38%
Zinc 33.5 +32% +13%
Far East components((4)) 41.8 +10% -1%
(1) FY 2022 materials cost of sales for raw materials, components and
hardware for overall category
(2) Average 2022 tracker price compared with average 2021 tracker
price
(3) Spot tracker price as at 31 December 2022 compared with spot
tracker price at 31 December 2021
(4) Pricing on a representative basket of components sourced from the
Far East by Tyman UK & Ireland
Average prices across all categories increased further during the year,
following significant inflation in 2021 and the impact of the invasion of
Ukraine. Commodity prices began to moderate through the second half, although
conversion costs remain high due to energy prices. Price increases and
surcharges were implemented to recover cost increases, albeit due to customer
pricing mechanisms in North America, there remains an inevitable timing lag in
recovery.
Adjusting items
Certain items that are considered to be significant in nature and / or quantum
have been excluded from adjusted measures, such that the effect of these items
on the Group's results can be understood and to enable an analysis of trends
in the Group's underlying trading performance.
2022 2021
£'m
£'m
Footprint restructuring - costs (6.3) -
Footprint restructuring - credits - 0.3
Footprint restructuring - net (6.3) 0.3
M&A and integration - credits - 0.6
M&A and integration - net - 0.6
Impairment charges - (1.9)
Impairment credits - 1.6
Impairment - net - (0.3)
(6.3) 0.6
The footprint restructuring costs in 2022 relate to the closure of the Hamburg
facility and the consolidation of the three UK Access solutions businesses
into a single site. These are considered to be major restructuring programmes
which required Board approval and therefore are drawn out separately as
adjusting items. These programmes were substantially completed in 2022.
The M&A credit in the prior year related to the release of provisions made
as part of the business combination accounting for previous acquisitions,
which are no longer required. The impairment charge in the prior year related
to impairment of certain of the Group's intangible assets following the
commencement of a multi-year ERP upgrade. The impairment credit related to the
release of a portion of provisions made in 2019 against inventory and other
assets associated with the new door seals product in North America, which was
no longer required.
Finance costs
Net finance costs increased marginally to £9.3 million (2021: £9.1 million).
Interest payable on bank loans, private placement notes and overdrafts
increased to £6.9 million (2021: £5.9 million), predominantly reflecting
higher net debt due to increased working capital and an unfavourable impact of
foreign exchange. The weighted average interest rate increased to 3.4% (2021:
3.1%), with the improved coupon rates on the new USPP debt being largely
offset by higher interest rates on the floating RCF debt, due to the increase
in global interest rates. Interest on lease liabilities of £3.0 million
increased slightly (2021: £2.5 million), reflecting foreign exchange and
higher interest rates.
Net finance costs in the period also benefited from a gain on revaluation of
derivative instruments of £0.1 million (2021: £0.1 million loss) due to the
movement in foreign exchange rates. Interest income from short term bank
deposits amounted to £0.9 million (2021: £Nil). Non-cash charges included in
net finance costs included amortisation of capitalised borrowing costs of
£0.6 million (2021: £0.5 million).
Forward exchange contracts
At 31 December 2022, the Group's portfolio of forward exchange contracts at
fair value amounted to a net liability of £0.2 million (2021: net liability
of £0.3 million). The notional value of the portfolio was £19.8 million
(2021: £24.3 million), comprising US dollar and Euro forward exchange
contracts with notional values of US$23.3 million and €0.7 million
respectively (2021: US$28 million; RMB30 million). These contracts have a
range of maturities up to 31 October 2023. During the year, a gain of £0.1
million (2021: loss of £0.1 million) was recognised directly in the income
statement.
Interest rate swaps
During the year, the Group entered into a cross-currency interest rate swap,
swapping US$10 million of the new USPP debt for £3.7 million and €5.0
million to fund the Group's UK and International operations. At 31 December
2022 the fair value of these swaps amounted to a net asset of £0.2 million
(2021: £Nil), with a fair value gain through OCI of £0.2 million (2021:
£Nil) recognised.
Taxation
The Group reported an income tax charge of £13.6 million (2021: £14.4
million), comprising a current tax charge of £17.6 million (2021: £17.3
million) and a deferred tax credit of £4.0 million (2021: credit of £2.9
million), reflecting an effective tax rate of 22.0% (2021: 22.5%). The
decrease in the income tax charge reflects the decrease in profit before tax,
and the benefit of the release of a transfer pricing provision no longer
required.
The adjusted tax charge was £18.5 million (2021: £18.8 million) representing
an adjusted effective tax rate of 21.6% (2021: 23.1%).
During the period, the Group paid corporation tax of £21.5 million (2021:
£17.7 million). This reflects a cash tax rate on adjusted profit before tax
of 25.1% (2021: 21.7%). The increase reflects the timing of payments on
account.
Earnings per share
Basic earnings per share decreased by 3.0% to 24.6 pence (2021: 25.4 pence),
reflecting the decrease in profit after tax, partially offset by a reduction
in the weighted average number of shares due to the purchase of shares by the
EBT in the year. Adjusted earnings per share increased to 34.7 pence (2021:
32.1 pence), reflecting the increase in adjusted profit after tax. There is no
material difference between these calculations and the fully diluted earnings
per share calculations.
Cash generation, funding and liquidity
Cash and cash conversion
£m 2022 2021
Net cash generated from operations 60.6 57.0
Add: Pension contributions 0.2 2.8
Add: Income tax paid 21.5 17.7
Less: Purchases of property, plant and equipment (19.2) (16.1)
Less: Purchases of intangible assets (4.9) (4.5)
Add: Proceeds on disposal of PPE 0.1 0.8
Add: Adjusting item cash costs 1.8 0.2
Adjusted operating cash flow(1) 60.1 57.9
Less: Pension contributions (0.2) (2.8)
Less: Income tax paid (21.5) (17.7)
Less: Net interest paid (9.5) (8.8)
Less: Adjusting item cash costs (1.8) (0.2)
Free cash flow(1) 27.1 28.4
(1) Alternative performance measures, details of which can be found
on page 39.
Net cash generated from operations increased by 6.3% to £60.6 million (2021:
£57.0 million), reflecting an increase in profit before tax after adding back
non-cash provision movements, partially offset by a higher net working capital
outflow, and higher income tax payments. Adjusted operating cash flow
increased by 3.8% to £60.1 million, reflecting the increase in adjusted
operating profit, partially offset by the higher net working capital outflow
and increased capital expenditure after two years of deferral due to COVID-19
and the operational intensity of the recovery.
Adjusted operating cash conversion decreased slightly to 63.5% (2021: 64.3%),
largely due to the working capital outflow. Adjusted operating cash conversion
has been below the target average level of 90% in the last two years as a
result of the significant investment in working capital made to protect
against supply chain disruption, which has been magnified by inflation, with
the reduction in demand in the second half of the year meaning that inventory
did not reduce to the extent planned. Inventory reduction initiatives are
expected to drive a much stronger cash conversion in 2023.
Free cash flow in the period was slightly lower than 2021 at £27.1 million
(2021: £28.4 million), as a result of the higher adjusted operating cash flow
offset by higher income tax payments on account, higher interest payments and
adjusting item cash costs.
Debt facilities
Bank and US private placement facilities available to the Group as at 31
December 2022 were as follows:
Facility Maturity Currency Committed Uncommitted
2022 Facility Dec 2026 Multi-currency £210.0m £100.0m
5.37% USPP Nov 2024 US$ US$45.0m -
3.51% USPP April 2029 US$ US$40.0m -
3.62% USPP April 2032 US$ US$35.0m -
In April 2022, the Group issued US$75 million of sustainability-linked US
Private Placement notes. US$40 million of the notes have a maturity of 7 years
and a base coupon rate of 3.51%, and US$35m have a maturity of 10 years and a
base coupon rate of 3.62%.
In December 2022, the Group secured a new £210 million sustainability-linked
revolving credit facility, which may be increased through an accordion option
of up to £100 million. The facility matures in December 2026, with an option
to extend for a further 12 months.
Both the USPP notes and the new RCF incorporate sustainability performance
targets which align with Tyman's sustainability roadmap (see note 9). These
incentive mechanisms result in a modest reduction or increase in the interest
rate depending on performance against these targets.
Liquidity
At 31 December 2022, the Group had gross debt of £250.1 million (2021:
£222.8 million) and net debt of £175.5 million (2021: £145.8 million).
Adjusted net debt, which excludes lease liabilities and capitalised borrowing
costs was £115.9 million (2021: £91.7 million), with the increase reflecting
the significantly higher working capital and adverse foreign exchange
movements.
The Group had cash balances of £74.6 million (2021: £77.0 million), bank
overdrafts of £16.4 million (2021: £18.9 million), and committed but undrawn
facilities of £125.8 million (2021: £123.6 million). This provides
immediately available liquidity of £184.0 million (2021: £180.8 million).
The Group also has potential access to the uncommitted £100.0 million
accordion facility.
Covenant performance
At 31 December 2022 Test Performance((1)) Headroom((2)) Headroom((2))
Leverage < 3.0× 1.0x £69.7m 65.0%
Interest Cover > 4.0× 18.2x £83.3m 78.0%
(1) Calculated covenant performance consistent with the Group's banking
covenant test (banking covenants exclude the effect of IFRS 16). See APMs on
page 41 for interest cover and page 42 for leverage.
(2) The approximate amount by which covenant adjusted EBITDA would
need to decline before the relevant covenant is breached
At 31 December 2022, the Group retained significant headroom on its banking
covenants. Leverage at the year-end was 1.0x (2021: 0.9x), reflecting the
higher level of net debt, offset by the slight increase in covenant adjusted
EBITDA. Interest cover at 31 December 2022 was 18.2x (2021: 17.4x).
Balance sheet - assets and liabilities
Working capital
£m FY 2021 Mvt FX 2022
Inventories 137.8 4.8 10.5 153.1
Trade receivables 69.9 (7.5) 5.1 67.5
Trade payables (78.4) 28.0 (5.4) (55.8)
Trade working capital 129.3 25.3 10.2 164.8
Trade working capital at the year end, net of provisions, was £164.8 million
(2021: £129.3 million). The trade working capital increase at average
exchange rates was £25.3 million (2021: £28.4 million).
The increase in inventory at average exchange rates was £4.8 million (2021:
£53.9 million), largely reflecting the impact of inflation on inventory
values. Inventory levels remain elevated following supply chain disruption and
the need to de-risk key material availability early in the year. The Group has
implemented a number of initiatives to bring inventory down to more normalised
levels, whilst maintaining service levels. The planned reduction of inventory
was negatively impacted by the shortfall in volume shipped towards the end of
the year. Trade receivables and trade payables decreased due lower trading
activity towards the period end, with purchasing significantly lower given the
reduced demand and elevated inventory levels.
Trade working capital increased by a further £10.2 million due to foreign
exchange movements.
Capital expenditure
Gross capital expenditure increased to £24.1 million (2021: £20.6 million)
or 1.7x depreciation (excluding RoU asset depreciation) (2021: 1.6x),
reflecting remaining catch up of expenditure deferred from 2021, investment in
new product development, operational excellence, and ERP upgrades. Net capital
expenditure was £24.0 million (2021: £19.8 million).
Goodwill and intangible assets
At 31 December 2022, the carrying value of goodwill and intangible assets was
£457.0 million (2021: £430.1 million). The increase in goodwill and
intangible assets is driven by foreign exchange movements, offset by the
amortisation of intangible assets through the income statement of £19.6
million (2020: £18.8 million).
Provisions
Provisions at 31 December 2022 increased to £7.9 million (2021: £6.2
million), with the increase primarily reflecting the restructuring provision
made for the costs of closure of the Hamburg facility of £3.3 million. This
provision is expected to be settled in the first half of 2023.
Balance sheet - equity
Shares in issue
At 31 December 2022, the total number of shares in issue was 196.8 million
(2021: 196.8 million) of which 0.5 million shares were held in treasury (2021:
0.5 million).
Employee Benefit Trust purchases
On 31 December 2022, the EBT held 2.1 million shares (2021: 0.8 million).
During the period, the EBT purchased 2.0 million shares in Tyman plc at a
total cost of £6.6 million (2021: 0.1 million shares at a total cost of £0.3
million).
Dividends
A final dividend of 9.5 pence per share (2021: 8.9 pence), equivalent to
£18.4 million based on the shares in issue as at 31 December 2022, will be
proposed at the Annual General Meeting (2021: £17.4 million). The total
dividend declared for the 2022 financial year is therefore 13.7 pence per
share (2021: 12.9 pence), in line with the Group's progressive dividend
policy. This equates to a Dividend Cover of 2.5x, within the Group's target
range of 2.0x to 2.5x adjusted EPS.
The ex-dividend date will be 27 April 2023 and the final dividend will be paid
on 26 May 2023 to shareholders on the register at 28 April 2023.
Only dividends paid in the year have been charged against equity in the 2022
financial statements. Dividend payments of £25.4 million were paid to
shareholders during 2022 (2021: £15.6 million).
Other financial matters
Return on capital employed
ROCE decreased by 120 bps to 13.3% (2021: 14.5%) as a result of significantly
higher average working capital during the year and the impact of inflation and
foreign exchange movements on capital employed, offset by a reduction in the
average carrying value of intangible assets through amortisation.
Currency
Currency in the consolidated income statement
The principal foreign currencies that impact the Group's results are the US
dollar and the Euro. In 2022, the Sterling was weaker against the US dollar
and slightly stronger against the Euro when compared with the average exchange
rates in 2021.
Translational exposure
Currency US$ Euro Other Total
% mvt in average rate (10.1%) 0.9%
£m Revenue impact 37.7 (0.7) 0.8 37.8
£m Profit impact ((1)) 4.8 (0.1) 0.1 4.8
1c decrease impact ((2)) £379k £101k
(1) Adjusted Operating Profit impact
(2) Defined as the approximate favourable translation impact of
a 1c decrease in the Sterling exchange rate of the respective currency on the
Group's Adjusted Operating Profit
The net effect of currency translation caused revenue and adjusted operating
profit from ongoing operations to increase by £37.8 million and £4.8 million
respectively compared with 2021.
Transactional exposure
Divisions that purchase or sell products in currencies other than their
functional currency will potentially incur transactional exposures. For
purchases by the UK and Ireland division from the Far East, these exposures
are principally Sterling against the US dollar or Chinese renminbi.
The Group's policy is to recover adverse transactional currency movements
through price increases or surcharges. Divisions typically buy currency
forward to cover expected future purchases for up to six months. The objective
is to achieve an element of certainty in the cost of landed goods and to allow
sufficient time for any necessary price changes to be implemented.
The gain on foreign exchange derivatives in 2022 is £0.1 million (2021:
minimal). The Group's other transactional exposures generally benefit from the
existence of natural hedges and are immaterial.
The Group's gross borrowings (excluding leases) are denominated in the
following currencies:
£m 2021 2021
Gross % Gross %
GBP (24.2) 12.8 (18.1) 11.1
US dollars (121.5) 64.5 (105.2) 62.4
Euros (42.7) 22.7 (44.7) 26.5
Gross borrowings (188.4) (168.0)
2023 technical guidance
Working capital is expected to reduce from the current elevated level as
supply chain disruption has subsided, with a net cash inflow of £20 - £30
million across the year and minimal build at the half year.
Capital expenditure is expected to be £22 - £27 million, reflecting ongoing
investment in new product development, operational excellence, and systems
upgrades.
The Group's operating cash conversion target average remains at 90% per annum.
Operating cash conversion is expected to be higher than the target average in
2023, reflecting the expected working capital inflow.
Leverage is expected to be below the target range of 1.0x to 1.5x covenant
adjusted EBITDA absent any M&A activity.
Net interest charge is expected to be £9 - £10 million, reflecting higher
average interest rates, offset by lower net debt.
The adjusted effective tax rate is expected to be c. 23.0% - 25.0%.
Jason Ashton
Chief Financial Officer
Consolidated income statement
For the year ended 31 December 2022
Note 2022 2021
£'m
£'m
Revenue 3 715.5 635.7
Cost of sales (493.2) (424.0)
Gross profit 222.3 211.7
Selling, general and administrative expenses (151.2) (138.5)
Net impairment losses on financial assets (0.4) (0.1)
Operating profit 70.7 73.1
Analysed as:
Adjusted(1) operating profit 3 94.6 90.0
Adjusting items 4 (6.3) 0.6
Amortisation of acquired intangible assets 7 (17.6) (17.5)
Operating profit 70.7 73.1
Finance income 1.0 -
Finance costs (10.3) (9.1)
Net finance costs (9.3) (9.1)
Profit before taxation 3 61.4 64.0
Income tax charge 5 (13.6) (14.4)
Profit for the year 47.8 49.6
Basic earnings per share 6 24.6p 25.4p
Diluted earnings per share 6 24.5p 25.3p
Non-GAAP alternative performance measures(1)
Adjusted(1) operating profit 94.6 90.0
Adjusted(1) profit before taxation 6 85.8 81.5
Basic adjusted(1) earnings per share 6 34.7p 32.1p
Diluted adjusted(1) earnings per share 6 34.5p 32.0p
(1) Before amortisation of acquired intangible assets, deferred
taxation on amortisation of acquired intangible assets, impairment of
goodwill, adjusting items, unwinding of discount on provisions, gains and
losses on the fair value of derivative financial instruments, amortisation of
borrowing costs and the associated tax effect. See definitions and
reconciliations on pages 39 to 43 for non-GAAP Alternative Performance
Measures.
Consolidated statement of comprehensive income
For the year ended 31 December 2022
2022 2021
£'m
£'m
Profit for the year 47.8 49.6
Other comprehensive income
Items that will not be reclassified to profit or loss
Remeasurements of post-employment benefit obligations - 1.6
Total items that will not be reclassified to profit or loss - 1.6
Items that may be reclassified subsequently to profit or loss
Exchange differences on translation of foreign operations(1) 54.1 0.1
Change in fair value of net investment hedge(1) (11.7) 2.3
Effective portion of changes in value of fair value hedges 0.2 -
Total items that may be reclassified to profit or loss 42.6 2.4
Other comprehensive income for the year, net of tax 42.6 4.0
Total comprehensive income for the year 90.4 53.6
(1) Comparatives have been represented to show separately the
change in fair value of net investment hedge for consistency with current year
presentation.
Items in the statement above are disclosed net of tax. The income tax relating
to each component of other comprehensive income is disclosed in note 5.
Consolidated statement of changes in equity
For the year ended 31 December 2022
Share Treasury Hedging Translation Retained Total
capital
reserve
reserve
reserve
earnings
equity
£'m
£'m
£'m
£'m
£'m
£'m
At 1 January 2021 9.8 (3.4) - 46.8 389.9 443.1
Profit for the year - - - - 49.6 49.6
Other comprehensive income - - - 2.4 1.6 4.0
Total comprehensive income - - - 2.4 51.2 53.6
Transactions with owners in their
capacity as owners
Share-based payments(1) - - - - 1.6 1.6
Dividends paid - - - - (15.6) (15.6)
Issue of own shares from Employee Benefit Trust - 1.1 - - (1.1) -
Purchase of own shares for Employee Benefit Trust - (0.3) - - - (0.3)
Total transactions with owners - 0.8 - - (15.1) (14.3)
At 31 December 2021 9.8 (2.6) - 49.2 426.0 482.4
Profit for the year - - - - 47.8 47.8
Other comprehensive income - - 0.2 42.4 - 42.6
Total comprehensive income - - 0.2 42.4 47.8 90.4
Transactions with owners in their
capacity as owners
Share-based payments(1) - - - - 0.8 0.8
Dividends paid - - - - (25.4) (25.4)
Issue of own shares from Employee Benefit Trust - 0.5 - - (0.5) -
Purchase of own shares for Employee Benefit Trust - (6.6) - - - (6.6)
Total transactions with owners - (6.1) - - (25.1) (31.2)
At 31 December 2022 9.8 (8.7) 0.2 91.6 448.7 541.6
( )
(1 ) Share-based payments include a tax charge of £0.2
million (2021: tax credit of £0.3 million) and a credit due to issuance of
shares under the deferred share bonus plan of £0.2 million (2021: £0.3
million).
Consolidated balance sheet
As at 31 December 2022
Note 2022 2021 2020
£'m
Restated(1) Restated(1)
£'m
£'m
TOTAL ASSETS
Non-current assets
Goodwill 7 399.3 363.3 361.9
Intangible assets 7 57.7 66.8 84.1
Property, plant and equipment 74.6 63.5 60.7
Right-of-use assets 8 57.3 52.0 51.8
Financial assets at fair value through profit or loss 1.2 1.1 1.1
Derivative financial instruments 0.2 - -
Deferred tax assets 1.7 4.2 5.2
592.0 550.9 564.8
Current assets
Inventories 153.1 137.8 84.0
Trade and other receivables 81.4 81.0 72.8
Cash and cash equivalents 74.6 77.0 73.2
309.1 295.8 230.0
TOTAL ASSETS 901.1 846.7 794.8
LIABILITIES
Current liabilities
Trade and other payables (88.2) (112.8) (84.4)
Derivative financial instruments (0.2) (0.3) (0.2)
Borrowings 9 (15.9) (19.0) (43.8)
Lease liabilities 8 (6.8) (6.0) (5.4)
Current tax liabilities (1.8) (6.0) (6.8)
Provisions (5.0) (1.4) (1.3)
(117.9) (145.5) (141.9)
Non-current liabilities
Borrowings 9 (172.5) (149.0) (128.8)
Lease liabilities 8 (54.9) (48.8) (48.4)
Deferred tax liabilities (6.9) (12.1) (15.7)
Retirement benefit obligations (4.3) (4.0) (8.9)
Provisions (2.9) (4.8) (7.6)
Other payables (0.1) (0.1) (0.4)
(241.6) (218.8) (209.8)
TOTAL LIABILITIES (359.5) (364.3) (351.7)
NET ASSETS 541.6 482.4 443.1
EQUITY
Capital and reserves attributable to owners of the Company
Share capital 9.8 9.8 9.8
Treasury reserve (8.7) (2.6) (3.4)
Hedging reserve 0.2 - -
Translation reserve 91.6 49.2 46.8
Retained earnings 448.7 426.0 389.9
TOTAL EQUITY 541.6 482.4 443.1
(1) See note 2.2 for details regarding reclassification
adjustments to the comparative balance sheets.
Consolidated cash flow statement
For the year ended 31 December 2022
Note 2022 2021
£'m
£'m
Cash flow from operating activities
Profit before taxation 3 61.4 64.0
Adjustments 10 53.0 47.4
Changes in working capital:
Inventories (4.8) (54.0)
Trade and other receivables 5.6 (9.1)
Trade and other payables (32.2) 29.2
Provisions utilised (0.7) -
Pension contributions (0.2) (2.8)
Income tax paid (21.5) (17.7)
Net cash generated from operating activities 60.6 57.0
Cash flow from investing activities
Purchases of property, plant and equipment (19.2) (16.1)
Purchases of intangible assets 7 (4.9) (4.5)
Proceeds on disposal of property, plant and equipment 0.1 0.8
Interest received 0.9 -
Net cash used in investing activities (23.1) (19.8)
Cash flow from financing activities
Interest paid (9.5) (8.8)
Dividends paid (25.4) (15.6)
Purchase of own shares for Employee Benefit Trust (6.6) (0.3)
Refinancing costs paid (2.1) -
Proceeds from drawdown of borrowings 122.3 40.0
Repayments of borrowings (113.0) (57.8)
Principal element of lease payments (6.2) (6.2)
Net cash used in financing activities (40.5) (48.7)
Net decrease in cash and cash equivalents and bank overdrafts (3.0) (11.5)
Exchange loss on cash and cash equivalents and bank overdrafts 3.1 (0.1)
Cash and cash equivalents and bank overdrafts at beginning of year 58.1 69.7
Cash and cash equivalents and bank overdrafts at end of year 58.2 58.1
Notes to the financial statements
For the year ended 31 December 2022
1. General information
Tyman plc is a leading international supplier of engineered fenestration and
access solutions to the construction industry. The Group designs and
manufactures products that enhance the comfort, sustainability, security,
safety and aesthetics of residential homes and commercial buildings. Tyman
serves its markets through three regional divisions. Headquartered in London,
the Group employs approximately 3,700 people with facilities in 16 countries
worldwide.
Tyman plc is a public limited company listed on the London Stock Exchange,
incorporated and domiciled in the United Kingdom. The address of the Company's
registered office is 29 Queen Anne's Gate, London SW1H 9BU.
2. Accounting policies and basis of preparation
The consolidated financial statements of Tyman plc have been prepared in
accordance with the UK-adopted International Accounting Standards and with the
requirements of the Companies Act 2006 as applicable to companies reporting
under those standards.
The consolidated financial statements have been prepared on a historical cost
basis, except for items that are required by IFRS to be measured at fair
value, principally certain financial instruments.
The financial information included in the full year results announcement does
not constitute statutory accounts of the Company for the years ended 31
December 2022 and 2021. Statutory accounts for the year ended 31 December 2021
have been reported on by the Company's auditor and delivered to the Registrar
of Companies. Statutory accounts for the year ended 31 December 2022 have been
audited and will be delivered to the Registrar of Companies following the
Company's Annual General Meeting. The report of the auditors for both years
was (i) unqualified, (ii) did not include a reference to any matters to which
the auditors drew attention by way of emphasis without qualifying their
report, and (iii) did not contain a statement under Section 498 (2) or (3) of
the Companies Act 2006. The consolidated financial statements have been
prepared using consistent accounting policies with those of the previous
financial year except as outlined in note 2.2 below.
These results were approved by the Board of Directors on 2 March 2023.
2.1 Going concern
The Group's business activities, financial performance and position, together
with factors likely to affect its future development and performance, are
described in the Chief Executive Officer's review on pages 3 to 6.
As at 31 December 2022, the Group had net cash and cash equivalents of £58.2
million, and an undrawn RCF available of £125.8 million, giving liquidity
headroom of £184.0 million. The Group also has potential access to an
uncommitted accordion facility of £100 million.
The Group is subject to leverage and interest cover covenants tested in June
and December and had significant headroom on both covenants at 31 December
2022, with £69.7 million (65%) of EBITDA headroom on the leverage covenant
and £83.3 million (78%) of EBITDA headroom on the interest cover covenant.
The Group has performed an assessment of going concern through reviewing
liquidity headroom and covenant compliance under the Board approved financial
forecasts and modelling several downside scenarios. In all scenarios modelled,
the Group would retain significant liquidity and covenant headroom throughout
the going concern period.
Reverse stress-testing has also been performed to model a scenario that would
result in elimination of covenant headroom within the going concern assessment
period. Revenue would need to decrease significantly, to an extent not
considered reasonably possible, for the covenants to be breached. As part of
this assessment, the Group has considered the risks relating to climate
change. As this risk relates to the medium to long term, there is no impact on
the short-term going concern assessment.
Having reviewed the various scenario models, available liquidity and taking
into account current trading, the Directors are satisfied that the Group has
sufficient financial resources to continue in operation for the foreseeable
future, which is considered to be a period of not less than twelve months from
the date of this report. Accordingly, the consolidated and Company financial
information has been prepared on a going concern basis.
2.2 Changes in accounting policies and disclosures
2.2.1 New, revised and amended standards and interpretations adopted by the
Group
The accounting standards and interpretations that became applicable in the
year did not materially impact the Group's accounting policies and did not
require retrospective adjustments.
2.2.2 New, revised and amended accounting standards not yet adopted
Certain new accounting standards, amendments to accounting standards and
interpretations have been published that are not mandatory for 31 December
2022 reporting periods and have not been early adopted by the Group. These
standards, amendments or interpretations are not expected to have a material
impact on the Group in the current or future reporting periods and on
foreseeable future transactions.
2.2.3 Prior year restatement
In September 2022, the Group received a letter from the Financial Reporting
Council ("FRC") as part of its regular review and assessment of the quality of
corporate reporting in the UK. The letter included a request for further
information on the Group's Annual Report and Accounts for the year ended 31
December 2021. Following completion of the correspondence with the FRC, the
Group undertook to restate the classification in two areas of the 2021
comparative balance sheets. As these reclassifications affected the
information presented in the balance sheet as at the beginning of the earliest
comparative period, a third balance sheet as at 31 December 2020 has been
presented.
The review conducted by the FRC was performed solely on the Group's published
2021 Annual Report and Accounts and does not provide any assurance that the
Annual Report and Accounts are correct in all material respects. The FRC's
review did not benefit from detailed knowledge of the Company's business or an
understanding of the underlying transactions entered into. The FRC accepts no
liability for reliance on their review by the Company or any third party.
i. Offsetting of deferred tax assets and liabilities
The Group previously presented deferred tax assets and liabilities gross on
the balance sheet. Certain of these assets and liabilities arose in the same
tax jurisdiction and met the criteria for offset in IAS 12. These balances
have therefore been restated to offset those that met the criteria. The effect
of this was to reduce deferred tax assets and deferred tax liabilities as at
31 December 2021 by £8.4 million (31 December 2020: £11.1 million).
ii. Offsetting of bank overdrafts
The Group has cash pooling arrangements that were previously recorded as part
of cash and cash equivalents, with the overdraft being disclosed in the notes
to the financial statements. The Directors have concluded that the second
criterion of IAS 32 paragraph 42 was not met. Consequently, a restatement has
been made with the effect that cash and cash equivalents and current
borrowings as at 31 December 2021 increased by £18.9 million (31 December
2020: £3.5 million).
These restatements did not affect the Group's income statement, net assets,
cash flows, KPIs or compliance with covenants.
The previously reported and restated financial statement line items are
summarised as follows:
31 December 2021
As previously reported Impact of restatement Restated
£m
£m
£m
Cash and cash equivalents 58.1 18.9 77.0
Deferred tax asset 12.6 (8.4) 4.2
Borrowings - current (0.1) (18.9) (19.0)
Deferred tax liability (20.5) 8.4 (12.1)
Net assets 482.4 - 482.4
Total assets 836.2 10.5 846.7
Total liabilities (353.8) (10.5) (364.3)
31 December 2020
As previously reported Impact of restatement Restated
£m
£m
£m
Cash and cash equivalents 69.7 3.5 73.2
Deferred tax asset 16.3 (11.1) 5.2
Borrowings - current (40.3) (3.5) (43.8)
Deferred tax liability (26.8) 11.1 (15.7)
Net assets 443.1 - 443.1
Total assets 802.4 (7.6) 794.8
Total liabilities (359.3) 7.6 (351.7)
3. Segment reporting
3.1 Segment information
The reporting segments reflect the manner in which performance is evaluated
and resources are allocated. The Group operates through three clearly defined
divisions: Tyman North America, Tyman UK & Ireland and Tyman
International.
North America comprises all the Group's operations within the US, Canada and
Mexico. UK & Ireland comprises the Group's UK and Ireland hardware
business, together with Access 360 and Tyman Sourcing Asia. International
comprises the Group's remaining businesses outside the US, Canada, Mexico and
the UK (although includes the two UK seal manufacturing plants that are
managed by the Tyman International leadership team). Centrally incurred
functional costs that are directly attributable to a division are allocated or
recharged to the division. All other centrally incurred costs and eliminations
are disclosed as a separate line item in the segment analysis.
In the opinion of the Board, there is no material difference between the
Group's operating segments and segments based on geographical splits.
Accordingly, the Board does not consider geographically defined segments to be
reportable.
The following tables present Group revenue and profit information for the
Group's reporting segments, which have been generated using the Group
accounting policies, with no differences of measurement applied, other than
those noted above.
3.2 Revenue
2022 2021
Segment revenue Inter-segment revenue External revenue Segment revenue Inter-segment revenue External revenue
£'m £'m £'m £'m £'m £'m
North America 474.9 (3.0) 471.9 400.5 (2.8) 397.7
UK & Ireland 103.5 (0.2) 103.3 106.2 (0.4) 105.8
International 143.4 (3.1) 140.3 135.2 (3.0) 132.2
Total revenue 721.8 (6.3) 715.5 641.9 (6.2) 635.7
Included within the Tyman International segment is revenue generated from the
UK seals plants of £24.7 million (2021: £22.3 million). There are no single
customers that account for greater than 10% of total revenue.
3.3 Profit before taxation
Note 2022 2021
£'m
£'m
North America 66.8 65.1
UK & Ireland 14.5 14.8
International 21.3 19.5
Operating segment profit 102.6 99.4
Centrally incurred costs (8.0) (9.4)
Adjusted operating profit 94.6 90.0
Adjusting items 4 (6.3) 0.6
Amortisation of acquired intangible assets 7 (17.6) (17.5)
Operating profit 70.7 73.1
Net finance costs (9.3) (9.1)
Profit before taxation 61.4 64.0
4. Adjusting items
2022 2021
£'m
£'m
Footprint restructuring - costs (6.3) -
Footprint restructuring - credits - 0.3
Footprint restructuring - net (6.3) 0.3
M&A and integration - credits - 0.6
M&A and integration - net - 0.6
Impairment charges - (1.9)
Impairment credits - 1.6
Impairment - net - (0.3)
(6.3) 0.6
5. Taxation
5.1 Taxation - income statement and other comprehensive income
2022 2021
£'m
£'m
Current taxation
Current tax on profit for the year (19.1) (18.8)
Prior year adjustments 1.5 1.5
Total current taxation (17.6) (17.3)
Deferred taxation
Origination and reversal of temporary differences 4.6 2.2
Rate change adjustment 0.1 0.4
Prior year adjustments (0.7) 0.3
Total deferred taxation 4.0 2.9
Income tax charge in the income statement (13.6) (14.4)
Total (charge)/credit relating to components of other comprehensive income
Current tax charge on translation (0.3) -
Current tax credit on share-based payments - 0.1
Deferred tax charge on actuarial gains and losses - (0.5)
Deferred tax credit on share-based payments (0.2) 0.2
Deferred tax charge on translation - (0.1)
Income tax charge in the statement of other comprehensive income (0.5) (0.3)
Total current taxation (17.9) (17.2)
Total deferred taxation 3.8 2.5
Total taxation (14.1) (14.7)
The Group's UK profits for this financial year are taxed at the statutory rate
of 19.0% (2021: 19.0%). The deferred tax balances have been measured using the
applicable enacted rates. In the UK, legislation to increase the standard rate
of corporation tax from 19% to 25% from 1 April 2023 was substantively enacted
in the Finance Act 2021 on 24 May 2021, and consequently deferred tax has been
remeasured to reflect this.
Taxation for other jurisdictions is calculated at rates prevailing in those
respective jurisdictions.
5.2 Reconciliation of the total tax charge
The tax assessed for the year differs from the standard rate of tax in the UK
of 19.0% (2021: 19.0%). The differences are explained below:
2022 2021
£'m
£'m
Profit before taxation 61.4 64.0
Profit before taxation multiplied by the standard rate of corporation tax in (11.7) (12.2)
the UK of 19.0% (2021: 19.0%)
Effects of:
Expenses not deductible for tax purposes (0.2) (0.9)
Overseas tax rate differences (2.5) (3.5)
Rate change adjustment 0.1 0.4
Prior year adjustments 0.7 1.8
Income tax charge in the income statement (13.6) (14.4)
5.3 Factors that may affect future tax charges
The estimated tax losses within the Group are as follows:
Gross losses Tax effect of losses
2022 2021 2022 2021
£'m
£'m
£'m
£'m
Capital losses 10.8 3.3 (2.7) (0.6)
Trading losses 14.1 20.2 (4.2) (5.4)
24.9 23.5 (6.9) (6.0)
In accordance with the Group's accounting policy, as the future use of these
losses is uncertain, none of these losses have been recognised as a deferred
tax asset.
An assessable temporary difference exists, but no deferred tax liability has
been recognised because the Group is able to control the timing of any
distributions from these subsidiaries and hence any tax consequences that may
arise.
6. Earnings per share
6.1 Earnings per share
2022 2021
Profit for the year (£'m) 47.8 49.6
Basic earnings per share (p) 24.6p 25.4p
Diluted earnings per share (p) 24.5p 25.3p
Basic earnings per share amounts are calculated by dividing net profit for the
year attributable to ordinary equity holders by the weighted average number of
ordinary shares outstanding during the year.
Diluted earnings per share amounts are calculated by dividing the net profit
attributable to ordinary equity holders by the weighted average number of
ordinary shares outstanding during the year, plus the weighted average number
of ordinary shares that would be issued on the conversion of all the diluted
potential ordinary shares into ordinary shares.
6.1.1 Weighted average number of shares
2022 2021
'm
'm
Weighted average number of shares (including treasury shares) 196.8 196.8
Treasury shares (0.5) (0.5)
Employee Benefit Trust shares (2.1) (0.9)
Weighted average number of shares - basic 194.2 195.4
Effect of dilutive potential ordinary shares - LTIP awards and options 1.0 0.7
Weighted average number of shares - diluted 195.2 196.1
6.1.2 Non-GAAP Alternative Performance Measure: adjusted earnings per share
The Group presents an adjusted earnings per share measure which excludes the
impact of exceptional items, certain non-cash finance costs, amortisation of
acquired intangible assets and certain non-recurring items. adjusted earnings
per share has been calculated using the adjusted profit before taxation and
using the same weighted average number of shares in issue as the earnings per
share calculation.
Adjusted profit after taxation is derived as follows:
2022 2021
£'m
£'m
Profit before taxation 61.4 64.0
Adjusting items 6.3 (0.6)
(Gain)/loss on revaluation of derivative instrument (0.1) 0.1
Amortisation of borrowing costs 0.6 0.5
Amortisation of acquired intangible assets 17.6 17.5
Adjusted profit before taxation 85.8 81.5
Income tax charge (13.6) (14.4)
Add back: Adjusted tax effect(1) (4.9) (4.4)
Adjusted profit after taxation 67.3 62.7
1 Tax effect of adjusting items, amortisation of borrowings costs,
amortisation of acquired intangible assets, gain or loss on revaluation of
fair value hedge and unwinding of discount on provisions.
Adjusted earnings per share is summarised as follows:
2022 2021
Basic Adjusted earnings per share 34.7p 32.1p
Diluted Adjusted earnings per share 34.5p 32.0p
7. Goodwill and intangible assets
7.1 Carrying amount of goodwill
£'m
Net carrying value
At 1 January 2021 361.9
Exchange difference 1.4
At 31 December 2021 363.3
Exchange difference 36.0
At 31 December 2022 399.3
Goodwill is monitored principally on an operating segment basis and the net
book value of goodwill is allocated by CGU as follows:
2022 2021
£'m
£'m
North America 302.7 268.5
UK & Ireland 60.2 60.2
International 36.4 34.6
399.3 363.3
7.2 Carrying amount of intangible assets
Computer Acquired Customer Other intangibles Total
software
brands
relationships
£'m
£'m
£'m
£'m £'m
Cost
At 1 January 2021 13.2 85.8 252.7 - 351.7
Additions 4.4 0.1 - - 4.5
Disposals (2.0) (3.0) - - (5.0)
Exchange difference (0.1) (0.8) (0.2) - (1.1)
At 31 December 2021 15.5 82.1 252.5 - 350.1
Additions 4.7 - - 0.2 4.9
Disposals (0.4) - - - (0.4)
Transfer between categories 0.1 (0.1) - - -
Exchange difference 1.8 7.8 24.3 - 33.9
At 31 December 2022 21.7 89.8 276.8 388.5
0.2
Accumulated amortisation
At 1 January 2021 (7.1) (57.4) (203.1) - (267.6)
Amortisation charge for the year (1.3) (5.4) (12.1) - (18.8)
Disposals 2.0 3.0 - - 5.0
Impairment - - - (1.9)
Exchange difference (0.1) 0.4 (0.3) - -
At 31 December 2021 (8.4) (59.4) (215.5) - (283.3)
Amortisation charge for the year (2.0) (5.4) (12.2) - (19.6)
Disposals 0.4 - - - 0.4
Impairment (0.1) (0.1) - - (0.2)
Exchange difference (0.9) (5.9) (21.3) - (28.1)
At 31 December 2021 (11.0) (70.8) (249.0) (330.8)
-
Net carrying value
At 1 January 2021 6.1 28.4 49.6 - 84.1
At 31 December 2021 7.1 22.7 37.0 - 66.8
At 31 December 2022 10.7 19.0 27.8 0.2 57.7
The amortisation charge for the year has been included in selling, general and
administrative expenses in the income statement and comprises £17.6 million
(2021: £17.7 million) relating to amortisation of acquired intangible assets
and £2.0 million (2021: £1.3 million) relating to amortisation of other
intangible assets.
8. Leases
8.1 Carrying value of right of use assets
Set out below are the carrying amounts of right-of-use assets recognised and
the movements during the year.
Land and buildings Plant and machinery Total
£'m
£'m
£'m
At 1 January 2021 50.0 1.8 51.8
Additions 1.4 0.9 2.3
Lease extensions 4.7 - 4.7
Change in indexation 0.1 - 0.1
Disposals (0.1) - (0.1)
Depreciation charge (6.1) (0.9) (7.0)
Exchange difference 0.2 - (0.2)
At 31 December 2021 50.2 1.8 52.0
Additions 6.8 1.5 8.3
Change in indexation 0.1 - 0.1
Disposals (0.1) - (0.1)
Depreciation charge (6.1) (1.0) (7.1)
Revaluation impairment (0.2) - (0.2)
Exchange difference 4.3 - 4.3
At 31 December 2022 55.0 2.3 57.3
8.2 Carrying value of lease liabilities
Set out below are the carrying amounts of lease liabilities (included under
interest-bearing loans and borrowings) and the movements during the year:
2022 2021
£'m
£'m
At 1 January (54.8) (53.8)
New leases (8.3) (2.3)
Lease extensions - (4.7)
Change in indexation (0.1) (0.2)
Lease disposals 0.1 0.2
Interest charge (3.0) (2.5)
Lease payments 9.2 8.6
Foreign exchange (4.8) (0.1)
At 31 December (61.7) (54.8)
Current liabilities (6.8) (6.0)
Non-current liabilities (54.9) (48.8)
At 31 December (61.7) (54.8)
8.3 Amounts recognised in profit or loss
The following are the amounts recognised in profit or loss:
2022 2021
£'m
£'m
Depreciation of ROU assets (7.1) (7.0)
Interest expense (included in finance cost) (3.0) (2.5)
Expense relating to short-term and low-value assets not included in lease (2.3) (1.3)
liabilities (included in cost of sales and selling, general and administration
expenses)
Expense relating to variable lease payments not included in lease liabilities (0.7) (0.5)
(included in cost of sales and selling, general and administration expenses)
(13.1) (11.3)
9. Borrowings
9.1 Carrying amounts of borrowings
2022 2021
£'m
£'m
Unsecured borrowings at amortised cost:
Bank borrowings (74.9) (116.5)
Bank overdraft (16.4) (18.9)
Senior notes (99.2) (33.3)
Capitalised borrowing costs 2.1 0.7
Borrowings (188.4) (168.0)
Analysed as:
Current liabilities (15.9) (19.0)
Non-current liabilities (172.5) (149.0)
(188.4) (168.0)
There were no defaults in interest payments in the year under the terms of the
existing loan agreements. Non-cash movements in the carrying amount of
interest-bearing loans and borrowings relate to the amortisation of borrowing
costs.
The carrying amounts of interest-bearing loans and borrowings (excluding lease
liabilities) are denominated in the following currencies:
2022 2021
£'m
£'m
Sterling (24.2) (18.1)
US dollars (121.5) (105.2)
Euros (42.7) (44.6)
Other - (0.1)
(188.4) (168.0)
9.1.1 Bank borrowings
Multi-currency revolving credit facility
In December 2022, the Group refinanced its revolving credit facility, securing
a new £210 million sustainability-linked Revolving Credit Facility, which
may be increased through an accordion option of up to £100 million. The
facility matures on 13 December 2026, with an option to extend by a further
year. The banking facility is unsecured and is guaranteed by Tyman plc and its
principal subsidiary undertakings. A portion of the loan margin is now linked
to the performance of the Group on three sustainability metrics, which align
with Tyman's immediate sustainability priorities and its 2030 sustainability
roadmap:
· Reduction in Scope 1 and 2 emissions from the 2019 baseline.
· Year-on-year increase in percentage of revenue from
positive-impact solutions that contribute to the United Nations Sustainable
Development Goals.
· Reduction in the Total Recordable Incident Rate per one million
hours worked (excluding the impact of COVID-19).
Progress against these sustainability metrics will be independently verified
on an annual basis. If Tyman achieves some, or all of these metrics, then the
loan pricing will be reduced for the following year; a shortfall against the
metrics will result in Tyman paying a similar premium to a nominated charity.
As at 31 December 2022, the Group has undrawn amounts committed under the
multi-currency revolving credit facility of £135.1 million (2021: £123.6
million). These amounts are floating rate commitments which expire beyond
twelve months.
9.1.2 Private placement notes
The Group's private placement notes of US$120 million are notes issued to US
financial institutions. These comprise:
· US$45.0 million issued in November 2014, with a 10-year maturity
from inception at a coupon of 5.37%, due for repayment in November 2024.
· US$75 million issued in April 2022. US$40 million of these notes
have a term of seven years maturing in April 2029, with a coupon rate of
3.51%, and US$35 million have a term of ten years maturing in April 2032, with
a coupon rate of 3.62%. These notes incorporate three sustainability
performance targets, which align with Tyman's sustainability roadmap. This
incentive mechanism results in a modest reduction or increase in the coupon
rate depending on performance against these targets. The targets are:
o Reduction in Tyman's Scope 1 and 2 emissions by a series of milestones,
including a reduction of 50% by 2026 and carbon neutrality by 2030 (relative
to 2019 baseline).
o Submission of Tyman's Scope 3 target to the Science Based Target
initiative (SBTi) for verification by February 2023.
o Participation in CDP in 2022 and annually thereafter.
9.2 Net debt
9.2.1 Net debt summary
2022 2021
£'m
£'m
Borrowings (188.4) (149.1)
Lease liabilities (61.7) (54.8)
Cash 74.6 58.1
At 31 December (175.5) (145.8)
9.2.2 Net debt reconciliation
Liabilities from financing activities(2) Other assets(2)
Borrowings(1) Lease liabilities Sub total Net cash and bank overdraft Total
At 1 January 2021 (169.1) (53.8) (222.9) 69.7 (153.2)
Financing cash flows (excluding interest) 17.8 6.2 24.0 (11.5) 12.5
Interest expense (5.9) (2.5) (8.4) - (8.4)
Interest payments 6.3 2.5 8.8 8.8
Disposals - 0.2 0.2 - 0.2
New leases - (2.3) (2.3) - (2.3)
Lease modifications - (0.2) (0.2) - (0.2)
Lease extensions - (4.7) (4.7) (4.7)
Foreign exchange adjustments 2.3 (0.2) 2.1 (0.1) 2.0
Amortisation of borrowing costs (0.5) - (0.5) - (0.5)
At 31 December 2021 (149.1) (54.8) (203.9) 58.1 (145.8)
Financing cash flows (excluding interest) (9.3) 6.2 (3.1) (2.9) (6.0)
Interest expense (6.9) (3.0) (9.9) - (9.9)
Interest payments 6.5 3.0 9.5 - 9.5
Disposals - 0.1 0.1 - 0.1
New leases - (8.3) (8.3) - (8.3)
Lease modifications - (0.1) (0.1) - (0.1)
Foreign exchange adjustments (14.7) (4.8) (19.5) 3.0 (16.5)
Financing costs capitalised 2.1 - 2.1 - 2.1
Amortisation of borrowing costs (0.6) - (0.6) - (0.6)
At 31 December 2022 (172.0) (61.7) (233.7) 58.2 (175.5)
( )
(1 ) Borrowings exclude bank overdraft of £16.4 million
(2021: £18.9 million).
(2) Comparatives have been represented for consistency with
current year presentation.
10. Adjustments to cash flows from operating activities
The following non-cash and financing adjustments have been made to profit
before taxation to arrive at operating cash flow:
Note 2022 2021
£'m
£'m
Net finance costs 9.3 9.1
Depreciation of PPE 12.4 11.5
Depreciation of right of use assets 7.1 7.0
Amortisation of intangible assets 7 19.6 18.8
Impairment of intangible assets 7 0.2 1.9
Impairment of property, plant and equipment 0.7 0.2
Impairment of right of use assets - 0.2
Loss on disposal of property, plant and equipment 0.2 0.1
Pension service costs and expected administration costs 0.1 0.3
Non-cash provision movements 2.1 (2.4)
Share-based payments 1.0 1.0
53.0 47.4
11. Events after the balance sheet date
There were no events after the balance sheet date.
Alternative performance measures
The Group uses adjusted figures as key performance measures in addition to
those reported under IFRS, as management believe these measures enable
management and stakeholders to assess the underlying trading performance of
the businesses as they exclude certain items that are considered to be
significant in nature and/or quantum, foreign exchange movements and the
impact of acquisitions and disposals. The alternative performance measures
("APMs") are consistent with how the businesses' performance is planned and
reported within the internal management reporting to the Board and Operating
Committees. Some of these measures are used for the purpose of setting
remuneration targets. The key APMs that the Group uses include like-for-like
("LFL") performance measures and adjusted measures for the income statement
together with adjusted financial position and cash flow measure. Explanations
of how they are calculated and how they are reconciled to an IFRS statutory
measure are set out below.
Limitations of APMs
APMs should not be viewed in isolation and are designed to provide
supplementary information. These may not be comparable to similarly labelled
measures used by other companies. Other limitations of the Group's adjusted
measures are that they exclude the amortisation of intangibles acquired in
business combinations, but do not similarly exclude the related revenue and
profits, and they exclude the cost of major restructuring programmes but do
not similarly exclude the financial benefits derived from these.
Adjusted operating profit and adjusted operating margin
Definition
Operating profit before amortisation of acquired intangible assets, impairment
of acquired intangible assets, impairment of goodwill, and adjusting items.
Adjusted operating margin is adjusted operating profit divided by revenue.
Purpose
This measure is used to evaluate the trading operating performance of the
Group.
Adjusting items are excluded from this measure to provide an understanding of
the elements of financial performance during the year to facilitate comparison
with prior periods and to assess the underlying trends in financial
performance.
Adjusting items include significant one-off redundancy and restructuring
costs, transaction costs and integration costs associated with merger and
acquisition activity, any impairment charges for intangible asset upgrades, as
well as credits relating to profit on disposal of businesses, and property
provision releases. These items are not considered to be a part of the
ordinary course of the Group's business.
Amortisation of acquired intangible assets is excluded from this measure as
this is a significant non-cash fixed charge that is not affected by the
trading performance of the business, but does not similarly exclude the
related revenue and profits generated from the business acquisition.
Impairment of acquired intangible assets and goodwill is excluded, as this can
be a significant non-cash charge.
Reconciliation/calculation
Adjusted operating profit is reconciled on the face of the Income Statement on
page 22.
Like for like or LFL revenue and operating profit
Definition
The comparison of revenue or adjusted operating profit, as appropriate,
excluding the impact of any acquisitions made during the current year and, for
acquisitions made in the comparative year, excluding from the current year
result the impact of the equivalent current year pre-acquisition period. For
disposals, the results are excluded for the whole of the current and prior
period. The prior period comparative is retranslated at the current period
average exchange rate. The Group considers these amendments provide
shareholders with a comparable basis from which to understand the organic
trading performance in the year.
Purpose
This measure is used by management to evaluate the Group's organic growth in
revenue and adjusted operating profit year on year, excluding the impact of
M&A and currency movements.
Reconciliation/calculation
2022 2021
£'m
£'m
Reported revenue 715.5 635.7
Effect of exchange rates - 44.5
Like-for-like revenue 715.5 635.7
Adjusted operating profit 94.6 90.0
Effect of exchange rates - 7.0
Like-for-like adjusted operating profit 94.6 97.0
Adjusted profit before tax and adjusted profit after tax
Definition
Profit before amortisation of acquired intangible assets, deferred tax on
amortisation of acquired intangible assets, impairment of acquired intangible
assets, impairment of goodwill, adjusting items, unwinding of discount on
provisions, gains and losses on the fair value of derivative financial
instruments, amortisation of borrowing costs, accelerated amortisation of
borrowing costs and the associated tax effect.
Purpose
This measure is used to evaluate the profit generated by the Group through
trading activities. In addition to the items excluded from operating profit
above, the gains and losses on the fair value of derivative financial
instruments, amortisation of borrowing costs and the associated tax effect are
excluded. These items are excluded as they are of a non-trading nature.
Reconciliation/calculation
A reconciliation is included in note 6.1.
Adjusted earnings per share
Definition
Adjusted profit after tax divided by the basic weighted average number of
ordinary shares in issue during the year, excluding those held as treasury
shares.
Purpose
This measure is used to determine the improvement in adjusted EPS for our
shareholders.
Reconciliation/calculation
A reconciliation of adjusted profit after tax and the number of shares can be
found in note 6.
Covenant EBITDA and covenant adjusted EBITDA
Definition
Covenant EBITDA: Adjusted operating profit with depreciation, amortisation of
computer software, and share-based payments expenses added back, less RoU
depreciation and interest payable on lease liabilities.
Covenant adjusted EBITDA: EBITDA plus the pre-acquisition EBITDA of businesses
acquired during the year covering the relevant pre-acquisition period less the
EBITDA of businesses disposed of during the year.
Purpose
This measure is used as the numerator in calculating covenants under the terms
of the Group's revolving credit facility.
Reconciliation/calculation
2022 2021
£'m
£'m
Adjusted operating profit 94.6 90.0
Depreciation of property, plant and equipment 19.5 11.5
Amortisation of computer software 2.0 1.3
Interest payable on lease liabilities (3.0) (1.2)
ROU depreciation (7.1) -
Share-based payments expense - equity settled 0.8 1.0
Covenant EBITDA and covenant adjusted EBITDA 106.8 102.6
Interest cover
Definition
Covenant EBITDA divided by the net interest payable on bank loans, private
placement notes and overdrafts and interest income from short-term bank
deposits.
Purpose
This measure is used to evaluate the profit available to service the Group's
interest costs. This is one of the covenants the Group is subject to under the
terms of its revolving credit facility.
Reconciliation/calculation
2022 2021
£'m
£'m
Covenant EBITDA 106.8 101.4
Net interest 5.9 5.8
Interest cover (x) 18.2x 17.4x
Gross Debt and Adjusted gross debt
Definition
Gross debt is borrowings and lease liabilities. Adjusted gross debt is gross
debt, with capitalised borrowing costs added back.
Purpose
This gives a measure of the gross amount owed to lenders, without the effect
of unamortised borrowing costs for which cash outflow has already occurred.
Reconciliation/calculation
2022 2021
£'m
£'m
Borrowings (188.4) (203.9)
Lease liabilities (61.7) (54.8)
Gross Debt (250.1) (258.7)
Capitalised borrowing costs (2.1) (0.7)
Adjusted gross debt (252.2) (259.4)
Adjusted net debt and covenant net debt
Definition
Borrowings, net of cash and cash equivalents, plus capitalised borrowing costs
and lease liabilities added back. For the purposes of bank covenants net debt
used in the leverage calculation is calculated based on the weighted average
exchange rates in line with the banking agreements.
Purpose
This gives a measure of the gross amount owed to lenders, without the effect
of unamortised borrowing costs.
Reconciliation/calculation
2022 2021
£'m
£'m
Net debt (175.5) (145.8)
Lease liabilities 61.7 54.8
Capitalised borrowing costs (2.1) (0.7)
Adjusted net debt (115.9) (91.7)
Adjustment to weighted average exchange rate 4.4 0.7
Covenant net debt (111.5) (91.0)
Leverage
Definition
Adjusted net debt translated at the average exchange rate for the year divided
by covenant adjusted EBITDA, as defined in the banking agreements.
Purpose
This measure is used to evaluate the ability of the Group to generate
sufficient cash flows to cover its contractual debt servicing obligations.
Reconciliation/calculation
2022 2021
£'m
£'m
Covenant adjusted net debt (at average exchange rate) 111.5 91.0
Covenant adjusted EBITDA 106.8 102.6
Leverage (x) 1.0x 0.9x
Return on Capital Employed (ROCE)
Definition
Adjusted operating profit as a percentage of the last thirteen-month average
capital employed.
Purpose
This measure is used to evaluate how efficiently the Group's capital is being
employed to improve profitability.
Reconciliation/calculation
2022 2021
£'m
£'m
Adjusted operating profit 94.6 90.0
Average capital employed 710.7 619.4
ROCE 13.3% 14.5%
Average capital employed can be reconciled to the balance sheet as follows:
2022 2021
£'m
£'m
Inventories 153.1 137.8
Trade and other receivables 81.4 81.0
Intangible assets 57.7 66.8
Property, plant & equipment 74.6 63.5
Right-of-use asset 57.3 52.0
Goodwill 399.3 363.3
Deferred tax asset 14.9 4.2
Trade and other payables (88.2) (112.8)
Tax liabilities (1.8) (6.0)
Provisions - current (5.0) (1.4)
Provisions non - current (2.9) (4.8)
Deferred tax liabilities (20.1) (12.1)
Financial asset at FV through P&L 1.2 1.1
Total capital employed 721.5 632.6
Adjustment to 13-month average (10.8) (13.2)
Average capital employed 710.7 619.4
Adjusted operating cash conversion and adjusted operating cash flow
Definition
Adjusted operating cash flow
Net cash generated from operations before income tax paid, adjusting item
costs cash settled in the year and pension contributions, and after proceeds
on disposal of property, plant and equipment, payments to acquire property,
plant and equipment and payments to acquire intangible assets.
Adjusted operating cash conversion
Adjusted operating cash flow divided by adjusted operating profit.
Purpose
These measures are used to evaluate the cash flow generated by operations in
order to pay down debt, return cash to shareholders and make further
investment in the business.
Reconciliation/calculation
A reconciliation is included in the financial review on page 16.
Definitions and glossary of terms
APM Alternative Performance Measure
bps Basis points
CGU Cash Generating Unit
CHIC Concealed hardware innovative components
CPA Construction Products Association
EB Trust (EBT) The Tyman Employees' Benefit Trust
EBITDA Earnings before Interest, Taxation, Depreciation and Amortisation
EPS Earnings per Share
ERP Enterprise resource planning
GAAP Generally accepted accounting principles
GCC Gulf Cooperation Council
IoT Internet of Things
IFRS International Financial Reporting Standards
KPI Key performance indicator
LFL Like-for-like
LTI Lost time incident
LTIFR Lost time incident frequency rate - a core safety metric expressing the number
of lost time incidents as a ratio per 1 million hours worked
LTIP Long term incentive plan
M&A Mergers and acquisitions
NAHB The National Association of Home Builders
NPD New Product Development
OEM Original equipment manufacturer
PMI Purchasing Managers' Index
PPE Property, plant and equipment
RCF Revolving credit facility
RMI Renovation, maintenance and improvement
ROCE Return on capital employed
ROU Right of use
SBTi Science Based Target initiative
USPP US private placement
Exchange rates
The following foreign exchange rates have been used in the financial
information to translate amounts into Sterling:
Closing Rates: 2022 2021
US dollars 1.2097 1.3512
Euros 1.1298 1.1912
Australian dollars 1.7743 1.8607
Canadian dollars 1.6386 1.7159
Brazilian Real 6.3937 7.5285
Average Rates: 2022 2021
US dollars 1.2370 1.3757
Euros 1.1732 1.1631
Australian dollars 1.7795 1.8321
Canadian dollars 1.6078 1.7244
Brazilian Real 6.3857 7.4216
Roundings
Percentage numbers have been calculated using unrounded figures, which may
lead to small differences in some figures and percentages quoted.
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