REG - Tyman PLC - Half-year Report
25/07/2023 07:00
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RNS Number : 0219H Tyman PLC 25 July 2023
TYMAN PLC
RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2023
Tyman plc (TYMN.L) announces results for the six months ended 30 June 2023.
Summary Group Results
£m unless stated H1 2023 H1 2022 LFL((1))
Change vs 2022
Revenue 329.9 360.0 -8% -11%
Adjusted operating profit* 38.7 49.3 -22% -24%
Adjusted operating margin* 11.7% 13.7% -200bps -200bps
Operating profit 27.8 40.8 -32%
Adjusted profit before taxation* 34.2 45.4 -25%
Profit before taxation 22.7 37.4 -39%
Adjusted EPS* 13.3p 17.6p -24%
Basic EPS 8.8p 14.6p -40%
Dividend per share 4.2p 4.2p -
Leverage((2)) 1.2x 1.1x +0.1x
Return on capital employed* 11.5% 13.9% -240bps
* Alternative performance measures (APMs) provide additional
information to shareholders on the underlying performance of the business and
are used consistently through the statement. Further details can be found on
page 40.
(1) LFL = constant currency like-for-like (see APMs on page 40)
(2) Leverage is calculated in accordance with the debt covenant
methodology (see APMs on page 40)
Highlights:
• Solid first half performance despite the challenging market
backdrop and against a strong comparative period
• Expect full year adjusted operating profit at the top end of
market expectations
• Revenue decline reflected significant reduction in volumes
partially offset by the carryover benefit of pricing actions
• Adjusted operating profit decline primarily reflected negative
operating leverage from significant reduction in volumes
• Increase in North America LFL adjusted operating margin of 70bps
to 15.0%, with pricing carryover benefits more than offsetting input cost
inflation
• 100% adjusted operating cash conversion, reflecting a £16 million
reduction in inventory since the year end
• Further progress on strategic initiatives, including our
sustainability roadmap
• Completed acquisition of Lawrence Industries shortly after period
end, expanding our market-leading portfolio of hardware for the North American
market; proportion of adjusted operating profits generated in North America
now more than 70% on a proforma basis
Jason Ashton, Interim Chief Executive Officer, commented: "The Group has
remained focussed on delivering on its financial targets and strategic
priorities in the first half, resulting in a solid performance despite the
challenging market backdrop and against a strong comparative period. The
agility of our teams in managing cost and reducing inventory, together with
the success of the prior year pricing actions in offsetting cost inflation,
has limited the decline in adjusted operating profit despite a significant
reduction in volumes. The operating margin expansion delivered by the North
America division in the period also represented notable progress.
We were delighted to announce the acquisition of Lawrence Industries in early
July, which is highly complementary to our market-leading North American
window hardware portfolio and immediately earnings enhancing, and I am pleased
to welcome our new colleagues at Lawrence Industries to Tyman.
Tyman remains well placed for growth as the North American housing market
backdrop improves and, assuming broadly unchanged market conditions in the
second half, we expect to deliver full year adjusted operating profit at the
top end of market expectations, with a £2 - £3 million contribution from
Lawrence Industries being partially offset by adjusting to current exchange
rates*."
(*) Company compiled analyst consensus of £80.8 million, with a range of
£77.6 million - £84.3 million. Details can be found at:
https://www.tymanplc.com/investor-relations/analysts-consensus
(https://www.tymanplc.com/investor-relations/analysts-consensus)
25 July 2023
Enquiries
Tyman plc 020 7976 8000
Jason Ashton - Interim Chief Executive Officer investor.relations@tymanplc.com (mailto:investor.relations@tymanplc.com)
Juliette Lowes - Interim Chief Financial Officer
Matt Jones - Head of Investor Relations
MHP 020 3128 8404
Reg Hoare / Rachel Farrington / Matthew Taylor tyman@mhpgroup.com
Analyst and investor presentation
Tyman will host an analyst and investor presentation at 9.00 a.m. today,
Tuesday 25 July 2023, which will be webcast live at:
https://brrmedia.news/TYMN_HY23 (https://brrmedia.news/TYMN_HY23)
Audio conference call details are:
Number +44 (0) 33 0551 0200
Password (if prompted) Quote 'Tyman H1 2023 Results' when prompted
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 and Ireland and Tyman
International. Headquartered in London, the Group employs approximately 3,400
people with facilities in 16 countries worldwide. Further information is
available at www.tymanplc.com (http://www.tymanplc.com/) .
Overview of results
Performance in H1 2023
Tyman delivered a solid overall performance in the first half of 2023 against
a strong comparative period and despite a continuation of the weak markets
experienced in the fourth quarter of 2022. Revenue for the period declined by
8% to £329.9 million (2022: £360.0 million), reflecting a like-for-like
(LFL) decline of 11% partially offset by 3% growth from foreign exchange
movements. 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 in recovering
input cost inflation.
Residential housebuilding and RMI activity across the Group's major markets
was impacted by the cost of living crisis caused by the combination of
elevated levels of consumer inflation and interest rates. This contrasts with
the first half of 2022, a period which benefitted from a post-COVID rebound in
RMI activity, some of which was supported by government fiscal stimulus
programmes which are no longer in place. In addition to the weakness in
underlying market demand, volumes were also impacted by customer destocking.
The extent of such destocking is difficult to quantify, although it is
believed that this impact has moderated as the period progressed.
The Group's results reflect the positive impact of prior year pricing actions
and the strength of the Group's brands that have enabled pricing power to be
maintained. It has also been 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 period, although
prices for certain raw materials remain high. In addition, labour markets have
remained competitive, especially in the US, resulting in wage inflation
remaining above long-term averages.
The Group continues to respond to the soft demand backdrop with adjustments to
production shifts, targeted headcount reductions, reductions in temporary
labour, natural labour attrition and tight control of discretionary costs.
These cost actions were not able to offset a significant under-absorption of
fixed costs, with production volumes declining by more than sales volumes to
further reduce inventory levels, which decreased by £21.3 million during the
period. As a result, adjusted operating profit declined by 22% on a reported
basis (reflecting a LFL decline of 24% and a 2% foreign exchange benefit).
Reflecting the progress on inventory reduction, adjusted operating cash
conversion improved to 100% (2022: 34%).
An interim dividend of 4.2 pence per share will be paid on 8 September 2023 to
shareholders on the register at close of business on 4 August 2023.
Health and safety
The health and safety of Tyman's employees remains the Group's top priority,
with progress in our safety excellence programme being primarily measured by
the lost time incident frequency rate (LTIFR). This was 0.9 incidents per
million hours worked in the period, a 25% improvement compared to the prior
year, giving confidence that we can meet our ambitious goal of reducing the
LTIFR to less than one by the end of the year.
Strategic progress
The Group 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, US has begun. The multi-year
programme to roll-out a new ERP template across North America continued, 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 was
completed with the transfer of production lines from Germany to the Newton
Aycliffe facility in the UK, and the consolidation of the UK commercial access
solutions business into a single site was also completed.
During the period the Science Based Targets initiative validated the Group's
targets to reduce absolute scope 1 and scope 2 GHG emissions by 46.2% by 2030
from a 2019 base year and reduce absolute scope 3 GHG emissions from purchased
goods and services by 27.5% within the same timeframe. 100% renewable
electricity tariffs will soon be extended to two sites in Mexico. Once in
place, around 38% of the Group's electricity consumption will be derived from
certified 100% renewable electricity, addressing over a quarter of the Group's
scope 1 and 2 operational footprint.
Within the Define strategic pillar, leaders from across the Group met with
Tyman's major Chinese suppliers in June as part of the ongoing Procurement
Excellence initiative. After several challenging COVID years, this event was
welcomed by suppliers to be able to meet with divisional Presidents and
allowed all three divisions to engage with suppliers on many topics, including
quality, cost, lead times and sustainability.
Activities to Grow market share continue to yield positive results. In North
America, further net customer wins were achieved despite the challenging
market backdrop, whilst the new distribution centre in Arizona is enabling
greater market penetration in the western US. In International markets,
further progress was made in growing partnerships with system houses, whilst
there has been good success with recent new product launches in the UK and
share gains with distributors in this market. Enabling customers to innovate
through sustainability is a key differentiator for the Group. In March, a
conference was held with our Iberian system house partners to discuss this
topic in more detail, including how to increase the recycled aluminium content
in products, and the Group's CHIC concealed hinges for tilt-and-turn windows
and Fulcra door hinges have now achieved Environmental Product Declarations
(EPD) certification.
As announced on 12 July 2023, Tyman acquired US-based Lawrence Industries
shortly after the period end for an initial consideration of $57 million.
Lawrence Industries designs, manufactures and sells high-performance composite
window hardware in North America, and adds an exciting new product category to
Tyman's market-leading portfolio of window and door hardware for the
attractive North American market. Being a low-cost product category, composite
hardware is benefitting from the growing demand for affordable housing in the
US. The acquisition is immediately earnings enhancing and, on a proforma
basis, increases the proportion of adjusted operating profits that Tyman
generates in North America to more than 70%.
Board changes
As announced on 6 April 2023, Jo Hallas decided to step down as Chief
Executive Officer (CEO) and Director of Tyman by mutual agreement with the
Board with immediate effect. Jason Ashton, previously the Group's Chief
Financial Officer (CFO), has been acting as interim CEO since then and a
process to recruit Jo's successor is underway. As announced on 21 April 2023,
Juliette Lowes, who was previously Group Financial Controller, has assumed the
interim CFO role since that date. Juliette reports to the Board but is not a
statutory Board director.
After more than six years' service as a Non-executive Director, Helen
Clatworthy retired from the Board with effect from 21 July 2023. The Board
would like to thank Helen for her significant contribution to the Group; her
leadership, experience and judgement have been invaluable through a period of
considerable change. Dr Margaret Amos joined the Board as a Non-executive
Director with effect from 19 June 2023. She is a member of each of the
Remuneration and Nominations Committees and, from 21 July 2023, she has
assumed the role of Chair of the Audit & Risk Committee from Helen
Clatworthy.
Outlook
The positive long-term structural growth drivers for the Group remain intact,
including favourable housing market fundamentals, increasing building
regulation and a focus on sustainability. The Group remains focussed on taking
market share, through executing well with customers, launching innovative new
products, and expanding its channels to market. Activities to enhance supply
chain and manufacturing efficiency and resilience are expected to structurally
improve gross margin and working capital management. As a result, the Group is
well-placed for growth when the housing market backdrop improves.
2023 is expected to see a return to more normal seasonality compared to the
trends experienced in recent years. The leading indicators for our major
markets continue to signal a challenging market outlook in the second half of
2023, although visibility is limited, and market conditions can change
rapidly.
As we move into the second half, the impact of customer destocking is expected
to subside, production levels will normalise with market demand, and commodity
cost inflation is expected to ease further. Profitability is expected to
continue to benefit from prior year pricing actions, whilst the benefits of
previously announced structural cost-saving initiatives will be realised in
the second half. The agility of our business model and flexibility in our cost
base will enable us to swiftly adapt to any potential changes in demand. As a
result, we expect full year adjusted operating profit to be at the top end of
market expectations, with a £2 - £3 million contribution from Lawrence
Industries being partially offset by adjusting to current exchange rates.
Jason Ashton
Interim Chief Executive Officer
Tyman North America
£m except where stated H1 2023 H1 2022 Change LFL
Revenue 215.4 229.5 -6% -11%
Adjusted operating profit 32.4 32.6 -1% -6%
Adjusted operating profit margin 15.0% 14.2% +80bps +70bps
Markets
The US residential housing market has remained subdued throughout the first
half of 2023. While long-term housing demand fundamentals remain positive,
they are currently constrained by elevated interest rates and inflation.
According to the US Census Bureau, US housing starts declined by 15% in the
first half, whilst single family starts, to which the division has
proportionally higher exposure, declined by 21%. Residential housing permits,
a key leading indicator, declined by 19%, with single family permits declining
by 21%. According to LIRA (Leading Indicator of Replacement Activity), the
rate of growth in the annual spend on repair and remodelling in the US slowed
from 16% in the fourth quarter of 2022 to 9.5% in the second quarter of 2023.
The NAHB Remodelling Market Index posted readings of 70 and 68 in the first
and second quarter of 2023 respectively, consistent with the level posted at
the end of 2022. Towards the end of the period there were tentative signs of
improvement in the US residential housing market, but it remains too early to
identify this as a positive trend.
The US commercial market remained resilient in the first half of 2023, driven
by education and commercial building investment, whilst government legislation
is providing some stimulus to the public infrastructure market. In Canada,
single detached housing starts declined by 28% in the period, also impacted by
elevated inflation and interest rates.
Business performance and developments
Reported revenues declined by 6%, reflecting a LFL decrease of 11% offset by
the positive impact of foreign exchange. LFL revenues were impacted by a
decline in volumes resulting from the challenging market backdrop and customer
destocking, which more than offset the benefits from prior year pricing
actions and net customer wins. The rate of volume decline moderated towards
the end of the period.
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
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 planned to go live in late 2023.
The new distribution site in Phoenix to service the western US market is
performing to plan, whilst the consolidation of two manufacturing sites into
one in Owatonna is also progressing to schedule with product line transfers
and process flow improvements underway and planned capital investment in a new
paint line approved and on order.
During the period the business achieved incremental net customer wins despite
losing some low profitability business through maintaining a disciplined
approach to pricing. These business losses were more than offset by wins
gained from new products, such as the entry-price point sliding patio door
solution, together with superior customer service levels. Additional new
product launches are expected to drive further incremental net customer wins
in the second half of 2023, including a next generation casement window
solution that incorporates magnetic elements in the handle to improve its
operation, and an entry level casement lock solution for the Canadian market.
Input cost inflation has, in general, continued to ease during 2023, although
certain commodity prices remain high and labour inflation has continued at
historically high levels. The labour availability and retention challenges
experienced in 2022 have improved, and the resultant workforce stabilisation
has helped to drive a reduction in overtime and enabled a focus on continuous
improvement projects to improve efficiency and supply chain resiliency and
reduce inventory. There remain considerable opportunities in this area.
The significant decline in volume in the period was the primary driver of the
6% decline in LFL adjusted operating profit (1% decrease in adjusted operating
profit on a reported basis, reflecting the impact of foreign exchange). The
decline in production output did, however, enable a reduction in inventory of
$24 million in the period. The natural lag in the recovery of input cost
inflation via pricing actions that impacted the division's adjusted operating
profit and margin in 2021 and 2022 has, as expected, begun to reverse in 2023,
resulting in a normalising price-cost dynamic in the period. As a result, the
division delivered a LFL adjusted operating margin increase of 70bps to 15.0%
despite the lower volumes.
Shortly after the period end Lawrence Industries was acquired. Lawrence
Industries designs, manufactures and sells high-performance composite hardware
for sliding and hung windows to North American PVC window fabricators.
Composite hardware provides an attractive, high performance, low-cost product
option, is a beneficiary of the growing demand for affordable homes in North
America, and the combination of AmesburyTruth and Lawrence Industries will
provide a strong value proposition for customers. Lawrence Industries will
continue to trade under its own well-respected brand name.
Outlook
The underlying fundamentals of the US housing market remain strong, with years
of supply lagging demand creating a significant housing deficit. Nevertheless,
short-term constraints on market demand exist due to the historically high
levels of inflation and interest rates. The NAHB forecasts a 4% decline in
private RMI spending and a 21% decline in single family housing starts in
2023.
Against this backdrop, the division will maintain its focus on gaining market
share, notably in the western US and Canada, and continue to develop its new
product pipeline. The benefits of prior year pricing actions will help
mitigate the adverse impact of lower volumes, whilst cost inflation should
continue to ease during the second half. Work to streamline the supply chain
and return operational efficiencies across the network to normalised levels
will remain a focus and, along with a £2 - £3 million contribution from
Lawrence Industries, is expected to result in further improvements to the
division's performance in the second half.
Tyman UK & Ireland
£m except where stated H1 2023 H1 2022 Change LFL
Revenue 51.0 53.7 -5% -5%
Adjusted operating profit 5.8 7.7 -25% -25%
Adjusted operating margin 11.4% 14.3% -290bps -290bps
Markets
Activity in the UK residential RMI market, to which the division is
predominantly exposed, remained subdued in the first half of 2023, impacted by
the pressure on household incomes from elevated levels of inflation and
interest rates that have been a headwind for the market for more than a year.
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
latest CPA forecast expects spending in the private RMI market to decline by
11% in 2023, following a decrease of 4% in 2022.
Whilst the UK construction PMI (CPMI) has posted readings slightly above the
neutral 50 level during most of the first half, the residential component of
the CPMI has been below 50; indeed, the June 2023 CPMI showed the residential
housing component deteriorating to its lowest level in 14 years, excluding the
COVID period. In contrast, the commercial and civil engineering components of
the CPMI have stayed above 50 and the CPA forecasts these sectors to be
broadly flat in 2023.
Business performance and developments
Revenue decreased by 5% in H1 2023 on a LFL and reported basis. The benefit of
prior year pricing actions was more than offset by a decline in hardware
volumes, reflecting the above-mentioned ongoing challenges in the residential
RMI market. In addition, there was a fall in revenue in the commercial access
solutions business, which was impacted by supplier delays with its new
automation equipment.
Despite the challenging market conditions, the hardware business has continued
with its strategic initiatives and achieved share gains in the period, notably
with major distributors, where the strength of the brands and the close
customer collaboration provided by the business are differentiators. The work
that has been taking place over the past 18 months to improve the division's
new product development processes and pipeline is also now starting to deliver
benefits, with revenues from new products in categories such as friction
stays, door closers, handles, cylinders, hinges and letterplates running ahead
of both plan and the prior year during the first half, despite the tough
market backdrop.
Input cost inflation, including that caused by adverse foreign exchange
movements, has continued to create a headwind during the period, though to a
lesser extent than experienced in 2022. Given this, the hardware business has
remained agile with regards to pricing, with the combination of prior year
general price increases and surcharges largely offsetting raw material
inflation and higher air freight costs in the first half.
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 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 recent 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 period. The business experienced supplier
delays with the new automation equipment and paint line for the facility which
significantly impacted its operational and financial performance in the first
half; these challenges have now been worked through and the business is set
for an improved second half performance.
LFL and reported adjusted operating profit decreased by 25%. This was
primarily attributable to the supplier-related operational challenges that
affected Access 360's performance, as the hardware business was able to
largely offset the negative operating leverage impact from lower hardware
volumes with the benefits from prior year pricing actions and tight cost
control.
Outlook
As highlighted by the latest CPA forecast referenced above, the UK residential
RMI market is expected to remain challenging through the remainder of 2023.
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 alleviation of the operational challenges
experienced by Access 360 in the first half will further support an
improvement in the division's performance in the second half.
Tyman International
£m except where stated H1 2023 H1 2022 Change LFL
Revenue 63.5 76.8 -17% -18%
Adjusted operating profit 5.5 14.0 -61% -60%
Adjusted operating profit margin 8.7% 18.3% -960bps -900bps
Markets
As expected, the decline in demand levels experienced in the second half of
2022 across most of the division's key geographies continued through the first
half of 2023. Rising interest rates and persistently high levels of inflation
continue to have a negative effect on consumer confidence across Europe, which
accounts for approximately 65% of divisional revenue. The Eurozone
Construction PMI remained in a range of 44.2 to 47.6 throughout the first half
of 2023, indicating a construction sector in contraction; within this, the
data for the division's largest market, Italy, was slightly better than the
Eurozone average but remained below the neutral 50 level during the period.
Elsewhere, there continued to be favourable market conditions in the Gulf
Cooperation Council cluster of markets, but activity levels remain
disappointing in China and Latin America.
Business performance and developments
LFL revenues declined by 18% in the period against an exceptionally strong
comparative. The drivers of this were the challenging market conditions,
exacerbated by customer destocking, especially in early 2023. These negative
volume impacts more than offset the benefit from the carryover of prior year
pricing actions. Reported revenues declined by 17%, reflecting the impact of
foreign exchange.
The strategic initiative to develop system house partnerships continued to
gain traction during the first half, notably in Europe and the GCC. This
channel now represents 18% of the division's revenue (compared to 16% for the
full year 2022) and is expected to continue to grow faster than the market in
these key geographies, as they are driving innovation and sustainability in
the industry. Once a supplier is integrated into a system house's customised
solution it provides a stable recurring revenue stream. Tyman is well placed
to grow with this group of customers by working closely with them to create
innovative solutions, with systems deploying newly developed Giesse hardware
and Schlegel seal products starting to be delivered to the market in 2023.
Sustainability continues to be a key differentiator for Tyman across Europe,
and in May two major product ranges, the CHIC concealed hinges for tilt and
turn windows and Fulcra door hinges, achieved Environmental Product
Declaration (EPD) certification, creating additional revenue opportunities as
EPD certification is a prerequisite for an increasing number of tenders in the
market. In March, the division hosted a sustainability conference for its
Iberian system house partners to present Tyman's 2030 sustainability roadmap
and discuss collaborative efforts for sustainable solutions in the European
aluminium fenestration market.
Work to optimise the division's seals manufacturing business following the
closure of the German seals manufacturing plant and the transfer of its
production to the Newton Aycliffe facility in the UK was completed in the
first half. This consolidation will deliver structural improvements to
profitability and enhanced customer service levels. Further process automation
has been implemented at the Budrio hardware manufacturing facility to enhance
safety, capacity and efficiency.
The division's pricing strategy remains agile and responsive to market
conditions, balancing volume and margin, but prior year pricing actions were
insufficient to fully recover input cost inflation in the period. Combined
with the significant decline in sales and production and the consequential
negative effect on fixed cost absorption, this resulted in a LFL adjusted
operating profit decline of 60%, with the adjusted operating margin decreasing
to 8.7%. On a reported basis, adjusted operating profit decreased by 61%,
reflecting the impact of foreign exchange.
Outlook
Recent construction PMI data suggests that the market is likely to remain
challenging in the second half of the year, with consumer confidence in most
of the division's key markets continuing to be impacted by rising interest
rates and elevated levels of inflation. Hence, whilst the division's LFL
revenue performance in the second half should benefit from ongoing share
gains, an absence of customer destocking and easier comparators, no recovery
in market demand is currently anticipated outside of the GCC cluster, which is
expected to maintain its recent growth trends.
Given this, the priorities remain to capture share growth opportunities
through new product launches and channel expansion activities whilst
continuing to tightly manage the cost base. The division will also continue to
take measures to increase the variable element of its cost base and reduce its
operating leverage, including reviewing its footprint outside of Europe.
FINANCIAL REVIEW
Income statement
Revenue and profit
Reported revenue in the period decreased by 8.4% to £329.9 million (H1 2022:
£360.0 million) against a very strong comparator, largely reflecting a
decline in volumes of £73.8 million, driven by the weaker global
macroeconomic conditions which began to take effect in the second half of
2022, combined with the impact of customer destocking. The volume shortfall
was partially offset by the benefit of the carryover of prior year price
increases of £22.7 million and surcharges of £8.8 million to recover
significant input cost inflation experienced across 2021 and 2022, for which
there was a lag in recovery. Reported revenue also benefitted from favourable
foreign exchange movements of £12.2 million. On a LFL basis, which excludes
the foreign exchange benefit, revenue decreased 11.4% compared to H1 2022.
Operating profit decreased by 31.9% to £27.8 million (H1 2022: £40.8
million). The impact of the drop through of lower sales volumes was c.£23.6
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
and productivity impacted profitability by c.£6.9 million. The carryover of
pricing actions of £31.5 million more than offset in-period material, wages
and salary, and other input cost inflation of £11.5 million, with the
significant lag experienced over the last two years now reversed. Operating
profit was also impacted by adverse transactional foreign exchange movements,
adjusting items associated with restructuring and M&A activity, and
benefitted from favourable foreign exchange movements of £1.7 million.
Adjusted operating profit, which excludes adjusting items and amortisation of
acquired intangibles, decreased by 21.5% to £38.7 million (H1 2022: £49.3
million), and on a LFL basis, excluding the benefit of foreign exchange
decreased by 24.1%.
Operating margin decreased by 290 bps to 8.4% (H1 2022: 11.3%) and adjusted
operating profit margin decreased by 200 bps to 11.7% (H1 2022: 13.7%).
Reported profit before taxation decreased by 39.3% to £22.7 million (H1 2022:
£37.4 million), as a result of the lower operating profit and an increase in
net finance costs of £1.7 million. Adjusted profit before tax decreased by
24.6% to £34.2 million (H1 2022: £45.4 million), as a result of the lower
adjusted operating profit and higher net finance costs. On a LFL basis,
excluding the foreign exchange benefit, this decreased 27.2%.
Materials and input costs
£m except where stated FY 2022 Materials ((1)) Average ((2)) Spot ((3))
Aluminium 21.5 -18.5% -23.9%
Polypropylene 45.2 -32.6% -26.7%
Stainless steel 80.2 -0.9% -17.0%
Zinc 33.5 -3.3% -9.8%
Far East components ((4)) 41.8 -5.3% -11.7%
(1) FY 2022 materials cost of sales for raw materials, components and
hardware for overall category. Only major materials categories are presented
(2) Average H1 2023 tracker price compared with average H1 2022 tracker
price
(3) Spot tracker price as at 30 June 2023 compared with spot tracker price
at 30 June 2022
(4) Pricing on a representative basket of components sourced from the Far
East by the UK & Ireland division
Both spot and average prices across all major categories moderated in H1 2023,
following significant inflation over the previous two years. However, as
higher priced inventory carried into the year was still being sold-through,
the Group is yet to realise the benefit of cost reductions. Previously
implemented price increases and surcharges are now recovering the gap
experienced over the last two years as 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 £79.9 million (H1
2022: £75.6 million), driven largely by salary and other cost inflation,
adjusting items associated with restructuring and M&A activity, and
foreign exchange of £1.9 million, partially offset by lower amortisation of
acquired intangibles and the effect of cost control measures implemented in
response to weaker demand. Adjusted selling, general and administrative costs,
which exclude the impact of adjusting items and amortisation of acquired
intangibles, increased to £69.0 million (H1 2022: £67.1 million). On a LFL
basis, adjusted selling, general and administrative expenses were flat against
2022.
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.
£m H1 2023 H1 2022
Redundancy and restructuring (2.5) -
M&A and integration (0.6) -
(3.1) -
The redundancy and restructuring costs comprise costs associated with the
departure of the previous Chief Executive Officer, costs related to a targeted
reduction in workforce in North America, and the final costs relating to the
closure of the Hamburg facility and consolidation of the three UK access
solutions businesses into a single site that commenced in the second half of
2022 and are now substantially completed.
The M&A integration costs relate to transaction fees incurred in the
period in respect of the acquisition of Lawrence Industries, which completed
subsequent to the period end.
Finance costs
Net finance costs increased to £5.1 million (H1 2022: £3.4 million).
Interest payable on bank loans, private placement notes and overdrafts
increased to £4.5 million (H1 2022: £2.9 million), reflecting a
significantly higher weighted average interest rate, partially offset by lower
average net debt. The weighted average interest rate increased to 4.6% (H1
2022: 2.8%), with the improved coupon rates on the new USPP debt issued in
April 2022 more than offset by higher interest rates on the floating RCF debt,
due to the significant increase in global base interest rates.
Interest on lease liabilities of £1.3 million was broadly in line with the
previous period (H1 2022: £1.2 million). Interest income from short term bank
deposits amounted to £1.0 million (H1 2022: £0.2 million), reflecting higher
interest rates. Finance costs were also impacted by a loss on revaluation of
derivative instruments of £0.3 million (H1 2022: gain of £0.7 million), and
amortisation of capitalised borrowing costs of £0.3 million (H1 2022: £0.2
million).
Taxation
The Group reported an income tax charge of £5.6 million (H1 2022: £9.0
million), comprising a current tax charge of £7.4 million (H1 2022: £11.0
million) and a deferred tax credit of £1.8 million (H1 2022: credit of £2.0
million), representing an effective tax rate of 24.7% (H1 2022: 24.1%). The
increase in the effective tax rate reflects a tax cost associated with the
closure of the facility in Hamburg. The adjusted effective tax rate, which
excludes the tax effect of adjusting items, including the cost associated with
the closure of the Hamburg facility was 24.4% (H1 2022: 24.4%). This is the
Group's current best estimate of the effective tax rate for the 2023 full
year.
During the period, the Group paid corporation tax of £7.3 million (H1 2022:
£10.0 million). This reflects a cash tax rate on adjusted profit before tax
of 21.3% (H1 2022: 22.0%). The decrease is a result of a refund of tax
overpaid for the 2021 tax year received in H1 2023.
Earnings per share
Basic earnings per share decreased by 39.7% to 8.8 pence (H1 2022: 14.6
pence), and adjusted earnings per share decreased by 24.4% to 13.3 pence (H1
2022: 17.6 pence), largely 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
£m H1 2023 H1 2022
Net cash from operating activities 33.9 17.7
Add: Pension contributions 0.1 0.1
Add: Income tax paid 7.3 10.0
Less: Purchases of property, plant and equipment (5.1) (9.0)
Less: Purchases of intangible assets (2.2) (2.1)
Add: Adjusting item cash costs 4.6 -
Adjusted operating cash flow* 38.6 16.7
Less: Pension contributions (0.1) (0.1)
Less: Income tax paid (7.3) (10.0)
Less: Net interest paid (4.6) (3.3)
Less: Adjusting item cash costs (4.6) -
Free cash flow* 22.0 3.3
* Alternative performance measures, details of which can be found on
page 40.
Net cash from operating activities increased to £33.9 million (H1 2022:
£17.7 million), largely reflecting a significantly lower working capital
outflow of £2.6 million in H1 2023, compared to £32.3 million in H1 2022, as
a result of actions taken to reduce inventory in the period, following a
significant build in H1 2022 to service demand following a period of supply
chain disruption. This was partially offset by lower profit before tax and
cash outflows on provisions made in 2022 associated with restructuring
activities. Adjusted operating cash flow in the period increased to £38.6
million (H1 2022: £16.7 million), reflecting the higher net cash from
operating activities and lower capital expenditure. Adjusted operating cash
conversion in H1 2023 was much higher than normalised H1 levels at 99.8% (H1
2022: 33.8%), reflecting the lower working capital outflow.
Free cash flow in the period was £22.0 million, compared to £3.3 million in
H1 2022, as a result of a significantly higher adjusted operating cash flow
and lower income tax payments on account, offset slightly by higher net
interest paid.
Debt facilities
Bank and US private placement facilities available to the Group, as at 30 June
2023, were as follows:
Facility Maturity Currency Committed Uncommitted
2022 Facility Dec 2026 Multicurrency £210.0m £100.0m
5.37 % USPP Nov 2024 US$ US$45.0m -
3.51 % USPP April 2029 US$ US$40.0m -
3.62 % USPP April 2032 US$ US$35.0m -
There have been no changes to the multi-currency 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
which align with Tyman's sustainability roadmap as outlined in the Annual
Report and Accounts for the year ended 31 December 2022. These incentive
mechanisms result in a modest reduction or increase in the interest rate
depending on performance against these targets.
Liquidity
At 30 June 2023, the Group had gross debt of £246.4 million (H1 2022: £268.7
million) and net debt of £167.8 million (H1 2022: £182.0 million). Adjusted
net debt, which excludes lease liabilities and capitalised borrowing costs was
£112.7 million (H1 2022: £125.7 million), with the decrease reflecting
operating cash generation, including the lower working capital, as well as
benefitting from foreign exchange movements.
The Group had cash balances of £78.6 million (H1 2022: £86.7 million), bank
overdrafts of £27.8 million (H1 2022: £23.4 million) and committed but
undrawn facilities of £132.3 million (H1 2022: £140.5 million). This
provides immediately available liquidity of £183.1 million (H1 2022: £203.8
million). The Group also has potential access to the uncommitted £100.0
million accordion facility.
Covenant performance
At 30 June 2023 Test Performance ((1)) Headroom ((2)) Headroom ((2))
Leverage < 3.0x 1.2x £58.3m 60%
Interest Cover > 4.0x 14.6x £70.2m 73%
(1) Calculated covenant performance consistent with the Group's banking
covenant test (banking covenants exclude impact of IFRS 16). See APMs on page
44 for interest cover and page 46 for leverage.
(2) The approximate amount by which adjusted EBITDA would need to decline
before the relevant covenant is breached.
At the half year, the Group retained significant headroom on its banking
covenants. Leverage at the period end was 1.2x (H1 2022: 1.1x), reflecting the
lower covenant EBITDA, which is measured on an LTM basis. Interest cover at
the period end was 14.6x (H1 2022: 19.3x), largely reflecting the higher
interest expense as well as the lower covenant EBITDA.
Balance sheet - assets and liabilities
Working capital
£m FY 2022 Mvt FX H1 2023
Inventories 153.1 (16.1) (5.2) 131.8
Trade receivables 67.5 19.8 (2.6) 84.7
Trade payables (55.8) 1.4 1.7 (52.7)
Trade working capital 164.8 5.1 (6.1) 163.8
Trade working capital at the half year, net of working capital provisions, was
£163.8 million (H1 2022: £170.3 million; FY 2022: £164.8 million). The
trade working capital build to the half year at average exchange rates was
£5.1 million (H1 2022: £30.3 million).
The decrease in inventory at average exchange rates was £16.1 million (H1
2022: increase of £20.9 million). 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 in the
period due to the seasonal increase in trading activity and the effect of
carryover pricing, and trade payables decreased as a result of lower inventory
purchasing.
Trade working capital decreased by £6.1 million due to foreign exchange
movements.
Capital expenditure
Gross capital expenditure decreased to £7.3 million (H1 2022: £11.1 million)
or 1.0x depreciation (H1 2022: 1.7x), due to H1 2022 having higher capital
investment as a result of a catch up of expenditure deferred from prior years.
Capital expenditure for the full year is now expected to be in the range of
£17 - £22 million.
Balance sheet - equity
Shares in issue
At 30 June 2023, the total number of shares in issue was 196.8 million (H1
2022: 196.8 million) of which 0.5 million shares were held in treasury (H1
2022: 0.5 million).
Employee Benefit Trust purchases
At 30 June 2023, the EBT held 2.0 million shares (H1 2022: 1.7 million).
During the period, the EBT purchased 0.2 million shares in Tyman plc at a
total cost of £0.5 million (H1 2022: 2.0 million shares at a total cost of
£6.6 million).
Dividends
An interim dividend of 4.2p per share (H1 2022: 4.2p) has been declared. The
ex-dividend date will be 3 August 2023 and the final dividend will be paid on
8 September 2023 to shareholders on the register at close of business on 4
August 2023.
Only dividends paid in the year have been charged against equity in the H1
2023 financial statements. Dividend payments of £18.5 million were paid to
shareholders during H1 2023 (H1 2022: £17.2 million).
Other financial matters
Return on capital employed (ROCE)
ROCE decreased by 240 bps to 11.5% (H1 2022: 13.9%) as a result of the lower
adjusted operating profit, higher average working capital, and the impact of
foreign exchange movements on capital employed, offset by a reduction in the
carrying value of intangible assets through amortisation.
Currency
The principal foreign currencies that impact the Group's results are the US
dollar and the Euro. In H1 2023, Sterling was weaker against both the US
dollar and the Euro when compared with the average exchange rates in H1 2022.
Translational exposure
Currency US$ Euro Other Total
% movement in average rate (5.1%) (3.9%) -
£m Revenue impact ((1)) 10.8 1.6 (2.0) 10.4
£m Profit impact ((1)(2)) 1.5 0.2 (0.3) 1.4
1c decrease impact ((3)) £195k £31k £6k £232k
(1) Calculated based on H1 2023 financial information
(2) Adjusted operating profit impact
(3) Defined as the approximate favourable translation impact of a 1c
decrease in the Sterling exchange rate of the respective currency on the
Group's adjusted operating profit
The net effect of currency translation caused revenue and adjusted operating
profit from ongoing operations to increase by £10.4 million and £1.4 million
respectively if current period results are translated at H1 2022 exchange
rates.
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 Group recognised a loss on foreign exchange derivatives in H1 2023 of
£0.3 million (H1 2022: gain of £0.7 million). The Group's other
transactional exposures generally benefit from the existence of natural hedges
and are immaterial.
Principal risks and uncertainties
The Board has reviewed the Group's principal risks and concluded these remain
consistent with those disclosed in the Annual Report and Accounts for the year
ended 31 December 2022. As part of this review, the Board has considered the
impact of the uncertain macro-economic environment and the impact of
geo-political circumstances, including the ongoing effects of the war in
Ukraine.
Juliette Lowes
Interim Chief Financial Officer
Tyman plc
Condensed consolidated income statement
Note Six months ended Six months ended Year ended
30 June 2023 (unaudited)
30 June 2022 (unaudited)
31 December 2022 (audited)
£m
£m
£m
Revenue 3 329.9 360.0 715.5
Cost of sales (222.0) (243.6) (493.2)
Gross profit 107.9 116.4 222.3
Selling, general and administrative expenses (79.9) (75.6) (151.2)
Net impairment losses on financial assets (0.2) - (0.4)
Operating profit 27.8 40.8 70.7
Analysed as:
Adjusted(1) operating profit 3 38.7 49.3 94.6
Adjusting items 4 (3.1) - (6.3)
Amortisation of acquired intangible assets 8 (7.8) (8.5) (17.6)
Operating profit 27.8 40.8 70.7
Finance income 1.0 0.9 1.0
Finance costs (6.1) (4.3) (10.3)
Net finance costs (5.1) (3.4) (9.3)
Profit before taxation 22.7 37.4 61.4
Income tax charge 5 (5.6) (9.0) (13.6)
Profit for the period attributable to shareholders of the Company 17.1 28.4 47.8
Basic earnings per share 6 8.8p 14.6p 24.6p
Diluted earnings per share 6 8.7p 14.5p 24.5p
Non-GAAP alternative performance measures(1)
Adjusted(1) operating profit 38.7 49.3 94.6
Adjusted(1) profit before taxation 34.2 45.4 85.8
Basic adjusted(1) earnings per share 13.3p 17.6p 34.7p
Diluted adjusted(1) earnings per share 13.2p 17.6p 34.5p
(1 ) See definitions and reconciliations on pages 40 to 50 for
non-GAAP Alternative Performance Measures.
Tyman plc
Condensed consolidated statement of comprehensive income
Six months ended Six months ended Year ended
30 June 2023 (unaudited)
30 June 2022 (unaudited)(1)
31 December 2022 (audited)
£m
£m
£m
Profit for the period 17.1 28.4 47.8
Other comprehensive (expense)/ income
Items that will not be reclassified to profit or loss
Remeasurements of post-employment benefit obligations (0.7) 0.1 -
Total items that will not be reclassified to profit or loss (0.7) 0.1 -
Items that may be reclassified subsequently to profit or loss
Exchange differences on translation of foreign operations(1) (25.3) 51.9 54.1
Change in fair value of net investment hedge(1) 5.3 (10.1) (11.7)
Effective portion of changes in value of fair value hedges (0.2) - 0.2
Total items that may be reclassified to profit or loss (20.2) 41.8 42.6
Other comprehensive (expense)/income for the period (20.9) 41.9 42.6
Total comprehensive (expense)/income for the period attributable to (3.8) 70.3 90.4
shareholders of the Company
(1) Comparatives have been represented for the six months ended 30 June
2022 to show separately the change in fair value of net investment hedge for
consistency with current year presentation.
Items in the statement above are disclosed net of tax.
Tyman plc
Condensed consolidated statement of changes in equity
Share Treasury Hedging reserve Translation Retained Total
capital
reserve
reserve
earnings
equity
£m
£m £m
£m
£m
£m
At 1 January 2022 (audited) 9.8 (2.6) - 49.2 426.0 482.4
Profit for the period - - - - 28.4 28.4
Other comprehensive income - - - 41.8 0.1 41.9
Total comprehensive income - - - 41.8 28.5 70.3
Transactions with owners as their capacity as owners
Share-based payments(1) - - - - 1.0 1.0
Dividends paid - - - - (17.2) (17.2)
Issue of own shares from Employee Benefit Trust - 0.5 - - (0.5) -
Purchase of own shares for EBT - (6.6) - - - (6.6)
Total transactions with owners - (6.1) - - (16.7) (22.8)
At 30 June 2022 (unaudited) 9.8 (8.7) - 91.0 437.8 529.9
Profit for the period - - - - 19.4 19.4
Other comprehensive income/(expense) - - 0.2 0.6 (0.1) 0.7
Total comprehensive income - - 0.2 0.6 19.3 20.1
Transactions with owners as their capacity as owners
Share-based payments(1) - - - - (0.2) (0.2)
Dividends paid - - - - (8.2) (8.2)
Total transactions with owners - - - - (8.4) (8.4)
At 31 December 2022 (audited) 9.8 (8.7) 0.2 91.6 448.7 541.6
Profit for the period - - - - 17.1 17.1
Other comprehensive (expense)/income - - (20.0) (0.7) (20.9)
(0.2)
Total comprehensive (expense)/ income - - (20.0) 16.4 (3.8)
(0.2)
Transactions with owners as their capacity as owners
Share-based payments(1) - - - - 0.6 0.6
Dividends paid - - - - (18.5) (18.5)
Issue of own shares from EBT - 2.1 - - (2.1) -
Purchase of own shares for EBT - (0.5) - - - (0.5)
Total transactions with owners - 1.6 - - (20.0) (18.4)
At 30 June 2023 (unaudited) 9.8 (7.1) - 71.6 445.1 519.4
( )
(1) ( ) Share-based payments include a tax
charge of £Nil (six months ended 30 June 2022: £Nil; year ended 31 December
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 (six months ended 30 June
2022: £Nil; year ended 31 December 2022: tax credit of £0.2 million
Tyman plc
Condensed consolidated balance sheet
Note 30 June 2023 (unaudited) 30 June 2022 31 December 2022 (audited)
£m
Restated(1)
£m
(unaudited)
£m
Assets
Non-current assets
Goodwill 7 383.8 397.8 399.3
Intangible assets 8 48.9 64.7 57.7
Property, plant and equipment 9 71.1 71.3 74.6
Right of use assets 53.4 53.2 57.3
Financial assets at fair value through profit or loss 13 1.2 1.2 1.2
Derivative financial instruments 13 - 0.3 0.2
Deferred tax assets 1.5 4.4 1.7
559.9 592.9 592.0
Current assets
Inventories 131.8 169.9 153.1
Trade and other receivables 99.3 107.7 81.4
Cash and cash equivalents 14 78.6 86.7 74.6
309.7 364.3 309.1
TOTAL ASSETS 869.6 957.2 901.1
Liabilities
Current liabilities
Trade and other payables (87.5) (130.3) (88.2)
Derivative financial instruments 13 (0.5) - (0.2)
Borrowings 10 (27.2) (23.4) (15.9)
Lease liabilities (6.7) (6.4) (6.8)
Current tax liabilities (1.7) (6.9) (1.8)
Provisions (1.0) (1.2) (5.0)
(124.6) (168.2) (117.9)
Non-current liabilities
Borrowings 10 (162.0) (188.4) (172.5)
Lease liabilities (50.5) (50.5) (54.9)
Deferred tax liabilities (4.7) (11.1) (6.9)
Retirement benefit obligations (4.9) (4.1) (4.3)
Provisions (3.5) (4.8) (2.9)
Other payables - (0.2) (0.1)
(225.6) (259.1) (241.6)
Total liabilities (350.2) (427.3) (359.5)
Net assets 519.4 529.9 541.6
Equity
Capital and reserves attributable to owners of the Company
Share capital 11 9.8 9.8 9.8
Treasury reserve (7.1) (8.7) (8.7)
Hedging reserve - - 0.2
Translation reserve 71.6 91.0 91.6
Retained earnings 445.1 437.8 448.7
Total Equity 519.4 529.9 541.6
(1 ) See note 2.2 for details regarding reclassification
adjustment to the comparative balance sheet as at 30 June 2023.
Tyman plc
Condensed consolidated cash flow statement
Note Six months ended Six months ended Year ended
30 June 2023 (unaudited)
30 June 2022 (unaudited)
31 December 2022 (audited)
£m
£m
£m
Cash flow from operating activities
Profit before taxation 3 22.7 37.4 61.4
Adjustments 14 24.1 22.7 53.0
Changes in working capital:
Inventories 16.1 (20.9) (4.8)
Trade and other receivables (20.8) (20.4) 5.6
Trade and other payables 2.1 9.0 (32.2)
Provisions utilised (2.9) - (0.7)
Pension contributions (0.1) (0.1) (0.2)
Income tax paid (7.3) (10.0) (21.5)
Net cash from operating activities 33.9 17.7 60.6
Cash flow from investing activities
Purchases of property, plant and equipment 9 (5.1) (9.0) (19.2)
Purchases of intangible assets 8 (2.2) (2.1) (4.9)
Proceeds on disposal of property, plant and equipment - - 0.1
Interest received 1.1 0.1 0.9
Net cash used in investing activities (6.2) (11.0) (23.1)
Cash flow from financing activities
Interest paid (5.7) (3.4) (9.5)
Dividends paid (18.5) (17.2) (25.4)
Purchase of own shares for Employee Benefit Trust (0.4) (6.6) (6.6)
Refinancing costs paid (0.2) (0.2) (2.1)
Proceeds from drawdown of borrowings 22.5 82.3 122.3
Repayments of borrowings (26.6) (56.3) (113.0)
Principal element of lease payments (3.6) (3.3) (6.2)
Net cash used in financing activities (32.5) (4.7) (40.5)
Net (decrease)/increase in cash and cash equivalents and bank overdrafts (4.8) 2.0 (3.0)
Exchange (loss)/gain on cash and cash equivalents and bank overdrafts (2.6) 3.2 3.1
Cash and cash equivalents and bank overdrafts at beginning of period 58.2 58.1 58.1
Cash and cash equivalents and bank overdrafts at the end of period 14 50.8 63.3 58.2
( )
Tyman plc
Notes to the condensed consolidated financial statements
1. General information
Tyman plc is a leading international supplier of engineered fenestration
components 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 divisions. Headquartered in London, the
Group employs approximately 3,400 people with facilities in 16 countries
worldwide.
Tyman is a public limited company listed on the London Stock Exchange,
incorporated and domiciled in the United Kingdom. The address of the Company's
registered office is 29 Queen Anne's Gate, London, SW1H 9BU.
These interim financial statements were approved for issue on 24 July 2023 and
have been reviewed, not audited, by Deloitte, the Group's auditors.
These interim financial statements do not comprise statutory accounts within
the meaning of Section 434 of the Companies Act 2006. Statutory accounts for
the year ended 31 December 2022 were approved by the Board of Directors on 2
March 2023 and delivered to the Registrar of Companies. The report of the
auditors on those accounts was unqualified, did not contain an emphasis of
matter paragraph and did not contain any statement under Section 498 of the
Companies Act 2006.
The financial information for the year ended 31 December 2022 is extracted
from the Group's consolidated financial statements for that year.
2. Accounting policies and basis of preparation
2.1 Basis of preparation
The condensed consolidated interim financial statements for the half-year
reporting period ended 30 June 2023 have been prepared in accordance with the
UK-adopted International Accounting Standard 34, 'Interim Financial Reporting'
and the Disclosure guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority. The interim report does not include all
of the notes of the type normally included in an annual financial report.
Accordingly, this report should be read in conjunction with the annual
financial statements for the year ended 31 December 2022, which has been
prepared in accordance with UK-adopted international accounting standards and
with the requirements of the Companies Act 2006, and any public announcements
made by Tyman plc during the interim reporting period.
2.2 Changes in accounting policies and disclosures
2.2.1 New accounting standards effective in period
The accounting standards that became applicable in the period did not impact
the Group's accounting policies and did not require retrospective adjustments.
2.2.2 New, revised and amended accounting standards not yet effective
None of the standards which have been issued by the Financial Reporting
Council but are not yet effective are expected to have a material impact on
the Group.
2.2.3 Prior year restatement
As disclosed in the 2022 Annual Report and Accounts, following a letter
received from the Financial Reporting Council ("FRC") as part of its regular
review and assessment of the quality of corporate reporting in the UK, the
Group restated the classification of two areas of the 2021 comparative balance
sheet. One of these areas, relating to the offsetting of deferred tax assets
and liabilities also affected the balance sheet as at 30 June 2022, and
therefore the reclassification adjustment has been applied to the interim
comparative balance sheet.
The Group previously presented deferred tax assets and liabilities gross on
the balance sheet. Certain of these assets and liabilities arose in the same
tax jurisdiction and met the criteria for offset in IAS 12. These balances
have therefore been restated to offset those that met the criteria. The effect
of this was to reduce deferred tax assets and deferred tax liabilities as at
30 June 2022 by £8.6 million.
This restatement did not affect the Group's income statement, net assets, cash
flows, KPIs or compliance with covenants.
The previously reported and restated financial statement line items are
summarised as follows:
30 June 2022
As previously reported Impact of restatement Restated
£m
£m
£m
Deferred tax asset 13.0 (8.6) 4.4
Deferred tax liability (19.7) 8.6 (11.1)
Net assets 529.9 - 529.9
Total assets 965.8 (8.6) 957.2
Total liabilities (435.9) 8.6 (427.3)
2.3 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 overview of results on pages 3 to 5. There have been no
changes to the Group principal risks and uncertainties from those outlined in
the annual report for the year ended 31 December 2022.
As at 30 June 2023, the Group had net cash and cash equivalents of £50.8
million and an undrawn RCF available of £132.3 million, giving liquidity
headroom of £183.1 million. The Group also has potential access to an
uncommitted accordion facility of £100 million.
The Group is subject to leverage and interest cover covenants tested in June
and December and had significant headroom on both covenants at 30 June 2023.
The Group has £58.3 million of EBITDA headroom on the leverage covenant (60%)
and £70.2 million on the interest cover covenant (73%).
The Group has performed an assessment of going concern through reviewing
covenant compliance and liquidity headroom based on latest forecasts, which
show the Group would retain significant headroom throughout the going concern
period.
Having considered the financial performance and position for the period ended
30 June 2023, current trading, the latest forecast financial information, and
the Group's principal risks, the Directors are satisfied that the Group has
sufficient resources to continue in operation for the foreseeable future, a
period of not less than 12 months from the date of this report. Accordingly,
the consolidated financial information has been prepared on a going concern
basis.
2.4 Accounting policies
The accounting policies adopted are consistent with those of the previous
financial year and corresponding interim reporting period. Taxes on income in
the interim periods are accrued using tax rates that would be applicable to
expected total annual profit or loss.
2.5 Accounting judgements and estimates
The preparation of financial statements requires management to exercise
judgement in applying the Group's accounting policies. It also requires the
use of certain critical accounting estimates and assumptions that affect the
reported amounts of assets, liabilities, income and expenses. Actual amounts
may differ from these estimates.
In preparing these interim financial statements, the significant judgements
made by management in applying the Group's accounting policies and the key
sources of estimation uncertainty were the same as those applied to the
consolidated financial statements for the year ended 31 December 2022.
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 business and
Tyman's Asia sourcing operation. International comprises the Group's remaining
businesses outside the US, Canada, Mexico and the UK (although includes the
two UK seal manufacturing plants that are managed by the Tyman International
leadership team). Centrally incurred functional costs that are directly
attributable to a division are allocated or recharged to the division. All
other centrally incurred costs and eliminations are disclosed as a separate
line item in the segment analysis.
In the opinion of the Board, there is no material difference between the
Group's operating segments and segments based on geographical splits.
Accordingly, the Board does not consider geographically defined segments to be
reportable.
The following tables present revenue and profit information for the Group's
reporting segments, which have been generated using the Group's accounting
policies, with no differences of measurement applied.
3.2 Revenue
Six months ended Six months ended
30 June 2023 (unaudited)
30 June 2022 (unaudited)
£m
£m
Segment revenue Inter-segment revenue External revenue Segment revenue Inter-segment revenue External revenue
North America 216.5 (1.1) 215.4 230.8 (1.3) 229.5
UK & Ireland 51.1 (0.1) 51.0 53.8 (0.1) 53.7
International 64.5 (1.0) 63.5 78.2 (1.4) 76.8
Total revenue 332.1 (2.2) 329.9 362.8 (2.8) 360.0
Year ended
31 December 2022 (audited)
£m
Segment revenue Inter-segment revenue External revenue
North America 474.9 (3.0) 471.9
UK & Ireland 103.5 (0.2) 103.3
International 143.4 (3.1) 140.3
Total revenue 721.8 (6.3) 715.5
Included within the International segment is revenue generated from the UK
seals plants of £13.0 million (six months ended 30 June 2022: £13.2 million;
year ended 31 December 2022: £24.7 million).
3.3 Profit before taxation
Note Six months ended Six months ended Year ended
30 June 2023 (unaudited)
30 June 2022 (unaudited)
31 December 2022 (audited)
£m
£m
£m
North America 32.4 32.6 66.8
UK & Ireland 5.8 7.7 14.5
International 5.5 14.0 21.3
Operating segment result 43.7 54.3 102.6
Centrally incurred costs (5.0) (5.0) (8.0)
Adjusted operating profit 38.7 49.3 94.6
Adjusting items 4 (3.1) - (6.3)
Amortisation of acquired intangible assets 8 (7.8) (8.5) (17.6)
Operating profit 27.8 40.8 70.7
Net finance costs (5.1) (3.4) (9.3)
Profit before taxation 22.7 37.4 61.4
4. Adjusting items
Six months ended Six months ended Year ended
30 June 2023 (unaudited)
30 June 2022 (unaudited)
31 December 2022 (audited)
£m
£m
£m
Redundancy and restructuring costs (2.5) - (6.3)
M&A and integration costs (0.6) - -
Total Adjusting items (3.1) - (6.3)
The redundancy and restructuring costs comprise costs associated with the
departure of the previous Chief Executive Officer, costs related to a targeted
reduction in workforce in North America, and the final costs relating to the
closure of the Hamburg facility and consolidation of the three UK access
solutions businesses into a single site that commenced in the second half of
2022 and are now substantially completed.
The M&A integration costs relate to transaction fees incurred in the
period in respect of the acquisition of Lawrence Industries, which completed
subsequent to the period end.
The redundancy and restructuring costs in 2022 relate to the closure of the
Hamburg facility and the consolidation of the three UK access solutions
businesses into a single site. The costs included severance, onerous
contracts, winding up costs, and certain costs of preparing and running new
facilities that were not yet operational.
5. Taxation
The Group reported an income tax charge to the income statement of £5.6
million (six months ended 30 June 2022: £9.0 million), comprising a current
tax charge of £7.4 million (six months ended 30 June 2022: £11.0 million)
and a deferred tax credit of £1.8 million (six months ended 30 June 2022:
credit of £2.0 million).
The tax charge has been calculated using an effective tax rate of 24.7% (six
months ended 30 June 2022: 24.1%) based on tax rates substantively enacted at
30 June 2023. The adjusted effective tax rate was 24.4% (six months ended 30
June 2022: 24.4%). This is the Group's current best estimate of the effective
tax rate for the 2023 full year.
Deferred tax balances have been calculated at the substantively enacted rates
they are expected to unwind at in their respective territories.
Income tax recognised in the statement of other comprehensive income was £Nil
(six months ended 30 June 2022: £Nil).
During the period, the Group paid corporation tax of £7.3 million (six months
ended 30 June 2022: £10.0 million). The decrease is a result of a refund of
tax overpaid for the 2021 tax year, which was received in H1 2023.
Six months ended Six months ended Year ended
30 June 2023 (unaudited)
30 June 2022 (unaudited)
31 December 2022 (audited)
£m
£m
£m
Current taxation
Current tax on profit for the period (7.7) (11.2) (19.1)
Prior year adjustments 0.3 0.2 1.5
Total current taxation (7.4) (11.0) (17.6)
Deferred taxation
Origination and reversal of temporary differences 1.8 1.9 4.6
Tax rate change adjustment - - 0.1
Prior year adjustments - 0.1 (0.7)
Total deferred taxation 1.8 2.0 4.0
Income tax charge in the income statement (5.6) (9.0) (13.6)
Income tax charge in the statement of other comprehensive income - - (0.5)
Total current taxation (7.4) (11.0) (17.9)
Total deferred taxation 1.8 2.0 3.8
Total taxation (5.6) (9.0) (14.1)
6. Earnings per share
6.1 Basic and diluted earnings per share
Six months ended Six months ended Year ended
30 June 2023 (unaudited)
30 June 2022 (unaudited)
31 December 2022 (audited)
Profit for the period (£m) 17.1 28.4 47.8
Basic earnings per share 8.8p 14.6p 24.6p
Diluted earnings per share 8.7p 14.5p 24.5p
Basic earnings per share amounts are calculated by dividing net profit for the
period attributable to ordinary equity holders by the weighted average number
of ordinary shares outstanding during the period.
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 period plus the weighted average number
of ordinary shares that would be issued on the conversion of all the dilutive
potential ordinary shares into ordinary shares.
6.2 Weighted average number of shares
Six months ended Six months ended Year ended
30 June 2023 (unaudited)
30 June 2022 (unaudited)
31 December 2022 (audited)
m
m
m
Weighted average number of shares in issue 196.8 196.8 196.8
Treasury shares (0.5) (0.5) (0.5)
Employee Benefit Trust shares (2.0) (1.7) (2.1)
Weighted average number of shares - basic 194.3 194.6 194.2
Effect of dilutive potential ordinary shares (1) 1.3 0.7 1.0
Weighted average number of shares - diluted 195.6 195.3 195.2
(1 ) LTIP awards and options
7. Goodwill
30 June 2023 (unaudited) 30 June 2022 (unaudited) 31 December 2022 (audited)
£m
£m
£m
Net book amount at the beginning of the period 399.3 363.3 363.3
Exchange difference (15.5) 34.5 36.0
Net book amount at the end of the period 383.8 397.8 399.3
Goodwill is monitored principally on an operating segment basis and the net
book value of goodwill is allocated by CGU as follows:
30 June 2023 (unaudited) 30 June 2022 (unaudited) 31 December 2022
£m
£m
(audited)
£m
North America 287.9 301.9 302.7
UK & Ireland 60.2 60.2 60.2
International 35.7 35.7 36.4
Net book amount at the end of the period 383.8 397.8 399.3
Impairment assessment
The Directors have considered whether there are any impairment indicators at
the interim and have concluded that there are no indicators that would require
the Group to perform a full impairment test at 30 June 2023.
8. Intangible assets
30 June 2023 (unaudited) 30 June 2022 (unaudited) 31 December 2022
£m
£m
(audited)
£m
Net book amount at the beginning of the period 57.7 66.8 66.8
Additions 2.2 2.1 4.9
Amortisation charge for the period (9.0) (9.2) (19.6)
Impairment charge - - (0.2)
Exchange difference (2.0) 5.0 5.8
Net book amount at the end of the period 48.9 64.7 57.7
The amortisation charge for the period includes £7.8 million relating to
amortisation of acquired intangible assets (six months ended 30 June 2022:
£8.5 million; year ended 31 December 2022: £17.6 million) and £1.2 million
relating to amortisation of other intangible assets (six months ended 30 June
2022: £0.7 million; year ended 31 December 2021: £2.0 million). The
amortisation charge for the period is included in selling, general and
administrative expenses in the income statement.
9. Property, plant and equipment
30 June 2023 (unaudited) 30 June 2022 (unaudited) 31 December 2022
£m
£m
(audited)
£m
Net book amount at the beginning of the period 74.6 63.5 63.5
Additions 5.1 9.0 19.2
Disposals (0.2) - (0.3)
Depreciation charge for the period (6.1) (5.9) (12.4)
Impairment charge for the period - - (0.7)
Exchange difference (2.3) 4.7 5.3
Net book amount at the end of the period 71.1 71.3 74.6
The depreciation charge for the period is included in selling, general and
administrative expenses in the income statement.
10. Borrowings
30 June 2023 (unaudited) 30 June 2022 (unaudited) 31 December 2022
£m
£m
(audited)
£m
Current (27.2) (23.4) (15.9)
Non-current (162.0) (188.4) (172.5)
(189.2) (211.8) (188.4)
Current borrowings include the bank overdrafts. See reconciliation in note 14.
Movements in borrowings (excluding lease liabilities) are analysed as follows:
30 June 2023 (unaudited) 30 June 2022 (unaudited) 31 December 2022 (audited)
£m
£m
£m
Balance at the beginning of the period (188.4) (149.1) (149.1)
Refinancing costs paid 0.2 0.2 2.1
Drawdown of borrowings (22.5) (82.3) (122.3)
Repayments of borrowings 26.6 56.3 113.0
Amortisation of borrowing costs (0.3) (0.2) (0.6)
Net interest accrued - - (0.4)
Overdraft facility (11.3) (23.4) (16.4)
Exchange difference 6.5 (13.3) (14.7)
Balance at the end of the period (189.2) (211.8) (188.4)
There have been no changes to the multi-currency 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. The
Group has significant headroom in both the leverage and interest cover
covenants.
The Group has the following undrawn committed multi-currency revolving credit
facility:
30 June 2023 (unaudited) 30 June 2022 (unaudited) 31 December 2022 (audited)
£m
£m
£m
Floating rate
Expiry beyond 12 months (132.3) (140.5) (135.1)
The Group also has access to an uncommitted £100.0 million accordion facility
and at 30 June 2023 held net cash and cash equivalents of £50.8 million (30
June 2022: £63.3 million; 31 December 2022: £58.2 million).
11. Share capital
Number of shares Ordinary shares
'000
£m
At 30 June 2022, 31 December 2022 and 30 June 2023 196.8 9.8
12. Dividends
30 June 2023 (unaudited) 30 June 2022 (unaudited) 31 December 2022 (audited)
£m
£m
£m
Amounts recognised as distributions to owners in the period:
Final dividend. For the year ended 31 December 2022 9.5p per share (2021: 18.5 17.2 17.2
8.9p)
Interim dividend. For the year ended 31 December 2022 of 4.2p (2021: 4.0p) - - 8.2
Total amounts recognised as distributions to owners in the period 18.5 17.2 25.4
Amounts not recognised in the financial statements:
Final dividend proposed. For the year ended 31 December 2022 9.5p per share - - 18.4
(2021: 8.9p)
Interim dividend proposed. For the year ending 31 December 2023 4.2p per share 8.2 8.1 -
(2022: 4.2p)
13. Financial risk management and financial instruments
13.1 Financial risk factors and fair value estimation
The Group is exposed to risks arising from the international nature of its
operations and the financial instruments which fund them, in particular to
foreign currency, interest rate and liquidity risks. Full details of the
Group's policies for managing these risks are disclosed in the Group's annual
financial statements for the year ended 31 December 2022.
Since the date of that report there have been no significant changes in:
· the nature of the financial risks to which the Group is
exposed;
· the Group's contractual cash outflows and the committed
facilities available to fund them, or
· difference between book value and fair value of any financial
instruments.
There have been no new financial instruments entered into in the current
period, with the exception of foreign exchange contracts.
Derivatives shown at fair value in the Group's balance sheet therefore
comprise level 2 cross-currency interest rate swaps fair valued using forward
interest rates extracted from observable yield curves, and forward exchange
contracts fair valued by marking-to-market contracts at the period end rate.
The effects of discounting are generally insignificant for level 2
derivatives.
During the period the Group held no level 1 financial instruments, there were
no transfers between levels and no changes were made to valuation techniques.
The Group's other financial instruments are measured at amortised cost.
13.2 Level 2 and level 3 fair values
The Group has the following financial assets and liabilities categorised at
levels 2 and 3:
30 June 2023 (unaudited) 30 June 2022 (unaudited) 31 December 2022 (audited)
£m
£m
£m
Level 2
Derivative financial assets - 0.3 0.2
Derivative financial liabilities (0.5) - (0.2)
Level 3
Financial assets at fair value through profit or loss 1.2 1.2 1.2
13.3 Fair value of financial assets and liabilities measured at amortised cost
The fair values of borrowings are as follows:
30 June 2023 (unaudited) 30 June 2022 (unaudited) 31 December 2022
£m
£m
(audited)
£m
Current (27.2) (6.4) (15.9)
Non-current (163.1) (187.7) (173.6)
(190.3) (194.1) (189.5)
The fair values of trade and other receivables, cash and cash equivalents, and
trade and other payables approximate their carrying amounts.
14. 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 Six months ended Six months ended Year ended
30 June 2023 (unaudited)
30 June 2022 (unaudited)
31 December 2022 (audited)
£m
£m
£m
Net finance costs 5.1 3.4 9.3
Depreciation of PPE 9 6.1 5.9 12.4
Depreciation of right of use assets 3.9 3.7 7.1
Amortisation of intangible assets 8 9.0 9.2 19.6
Impairment of intangible assets 8 - - 0.2
Impairment of PPE 9 - - 0.7
Impairment of ROU - - 0.2
Loss on disposal of PPE 0.1 - 0.1
Pension service costs and administration costs 0.1 0.1 0.3
Non-cash provision movements (0.7) (0.3) 2.1
Share-based payments 0.5 0.7 1.0
24.1 22.7 53.0
14.1 Reconciliation of cash and cash equivalents and bank overdrafts at the
period end
Six months ended Six months ended Year ended
30 June 2022 (unaudited)
30 June 2022 (unaudited)
31 December 2022 (audited)
£m
£m
£m
Cash at bank and on deposit 78.6 86.7 74.6
Bank overdrafts (27.8) (23.4) (16.4)
Cash and cash equivalents and bank overdrafts at the end of the period 50.8 63.3 58.2
15. Related party transactions
There were no material related party transactions requiring disclosure, other
than compensation of key management personnel which will be disclosed in the
Group's Annual Report and Accounts for the year ending 31 December 2023.
16. Events after the balance sheet date
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 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 $57.0 million on a debt and
cash free basis. Further contingent consideration of up to $12.5 million will
be payable based on achievement of stretching growth targets in respect of the
financial results for the two years up to and including 31 December 2024.
Consideration was funded from existing debt facilities. For the financial year
ended 31 December 2022, Lawrence reported unaudited revenue of approximately
$20.0 million and profit before tax of approximately $7.5 million, with gross
assets as at 31 December 2022 of $3.4 million. The acquisition will report as
part of Tyman's North America division.
Due to the short time period between the acquisition and the date of these
interim financial statements, acquisition accounting has not yet been
completed. Business combination disclosures will be provided in the financial
statements for the year ending 31 December 2023.
Statement of Directors' responsibilities
Each of the Directors of Tyman plc confirms, to the best of his or her
knowledge, that:
· the Interim Financial Statements have been prepared in
accordance with IAS 34 'Interim Financial Reporting' as adopted by the UK and
give a true and fair view of the assets, liabilities, financial position and
profit and loss of Tyman plc;
· the interim report includes a fair review of the information
required by:
· DTR 4.2.7R of the Disclosure Guidance and Transparency Rules
sourcebook of the United Kingdom's Financial Conduct Authority, being an
indication of important events that have occurred during the first six months
of the financial year and their impact on the interim financial statements;
and a description of the principal risks and uncertainties for the remaining
six months of the year; and
· DTR 4.2.8R of the Disclosure Guidance and Transparency Rules
sourcebook of the United Kingdom's Financial Conduct Authority, being related
party transactions that have taken place in the first six months of the
current financial year and that have materially affected the financial
position or performance of the Group during that period; and any changes in
the related party transactions described in the last annual report that could
do so.
The Directors of Tyman plc are listed in the Group's Annual Report and
Accounts for the year ending 31 December 2022.
A list of the current Directors is maintained at the Tyman website:
www.tymanplc.com (http://www.tymanplc.com) .
By order of the Board
Jason
Ashton
Interim Chief Executive
Officer
24 July 2023
INDEPENDENT REVIEW REPORT TO TYMAN PLC
Conclusion
We have been engaged by Tyman plc ("the company") to review the condensed set
of financial statements for Tyman plc and its subsidiaries (the "Group") in
the half-yearly financial report for the six months ended 30 June 2023 which
comprises the condensed consolidated balance sheet as at 30 June 2023 and the
condensed consolidated income statement, condensed consolidated statement of
comprehensive income, condensed consolidated statement of changes in equity
and condensed consolidated cashflow statement for the six-months period then
ended and the related notes 1 to 16.
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half-yearly
financial report for the six months ended 30 June 2023 is not prepared, in all
material respects, in accordance with United Kingdom adopted International
Accounting Standard 34 and the Disclosure Guidance and Transparency Rules of
the United Kingdom's Financial Conduct Authority.
Basis for Conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410 "Review of Interim Financial Information Performed by
the Independent Auditor of the Entity" issued by the Financial Reporting
Council for use in the United Kingdom (ISRE (UK) 2410). A review of interim
financial information consists of making inquiries, primarily of persons
responsible for financial and accounting matters, and applying analytical and
other review procedures. A review is substantially less in scope than an audit
conducted in accordance with International Standards on Auditing (UK) and
consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly,
we do not express an audit opinion.
As disclosed in note 2, the annual financial statements of the Group are
prepared in accordance with United Kingdom adopted international accounting
standards. The condensed set of financial statements included in this
half-yearly financial report has been prepared in accordance with United
Kingdom adopted International Accounting Standard 34, "Interim Financial
Reporting".
Conclusion Relating to Going Concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for Conclusion section of this report,
nothing has come to our attention to suggest that the directors have
inappropriately adopted the going concern basis of accounting or that the
directors have identified material uncertainties relating to going concern
that are not appropriately disclosed.
This Conclusion is based on the review procedures performed in accordance with
ISRE (UK) 2410; however future events or conditions may cause the entity to
cease to continue as a going concern.
Responsibilities of the directors
The directors are responsible for preparing the half-yearly financial report
in accordance with the Disclosure Guidance and Transparency Rules of the
United Kingdom's Financial Conduct Authority.
In preparing the half-yearly financial report, the directors are responsible
for assessing the Group's ability to continue as a going concern, disclosing
as applicable, matters related to going concern and using the going concern
basis of accounting unless the directors either intend to liquidate the
company or to cease operations, or have no realistic alternative but to do so.
Auditor's Responsibilities for the review of the financial information
In reviewing the half-yearly financial report, we are responsible for
expressing to the company a conclusion on the condensed set of financial
statements in the half-yearly financial report. Our Conclusion, including our
Conclusion Relating to Going Concern, are based on procedures that are less
extensive than audit procedures, as described in the Basis for Conclusion
paragraph of this report.
Use of our report
This report is made solely to the company in accordance with ISRE (UK) 2410.
Our work has been undertaken so that we might state to the company those
matters we are required to state to it in an independent review report and for
no other purpose. To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the company, for our review work,
for this report, or for the conclusions we have formed.
Deloitte LLP
Statutory Auditor
London, UK
24 July 2023
Alternative Performance Measures
The Group uses adjusted figures as key performance measures in addition to
those reported under IFRS, as the Group believes these measures enable
management and stakeholders to assess the 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 those used by management internally in business
planning, performance analysis, and reporting to the Board and ExCo. 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, adjusted operating profit, adjusted profit before tax, adjusted
operating cash flow, and adjusted net debt. Explanations of how APMs are
calculated and how they are reconciled to the most relevant 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.
Like-for-like or LFL revenue and adjusted operating profit
Definition
The comparison of revenue or 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,
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, excluding the impact of M&A and
currency movements.
Reconciliation/calculation
Six months ended Six months ended
30 June 2023 (unaudited)
30 June 2022 (unaudited)
£m
£m(1)
Reported revenue 329.9 360.0
Effect of exchange rates - 12.2
Like-for-like revenue 329.9 372.2
Adjusted operating profit(2) 38.7 49.3
Effect of exchange rates - 1.7
Like-for-like adjusted operating profit 38.7 51.0
(1 ) As adjusted to restate at current average year exchange
rate.
(2 ) Refer to the consolidated income statement for
reconciliation of adjusted operating profit.
( )
Adjusted operating profit and adjusted operating margin
Definition
Operating profit before amortisation of acquired intangible assets, impairment
of goodwill and acquired intangible assets, and adjusting items.
Adjusted operating margin is calculated as adjusted operating profit divided
by revenue, expressed as a percentage.
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 redundancy and restructuring costs,
transaction costs and integration costs associated with merger and
acquisition activity, impairment charges related to material intangible asset
upgrades, as well as credits relating to profit on disposal of businesses, and
property provision releases. These items are not considered to be a part of
the ordinary course of the Group's business.
Amortisation of acquired intangible assets is excluded from this measure as
this is a significant non-cash fixed charge that is not affected by the
trading performance of the business.
Impairment of acquired intangible assets and goodwill is excluded, as this can
be a significant non-cash charge.
Reconciliation/calculation
Adjusted operating profit is reconciled on the face of the income statement on
page 20.
Six months ended Six months
30 June 2023 (unaudited)
£m ended
30 June 2022 (unaudited)
£m
Adjusted operating profit 38.7 49.3
Revenue 329.9 360.0
Adjusted operating margin (%) 11.7% 13.7%
Adjusted profit before and after tax
Definition
Profit before amortisation of acquired intangible assets, deferred tax on
amortisation of acquired intangible assets, impairment of acquired intangible
assets, impairment of goodwill, adjusting items, unwinding of discount on
provisions, gains and losses on the fair value of derivative financial
instruments, amortisation of borrowing costs, accelerated amortisation of
borrowing costs and the associated tax effect.
Purpose
This measure is used to evaluate the profit generated by the Group through
trading activities. The above items are excluded as they are of a non-trading
nature. This metric is used in assessing the Directors' remuneration.
Reconciliation/calculation
Six months ended Six months ended
30 June 2023 (unaudited)
30 June 2022 (unaudited)
£m
£m
Profit before taxation 22.7 37.4
Adjusting items 3.1 -
Loss/(gain) on revaluation of fair value hedge 0.3 (0.7)
Amortisation of borrowing costs 0.3 0.2
Amortisation of acquired intangible assets 7.8 8.5
Adjusted profit before taxation 34.2 45.4
Income tax charge (5.6) (9.0)
Add back: Adjusted tax effect(1) (2.8) (2.1)
Adjusted profit after taxation 25.8 34.3
(1 ) Tax effect of adjusted items, amortisation of borrowing
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 earnings from trading
activities per share for the Group's shareholders. This metric is used in
assessing the Directors' remuneration.
Reconciliation/calculation
Six months ended Six months ended
30 June 2023 (unaudited)
30 June 2022 (unaudited)
Adjusted profit after tax 25.8 34.3
Weighted average number of shares- basic 194.6 194.6
Weighted average number of shares- diluted 195.6 195.3
Basic adjusted earnings per share 13.3p 17.6p
Diluted adjusted earnings per share 13.2p 17.6p
Covenant net interest
Definition
Covenant net interest is LTM interest payable on bank loans, private placement
notes and overdrafts and interest income from short-term bank deposits.
Purpose
This measure is used in the covenant metric of interest cover.
Reconciliation/calculation
Six months ended Six months ended
30 June 2023 (unaudited)
30 June 2022 (unaudited)
£m
£m
Interest from loans 4.5 2.9
Interest income from short term deposits (1.0) (0.2)
Adjustment to align to LTM covenant net interest 3.1 2.7
Covenant net interest 6.6 5.4
Covenant EBITDA and covenant adjusted EBITDA
Definition
Covenant EBITDA is LTM 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 is LTM 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
Six months ended Six months ended
30 June 2023 (unaudited) 30 June 2022 (unaudited)
£m
£m
Adjusted operating profit 38.7 49.3
Depreciation of property, plant and equipment 6.1 5.9
Amortisation of computer software 1.2 0.7
Interest payable on lease liabilities (1.3) (1.2)
Share-based payments 0.5 0.7
Adjustment to align to LTM covenant EBITDA 51.4 49.6
Covenant EBITDA and covenant adjusted EBITDA 96.6 105.0
Interest cover
Definition
Covenant adjusted 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
Six months ended Six months ended
30 June 2023 (unaudited) 30 June 2022 (unaudited)
£m
£m
Covenant adjusted EBITDA 96.6 105.0
Covenant net interest 6.6 5.4
Interest cover (x) 14.6x 19.3x
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 capitalised borrowing costs for which cash outflow has already occurred.
Reconciliation/calculation
30 June 2023 (unaudited) 30 June 2022 (unaudited)
£m
£m
Borrowings (189.2) (211.8)
Lease liabilities (57.2) (56.9)
Gross debt (246.4) (268.7)
Capitalised borrowing costs (2.1) (0.6)
Adjusted gross debt (248.5) (269.3)
Net debt
Definition
Long and short term borrowings, including lease liabilities and bank
overdraft, net of cash and cash equivalents.
Purpose
This gives a measure of the net amount of debt repayable by the company.
Reconciliation/calculation
30 June 2023 (unaudited) 30 June 2022 (unaudited)
£m
£m
Gross debt (246.4) (268.7)
Cash and cash equivalents 78.6 86.7
Net debt (167.8) (182.0)
Adjusted net debt and covenant adjusted net debt
Definition
Borrowings, plus capitalised borrowing costs and lease liabilities, net of
cash and cash equivalents, adjusted to reflect the weighted average exchange
rate as required per the covenant agreement.
Purpose
This gives a measure of the gross amount owed to lenders, without the effect
of capitalised borrowing costs.
Reconciliation/calculation
30 June 2023 (unaudited) 30 June 2022 (unaudited)
£m
£m
Net debt (167.8) (182.0)
Lease liabilities 57.2 56.9
Capitalised borrowing costs (2.1) (0.6)
Adjusted net debt (112.7) (125.7)
Adjustment to weighted average exchange rate (2.3) 8.2
Covenant adjusted net debt (115.0) (117.5)
Leverage
Definition
Adjusted net debt translated at the average exchange rate for the year,
divided by covenant adjusted EBITDA as defined in the lending 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
30 June 2023 (unaudited) 30 June 2022 (unaudited)
£m
£m
Covenant adjusted net debt (at average exchange rate) (115.0) (117.5)
Covenant adjusted EBITDA 96.6 105.0
Leverage (x) 1.2x 1.1x
Adjusted operating profit (LTM)
Definition
Adjusted operating profit aligned to the last twelve months.
Purpose
This measure is used in the ROCE calculation.
Reconciliation/calculation
Six months ended Six months ended
30 June 2023 (unaudited)
30 June 2022 (unaudited)
£m
£m
Adjusted operating profit 38.7 49.3
Adjustment to LTM 45.2 42.2
Adjusted operating profit (LTM) 83.9 91.5
Return on Capital Employed (ROCE)
Definition
LTM 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. This metric is used in assessing the
Directors' remuneration.
Reconciliation/calculation
Six months ended Six months ended
30 June 2023 (unaudited)
30 June 2022 (unaudited)
£m
£m
Adjusted operating profit (LTM) 83.9 91.5
Average capital employed 729.7 656.2
Return on capital employed (%) 11.5% 13.9%
Average capital employed
Inventories 131.8 169.9
Trade and other receivables 99.3 107.7
Intangible assets 48.9 64.7
Property, plant & equipment 71.1 71.3
Right-of-use asset 53.4 53.2
Goodwill 383.8 397.8
Deferred tax asset 1.5 4.4
Trade and other payables (87.5) (130.3)
Tax liabilities (1.7) (6.9)
Provisions - current (1.0) (1.2)
Provisions non - current (3.5) (4.8)
Deferred tax liabilities (4.7) (11.1)
Financial assets at FV through P&L 1.2 1.2
Total capital employed 692.6 715.9
Adjustment to 13-month average 37.1 (59.7)
Average capital employed 729.7 656.2
Adjusted operating cash flow and adjusted operating cash conversion
Definition
Adjusted operating cash flow
Net cash generated from operations before income tax paid, adjusting items
cash settled in the year, 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 the business
operations in order to pay down debt, return cash to shareholders and invest
in acquisitions.
Reconciliation/calculation
A reconciliation is included in the financial review on page 15.
Free cash flow
Definition
Adjusted operating cash flow after deducting pension contributions, income tax
paid, net interest paid and adjusted cash costs settled in the year.
Purpose
This measure is used to evaluate the cash flow generated by the business
operations after expenditure incurred on maintaining capital assets.
Reconciliation/calculation
See page 15 for reconciliation between adjusted operating cash flow and free
cash flow.
Adjusted selling, general and administrative expenses
Definition
Selling, general and administrative expenses before adjusting items,
amortisation of acquired intangible assets, impairment of acquired intangible
assets and impairment of acquired goodwill.
Purpose
This measure is used to evaluate the selling, general and administrative
expenses of the business excluding the effect of adjusting items and
amortisation of acquired intangible assets, which is a significant charge that
is not directly affected by trading.
Reconciliation/calculation
Six months ended Six months ended
30 June 2023 (unaudited)
30 June 2022 (unaudited)
£m
£m
Selling, general and administrative expenses (79.9) (75.6)
Adjusting items 3.1 -
Amortisation of acquired intangible assets 7.8 8.5
Adjusted selling, general and administrative expenses (69.0) (67.1)
Adjusted tax charge
Definition
Tax charge adjusted for the tax effect of adjusted items, amortisation of
borrowings costs, amortisation of acquired intangible assets, gain or loss on
revaluation of fair value hedge and unwinding of discount on provisions.
Purpose
This measure is used to evaluate the tax charge arising on the adjusted profit
of the Group.
Reconciliation/calculation
Six months ended Six months ended
30 June 2023 (unaudited)
30 June 2022 (unaudited)
£m
£m
Tax charge (5.6) (9.0)
Tax effect of adjusting items (2.8) (2.1)
Adjusted tax charge (8.4) (11.1)
Adjusted effective tax rate
Definition
Adjusted tax charge divided by adjusted profit before tax.
Purpose
This measure is used to evaluate the tax charge relative to profit arising on
the adjusted trading activity of the Group.
Reconciliation/calculation
Six months ended Six months ended
30 June 2023 (unaudited)
30 June 2022 (unaudited)
£m
£m
Adjusted tax charge (8.4) (11.1)
Adjusted profit before tax 34.2 45.4
Adjusted effective tax rate (%) 24.4% 24.4%
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
EBITDA Earnings before Interest, Taxation, Depreciation and Amortisation
EBT Employee Benefit Trust
EPD Environmental Product Declaration
EPS Earnings per share
ERP Enterprise Resource Planning
FRC Financial Reporting Council
GHG Greenhouse gases
GCC Gulf Cooperation Council
IFRS International Financial Reporting Standards
LFL Like-for-like
LIRA Leading Indicator of Replacement Activity
LTIFR Lost time incident frequency rate
LTM Last twelve months
LTIP Long term incentive plan
M&A Mergers and acquisitions
NAHB The National Association of Home Builders
PMI Purchasing Managers' Index
PPE Property, plant and equipment
RCF Revolving credit facility
RMI Renovation, maintenance and improvement
ROCE Return on capital employed
RoU Right of use
Tyman Any references to Tyman, the Group, or the Company refer to Tyman plc and its
subsidiaries
USPP US private placement
EXCHANGE RATES
The following foreign exchange rates have been used in the financial
information to translate amounts into Sterling:
Closing Rates: H1 2023 H1 2022 FY 2022
US Dollars 1.2663 1.2147 1.2097
Euros 1.1633 1.1624 1.1298
Australian Dollars 1.9070 1.7625 1.7743
Canadian Dollars 1.6777 1.5660 1.6386
Brazilian Real 6.1165 6.3258 6.3937
Average Rates: H1 2023 H1 2022 FY 2022
US Dollars 1.2334 1.2992 1.2370
Euros 1.1412 1.1877 1.1732
Australian Dollars 1.8256 1.8059 1.7795
Canadian Dollars 1.6621 1.6516 1.6078
Brazilian Real 6.2537 6.5993 6.3857
ROUNDINGS
Percentage numbers have been calculated using unrounded figures, which may
lead to small differences in some figures and percentages quoted.
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. END IR DZLFLXDLXBBZRecent news on Tyman
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