REG - Tyman PLC - Final Results
07/03/2024 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20240307:nRSG8899Fa&default-theme=true
RNS Number : 8899F Tyman PLC 07 March 2024
TYMAN PLC
RESULTS FOR THE YEAR ENDED 31 DECEMBER 2023
Tyman plc (TYMN.L) announces results for the year ended 31 December 2023.
Summary Group Results
£m unless stated 2023 2022 Change LFL ((1))
Revenue 657.6 715.5 -8% -8%
Adjusted operating profit* 84.4 94.6 -11% -13%
Adjusted operating margin* 12.8% 13.2% -40bps -60bps
Operating profit 60.2 70.7 -15%
Adjusted profit before taxation* 75.0 85.8 -13%
Profit before taxation 50.0 61.4 -19%
Adjusted EPS* 30.1p 34.7p -13%
Basic EPS 19.6p 24.6p -20%
Dividend per share 13.7p 13.7p -
Leverage ((2)) 1.1x 1.0x +0.1x
Return on capital employed* 11.7% 13.3% -160bps
* 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 pages 37 to 42.
(1) LFL = constant currency like-for-like (see APMs on page 38).
(2) Leverage is calculated in accordance with the debt covenant
methodology (see APMs on pages 39 to 41).
Highlights:
• Robust overall performance in line with expectations despite
challenging market conditions
• Revenue decline reflected significant reduction in volumes
partially offset by the carryover benefit of pricing actions and share gains
• Adjusted operating profit decline primarily reflected negative
operating leverage from significant reduction in volumes, partially offset by
an initial contribution from Lawrence
• North America adjusted operating margin increase of 130bps to
15.5%, benefitting from the reversal of the pricing lag and the contribution
from Lawrence; division represents >70% of Group adjusted operating profit
• Excellent adjusted operating cash conversion of 143%, reflecting a
£34 million reduction in inventory and enabling a net debt reduction despite
acquiring Lawrence for £44 million
• Good progress with our strategic initiatives to gain share and
structurally improve margin
• Best ever safety performance, with LTIFR of 1.0 and TRIR reducing
by 26% to 4.2
• Near-term carbon reduction targets validated by the Science Based
Targets initiative
• Full-year dividend per share maintained at 13.7 pence, reflecting
confidence in the Group's future growth prospects
Jason Ashton, Interim Chief Executive Officer at 31 December 2023, commented:
"The Group performed robustly in a volatile and challenging environment in
2023, with good margin progression in North America and excellent operating
cash conversion. The agility of our management teams in flexing cost, together
with the reversal of the pricing lag in North America, enabled us to deliver
full-year adjusted operating profit in line with market expectations.
We also reduced net debt, despite acquiring Lawrence for £44 million, and
have maintained the full-year dividend, reflecting our confidence that the
Group remains well-positioned to take advantage of the positive structural
growth drivers when the housing market backdrop improves.
Pleasingly, the Group achieved its best ever safety performance and had its
near-term carbon reduction targets validated by the Science Based Targets
initiative."
Rutger Helbing, Chief Executive Officer from 2 January 2024, commented: "Since
I joined Tyman, I have had the opportunity to visit 14 of our manufacturing
sites so far, encompassing all three divisions. These visits have enabled me
to better understand our market-leading brands and differentiated products,
and to meet many of our passionate and dedicated employees.
The structural growth drivers for the Group remain attractive, although
leading indicators for our major markets are currently signalling a
challenging market outlook for 2024. However, given our self-help measures and
a full-year contribution from Lawrence, the Board expects the Group to make
progress in 2024."
7 March 2024
Enquiries
Tyman plc 020 7976 8000
Rutger Helbing - Chief Executive Officer investor.relations@tymanplc.com (mailto:investor.relations@tymanplc.com)
Jason Ashton - Chief Financial Officer
Matt Jones - Head of Investor Relations
MHP 07827 662 831
Reg Hoare / Rachel Farrington / Matthew Taylor tyman@mhpgroup.com (mailto:tyman@mhpgroup.com)
Analyst and investor presentation
Tyman will host an analyst and investor presentation at 9.30 a.m. today,
Thursday 7 March 2024, at the offices of Deutsche Numis, 45 Gresham Street,
London, EC2V 7BF.
The presentation will be webcast at: https://brrmedia.news/TYMN_FY23
(https://brrmedia.news/TYMN_FY23) .
The audio conference call details are:
Number +44 (0) 33 0551 0200
Password (if prompted) Tyman Full Year
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 3,600
people with facilities in 15 countries worldwide. Further information is
available at www.tymanplc.com (http://www.tymanplc.com/) .
Overview of results
Performance in 2023
Tyman delivered a robust overall performance in 2023 against a strong
comparative period and despite a continuation of the challenging markets
experienced since the second half of 2022. Revenue declined by 8% to £657.6
million (2022: £715.5 million), reflecting a like-for-like ("LFL") decline of
8%, a 1% decline from foreign exchange movements and 1% growth from the
acquisition of Lawrence Industries ("Lawrence") in July 2023. The LFL decline
reflected the impact of a significant reduction in volumes due to underlying
demand softness and customer destocking, which more than offset the benefit
from the carryover of pricing actions and share gains.
Residential housebuilding and RMI activity across the Group's major markets
were impacted by the combination of elevated consumer inflation and interest
rates. In addition, volumes were impacted by customer destocking, notably in
our seals businesses, and the withdrawal of various government fiscal stimulus
programmes, which had boosted market activity in the International division in
2022. Whilst market demand remained soft throughout the year, the comparators
eased in the second half, particularly in the North America and International
divisions, resulting in a marked reduction in the LFL revenue decline in the
second half of the year as compared to the first half.
The Group's profitability in 2023 reflected the positive impact of prior year
pricing actions. The strength of the Group's brands enabled pricing power to
be maintained, and it was pleasing to see the reversal of the pricing lag that
negatively impacted operating margins in North America during 2021 and 2022.
Commodity cost inflation in general eased during the year, but labour markets
have remained competitive, especially in the US, resulting in wage inflation
remaining above long-term averages.
The Group responded to the soft demand backdrop with adjustments to production
shifts, targeted headcount reductions, reductions in temporary labour,
allowing natural labour attrition and tight control of discretionary costs. In
addition, measures were taken during the year to reduce the fixed element of
the cost base, including ceasing manufacturing operations in Brazil and taking
the decision to exit the Chinese commercial market at the end of 2023. These
cost actions will benefit future profitability but were not able to fully
offset the significant under-absorption of fixed costs in the year, with
production volumes declining by more than sales volumes in order to reduce
inventory levels. As a result, adjusted operating profit declined by 11% on a
reported basis (reflecting a LFL decline of 13%, a 1% impact from foreign
exchange movements and a 3% contribution from Lawrence) and the adjusted
operating margin declined by 40bps to 12.8%. Both adjusted operating profit
and the adjusted operating margin improved markedly in the second half of the
year as compared to the first half. Notably, the full-year adjusted operating
margin in North America increased by 75bps compared to 2022 on a LFL basis.
Reflecting the progress on inventory, which decreased by £34.1 million,
adjusted operating cash conversion improved significantly to 143% (2022: 64%).
The average adjusted operating cash conversion rate over the last five years
now stands at 107%.
Health and safety
The health and safety of our people is the Group's top priority and is
embedded in our culture through our "Safety is our First Language" programme.
Pleasingly, the Group achieved a lost time incident frequency rate ("LTIFR")
of 1.0 in 2023, a 29% improvement on 2022 and a 79% improvement versus the
2018 baseline LTIFR of 4.8. To ensure that the significant progress made in
recent years is maintained and improved upon, a safety leadership refresher
course has been deployed across the business.
Having now almost achieved its ambitious goal of a LTIFR of less than 1.0, the
Group is shifting its focus to the total recordable incident rate ("TRIR"), a
more rounded measure of safety performance that captures all incidents
requiring medical intervention beyond first aid. The Group's TRIR of 4.2 in
2023 represented a 26% improvement on 2022 and the Group's best performance on
this measure to date. A target has been set to achieve a world-class TRIR of
less than 3.0 by 2026.
Strategic progress
The Group has continued to progress its Focus, Define, Grow strategy, all of
which is underpinned by sustainability.
Within the Focus strategic pillar, the project to consolidate two
manufacturing sites into one in Owatonna in the US began in 2023 and is
progressing to plan. The multi-year programme to roll-out a new ERP system
across North America continued in the year with a further two sites
successfully going live in March. This programme will enable enhanced customer
service levels, greater efficiencies, and improved decision making. The
European seals manufacturing optimisation programme progressed, with the
transfer of production lines from Germany to the Newton Aycliffe facility in
the UK, and there was further optimisation of our international footprint to
reduce the fixed cost base. The consolidation of the UK commercial access
solutions business into a single site in Wolverhampton in the UK also
completed during the year.
In the first half of 2023 the Science Based Targets initiative validated the
Group's targets to reduce absolute Scope 1 and Scope 2 greenhouse gas ("GHG")
emissions by 46.2% by 2030 from a 2019 base year, and to reduce absolute Scope
3 GHG emissions from purchased goods and services by 27.5% within the same
timeframe. 100% renewable electricity tariffs are now in place for all
manufacturing plants in Europe and plans are well progressed to extend them to
the Group's Mexican plants. Tyman hosted an energy and waste Kaizen event with
a major US customer in the second half of the year, in the process
successfully identifying almost 90 opportunities to reduce electricity, water
and waste, with a combined estimated annual saving of US$0.4 million.
Within the Define strategic pillar, leaders from across the Group met with
Tyman's major Chinese suppliers in June. After several challenging COVID-19
years, this event was welcomed by suppliers to be able to meet with the
divisional Presidents and allowed all three divisions to re-engage with
suppliers on many topics, including quality, cost, lead times and
sustainability. The Group also continued the development of groupwide
leadership competencies, and pulse surveys were used to assess progress
against the action plans developed from the 2022 employee engagement survey
results, with the next full employee engagement survey planned for 2024.
Activities to Grow market share continued to yield positive results. In North
America, further net customer wins were achieved, aided by the distribution
centre that was opened in late 2022 in Phoenix, Arizona that is enabling
greater penetration of the western US market. In International markets,
further progress was made in growing partnerships with system houses, with
revenue from this channel now comprising 22% of divisional revenue (2022:
21%). New product launches have performed well in the UK and there have been
notable share gains in this market, particularly in the distribution channel.
Enabling customers to innovate through more sustainable solutions is a key
area of differentiation for the Group. During 2023, the percentage of Group
revenue derived from products and solutions that positively impact one or more
of the UN Sustainable Development Goals ("SDGs") in use increased to 23%
(2022: 22%), and several of the Group's products achieved Environmental
Product Declaration ("EPD") certification.
In July 2023, Tyman acquired Lawrence for an initial consideration of US$57
million. Lawrence adds an exciting new product category, high-performance
composite hung window hardware, to Tyman's portfolio of window and door
hardware for the US residential housing market, which has attractive long-term
growth prospects. The integration of Lawrence is progressing well and
delivering commercial and procurement synergies as expected.
The Group retains a good pipeline of targets that meet our commercial and
strategic objectives and will continue to pursue a disciplined M&A
strategy, whilst remaining cognisant of its target leverage range.
Outlook
The structural growth drivers for the Group remain attractive, although
leading indicators for our major markets are currently signalling a
challenging market outlook for 2024. However, given our self-help measures and
a full-year contribution from Lawrence, the Board expects the Group to make
progress in 2024.
Jason Ashton
Interim Chief Executive Officer at 31 December 2023
Tyman North America
£m except where stated 2023 2022 Change LFL
Revenue 432.3 471.9 -8% -9%
Adjusted operating profit 67.1 66.9 - -5%
Adjusted operating margin 15.5% 14.2% +130bps +75bps
Markets
Activity in the US residential housing market has been constrained by elevated
interest rates and inflation since the second half of 2022. According to the
US Census Bureau, US housing starts declined by 9% in 2023, whilst single
family starts, to which the division has proportionally higher exposure,
declined by 6%. The single family new build market improved as the year
progressed, as pent-up demand was captured by national homebuilders offering
incentives that enabled homeowners to cope with historically high mortgage
rates.
In contrast, the RMI market softened as the year progressed. According to LIRA
(Leading Indicator of Replacement Activity), the rate of growth in the annual
spend on repair and remodelling in the US, which incorporates cost inflation,
slowed from 16% in the fourth quarter of 2022 to 2% in the fourth quarter of
2023.
The US commercial market remained resilient in 2023, driven by education and
commercial building investment, whilst government legislation is providing
some stimulus to the public infrastructure market. In Canada, which was also
impacted by elevated inflation and interest rates, housing starts declined by
7%.
Business performance and developments
Reported revenues declined by 8%, reflecting a LFL decrease of 9% offset by a
1% contribution from Lawrence, with negligible impact from foreign exchange
movements. LFL revenues were impacted by a decline in volumes resulting from
the challenging market backdrop and customer destocking, notably in the seals
business, which more than offset the benefits from prior year pricing actions
and net customer wins. The rate of volume decline moderated during the fourth
quarter, mainly reflecting an easier comparator.
The division made good progress 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 and to
provide a more consistent customer experience, drive further back-office
efficiencies, and improve the business's decision support capabilities. This
multi-year programme is progressing well, with two key sites successfully
going live in March and another two sites going live in early 2024.
The distribution site in Phoenix, which was added in late 2022 to service the
western US market, is performing well, whilst the consolidation of two
manufacturing sites into one in Owatonna is progressing to schedule, with
product line transfers and process flow improvements underway and capital
investment in a new paint line on order. In addition to cost savings, there
will be significant safety, sustainability and service benefits on completion
of this project in 2025, as well as helping to alleviate the tight labour
situation.
During 2023, the business achieved incremental net customer wins despite
exiting some low profitability business as a result of taking a disciplined
approach to pricing. These losses were more than offset by wins gained from
new products, such as the entry-price point sliding patio door solution, and
benefits of the new distribution centre in Phoenix. After several years when
customers have been focused on managing COVID-19, disrupted supply chains and
significant cost inflation, new product development is now a priority again
for customers as they look to position for future growth. The division is
responding to this by accelerating its new product pipeline with increased
engineering resources. Products such as a magnetic casement window handle
solution, an "around the corner" seal, and a low-priced flood tight floor
access door are examples of new products coming to the market in early 2024.
A major development in 2023 was the acquisition of Lawrence. Lawrence designs,
manufactures and sells high-performance composite hardware for sliding and
hung windows to North American PVC window fabricators, and is a beneficiary of
the growing demand for affordable homes in North America. Lawrence has
performed to plan since acquisition, with the combination of AmesburyTruth and
Lawrence already proving to represent a strong value proposition for
customers.
Input cost inflation in general eased during 2023, although certain commodity
prices remained high and labour inflation continued at historically high
levels. The labour availability and retention challenges experienced in 2022
improved across most of the network, and the resultant workforce stabilisation
is enabling a focus on continuous improvement projects to improve efficiency,
enhance supply chain resiliency and reduce inventory.
As expected, the natural lag in the recovery of input cost inflation via
pricing actions that impacted the division's adjusted operating margin in 2021
and 2022 reversed in 2023. This enabled the division to largely offset the
negative effect on fixed cost absorption from the significant decline in
volumes, with production volumes being down even more than sales volumes to
enable a reduction in inventory of c.US$30 million. This limited the decline
in LFL adjusted operating profit to 5%. Adjusted operating profit was flat on
a reported basis, reflecting a 5% contribution from Lawrence, with negligible
effect of foreign exchange. As a result, the division delivered a LFL adjusted
operating margin increase of 75 basis points to 15.5%.
Outlook
The underlying fundamentals of the US housing market remain strong, with years
of supply lagging demand creating a significant housing deficit. Economists
are forecasting that the easing in inflation that began in 2023 will lead to
interest rate reductions in the first half of 2024, which could alleviate the
recent constraints on market demand and stimulate activity later in the year.
The NAHB currently forecasts a 5.5% increase in single family housing starts,
whilst LIRA projects that the spend on repair and remodelling will decline by
mid to high single digits.
Against this backdrop, the division will maintain its focus on gaining market
share, notably in the western US, by further exploiting the commercial
opportunities from the Lawrence acquisition and continuing to develop its new
product pipeline. Work to streamline the supply chain and return operational
efficiencies across the network to normalised levels will remain a focus,
along with progressing the consolidation of two sites into one in Owatonna and
continuing the ERP implementation. Together with a full-year contribution from
Lawrence, these actions will support further improvement in 2024.
Tyman UK & Ireland
£m except where stated 2023 2022 Change LFL
Revenue 97.3 103.3 -6% -6%
Adjusted operating profit 12.0 14.5 -17% -17%
Adjusted operating margin 12.3% 14.0% -170bps -170bps
Markets
Activity in the UK residential RMI market, to which the division is
predominantly exposed, remained subdued in 2023, impacted by the pressure on
household incomes from elevated levels of inflation and interest rates. This
negative impact was amplified by customer destocking following the
higher-than-normal inventory levels that had been built during the
post-pandemic market rebound and associated supply chain challenges. The most
recent CPA forecast projected spending in the private RMI market to have
declined by 11% in 2023.
Whilst the UK construction PMI ("CPMI") has posted readings slightly above the
neutral 50 level for much of the year, the housing component of the CPMI was
below 50 throughout and took a notable step down in the autumn of 2023 to the
mid 40's and has since been stuck around this level, with the weakness in
housing spreading to the previously growing segments of infrastructure and
commercial. As a result, the CPA forecasts the infrastructure segment to have
been broadly flat in 2023 and commercial end markets to have experienced a
slight decline, both of which represent a softening compared to projections at
the start of the year.
Business performance and developments
Revenue decreased by 6% in 2023 on a LFL and reported basis as a result of a
decline in hardware volumes, reflecting the above-mentioned challenges in the
residential RMI market. This decline accelerated slightly in the second half
of the year, mirroring the stepdown in the CPMI. In addition, there was a fall
in revenue in the commercial access solutions business, which was impacted by
the continued effect of delays with new automation equipment as well as a
slowdown in the commercial market in the second half of the year.
Despite the challenging market conditions, the hardware business continued
with its strategic initiatives and achieved meaningful share gains in 2023
across all major routes to market and notably with major distributors, where
the strength of the brands and the close customer collaboration are
differentiators. The work that has been taking place in recent years to
improve the new product development processes and pipeline is delivering
benefits, with revenues from new products in categories such as friction
stays, door closers, hinges and letterplates running ahead of the prior year,
despite the tough market backdrop.
Raw material prices eased during the year and air freight costs were lower,
although the benefit of this was partially offset by ongoing wage inflation.
Given this, the hardware business remained agile with regards to pricing, and
responded to competitive pressures with targeted price adjustments.
As part of the Group's sustainability roadmap, the hardware business has
continued its development of sustainable packaging solutions and the
elimination of hazardous substances, such as chromium VI, from products. Given
the division sources much of its products from Asia, the achievement of these
goals relies on key Chinese suppliers and formed a major topic of discussion
at a Tyman supplier conference in Ningbo to ensure the engagement, alignment
and support of suppliers in producing and delivering sustainable solutions for
customers.
Access 360, the division's commercial access solutions business, completed the
final steps in the consolidation of the three heritage Access 360 sites
(Profab, Howe Green and the Bilco warehouse) into a single highly automated
facility in Wolverhampton during the first half of the year. The business
experienced delays with the new equipment for the facility, which
significantly impacted its operational and financial performance. As these
issues were overcome, the business' operating efficiency and financial
performance improved progressively during the second half despite the
above-mentioned softening of its end markets.
LFL and reported adjusted operating profit decreased by 17%. This was
primarily attributable to the above-mentioned challenges that affected Access
360's performance, as the hardware business was able to partially offset the
negative operating leverage impact from lower hardware volumes with tight cost
control.
Outlook
The UK residential RMI market is expected to remain challenging during 2024,
with the CPA currently forecasting a further 4% decline, leading to a
competitive market landscape. Against this backdrop, the hardware business
will continue to focus on new product development, share gains and enhancing
its supply chain resilience to ensure customer service levels are maintained,
whilst continuing to tightly manage discretionary costs.
The operational challenges experienced by Access 360 in the first half of 2023
have been overcome and the commercial pipeline is improving, and, absent any
further softening of end markets, we anticipate that the business will show
progress in 2024.
Tyman International
£m except where stated 2023 2022 Change LFL
Revenue 128.0 140.3 -9% -6%
Adjusted operating profit 13.5 21.3 -37% -31%
Adjusted operating profit margin 10.5% 15.2% -470bps -380bps
Markets
The decline in demand levels that began in the second half of 2022 across most
of the division's key markets continued throughout 2023. Elevated interest
rates and inflation had a negative effect on consumer confidence across
Europe, which accounts for approximately 65% of divisional revenue, and this
in turn reduced activity levels in the private RMI and housebuilding markets
across the region. The Eurozone Construction PMI remained stuck in the mid
40's throughout 2023, indicative of a construction sector in contraction. The
data for the division's largest market, Italy, was better than the Eurozone
average, running in the high 40's for much of the year and rising above 50 in
the final few months of 2023. During 2022, market demand had benefitted from
various government fiscal stimulus programmes across Europe, notably in Italy,
France and Spain, and the gradual reduction in funding for these programmes in
2023 negatively impacted market activity levels.
Elsewhere, there continued to be favourable market conditions in the Gulf
Cooperation Council ("GCC") cluster of markets, but most other export markets
remained weak.
Business performance and developments
Revenue declined by 9% in the period on a reported basis and by 6% on a LFL
basis against a strong comparative. The drivers of this were the challenging
market conditions experienced throughout the year, which were amplified by
significant customer destocking in the seals business, and more than offset
the benefit from the carryover of prior year pricing actions. There was a
marked improvement in the LFL revenue decline in the second half of the year,
mainly reflecting weaker comparators.
The business performed creditably given the tough market environment, notably
continuing to gain traction with system houses in Europe and the GCC. This
channel now represents 22% of the division's revenue (compared to 21% in 2022)
and is expected to continue to grow faster than the market, as system houses
are reacting quicker to building regulation changes and driving innovation and
sustainability in the industry. Tyman is well placed to grow with this group
of customers by working closely with them to create innovative solutions, with
multiple systems deploying newly developed Giesse hardware and Schlegel seal
products delivered to the market in 2023 and due for launch in 2024. Further
dedicated sales resource has been added specifically to accelerate this
initiative and organisation changes are underway to ensure excellent service
and new product development capabilities are provided to this channel.
Sustainability continues to be a key differentiator for Tyman across Europe,
and during 2023 two major product ranges, the CHIC concealed hinges for tilt
and turn casement windows and Fulcra door hinges, achieved Environmental
Product Declaration ("EPD") certification, creating additional revenue
opportunities as EPD certification becomes a prerequisite for an increasing
number of tenders in the market.
Work to optimise the division's seals manufacturing business continued
following the closure of the German seals manufacturing plant at the end of
2022, with the transfer of its production to the Newton Aycliffe facility in
the UK now completed. This consolidation will deliver structural improvements
to profitability and enhanced customer service levels. The business also took
further action to reduce the fixed cost base, including closing its
manufacturing operation in Brazil in July 2023, and exiting completely from
the loss-making Chinese market at the end of the year. In the division's
largest hardware manufacturing facility in Italy there has been significant
investment during 2023 in process automation and robotics to enhance safety,
capacity and efficiency.
Prior year pricing actions largely offset raw material and wage inflation but
the significant decline in sales and production and the consequential negative
effect on fixed cost absorption resulted in a LFL adjusted operating profit
decline of 31%, with the adjusted operating margin decreasing to 10.5%. On a
reported basis, adjusted operating profit decreased by 37%, reflecting the
impact of foreign exchange.
Outlook
Recent construction PMI data suggests that the market is likely to remain
challenging in the first half of 2024. GlobalData currently forecasts that the
European residential RMI market will decline by almost 5% in 2024, whilst
Euroconstruct forecasts a 4% contraction.
Offsetting the anticipated market weakness, the division's revenue performance
in 2024 is expected to benefit from ongoing share gains, an absence of
customer destocking, as well as continued growth from the GCC cluster, which
is expected to maintain its recent growth trend.
The priorities remain to capture share growth opportunities through ongoing
innovation and system house expansion activities, whilst continuing to tightly
manage the cost base. The division will also continue to take measures to
reduce the fixed element of its cost base to reduce its operating leverage and
will benefit in 2024 from both the absence of losses in China and the
operational improvements at its Newton Aycliffe seals facility.
Financial review
Income statement
Revenue and profit
Reported revenue for the year decreased by 8.1% to £657.6 million (2022:
£715.5 million), against a strong comparator, largely reflecting a decline in
volumes of c.£108 million, driven by the weaker global macroeconomic
conditions, which began to take effect in the second half of 2022, and
unfavourable foreign exchange movements of £6.4 million. The volume shortfall
was partially offset by the benefit of the carryover of prior year price
increases of £32.6 million and surcharges of £16.8 million to recover the
significant input cost inflation experienced across 2021 and 2022, for which
there was a lag in recovery. There was also a £7.1 million contribution from
Lawrence, which was acquired in July 2023. On a LFL basis, which excludes the
revenue generated from Lawrence and the adverse impact of foreign exchange,
revenue decreased 8.3% compared to 2022.
Operating profit decreased by 14.9% to £60.2 million (2022: £70.7 million).
The impact of the drop through of lower sales volumes was c.£35 million.
Production volumes were down more than sales volumes in order to reduce
inventory levels, and although significant cost reductions were achieved in
response to lower demand, the net effect on fixed cost absorption was
significant, and this, combined with the knock-on effect of machinery delays
on the Access 360 site consolidation, impacted profitability by c.£10.2
million. The carryover of pricing actions and tariffs of £49.4 million more
than offset in-year material, wages and salary, and other input cost inflation
of £14.5 million, with the significant lag experienced over the last two
years now reversed. Operating profit was also impacted by adverse
transactional foreign exchange movements of £1.4 million and adjusting items,
which included restructuring costs, M&A activity, CEO transition costs,
and the impact of the significant devaluation of the Argentinean Peso in
December 2023 on retranslating Euro-denominated payables. The acquisition of
Lawrence benefitted operating profit by £3.1 million. Adjusted operating
profit, which excludes the adjusting items and amortisation of acquired
intangibles, decreased by 10.8% to £84.4 million (2022: £94.6 million).
Operating margin decreased by 70 bps to 9.2% (2022: 9.9%) and adjusted
operating margin decreased by 40 bps to 12.8% (2022: 13.2%), largely as a
result of the lower sales and production volumes, and the challenges with the
Access 360 site consolidation. On a LFL basis, excluding the adverse impact of
foreign exchange and benefit from Lawrence, adjusted operating margin
decreased by 64 bps.
Reported profit before taxation decreased by 18.6% to £50.0 million (2022:
£61.4 million), primarily as a result of the lower operating profit and an
increase in net finance costs, driven by increases in global interest rates
and debt drawn down to fund the Lawrence acquisition. Adjusted profit before
tax decreased by 12.6% to £75.0 million (2022: £85.8 million), as a result
of the lower adjusted operating profit and higher interest charge.
Materials and input costs
Materials((1)) 2023 Average((2)) Spot((3))
£m
Aluminium 17.9 -25% -31%
Polypropylene 39.3 -26% -11%
Stainless steel 59.4 -14% -40%
Zinc 29.4 -11% -18%
Far East components((4)) 17.2 -6% +3%
(1) 2023 materials cost of sales for raw materials, components and
hardware for overall category.
(2) Average 2023 tracker price compared with average 2022 tracker
price.
(3) Spot tracker price as at 31 December 2023 compared with spot
tracker price at 31 December 2022.
(4) Pricing on a representative basket of components sourced from the
Far East by Tyman UK & Ireland.
Both spot and average prices across all major categories moderated in 2023,
except for the spot rate on Far East components, following significant
inflation over the previous two years. However, as higher priced inventory
carried into the year was still being sold through, the Group only began to
realise the benefit of input cost reductions towards the end of the year.
Previously implemented price increases and surcharges are now recovering the
gap experienced over the last two years as a result of the timing lag driven
by the magnitude and frequency of cost increases, as well as customer pricing
mechanisms.
Selling, general and administrative expenses
Selling, general and administrative expenses increased to £157.1 million
(2022: £151.2 million), predominantly due to salary and other cost inflation,
the acquisition of Lawrence and adjusting items of £10.6 million (2022: £6.3
million), partially offset by lower amortisation of acquired intangibles, the
effect of cost control measures implemented in response to weaker demand and
foreign exchange movements. Adjusted selling, general and administrative
costs, which excludes the impact of adjusting items and amortisation of
acquired intangibles, increased to £132.9 million (2022: £127.3 million).
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.
2023 2022
£m
£m
Restructuring costs (6.7) (6.3)
CEO transition costs (1.3) -
M&A costs (1.4) -
Argentina devaluation charge (1.2) -
Total adjusting items (10.6) (6.3)
The restructuring costs of £6.7 million comprise costs related to the Access
360 site consolidation, costs related to a targeted reduction in workforce in
North America, and costs associated with the streamlining of the International
division operations, including the final costs relating to the closure of the
Hamburg facility, cessation of manufacturing in Brazil and closure of the
Chinese business.
The CEO transition costs of £1.3 million include exit costs relating to the
former CEO, as well as recruitment costs for the new CEO.
M&A costs of £1.4 million comprise costs associated with the Lawrence
acquisition, including due diligence, legal fees, and other
acquisition-related costs, as well as a charge associated with the estimated
earn-out, which under accounting standards is treated as post-combination
remuneration rather than consideration due to it being conditional on the
continuing employment of a key employee.
The Argentina devaluation charge of £1.2 million relates to the impact of the
significant devaluation of the Argentinian peso in December 2023, following
the change in government, on retranslating Euro-denominated payables.
Finance costs
Net finance costs increased to £10.2 million (2022: £9.3 million).
Interest payable on bank loans, private placement notes and overdrafts
increased to £10.8 million (2022: £6.9 million), predominantly reflecting a
significantly higher weighted average interest rate, a draw-down of the
revolving credit facility to fund the Lawrence acquisition consideration of
£43.8 million, and a favourable impact of foreign exchange. The weighted
average interest rate increased to 5.1% (2022: 3.4%), driven by the effect of
a significant increase in global base interest rates on floating rate RCF
debt, which more than offset the improved coupon rates on the USPP debt issued
in April 2022. Finance costs were also impacted by a loss on revaluation of
derivative financial instruments of £0.3 million (2022: £0.1 million gain),
driven by the movement in foreign exchange rates.
Interest on lease liabilities decreased slightly to £2.6 million (2022: £3.0
million), reflecting a lower average lease liability, partially offset by the
impact of higher interest rates on new leases. Finance costs also included
amortisation of capitalised borrowing costs of £0.5 million (2022: £0.6
million) and pension interest costs of £0.2 million (2022: £nil).
Interest income from short-term bank deposits amounted to £3.4 million (2022:
£0.9 million), reflecting an increase in base interest rates.
Forward exchange contracts
At 31 December 2023, the Group's portfolio of forward exchange contracts at
fair value amounted to a net liability of £0.5 million (2022: net liability
of £0.2 million). The notional value of the portfolio was £34.8 million
(2022: £19.8 million), comprising US dollar and Euro forward exchange
contracts with notional values of US$43.9 million and €0.4 million
respectively (2022: US$23.3 million; €0.7 million). These contracts have a
range of maturities up to 15 January 2025. During the year, a loss of £0.3
million (2022: gain of £0.1 million) was recognised directly in the income
statement.
Interest rate swaps
In 2022, the Group entered into a cross-currency interest rate swap, swapping
US$10 million of the USPP debt for £3.7 million and €5.0 million to fund
the Group's UK and International operations. At 31 December 2023, the fair
value of these swaps amounted to a net liability of £0.3 million (2022: net
asset of £0.2 million), with a fair value loss through OCI of £0.5 million
(2022: gain of £0.2 million) recognised.
Taxation
The Group reported an income tax charge of £11.8 million (2022: £13.6
million), comprising a current tax charge of £14.5 million (2022: £17.6
million) and a deferred tax credit of £2.7 million (2022: credit of £4.0
million). The effective tax rate was 23.6% (2022: 22.0%), with the increase
reflecting that 2022 benefitted from the release of transfer pricing
provisions no longer required.
The adjusted tax charge was £16.4 million (2022: £18.5 million) representing
an adjusted effective tax rate of 21.9% (2022: 21.6%).
During the period, the Group paid corporation tax of £15.5 million (2022:
£21.5 million). This reflects a cash tax rate on adjusted profit before tax
of 20.7% (2022: 25.1%). The decrease reflects the timing of payments on
account, with a refund of previously overpaid tax being received in 2023.
Earnings per share
Basic earnings per share decreased by 20.4% to 19.6 pence (2022: 24.6 pence),
and adjusted earnings per share decreased by 13.3% to 30.1 pence (2022: 34.7
pence), reflecting the decrease in 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
Net cash generated from operating activities increased by 79.5% to £108.8
million (2022: £60.6 million), reflecting a working capital inflow of £29.8
million compared to a working capital outflow of £31.4 million in 2022,
primarily as a result of actions taken to reduce inventory in the period
following a significant build in 2022. This was partially offset by lower
profit before tax and cash outflows on provisions relating to restructuring
activities. Adjusted operating cash flow, which excludes cash flows from
adjusting items, increased to £120.4 million (2022: £60.1 million),
reflecting the higher net cash from operating activities and lower capital
expenditure.
Free cash flow of £85.0 million in the period was higher than 2022 (2022:
£27.1 million), as a result of the higher adjusted operating cash flow and
lower income tax payments, offset by higher pension contributions and
adjusting item cash costs.
Debt facilities
Bank and US private placement facilities available to the Group as at 31
December 2023 were as follows:
Facility Maturity Committed
2022 Facility (multi-currency) Dec 2027 £210.0m((1))
5.37% USPP Nov 2024 US$45.0m
3.51% USPP April 2029 US$40.0m
3.62% USPP April 2032 US$35.0m
(1) The Group also has potential access to an uncommitted £100.0 million
accordion facility.
The option to extend the multi-currency revolving credit facility by one year
was exercised during the year, giving a maturity date of December 2027. There
were no other changes to the revolving credit facility and US private
placement notes during the period, details of which are outlined in the Annual
Report and Accounts for the year ended 31 December 2022.There were no defaults
in the period under the terms of loan agreements.
Both the USPP notes and the RCF incorporate sustainability performance targets
that align with Tyman's sustainability roadmap (see note 8). These incentive
mechanisms result in a modest reduction or increase in the interest rate
depending on performance against these targets.
Liquidity
At 31 December 2023, the Group had gross debt of £231.4 million (2022:
£250.1 million) and net debt of £167.7 million (2022: £175.5 million).
Adjusted net debt, which excludes lease liabilities and capitalised borrowing
costs, was £110.3 million (2022: £115.9 million), with the decrease
reflecting operating cash generation, including the lower working capital, as
well as a benefit from foreign exchange movements. This reduction was achieved
despite completing the acquisition of Lawrence for cash consideration of
£43.8 million.
The Group had cash balances of £63.7 million (2022: £74.6 million), bank
overdrafts of £25.4 million (2022: £16.4 million) and committed but undrawn
facilities of £144.8 million (2022: £125.8 million). This provides
immediately available liquidity of £183.1 million (2022: £184.0 million).
The Group also has potential access to the uncommitted £100.0 million
accordion facility, which has remained unchanged from the previous year.
Covenant performance
At 31 December 2023 Test Performance((1)) Headroom((2))
Leverage < 3.0× 1.1x £65.4m (65%)
Interest cover > 4.0× 13.2x £68.0m (70%)
(1) Calculated covenant performance consistent with the Group's banking
covenant test (banking covenants exclude the effect of IFRS 16). See APMs on
page 40 for interest cover and page 41 for leverage.
(2) The approximate amount by which covenant adjusted EBITDA would
need to decline before the relevant covenant is breached.
At 31 December 2023, the Group retained significant headroom on its banking
covenants. Leverage at the year end was 1.1x (2022: 1.0x), reflecting the
funding of the Lawrence acquisition, partially offset by the strong free cash
flow. Interest cover at 31 December 2023 was 13.2x (2022: 18.2x).
Balance sheet - assets and liabilities
Trade working capital
£m 2022 Movement Acquisitions FX 2023
Inventories 153.1 (28.7) 0.5 (5.9) 119.0
Receivables 67.5 2.7 1.0 (3.0) 68.2
Payables (55.8) (2.7) (0.1) 1.9 (56.7)
Working capital 164.8 (28.7) 1.4 (7.0) 130.5
Trade working capital at the year end was £130.5 million (2022: £164.8
million). The trade working capital reduction at average exchange rates was
£28.7 million (2022: £25.3 million build). The acquisition of Lawrence
contributed an additional £1.4 million to trade working capital.
The decrease in inventory at average exchange rates was £28.7 million (2022:
£4.8 million increase). This was driven by initiatives implemented to bring
inventory down to more normalised levels, following a build driven by supply
chain disruption through 2022. Trade receivables increased due to an increase
in sales levels towards the end of the year, and trade payables increased as a
result of the timing of inventory purchases.
Trade working capital decreased by £7.0 million (2022: £10.2 million) due to
foreign exchange movements.
Capital expenditure
Gross capital expenditure decreased to £15.6 million (2022: £24.1 million)
or 1.1x depreciation (excluding RoU asset depreciation) (2022: 1.7x). The
reduction reflected timing of investments, with 2022 including spend
associated with footprint projects, and some catch up of expenditure deferred
from prior years. Net capital expenditure was £15.5 million (2022: £24.0
million).
Goodwill and intangible assets
At 31 December 2023, the carrying value of goodwill and intangible assets was
£465.5 million (2022: £457.0 million). The acquisition of Lawrence increased
goodwill and intangible assets by £39.7 million, which was partially offset
by the impact of foreign exchange of £18.4 million, a write-off of £1.0
million relating to the closure of the China business, and amortisation of
intangible assets through the income statement of £16.3 million (2022: £19.6
million).
Provisions
Provisions at 31 December 2023 decreased to £5.5 million (2022: £7.9
million), reflecting the utilisation of the provision made in the prior year
for the closure of the Hamburg facility, partially offset by a provision made
for costs of the closure of the China business, expected to be utilised in the
first half of 2024.
Defined benefit pension scheme
The Group's net defined benefit pension liability decreased to £2.6 million
(2022: £4.3 million), reflecting the termination of the two US defined
benefit pension schemes. The process to terminate the schemes commenced in
2021 and completed in 2023, with the final funding payments amounting to £2.4
million being made. Termination of these schemes reduces income statement
volatility, administration costs, and future cash outflows. The remaining
£2.6 million liability relates to the statutory pension obligation in Italy,
which is unfunded.
Balance sheet - equity
Shares in issue
At 31 December 2023, the total number of shares in issue was 196.8 million
(2022: 196.8 million), of which 0.4 million shares were held in treasury
(2022: 0.5 million).
Employee Benefit Trust purchases
At 31 December 2023, the Employee Benefit Trust ("EBT") held 1.4 million
shares (2022: 2.1 million). During the period, the EBT purchased 0.2 million
shares in Tyman plc at a total cost of £0.5 million (2022: 2.0 million shares
at a total cost of £6.6 million).
Dividends
A final dividend of 9.5 pence per share (2022: 9.5 pence), equivalent to
£18.5 million based on the shares in issue as at 31 December 2023, will be
proposed at the Annual General Meeting (2022: £18.4 million). The total
dividend declared for the 2023 financial year is therefore 13.7 pence per
share (2022: 13.7 pence). This equates to a Dividend Cover of 2.2x, within the
Group's target range of 2.0x to 2.5x adjusted EPS.
The ex-dividend date will be 25 April 2024 and the final dividend will be paid
on 29 May 2024 to shareholders on the register at 26 April 2024.
Only dividends paid in the year have been charged against equity in the 2023
financial statements. Dividend payments of £26.6 million were paid to
shareholders during 2023 (2022: £25.4 million).
Other financial matters
Return on capital employed
ROCE decreased by 160 bps to 11.7% (2022: 13.3%) primarily as a result of the
lower adjusted operating profit, partly offset by lower average working
capital.
Return on acquisition investment
Lawrence was acquired in July 2023 for consideration of £43.8 million. As the
acquisition was only completed in the second half of the year, ROAI will be
reported in 2024. Lawrence has performed encouragingly in the period since
acquisition, has good prospects and is on track to exceed the minimum return
threshold of 14% within two years of acquisition.
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 2023, Sterling was slightly stronger against the US
dollar and weaker against the Euro when compared with the average exchange
rates in 2022.
Translational exposure
Currency US$ Euro Other((3)) Total
% movement in average rate 0.6% (2.0%) - -
£m Revenue impact ((1)) (2.4) 1.5 (11.2) (12.1)
£m Profit impact ((1)) (0.3) 0.2 (4.2) (4.3)
1c decrease impact ((2)) £401k £60k - -
(1) Calculated based on 2023 revenue and adjusted operating
profit at 2022 exchange rates.
(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 2023 adjusted operating profit.
(3) Other currencies include the Argentinian Peso, which was
significantly impacted by devaluation in 2023.
The net effect of currency translation caused revenue and adjusted operating
profit from ongoing operations to decrease by £12.1 million and £4.3 million
respectively compared with 2022.
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 & 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 loss on foreign exchange derivatives in 2023 is £0.5 million (2022: £0.2
million gain). The Group's other transactional exposures generally benefit
from the existence of natural hedges and are immaterial.
2024 technical guidance
The working capital cycle is expected to normalise, with minimal net cash
outflow across the year following a seasonal build at the half year of
c.£20-25 million.
Capital expenditure is expected to be c.£25 million, reflecting ongoing
investment in new product development, operational excellence, and systems
upgrades.
Adjusted operating cash conversion is expected to return closer to the target
average of 90%, reflecting more normalised working capital movements.
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 c.£8-10 million, reflecting lower
average net debt.
The adjusted effective tax rate is expected to be c.24.0-26.0%.
Juliette Lowes
Interim Chief Financial Officer at 31 December 2023
Consolidated income statement
For the year ended 31 December 2023
Note 2023 2022
£m
£m
Revenue 3 657.6 715.5
Cost of sales (439.5) (493.2)
Gross profit 218.1 222.3
Selling, general and administrative expenses (157.1) (151.2)
Net impairment losses on financial assets (0.8) (0.4)
Operating profit 60.2 70.7
Finance income 3.4 1.0
Finance costs (13.6) (10.3)
Net finance costs (10.2) (9.3)
Profit before taxation 3 50.0 61.4
Income tax charge 5 (11.8) (13.6)
Profit for the year 38.2 47.8
Basic earnings per share 6 19.6p 24.6p
Diluted earnings per share 6 19.5p 24.5p
Consolidated statement of comprehensive income
For the year ended 31 December 2023
2023 2022
£m
£m
Profit for the year 38.2 47.8
Other comprehensive (expense)/income
Items that will not be reclassified to profit or loss
Remeasurements of post-employment benefit obligations (1.7) -
Total items that will not be reclassified to profit or loss (1.7) -
Items that may be reclassified subsequently to profit or loss
Exchange differences on translation of foreign operations (31.9) 54.1
Change in fair value of net investment hedge 5.4 (11.7)
Effective portion of changes in value of fair value hedges (0.5) 0.2
Total items that may be reclassified (from)/to profit or loss (27.0) 42.6
Other comprehensive (expense)/income for the year (28.7) 42.6
Total comprehensive income for the year 9.5 90.4
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 2023
Share Share Treasury Hedging Translation Retained Total
capital
premium
reserve
reserve
reserve
earnings
equity
£m
£m
£m
£m
£m
£m
£m
At 1 January 2022 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
Profit for the year - - - - - 38.2 38.2
Other comprehensive expense - - - (0.5) (26.5) (1.7) (28.7)
Total comprehensive income - - - (0.5) (26.5) 36.5 9.5
Transactions with owners
in their capacity as owners
Share-based payments(1) - - - - - 1.2 1.2
Dividends paid - - - - - (26.6) (26.6)
Issue of own shares from Employee Benefit Trust 2.2 (1.9) 0.4
- 0.1 - -
Purchase of own shares for Employee Benefit Trust (0.5) - (0.5)
- - - -
Total transactions with owners - 0.1 1.7 - - (27.3) (25.5)
At 31 December 2023 9.8 0.1 (7.0) (0.3) 65.1 457.9 525.6
( )
(1 ) Share-based payments include a tax charge of £nil (2022: tax charge of
£0.2 million) and a credit due to issuance of shares under the deferred
share bonus plan of £0.1 million (2022: £0.2 million).
Consolidated balance sheet
As at 31 December 2023
Note 2023 2022
£m
£m
TOTAL ASSETS
Non-current assets
Goodwill 7 399.3 399.3
Intangible assets 7 66.2 57.7
Property, plant and equipment 71.1 74.6
Right-of-use assets 55.4 57.3
Financial assets at fair value through profit or loss 1.2 1.2
Derivative financial instruments - 0.2
Deferred tax assets 1.4 1.7
594.6 592.0
Current assets
Inventories 119.0 153.1
Trade and other receivables 85.6 81.4
Cash and cash equivalents 8 63.7 74.6
Current tax asset 2.3 -
270.6 309.1
Assets classified as held for sale 2.4 -
273.0 309.1
TOTAL ASSETS 867.6 901.1
LIABILITIES
Current liabilities
Trade and other payables (94.8) (88.3)
Derivative financial instruments (0.5) (0.2)
Borrowings 8 (60.2) (15.9)
Lease liabilities (7.1) (6.8)
Current tax liabilities (2.0) (1.8)
Provisions (2.1) (5.0)
(166.7) (118.0)
Non-current liabilities
Borrowings 8 (111.5) (172.5)
Lease liabilities (52.6) (54.9)
Deferred tax liabilities (4.9) (6.9)
Derivative financial instruments (0.3) -
Retirement benefit obligations (2.6) (4.3)
Provisions (3.4) (2.9)
(175.3) (241.5)
TOTAL LIABILITIES (342.0) (359.5)
NET ASSETS 525.6 541.6
EQUITY
Capital and reserves attributable to owners of the Company
Share capital 9.8 9.8
Share premium 0.1 -
Treasury reserve (7.0) (8.7)
Hedging reserve (0.3) 0.2
Translation reserve 65.1 91.6
Retained earnings 457.9 448.7
TOTAL EQUITY 525.6 541.6
Consolidated cash flow statement
For the year ended 31 December 2023
Note 2023 2022
£m
£m
Cash flow from operating activities
Profit before taxation 3 50.0 61.4
Adjustments 10 51.3 53.0
Changes in working capital:
Inventories 28.7 (4.8)
Trade and other receivables (6.7) 5.6
Trade and other payables 7.8 (32.2)
Provisions utilised (4.2) (0.7)
Pension contributions (2.6) (0.2)
Income tax paid (15.5) (21.5)
Net cash generated from operating activities 108.8 60.6
Cash flow from investing activities
Purchases of property, plant and equipment (11.1) (19.2)
Purchases of intangible assets 7 (4.5) (4.9)
Proceeds on disposal of property, plant and equipment 0.1 0.1
Acquisition of subsidiary undertakings, net of cash acquired 9 (43.8) -
Interest received 3.4 0.9
Net cash used in investing activities (55.9) (23.1)
Cash flow from financing activities
Interest paid (11.7) (9.5)
Dividends paid (26.6) (25.4)
Proceeds from issue of own shares from Employee Benefit Trust 0.4 -
Purchase of own shares for Employee Benefit Trust (0.5) (6.6)
Refinancing costs paid (0.6) (2.1)
Proceeds from drawdown of borrowings 84.7 122.3
Repayments of borrowings (103.7) (113.0)
Principal element of lease payments (7.1) (6.2)
Net cash used in financing activities (65.1) (40.5)
Net decrease in cash and cash equivalents and bank overdrafts (12.2) (3.0)
Exchange (loss)/gain on cash and cash equivalents and bank overdrafts (7.7) 3.1
Cash and cash equivalents and bank overdrafts at beginning of year 58.2 58.1
Cash and cash equivalents and bank overdrafts at end of year 8 38.3 58.2
Notes to the financial statements
For the year ended 31 December 2023
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 3,600 people with facilities in 15 countries.
Tyman plc is a public limited company listed on the London Stock Exchange,
incorporated and domiciled in the United Kingdom. The Company is registered in
England & Wales and 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 2023 and 2022. Statutory accounts for the year ended 31 December 2022
have been reported on by the Company's auditor and delivered to the Registrar
of Companies. Statutory accounts for the year ended 31 December 2023 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.
These results were approved by the Board of Directors on 6 March 2024.
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 4 to 6.
As at 31 December 2023, the Group had net cash and cash equivalents of £38.3
million, and an undrawn RCF available of £144.8 million, giving liquidity
headroom of £183.1 million. The Group also has potential access to an
uncommitted accordion facility of £100 million. The RCF matures in December
2027.
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
2023, with £65.4 million (65%) of EBITDA headroom on the leverage covenant
and £68.0 million (70%) 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
forecast 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 the 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 and, as a result, we have not included
any impact in either the base case or any of the downside scenarios of the
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
2023 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.
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 & 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 it 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
2023 2022
Segment revenue Inter-segment revenue External revenue Segment revenue Inter-segment revenue External revenue
£m £m £m £m £m £m
North America 434.5 (2.2) 432.3 474.9 (3.0) 471.9
UK & Ireland 97.5 (0.2) 97.3 103.5 (0.2) 103.3
International 129.8 (1.8) 128.0 143.4 (3.1) 140.3
Total revenue 661.8 (4.2) 657.6 721.8 (6.3) 715.5
Included within the Tyman International segment is revenue generated from the
UK of £26.4 million (2022: £24.7 million).
3.3 Profit before taxation
Note 2023 2022
£m
£m
North America 67.1 66.8
UK & Ireland 12.0 14.5
International 13.5 21.3
Operating segment profit 92.6 102.6
Centrally incurred costs (8.2) (8.0)
Adjusted operating profit 84.4 94.6
Adjusting items 4 (10.6) (6.3)
Amortisation of acquired intangible assets 7 (13.6) (17.6)
Operating profit 60.2 70.7
Net finance costs (10.2) (9.3)
Profit before taxation 50.0 61.4
4. Adjusting items
2023 2022
£m
£m
Restructuring costs (6.7) (6.3)
CEO transition costs (1.3) -
M&A costs (1.4) -
Argentina devaluation charge (1.2) -
Total adjusting items (10.6) (6.3)
For further information on adjusting items, see the financial review on pages
14 and 15 and the alternative performance measures on page 37.
5. Taxation
5.1 Taxation - income statement and other comprehensive income
2023 2022
£m
£m
Current taxation
Current tax on profit for the year (16.5) (19.1)
Prior year adjustments 2.0 1.5
Total current taxation (14.5) (17.6)
Deferred taxation
Origination and reversal of temporary differences 3.4 4.6
Rate change adjustment - 0.1
Foreign exchange difference 0.1 -
Prior year adjustments (0.8) (0.7)
Total deferred taxation 2.7 4.0
Income tax charge in the income statement (11.8) (13.6)
Total charge relating to components of other comprehensive income
Current tax credit/(charge) on translation 0.1 (0.3)
Deferred tax charge on defined benefit obligations (1.3) -
Deferred tax charge on share-based payments - (0.2)
Income tax charge in the statement of other comprehensive income (1.2) (0.5)
Total current taxation (14.4) (17.9)
Total deferred taxation 1.4 3.8
Total taxation (13.0) (14.1)
The standard rate of corporation tax in the UK changed from 19.0% to 25.0%
with effect from 1 April 2023. Accordingly, the Group's UK profits for this
financial year are taxed at a weighted average rate of 23.5% (2022: 19.0%).
The deferred tax balances have been measured using the applicable enacted
rates they are expected to unwind at in their respective territories.
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 weighted average rate of 23.5%
(2022: 19.0%). The differences are explained below:
2023 2022
£m
£m
Profit before taxation 50.0 61.4
Profit before taxation multiplied by the weighted average rate of corporation (11.7)
tax in the UK of 23.5% (2022: 19.0%)
(11.8)
Effects of:
Expenses not deductible for tax purposes (0.1) (0.2)
Overseas tax rate differences (1.2) (2.5)
Rate change adjustment - 0.1
Foreign exchange difference 0.1 -
Prior year adjustments 1.2 0.7
Income tax charge in the income statement (11.8) (13.6)
6. Earnings per share
6.1 Earnings per share
2023 2022
Profit for the year (£m) 38.2 47.8
Basic earnings per share (p) 19.6p 24.6p
Diluted earnings per share (p) 19.5p 24.5p
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
2023 2022
'm
'm
Weighted average number of shares (including treasury shares) 196.8 196.8
Treasury shares (0.4) (0.5)
Employee Benefit Trust shares (1.4) (2.1)
Weighted average number of shares - basic 195.0 194.2
Effect of dilutive potential ordinary shares - LTIP awards and options 1.4 1.0
Weighted average number of shares - diluted 196.4 195.2
7. Goodwill and intangible assets
7.1 Carrying amount of goodwill
Net carrying value Note £m
At 1 January 2022 363.3
Exchange difference 36.0
At 31 December 2022 399.3
Acquisition of subsidiary 9 17.6
Write off of goodwill (1.0)
Exchange difference (16.6)
At 31 December 2023 399.3
Goodwill is monitored principally on an operating segment basis and the net
book value of goodwill is allocated by CGU as follows:
2023 2022
£m
£m
North America 304.2 302.7
UK & Ireland 60.2 60.2
International 34.9 36.4
399.3 399.3
7.2 Carrying amount of intangible assets
Computer Acquired Customer Other intangibles Total
software
brands
relationships
£m
£m
£m
£m
£m
Note
Cost
At 1 January 2022 15.5 82.1 252.5 - 350.1
Additions 4.7 - - 0.2 4.9
Disposals (0.4) - - - (0.4)
Transfers 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 0.2 388.5
Additions 4.4 0.1 - - 4.5
Disposals (1.1) (0.1) - - (1.2)
Acquisition of subsidiary 9 - 1.5 20.6 - 22.1
Transfer between categories (0.1) 0.1 - - -
Exchange difference (1.1) (3.7) (11.0) - (15.8)
At 31 December 2023 23.8 87.7 286.4 0.2 398.1
Accumulated amortisation
At 1 January 2022 (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 2022 (11.0) (70.8) (249.0) - (330.8)
Amortisation charge for the year (2.7) (4.2) (9.4) - (16.3)
Disposals 1.1 0.1 - - 1.2
Exchange difference 0.6 3.0 10.4 - 14.0
At 31 December 2023 (12.0) (71.9) (248.0) - (331.9)
Net carrying value
At 1 January 2022 7.1 22.7 37.0 - 66.8
At 31 December 2022 10.7 19.0 27.8 0.2 57.7
At 31 December 2023 11.8 15.8 38.4 0.2 66.2
The amortisation charge for the year has been included in selling, general and
administrative expenses in the income statement and comprises £13.6 million
(2022: £17.6 million) relating to amortisation of acquired intangible assets
and £2.7 million (2022: £2.0 million) relating to amortisation of other
intangible assets.
8. Borrowings
8.1 Carrying amounts of borrowings
Unsecured borrowings at amortised cost: 2023 2022
£m
£m
Bank borrowings (54.3) (74.9)
Bank overdrafts (25.4) (16.4)
Senior notes (94.3) (99.2)
Capitalised borrowing costs 2.3 2.1
(171.7) (188.4)
Analysed as:
Current liabilities (60.2) (15.9)
Non-current liabilities (111.5) (172.5)
(171.7) (188.4)
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:
2023 2022
£m
£m
Sterling(1) (31.2) (24.2)
US dollars (100.1) (121.5)
Euros (40.4) (42.7)
(171.7) (188.4)
(1) Includes capitalised borrowing costs
8.1.1 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. During
the current year, the Group exercised its option to extend the RCF by an
additional year to December 2027. The banking facility is unsecured and is
guaranteed by Tyman plc and its principal subsidiary undertakings. A portion
of the loan margin is linked to the performance of the Group on three
sustainability metrics, which align with Tyman's immediate sustainability
priorities and its 2030 sustainability roadmap.
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 2023, the Group has undrawn amounts committed under the
multi-currency revolving credit facility of £144.8 million (2022: £125.8
million). These amounts are floating rate commitments which expire beyond
twelve months.
8.1.2 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.
8.2 Net debt
8.2.1 Net debt summary
2023 2022
£m
£m
Borrowings (171.7) (188.4)
Lease liabilities (59.7) (61.7)
Cash 63.7 74.6
At 31 December (167.7) (175.5)
8.2.3 Net debt reconciliation
Liabilities from financing activities Other assets
Borrowings(1) Lease liabilities Subtotal Net cash and bank overdrafts Total
£m £m £m £m £m
At 1 January 2022 (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)
Lease extensions (14.7) (4.8) (19.5) 3.0 (16.5)
Foreign exchange adjustments 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)
Financing cash flows (excluding interest) 19.0 7.1 26.1 (12.2) 13.9
Interest expense (10.8) (2.6) (13.4) - (13.4)
Interest payments 9.1 2.6 11.7 - 11.7
Accrued interest 1.7 - 1.7 - 1.7
Disposals - 0.1 0.1 - 0.1
New leases - (3.6) (3.6) - (3.6)
Lease modifications - (3.7) (3.7) - (3.7)
Foreign exchange adjustments 6.6 2.1 8.7 (7.7) 1.0
Financing costs capitalised 0.6 - 0.6 - 0.6
Amortisation of borrowing costs (0.5) - (0.5) - (0.5)
At 31 December 2023 (146.3) (59.7) (206.0) 38.3 (167.7)
( )
(1 ) Borrowings exclude bank overdrafts of £25.4 million
(2022: £16.4 million).
8.3 Net cash and cash equivalents
2023 2022
£m
£m
Cash at bank and on deposits 63.7 74.6
Bank overdrafts (25.4) (16.4)
Net cash and cash equivalents and bank overdrafts at 31 December 38.3 58.2
9. Business combination
9.1 Summary of Lawrence acquisition
On 12 July 2023, the Group completed the acquisition of 100% of the share
capital of Barry G Lawrence, Inc., which trades as Lawrence Industries
("Lawrence"). Lawrence designs, manufactures and sells high-performance
composite hardware for sliding and hung windows to North American window
fabricators, and is based in North Carolina, USA.
Lawrence was acquired for initial consideration of £43.8 million (US$56.6
million), with further contingent consideration of up to £9.8 million
(US$12.5 million) payable based on the achievement of stretching growth
targets in respect of the financial results for the two years up to, and
including, 31 December 2024 and key employment milestones being met. The
earn-out consideration has been treated as post-employment remuneration due to
this being contingent on certain employees remaining with the business and
included in adjusting items.
The following table summarises the provisional consideration paid and the
provisional fair values of assets acquired and liabilities assumed at the
acquisition date. The fair values will be finalised within twelve months of
the acquisition date.
Note Lawrence
£m
Intangible asset 7 22.1
Property, plant and equipment 2.7
Inventories 0.5
Trade and other receivables 1.0
Cash and cash equivalents 0.2
Trade and other payables (0.3)
Total identifiable net assets 26.2
Goodwill arising on acquisition 7 17.6
Total consideration 43.8
Satisfied by:
Cash 44.0
Consideration adjustment receivable (0.2)
Total consideration 43.8
Net cash outflow arising on acquisition:
Cash consideration (44.0)
Net cash and cash equivalents 0.2
Net cash outflow (43.8)
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 2023 2022
£m
£m
Net finance costs 10.2 9.3
Depreciation of property, plant and equipment 12.0 12.4
Depreciation of right-of-use assets 7.9 7.1
Amortisation of intangible assets 7 16.3 19.6
Impairment of intangible assets 7 - 0.2
Write off of goodwill 7 1.0 -
Impairment of property, plant and equipment - 0.7
Impairment of right-of-use assets - 0.2
Loss on disposal of property, plant and equipment 0.2 0.1
Pension service costs and administration costs 0.3 0.3
Non-cash provision movements 1.9 2.1
Share-based payments 1.5 1.0
51.3 53.0
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 believes 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 measures. 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 and 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 trends in financial performance.
Adjusting items include significant one-off redundancy and restructuring
costs, transaction and integration costs associated with merger and
acquisition activity, impairment charges for intangible asset upgrades, gains
or losses relating to disposal of businesses, property provision releases and
other items significant to understanding underlying performance. In the
current year, this includes the effect of a significant devaluation of the
Argentinian Peso due to government action on a foreign denominated payable
balance and the CEO transition costs. 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.
Impairment of acquired intangible assets and goodwill is excluded, as this can
be a significant non-cash charge.
Reconciliation/calculation
2023 2022
£m
£m
Operating profit 60.2 70.7
Adjusting items (note 4) 10.6 6.3
Amortisation of acquired intangible assets 13.6 17.6
Adjusted operating profit 84.4 94.6
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
2023 2022
£m
£m
Reported revenue 657.6 715.5
Contribution from Lawrence acquisition during the year (7.1) -
Effect of exchange rates - (6.4)
Like-for-like revenue 650.5 709.1
Adjusted operating profit 84.4 94.6
Contribution from Lawrence acquisition during the year (3.1) -
Effect of exchange rates - (1.4)
Like-for-like adjusted operating profit 81.3 93.2
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 and goodwill, adjusting items, gains and losses on the fair value of
derivative financial instruments, 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 and can
fluctuate significantly year on year.
Reconciliation/calculation
2023 2022
£m
£m
Profit before taxation 50.0 61.4
Adjusting items 10.6 6.3
Loss/(gain) on revaluation of derivative instrument 0.3 (0.1)
Amortisation of borrowing costs 0.5 0.6
Amortisation of acquired intangible assets 13.6 17.6
Adjusted profit before taxation 75.0 85.8
Income tax charge (11.8) (13.6)
Add back: Adjusted tax effect(1) (4.6) (4.9)
Adjusted profit after taxation 58.6 67.3
(1) Tax effect of adjusting items, amortisation of borrowings costs,
amortisation of acquired intangible assets and gain or loss on revaluation of
fair value hedge.
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 EPS from underlying
trading activity for our shareholders.
Reconciliation/calculation
Refer to note 6.1.1 for the calculation of the basic weighted average number
of shares.
2023 2022
Adjusted profit after taxation - £m 58.6 67.3
Weighted average number of shares (million) - basic 195.0 194.2
Adjusted earnings per share 30.1p 34.7p
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
2023 2022
£m
£m
Adjusted operating profit 84.4 94.6
Depreciation of property, plant and equipment and RoU assets 19.9 19.5
Amortisation of computer software 2.7 2.0
Interest payable on lease liabilities (2.6) (3.0)
RoU assets depreciation (7.9) (7.1)
Share-based payments - equity settled 1.1 0.8
Covenant EBITDA 97.6 106.8
Lawrence pre acquisition EBITDA 3.3 -
Covenant adjusted EBITDA 100.9 106.8
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
2023 2022
£m
£m
Covenant EBITDA 97.6 106.8
Covenant net interest 7.4 5.9
Interest cover (x) 13.2x 18.2x
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
2023 2022
£m
£m
Net debt (167.7) (175.5)
Lease liabilities 59.7 61.7
Capitalised borrowing costs (2.3) (2.1)
Adjusted net debt (110.3) (115.9)
Adjustment to weighted average exchange rate 3.8 4.4
Covenant net debt (106.5) (111.5)
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
2023 2022
£m
£m
Covenant net debt (at average exchange rate) 106.5 111.5
Covenant adjusted EBITDA 100.9 106.8
Leverage (x) 1.1x 1.0x
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
2023 2022
£m
£m
Borrowings (171.7) (188.4)
Lease liabilities (59.7) (61.7)
Gross debt (231.4) (250.1)
Capitalised borrowing costs (2.3) (2.1)
Adjusted gross debt (233.7) (252.2)
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
2023 2022
£m
£m
Adjusted operating profit 84.4 94.6
Average capital employed 720.3 710.7
ROCE (%) 11.7% 13.3%
Average capital employed can be reconciled to the balance sheet as follows:
2023 2022
£'m
£'m
Inventories 119.0 153.1
Trade and other receivables 85.6 81.4
Intangible assets 66.2 57.7
Property, plant & equipment 71.1 74.6
Right-of-use asset 55.4 57.3
Goodwill 399.3 399.3
Deferred tax asset 1.4 1.7
Trade and other payables (94.8) (88.2)
Net current tax asset/(liability) 0.3 (1.8)
Provisions - current (2.1) (5.0)
Provisions - non-current (3.4) (2.9)
Deferred tax liabilities (4.9) (6.9)
Financial asset at FV through P&L 1.2 1.2
Total capital employed 694.3 721.5
Adjustment to 13-month average 26.0 (10.8)
Average capital employed 720.3 710.7
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
2023 2022
£m
£m
Net cash generated from operating activities 108.8 60.6
Income tax paid 15.5 21.5
Adjusting item cash costs 9.0 1.8
Pension contributions 2.6 0.2
Proceeds on disposal of PPE 0.1 0.1
Payments to acquire PPE and intangible assets (15.6) (24.1)
Adjusted operating cash flow 120.4 60.1
Adjusted operating cash flow 120.4 60.1
Adjusted operating profit 84.4 94.6
Adjusted operating cash conversion (%) 142.6% 63.5%
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
CPMI Construction Purchasing Managers' Index
EBT The Tyman Employees' Benefit Trust
EBITDA Earnings before interest, taxation, depreciation and amortisation
EPD Environmental product declaration
EPS Earnings per share
ERP Enterprise resource planning
GCC Gulf Cooperation Council
GHG Greenhouse gas
IFRS International Financial Reporting Standards
Lawrence Barry G. Lawrence, Inc. (trading as Lawrence Industries)
LFL Like-for-like
LIRA Leading indicator of remodelling activity
LTIFR Lost time incident frequency rate
LTIP Long term incentive plan
M&A Mergers and acquisitions
NAHB National Association of Home Builders
P&L Profit & Loss
PMI Purchasing Managers' Index
PPE Property, plant and equipment
RCF Revolving credit facility
RMI Renovation, maintenance and improvement
ROAI Return on acquisition investment
ROCE Return on capital employed
RoU Right of use
SDG United Nations Sustainable Development Goals
TRIR Total recordable incident rate
USPP US private placement
The following principal exchange rates have been used in the financial
information to translate amounts into Sterling:
Closing rates: 2023 2022
US dollars 1.2731 1.2097
Euros 1.1532 1.1298
Australian dollars 1.8690 1.7743
Canadian dollars 1.6871 1.6386
Average rates: 2023 2022
US dollars 1.2438 1.2370
Euros 1.1499 1.1732
Australian dollars 1.8734 1.7795
Canadian dollars 1.6782 1.6078
Roundings
Percentage numbers have been calculated using unrounded figures, which may
lead to small differences in some figures and percentages quoted.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END FR FLFLDVFIRIISRecent news on Tyman
See all newsREG - BlackRock Group Tyman PLC - Form 8.3 - Tyman plc
AnnouncementREG - Maven Inv Partners Tyman PLC - Form 8.3 - TYMAN PLC
AnnouncementREG - Threadneedle AM Hdgs Tyman PLC - Form 8.3 - Tyman Plc
AnnouncementREG - Barclays PLC Tyman PLC - Form 8.3 - Tyman plc
AnnouncementREG - State Street Global Tyman PLC Quanex Building Prod - Form 8.3 - Quanex Building Products Corporation
Announcement