TIDMTIFS
RNS Number : 9275H
TI Fluid Systems PLC
09 August 2021
9 August 2021
TI Fluid Systems plc
Results for the six months ended 30 June 2021
TI Fluid Systems plc (TIFS), a leading global manufacturer of
automotive fluid storage, carrying and delivery systems and thermal
management products and systems for light vehicles announces its
results for the six-month period ended 30 June 2021.
Management basis* As reported
EURm H1 2021 H1 2020 Change H1 2021 H1 2020 Change
----------- ----------- --------- ----------- ---------
Revenue 1,522.5 1,183.1 339.4 1,522.5 1,183.1 339.4
% Change at constant currency 32.7% 28.7%
Adjusted EBIT / Operating
Profit or (Loss) 127.8 27.6 100.2 76.5 (311.9) 388.4
Margin 8.4% 2.3% 6.1% 5.0% (26.4)% 31.4%
Adjusted Net Income / Profit
or (Loss) for the period 45.4 (39.7) 85.1 11.1 (320.8) 331.9
Earnings per share 8.75 (7.61) 16.36 1.96 (61.66) 63.62
Adjusted Free Cash Flow** 46.3 34.9 11.4
Dividend (EUR cents) 1.93 - 1.93 1.93 - 1.93
*Management basis metrics are Non - IFRS measures as defined on
pages 19 to 20
** No equivalent GAAP measure - see table 8a for reconciliation
to statutory cash flow items
Group Highlights:
-- Successfully demonstrating the Group's continued resilient
performance within the ongoing light vehicle production recovery
and volatile production schedules impacted by supply chain
disruption:
-- Revenue of EUR1,522.5 million outperformed global light
vehicle production by 3.5% at constant currency and grew 28.7% at
actual exchange rates
-- Robust Adjusted EBIT margin of 8.4%; Operating Profit is
returning to normalised levels due to recovering revenues and the
non-repeat of the prior period exceptional impairment charge
-- Significant Adjusted Free Cash Flow generation of EUR46.3
million and net cash generated from operating activities of EUR98.8
million
-- Strong balance sheet and liquidity with cash position of
EUR469.4 million at 30 June 2021
-- Issue of EUR600.0 million Bond repayable in 2029, with the
proceeds used to reduce the term loan facilities. Term loans
extended from 2024 to 2026
-- The fixed cost reduction programme which commenced last year continues to be executed
-- Continued execution of our organic growth strategy and
strategic focus on battery electric vehicles ("BEVs") and hybrid
electric vehicles ("HEVs")
-- Approximately 50% of first half 2021 total new business wins
were on HEV and BEV platforms
-- The Group estimates to have its product content on more than
half of 94 key BEVs recently identified to come to market in Europe
and North America between 2020 and 2028. Approximately 40% of these
BEVs also have TIFS thermal product content*
-- Awarded a high volume pressure resistant fuel tank programme
with a Japanese supplier in Asia Pacific
-- Successfully launching HEV and BEV vehicle programmes with
European, North American and Asian OEMS across all major light
vehicle production regions
*Company estimates / JP Morgan Europe Equity Research: JP Morgan
Electric Cars - The EV Revolution is underway 6 April 2021
-- 2021 interim dividend of 1.93 euro cents per share, which
could represent a full year pay-out in line with our 30% of
Adjusted Net Income dividend policy (and dividend cover of 4.5x
Adjusted Basic EPS)
-- As discussed in our 2020 Annual Report, we have begun a
variety of initiatives to progress and better communicate our
various sustainability activities, including increasing focus and
accountability at all levels of the organization with respect to
Environmental, Social and Governance ('ESG') matters. To that end,
the Board formed our ESG Steering Committee in March 2021 to
provide oversight and guidance on our ESG strategy, policies, and
processes. Now, the company is pleased to announce its updated goal
to reduce its greenhouse gas (GHG) emissions by 37.5% by 2039
compared to 2019. This new target is consistent with the Paris
Agreement and is designed to meet the 'Well Below the 2 Degree'
scenario and supports the UN Sustainable Development Goal 13
Climate Action.
William L. Kozyra, Chief Executive Officer and President,
commented:
"The first six months of 2021 saw the continued recovery of
global light vehicle production volumes from the impacts of the
2020 COVID-19 pandemic. We continued to deliver strong revenue
outperformance, robust profit and significant positive free cash
flow generation despite headwinds from volatile production
schedules caused by supply side shortages of microchips for our OEM
customers. Our balance sheet, liquidity and cash positions remain
strong. In addition to having received the London Stock Exchange
Green Economy Mark which recognises the Group's strong revenue
generation from the supply of products that contribute to the green
economy by helping make vehicles cleaner, we are also pleased to
announce our updated goal to reduce our greenhouse gas (GHG)
emissions significantly by 2039 which represents our ongoing effort
to do our part to make the world a better place to live. We
continue to make steady progress in our growth strategy for fluid
systems and continue to win significant HEV and BEV programmes with
multiple customers across all major production regions. We are well
positioned on BEVs launching in the market today and over 2021-2028
we have a leading share of new thermal product content on key BEV
programmes coming to market. We continue to win new business awards
with our advanced pressure resistant plastic fuel tank technology
and continue with new collaboration projects with key customers,
including in China, to reduce weight, and maximise efficiency in
the vehicle through integrated thermal products and systems. The
Group remains well positioned for the automotive megatrends of
reduced emissions and electrification.
The Group continued to demonstrate its ability to outperform
global light vehicle production in H1 2021. We remain confident in
our strategy, business model resilience, operating flexibility and
strength in our ability to generate positive profit and positive
free cash flow in H1 2021."
Outlook
The Group had strong performance through the first half of 2021.
While annual global light vehicle production volumes are forecast
to return to pre-Covid levels by the end of 2022, IHS-Markit's
current 2021 global light vehicle production volume forecasts
(approximately 82 million units) may be optimistic given ongoing
microchip and other supply related constraints impacting specific
OEM plant production scheduling. However, despite this potential
volume softness for the second half of 2021, our annual outlook
guidance issued on 16 March 2021 remains unchanged. We remain
confident that our full year 2021 revenue will outperform global
light vehicle production volumes. We also continue to target a high
single digit adjusted EBIT margin for 2021 as well as Adjusted Free
Cash Flow that will support our dividend policy targeting a pay-out
of approximately 30% of Adjusted Net Income.
Results presentation
TI Fluid Systems plc will host a teleconference for analysts and
investors at 9.00 am UK time on 9 August 2021.
Analysts wishing to join may listen to the presentation live by
using the details below.
Conference Call Dial-In Details:
UK: +44 (0) 330 336 9105
Conference Code: 3223555
The presentation will be available at 7:00 am UK time from
www.tifluidsystems.com. An audio recording will be available on our
website in due course.
Enquiries
TI Fluid Systems plc
David J Royce
Investor Relations
Tel: +1 (248) 376 8624
FTI Consulting
Richard Mountain
Nick Hasell
Tel: +44 (0)20 3727 1340
Chief Executive Officer's review
Global light vehicle production volumes continued to recover and
we are able to report strong performance for the first half of 2021
despite the ongoing impact of microchip supply shortages on our OEM
customers production schedules. Management continues to take
meaningful actions to protect the business and make the Group even
stronger and more competitive in the future.
Half year 2021 performance
Global light vehicle production volume increased by 29.2% in the
first six months of 2021, compared to the first half of 2020. We
delivered revenue of EUR1,522.5 million (32.7% at constant
currency), or 3.5% above global light vehicle production. If we
include the impact of currency translation, revenue increased by
28.7%.
We also continued to generate strong Adjusted EBITDA of EUR198.5
million (13.0% margin) and Adjusted EBIT of EUR127.8 million (8.4%
margin). Adjusted Net Income for the period was EUR45.4 million (H1
2020: EUR(39.7) million loss) and positive Adjusted Free Cash Flow
amounted to EUR46.3 million (H1 2020: EUR34.9 million). The
increase in reported Net Profit for the period was due to the
better trading conditions and also the exceptional impairment
charge of EUR304.6 million in H1 2020 which was not repeated in H1
2021.
Our ability to maintain our strong revenue outperformance and
financial performance with robust margins and excellent positive
cash flow given the ongoing recovery and production schedule
volatility demonstrates the Group's consistent resilience and the
strength of our strategy, business model and experienced management
team and focus.
Strategy update
In 2021, we expect to continue our success as a leading global
manufacturer of highly engineered fluid storage, carrying and
delivery systems for light vehicles through the execution of our
strategy. Our financial performance benefits from our commitment,
focus and dedication to designing and producing products that help
make vehicles greener, the environment cleaner and the world a
better place to live. This is core to our business model and
strategy. We also continue to benefit from operational flexibility
and our balanced and diversified customer, platform and regional
profile. We remain confident in our focus on electrification and
our HEV and BEV strategy which is progressing very well and is
clearly evidenced by our ability to transition strongly in new
business wins on HEV and BEV and to have product content on
approximately half of the 94 key BEV platforms identified to come
to market in Europe and North America between 2021 and 2028. This
further demonstrates our successful transition to an electrified
world by validating the Group having thermal product content on
approximately 40% of these 94 BEVs. We also continue to win new
business awards for our advanced pressure resistant plastic fuel
tank technology on hybrid electric vehicles. We are proud of this
continuing accomplishment and trajectory.
We continue to build on and invest in our leadership in
technology, global manufacturing and competitive cost structure to
support long-term revenue growth and outperformance, profitability
and positive cash flow generation.
Over the longer term, we expect to benefit not only as global
light vehicle production returns to growth, but also from increased
demand for our advanced fluid handling products and systems and
higher content opportunities driven by the underlying megatrends of
emission reduction, increased fuel efficiency and electrification.
These megatrends have been and will continue to be front and centre
for our sector.
We will continue to prioritise variable and fixed cost
management and capital allocation to deliver sustainable growth and
continued strong financial performance.
We believe the Group's strong and diversified customer
relationships, extensive global footprint and long trusted
reputation as a leading fluid systems provider has contributed to
several thermal BEV collaboration activities and agreements, HEV
and BEV production contracts and will support continued growth in
these markets for many years to come. We continue to successfully
invest in the transition to electrification.
I remain excited about the path we are on and the Group's
future.
Updated Greenhouse Gas (GHG) Reduction Target
As discussed in our 2020 Annual Report, we have begun a variety
of initiatives to progress and better communicate our various
sustainability activities, including increased focus and
accountability at all levels of the organisation with respect to
Environmental, Social, and Governance ('ESG') matters. To that end,
the Board formed our ESG Steering Committee in March 2021 to
provide oversight and guidance on our ESG strategy, policies, and
processes. Now, we are pleased to announce our updated goal to
reduce our GHG emissions by 37.5% compared to 2019 by 2039. This
updated GHG reduction target is based on an absolute contraction
approach, meaning that we will use the actual mass of emissions
from our baseline year of 2019 and strive to reduce that mass to
the target level by 2039. In 2019, the Group emitted approximately
314k tonnes of CO2(e) Scope 1 and 2 combined emissions. As such, we
will seek to achieve a maximum of 196k tonnes of total CO2(e)
emissions by 2039. Our updated target is consistent with the Paris
Agreement and is designed to meet the 'Well Below 2 Degree'
scenario and supports the UN Sustainable Development Goal 13
Climate Action. Consistent with, and as an extension of, our
updated GHG reduction target, we ultimately aspire to become carbon
neutral.
Our people
The Group relies on the skills and expertise of its excellent
employees worldwide, and the H1 2021 results would not have been
achieved without the commitment and dedication of our entire global
team. We are proud to have a strong senior management team whose
deep experience, leadership and determination remains critical
during these continued uncertain times. I would like to recognise,
sincerely thank and continue to hope all can remain healthy as
things continue to improve moving forward.
Our experienced management team has a track record of execution
and delivery and will continue to manage through the near term
challenges in 2021.
Bill Kozyra
Chief Executive Officer and President
6 August 2021
Chief Financial Officer's Report
In the first half of 2021, we have continued to build on the
momentum created by the recovery of global volume production from
the unprecedented rapid decline in global light vehicle production
volumes experienced in H1 2020 influenced by the COVID-19 pandemic.
With our robust revenue growth outperforming global light vehicle
production, we delivered margin expansion and continue to
demonstrate strong cash generation. In April 2021, we refinanced
and extended the maturities of our borrowing facilities to underpin
our strong liquidity position and lower the cost of debt.
Table 1: Key Performance measures EURm
Management basis* As reported
H1 2021 H1 2020 Change H1 2021 H1 2020 Change
----------- ----------- --------- ----------- ---------
Revenue 1,522.5 1,183.1 339.4 1,522.5 1,183.1 339.4
% Change at constant currency 32.7% 28.7%
Adjusted EBITDA 198.5 109.7 88.8
Margin 13.0% 9.3% 3.7%
Adjusted EBIT / Operating
Profit or (Loss) 127.8 27.6 100.2 76.5 (311.9) 388.4
Margin 8.4% 2.3% 6.1% 5.0% (26.4%) 31.4%
Adjusted Net Income / Profit
or (Loss) for the period 45.4 (39.7) 85.1 11.1 (320.8) 331.9
Earnings per share (EUR
cents) 8.75 (7.61) 16.36 1.96 (61.66) 63.62
Adjusted Free Cash Flow
** 46.3 34.9 11.4
Dividend (EUR cents) 1.93 - 1.93 1.93 - 1.93
*Management basis metrics are Non - IFRS measures as defined on
pages 19 to 20
**No equivalent GAAP measure - see table 8a for reconciliation
to statutory cash flow items
Global light vehicle production remains the principal driver of
the Group's performance. In the first half of 2021, global light
vehicle production increased significantly to 39.4 million vehicles
or by 29.2% compared to the prior period as the world continues to
emerge from the adverse COVID-19 market impacts.
Revenue increased by EUR374.9 million, or 32.7% period over
period on a constant currency basis, to EUR1,522.5 million,
outperforming global light vehicle production by 3.5% in the
period. If we include the negative currency impact of EUR35.6
million, reported revenue increased by EUR339.4 million, or 28.7%
period over period.
We generated Adjusted EBIT of EUR127.8 million with a margin of
8.4%, an increase of 610bps from the prior period Adjusted EBIT
margin. The increase in margin is directly related to the
conversion of higher sales due to the ongoing recovery from the
impacts of COVID-19 in the prior period. On an 'as reported' basis,
we achieved an operating profit of EUR76.5 million compared to an
operating loss of EUR311.9 million in the prior period mainly due
to the conversion of higher sales and the exceptional impairment
charge of EUR304.6 million recognised in H1 2020. This is discussed
in more detail in the Operating Profit, Adjusted EBITDA and
Adjusted EBIT section of this report.
Adjusted Net Income rose EUR85.1 million to EUR45.4 million,
compared to EUR(39.7) million in the prior period. The reported
profit for the half year was EUR11.1 million compared to EUR320.8
million loss in the corresponding half of 2020. Basic EPS was 1.96
Euro cents (H1 2020: (61.66) Euro cents) and Adjusted Basic EPS was
8.75 Euro cents, an increase from (7.61) Euro cents in the first
half of 2020. In spite of the volatility in customer production
scheduling, driven by supply chain disruptions, the first half of
2021 was also another period of impressive cash flow performance,
where we delivered Adjusted Free Cash Flow of EUR46.3 million (H1
2020: EUR34.9 million). This strong cash performance was offset by
cash outflows from financing, resulting in our reported cash and
cash equivalent balances decreasing by EUR32.6 million (H1 2020:
increasing by EUR141.3 million) before currency translation, mostly
related to our dividend payment and a period end cash balance of
EUR469.4 million (H1 2020: EUR485.8 million). We ended the period
with net debt of EUR621.2 million (31 December 2020: EUR590.0
million).
Automotive Markets
Global light vehicle production volumes increased significantly
by 29.2% in H1 2021 to 39.4 million vehicles as shown in table 2 -
signalling strong recovery after the unprecedented fall due to the
impact of COVID-19 in H1 2020. The recovery was across all major
regions of the world.
Table 2: Global light vehicle production volumes: millions of
units
H1 2021 % Change
Europe, including Middle East and Africa 10.0 28.4%
Asia Pacific 21.3 27.2%
North America 6.8 32.0%
Latin America 1.3 61.5%
------------------------------------------ ------- ------
Total global volumes 39.4 29.2%
------------------------------------------ ------- ------
Source: IHS Markit, July 2021 and Company estimates
Change percentages calculated using unrounded data
Revenue
Our revenue in each of the regions and by segment is included in
table 3.
Table 3: Revenue by region and by segment EURm
% Change
at constant
H1 2021 H1 2020 Change % Change currency
Total Group Revenue 1,522.5 1,183.1 339.4 28.7% 32.7%
By Region
Europe and Africa 622.4 453.5 168.9 37.3% 37.4%
Asia Pacific 519.3 415.9 103.4 24.9% 26.9%
North America 356.5 298.4 58.1 19.5% 30.7%
Latin America 24.3 15.3 9.0 58.7% 93.1%
By segment
Fluid Carrying Systems ("FCS") 813.1 651.0 162.1 24.9% 29.8%
Fuel Tank and Delivery Systems
("FTDS") 709.4 532.1 177.3 33.3% 36.2%
Group revenue in H1 2021 was EUR1,522.5 million, an increase of
32.7% period over period at constant currency and when compared to
the global light vehicle production increase of 29.2% over the same
period resulted in a 3.5% outperformance primarily driven by
HEV/BEV launches in Europe.
In Europe and Africa, revenue at constant currency increased by
37.4% period over period compared to a light vehicle production
increase of 28.4%, an outperformance of 9.0%. This strong
outperformance was driven by the successful launch of new HEV/BEV
programmes for both FTDS and FCS, as well as a full trading period
compared to H1 2020 when the region experienced wide ranging
factory shutdowns.
In Asia Pacific, revenue at constant currency increased by 26.9%
period over period compared to light vehicle production increase of
27.2%, for a slight underperformance of 0.3%. This underperformance
was driven by the timing of programme ramp downs in FTDS, which
offset the benefit of new launches.
In North America, revenue at constant currency increased by
30.7% period over period compared to light vehicle production
increase of 32.0%, reflecting a slight underperformance of 1.3%.
The main impact for this region was programme ramp downs in the FCS
division mainly caused by our de-emphasis of Powertrain, and the
continued impact of our lower share of the full-size full-frame
trucks and SUV platforms of the North American market primarily in
the United States. FTDS NA experienced strong growth due to new
business launches and ramp ups, outperforming the market in that
region by 21.0%.
FCS revenue increased by EUR186.5 million, 29.8% at constant
currency from the prior period to EUR813.1 million, an
outperformance of 0.6% when compared to global light vehicle
production. The strong FCS revenue growth is driven by successful
launches of thermal programmes in Europe and Asia Pacific. The
division has been impacted by the Group's de-emphasis on Powertrain
which has resulted in programme ramp downs in North America region,
offsetting the benefit of new thermal launches.
FTDS revenue at constant currency increased by 36.2% to EUR709.4
million, outperforming global light vehicle production by 7.0%,
primarily driven by new business launches in Europe and North
America. Overall Asia Pacific outperformance slowed down due to
programme ramp downs.
Revenue increased by 28.7% to EUR1,522.5 million at reported
rates due to a net adverse currency exchange rate impact of EUR35.6
million compared with the prior period. This was mostly due to
strengthening of the Euro against the US dollar, partially offset
by the weakening in other key currencies in countries where the
Group has manufacturing operations. Table 4 below sets out the
movement in exchange rates most relevant to our operations.
Table 4: Exchange Rates
30 June 30 June
Key Euro exchange H1 2021 H1 2020 2021 Period 2020 Period
rates Average Average % Change End End % Change
------------------ -------- -------- ---------- ------------ ------------ --------
US dollar 1.205 1.102 9.3% 1.185 1.124 5.4 %
------------------ -------- -------- ----- ------------ ------------ --------
Chinese renminbi 7.797 7.747 0.6% 7.651 7.941 (3.7) %
------------------ -------- -------- ----- ------------ ------------ --------
South Korean won 1,347 1,328 1.4% 1,340 1,349 (0.7) %
------------------ -------- -------- ----- ------------ ------------ --------
Operating profit, Adjusted EBITDA* and Adjusted EBIT*
We use several financial measures to manage our business,
including Adjusted EBITDA and Adjusted EBIT, which are non-IFRS
measures, but are measures of profitability that have been used
consistently by the Group and give insight into the operating
performance of the business. The metrics are also used in certain
of our compensation plans and to communicate to our investors.
Table 5 shows a reconciliation between the reported measure,
operating profit, Adjusted EBITDA and Adjusted EBIT.
Table 5: Calculation of Adjusted EBITDA* and Adjusted EBIT*
EURm
H1 2021 H1 2020
Operating profit / (loss) 76.5 (311.9)
Depreciation and impairment of PP&E 47.1 54.3
Depreciation and impairment of right-of-use assets 14.7 16.9
Amortisation and impairment of intangible assets 35.0 39.4
Share of loss of associates (1.2) (0.1)
Exceptional impairment - 304.6
------------------------------------------------------- ------- -------
EBITDA 172.1 103.2
Net foreign exchange losses / (gains) 7.6 (0.7)
Dividend received from associates - 0.5
Net restructuring costs 17.6 6.6
Share of loss of associates 1.2 0.1
Adjusted EBITDA 198.5 109.7
------------------------------------------------------- ------- -------
Less:
Depreciation and impairment of PP&E (47.1) (54.3)
Depreciation and impairment of right-of-use assets (14.7) (16.9)
Amortisation and impairment of intangible assets (35.0) (39.4)
Add back:
Depreciation uplift arising on purchase accounting 5.3 6.5
Amortisation uplift arising on purchase accounting 20.8 22.0
------------------------------------------------------- ------- -------
Adjusted EBIT 127.8 27.6
------------------------------------------------------- ------- -------
* See Non-IFRS measures on pages 19 to 20
The operating profit of EUR76.5 million (H1 2020: EUR311.9
million loss) represents a significant increase on the prior year
principally as there was no repeat of the first half 2020
exceptional impairment charge of EUR304.6 million which was
recognised following a full impairment review triggered by the
significant change in projected volumes and forecast cash flows
projected at that time. Further details of the Group's impairment
indicators assessment that confirms that no further charge is
required can be found in Note 7. The latest global light vehicle
production volume projections indicate volumes return to 2019
levels slightly earlier in the forecast period than the data used
for the June 2020 impairment review. Our future cash forecasts are
also ahead of those used to underpin the impairment charge
recognised. As market uncertainties still remain, we have not
reversed any of the impairment charge recognised.
The restructuring programme started in 2020 continues to be
implemented in 2021, and in this regard we incurred further
restructuring charges of EUR17.6 million in the period related to
permanent headcount reductions across all our businesses and the
planned closure and downsizing of manufacturing plants in Europe,
North America and Latin America. At the end of H1 2021 there was a
restructuring provision of EUR18.5 million (H1 2020: EUR11.0
million).
Adjusted EBITDA has recovered to EUR198.5 million (H1 2020:
EUR109.7 million) and Adjusted EBITDA margin was 13.0% (H1 2020:
9.3%) with the major impact being the increase of operating profit
due to the conversion on higher revenue. Our operating costs have
increased at a slower pace compared to revenue growth mainly due to
efficiency gains from running relatively good factory capacities in
2021, and the temporarily suppressed costs due to the benefit of
working from home across most of our administrative functions. We
continue to see challenge in the supply chain relating to pricing
pressure and inflation of input costs for metals and resin.
Adjusted EBIT was EUR127.8 million (H1 2020: EUR27.6 million)
and Adjusted EBIT margin was 8.4% (H1 2020: 2.3%). This change was
impacted by higher Adjusted EBITDA as described previously. During
the period there were programme specific impairment charges of
EUR1.2 million (H1 2020: EUR4.1 million).
By segment, FCS Adjusted EBIT grew by EUR55.5 million to EUR69.6
million (H1 2020: EUR14.1 million) with Adjusted EBIT margin of
8.6% (H1 2020: 2.2%). The period over period margin growth reflects
the strong rebound from COVID-19 impacts, particularly in Europe
and Asia Pacific. The segment particularly benefited from
efficiency gains in labour and other costs incurred during the
factory shutdown period in H1 2020.
FTDS Adjusted EBIT increased by EUR44.7 million to EUR58.2
million (H1 2020: EUR13.5 million) with Adjusted EBIT margin of
8.2% (H1 2020: 2.5%). The increase in margin reflects the
conversion of the significantly higher revenues in H1 2021. Asia
Pacific margin also remains strong, benefiting from new business
launches in the fuel tanks business.
As a direct consequence of unwinding the Group's hedging
programme in March 2020 to release 'in the money' contractual
positions to cash, the Group has borne the translation impact on
unhedged non-Euro currency inter-company loan positions. This is
the primary constituent of the EUR7.6 million foreign exchange loss
arising in the period. The refinancing completed in April 2021
sought to rebalance the currency split of the external borrowings
to reduce the unhedged exposures.
Net finance expense
Net finance expense, before exceptional items for the period was
EUR30.8 million, a decrease of EUR9.9 million from the prior
period. The decrease was mainly due to fair value net losses on
financial instruments and derivatives that were incurred in the
first half of 2020. As a result of the refinancing carried out in
April 2021, an exceptional expense of EUR11.6 million associated
with the capitalised fee write off has been incurred. The expected
annual saving of the reduced interest expense as a result of the
refinancing in April 2021 is expected to be approximately EUR9.0
million.
Taxation
The Group income tax charge for the first half of 2021 is
EUR24.6 million based on Group Profit Before Tax of EUR44.5
million. This period over period increase in the tax charge of
EUR27.3 million is primarily due to a significant period over
period increase in profit. The H1 2021 Effective Tax Rate is 55.2%
(H1 2020: 5.6%) There were no significant changes to uncertain tax
positions during the period.
The H1 2021 Adjusted Effective Tax Rate is 34.6% (H1 2020:
40.8%). The Adjusted Effective Tax Rate is calculated by adjusting
for the impact of UK losses, the impact of the share of associates
loss and the prior period tax movements.
Table 6 shows the calculation of the Effective and Adjusted
Effective Tax Rates.
Table 6: Calculation of Effective and Adjusted Effective Tax
rates* EURm
Amounts in the table below do not include the exceptional charge
of EUR11.6 million and exceptional tax benefit of EUR2.8
million.
H1 2021 H1 2020
------------------------------- -------------------------------
Profit Profit
before before
tax Tax charge Tax rate tax Tax credit Tax rate
As reported 44.5 (24.6) 55.2% (48.1) 2.7 5.6%
Add back:
Share of associate loss 1.2 0.1
UK accounting loss** 26.3 - 43.1 -
------- ---------- ---------- ------- ---------- ----------
72.0 (24.6) 34.2% (4.9) 2.7 55.1%
Less:
Prior period deferred
tax benefit - (0.1)
Prior period corporate
tax benefit (0.3) (0.6)
------------------------ ------- ---------- ---------- ------- ---------- ----------
Adjusted 72.0 (24.9) 34.6% (4.9) 2.0 40.8%
------------------------ ------- ---------- ------ ------- ---------- ------
*See Non-IFRS measures on pages 19 to 20
** UK accounting loss is not tax effected due to the UK
historical tax loss position
Adjusted Net Income* and profit for the period
Adjusted Net Income is a component of the Adjusted Basic EPS
calculation and is also used to guide our dividend policy
calculation. The calculation of Adjusted Net Income is shown in
table 7a.
Table 7a: Adjusted Net Income* EURm
H1 2021 H1 2020
Adjusted EBITDA (see table 5) 198.5 109.7
Less:
Net finance expense before exceptional items (30.8) (40.7)
Income tax (expense)/ credit before exceptional items (24.6) 2.7
Depreciation and impairment of PP&E (47.1) (54.3)
Depreciation and impairment of right-of-use assets (14.7) (16.9)
Amortisation and impairment of intangible assets (35.0) (39.4)
Non-controlling interests' share of profit (0.9) (0.8)
Adjusted Net Income 45.4 (39.7)
-------------------------------------------------------- ------- -------
Table 7b: Reconciliation of profit for the period to Adjusted
Net Income* EURm
H1 2021 H1 2020
Profit /(loss) for the period 11.1 (320.8)
Less:
Non-controlling interests' share of profit (0.9) (0.8)
Net foreign exchange losses/ (gains) 7.6 (0.7)
Add back:
Exceptional finance expenses 11.6 -
Exceptional deferred tax credit (2.8) (29.2)
Exceptional asset impairment cost - 304.6
Net restructuring costs 17.6 6.6
Associate income less dividend received 1.2 0.6
--------------------------------------------- ------- -------
Adjusted Net Income 45.4 (39.7)
--------------------------------------------- ------- -------
*See Non-IFRS measures on pages 19 to 20
Adjusted Net Income was EUR45.4 million in H1 2021, a
significant increase from a EUR(39.7) million loss in H1 2020,
primarily driven by the flow through of higher revenues as a result
of the rebound in global light vehicle production volumes.
Basic EPS and Adjusted Basic EPS*
On a statutory basis, Basic Earnings per Share ('EPS') was 1.96
Euro cents for the period (H1 2020: (61.66) Euro cents), reflecting
the significantly improved profit for the period. Adjusted Basic
EPS calculation is based on Adjusted Net Income and the weighted
average number of shares issued. Adjusted Basic EPS was 8.75 Euro
cents per share for the period (H1 2020: (7.61) Euro cents per
share) reflecting the increase in Adjusted Net Income as noted
above.
*See Non-IFRS measures on pages 19 to 20
Dividend
The Company's dividend policy is to target an annual dividend of
approximately 30% of Adjusted Net Income, one third payable
following half year results and two thirds following the Group's
final results.
The Group paid a dividend of 6.74 Euro cents per share,
amounting to EUR35.0 million on 19 February 2021 based on the
overall strength of the Group's financial position and prospects.
The Group is committed to resuming its stated annual dividend
policy and the Board has decided to recommend a 2021 interim
dividend of 1.93 Euro cents per share, amounting to EUR10.0
million. The Board continues to believe that dividends represent an
important part of the Group's shareholder value proposition and
that the Company's dividend policy is both affordable and
sustainable within its wider capital allocation framework.
The Group continues to remain confident in its business model,
cost flexibility, strong cash generation, experienced management
team, and successful transition to electrification.
Cash Flow performance
The Group uses Adjusted Free Cash Flow as its primary operating
measure of cash flow performance.
Table 8a: Adjusted Free Cash Flow* EURm
H1 2021 H1 2020
Net cash generated from operating activities 98.8 92.5
Net cash used by investing activities (62.6) (48.6)
----------------------------------------------- ------- -------
Free Cash Flow* 36.2 43.9
Deduct:
Cash received on settlement of derivatives - (16.6)
Add back: Net restructuring cash spend 10.1 7.6
----------------------------------------------- ------- -------
Adjusted Free Cash Flow 46.3 34.9
----------------------------------------------- ------- -------
Table 8b: Reconciliation of Adjusted EBITDA to Adjusted Free
Cash Flow* EURm
H1 2021 H1 2020
Adjusted EBITDA 198.5 109.7
Less:
Net cash interest paid (22.6) (27.8)
Cash taxes paid (28.0) (20.9)
Payment for property, plant and equipment (42.2) (36.3)
Payment for intangible assets (21.7) (14.3)
Movement in working capital (37.1) 42.8
Movement in retirement benefit obligations (1.2) 0.7
Movement in provisions and other (9.5) (10.0)
--------------------------------------------- ------- -------
Free Cash Flow* 36.2 43.9
--------------------------------------------- ------- -------
Deduct:
Cash received on settlement of derivatives - (16.6)
Add back: Restructuring cash spend 10.1 7.6
--------------------------------------------- ------- -------
Adjusted Free Cash Flow 46.3 34.9
--------------------------------------------- ------- -------
*See Non-IFRS measures on pages 19 to 20
In H1 2021, we generated Adjusted Free Cash Flow of EUR46.3
million (H1 2020: EUR34.9 million). The Adjusted EBITDA generated
by the Group was used to fund investment in capital equipment and
intangibles. There was a EUR13.3 million increase in property,
plant and equipment and intangibles expenditure showing a return to
pre-COVID-19 capital expenditure. Tax cash payments were EUR7.1
million higher due to higher taxable profits. The outflow from
working capital of EUR37.1 million was driven by the increase in
working capital balances due to the recovery of activity levels
compared to last year. The net cash outflow on restructuring was
EUR10.1 million, predominantly severance payments (H1 2020: EUR7.6
million). In H1 2020 EUR16.6 million was received from foreign
exchange hedges which were closed out in March 2020.
Free cash flows of EUR36.2 million (H1 2020: EUR43.9 million)
were offset by cash outflows from financing of EUR68.8 million (H1
2020: EUR97.4 million in flows), resulting in a reported decrease
in cash and cash equivalents of EUR32.6 million (H1 2020: increase
of EUR141.3 million). Financing outflows include the net impact of
the H1 2021 refinancing and other borrowing repayments of EUR17.8
million (H1 2020: EUR110.7 million), and EUR16.0 million (H1 2020:
EUR12.8 million) lease principal repayments.
The 2021 dividend cash outflow amounted to EUR35.0 million (H1
2020: EURnil).
Retirement benefits
We operate funded and unfunded defined benefit schemes across
multiple jurisdictions with the largest being the US pension and
retiree healthcare schemes, which represent 52% of our net unfunded
position at 30 June 2021 (H1 2020: 60%). We also have funded
schemes in the UK and Canada 1% (H1 2020: 2%) and Germany 20% (H1
2020: 16%). While all our major plans are closed to new entrants, a
few allow for future accrual. Our schemes are subject to periodic
actuarial valuations. Our net unfunded position decreased by
EUR21.4 million from December 2020 to EUR139.3 million at 30 June
2021 due primarily to discount rates differential period-on-period
and overall pension investment performance.
Net debt* and net leverage*
Net debt, a non-IFRS measure, as at 30 June 2021 was EUR621.2
million, a slight increase of EUR31.2 million from the prior year
end. On 16 April 2021, the Group successfully completed the issue
of a EUR600.0 million unsecured bond. The proceeds were used to pay
down the existing term loans, in addition the term loan interest
rates were lowered and the maturity dates increased from December
2024 to December 2026. These facilities also include an additional
$225.0 million revolving credit facility with an undrawn amount of
$222.2 million (EUR187.5 million) at 30 June 2021. Full details of
these changes are given in Note 8. These changes resulted in
incremental costs of EUR14.7 million which were capitalised, as
well as reduced interest costs, the annual impact of which is
estimated at EUR9.0 million. The annual fee amortisation after
these changes is EUR4.2 million. Issuance fees and discounts of
EUR25.4 million on the loans are carried forward for future
amortisation.
The Group's net leverage ratio, also a non-IFRS measure, was 1.5
times Adjusted EBITDA as at 30 June 2021 (31 December 2020: 1.8
times); the decrease reflects the higher Adjusted EBITDA.
The Group excludes IFRS 16 lease liabilities from its net debt
and net leverage ratio. If the IFRS 16 lease liabilities were to be
included, the Group's net debt would be EUR777.6 million (31
December 2020: EUR 741.0 million) and net leverage ratio would be
1.9 times Adjusted EBITDA (31 December 2020: 2.2 times).
*See Non-IFRS measures on pages 19 to 20
Liquidity and Going Concern
Our principal sources of liquidity have historically been cash
generated from operating activities and amounts available under our
credit facilities, that currently consist of a revolving facility
under our cash flow credit agreement of $225.0 million (EUR189.9
million). The refinancing completed in April 2021 maintains
existing levels of liquidity, lowered our cost of debt and extended
debt maturities to December 2026. Total available liquidity (cash
plus available facilities) on 30 June 2021 was EUR656.9 million (31
December 2020: EUR666.5 million).
The Directors have reviewed the likely performance of the Group
for the period to 31 December 2022 by reference to an outlook using
the approved Budget and Medium Term Plan, updated for actual year
to date performance and current projections as a base case scenario
(global light vehicle volume assumptions - 2021: 83.0 million
units, 2022: 87.2 million units). The 2022 volumes used are lower
than the current IHS global light vehicle production forecast of
90.7 million reflecting some modelling caution and alignment with
the assumptions made during our Budget and Medium Term Plan. The
Directors' assessment has been made with reference to the Group's
current position and prospects, the Group's existing committed
finance facilities, the Group's strategy, business model and the
potential impact of the principal risks and how these are managed,
as detailed in the strategic report contained within the 2020
Annual Report.
In making their assessment, the Directors reviewed a base case
forecast covering the period to 31 December 2022 prepared using a
global light vehicle production volume forecast which takes account
of the short-term challenges associated with the current supply
chain issues and showed liquidity (cash plus undrawn banking
facilities) of EUR836 million at the end of the review period. The
base model was stress tested to assess the adverse impact of the
crystallisation of the principal risks likely to have a significant
financial impact in the period to December 2022. This severe but
plausible downside scenario assumed:
-- 8.1% lower global production volumes in 2021 compared to the
data used in the base model, volumes used - 2021: 77.0 million
units, 2022: 87.2 million units, (Risk: Global Light Vehicle
production volumes)
-- 5% operating margin reduction caused by operational
inefficiencies increased arising from customer schedule changes
(Risk: Competitor and Customer Pricing Pressure)
-- 0.5% sales price reduction (Risk: Competitor and Customer Pricing Pressure)
-- EUR20 million annual warranty charge (Risk: Product quality)
Available liquidity on 30 June 2021 was EUR657 million. The
impact of the severe but plausible downside scenario would be to
reduce available liquidity as per the base case to EUR701 million
at the end of the review period, EUR135m lower than the base case.
In both the base case and the severe but plausible downside
scenarios, there were no covenant breaches.
A reverse stress test was attempted to determine the level of
global light vehicle production which would extinguish all cash. It
was found that only a reduction of 40% in 2021 and 80% in 2022
compared to the base case (volumes used - 2021: 49.9 million units,
2022: 17.2 million units) for the period under review, excluding
any mitigating actions would be required to use all the Group's
cash without utilising the $225 million revolving credit facility.
This contrasts with the 2020 global light vehicle production drop
to 74.6 million, a drop 16.1% compared to 2019. As a result, the
Directors do not believe that a drop of 40% in 2021 and 80% drop in
2022 is likely and therefore do not regard this as a probable
outcome.
The Directors have concluded, after reviewing the future funding
requirements for the Group over the period to the end of 2022 by
reference to the headroom on the committed banking facilities and
the expected performance of the Group, that it is appropriate for
the financial statements to be prepared on a going concern basis
with no material uncertainties.
Principal Risks and Uncertainties
The executive management and Directors have considered the
principal risks and uncertainties of the Group and have determined,
on balance, that those reported in the 2020 Annual Report and
Accounts remain relevant for the remaining half of the financial
year. Current operating challenges from volatile customer
production volumes and supply chain disruptions in the automotive
industry are not thought to represent prolonged long-term risks
though they will persist into the second half and potentially into
2022. The Directors continue to monitor and consider the COVID-19
landscape and related risks stemming from the pandemic as well as
reviewing the developing risks identified in our 2020 Annual Report
- product portfolio redundancies, technological obsolescence,
product pivoting, climate change and the microchip related supply
chain disruptions. We continue to believe that these do not
represent separate new principal risks and uncertainties at this
time. Details of the Group's Principal Risks and Uncertainties are
available in the 2020 Annual
Report and Accounts available on our website
www.tifluidsystems.com.
Outlook
The Group had strong performance through the first half of 2021.
While annual global light vehicle production volumes are forecast
to continue to return to pre-Covid levels by the end of 2022,
IHS-Markit's current 2021 global light vehicle production volume
forecasts (approximately 82 million units) may be optimistic given
ongoing microchip and other supply-related constraints impacting
specific OEM plant production scheduling. However, despite this
potential volume softness for the second half of 2021, our annual
outlook guidance issued on 16 March 2021 remains unchanged. We
remain confident that our full year 2021 revenue will outperform
global light vehicle production volumes. We continue to target a
high single digit adjusted EBIT margin for 2021 as well as Adjusted
Free Cash Flow that will support our dividend policy targeting a
pay-out of approximately 30% of Adjusted Net Income.
Non-IFRS measures
In addition to the results reported under IFRS, we use certain
non-IFRS financial measures to monitor and measure performance of
our business and operations and the profitability of our Divisions.
Such measures are also utilised by the Board as targets in
determining compensation of certain executives and key members of
management, as well as in our communications with investors. In
particular, we use Adjusted EBIT, Adjusted EBITDA, Adjusted Net
Income, Adjusted Basic EPS, Adjusted Free Cash Flow and Adjusted
Effective Tax Rate. These non-IFRS measures are not recognised
measurements of financial performance or liquidity under IFRS, and
should be viewed as supplemental and not replacements or
substitutes for any IFRS measures.
EBITDA is defined as profit or loss before tax before net
finance expense, depreciation, amortisation and exceptional
impairment of tangible and intangible assets.
Adjusted EBITDA is defined as EBITDA adjusted for exceptional
administration costs, net foreign exchange gains/(losses), net
restructuring charges and associate share of profits or losses and
dividends received from associates.
Adjusted EBIT is defined as Adjusted EBITDA less depreciation,
amortisation and impairment arising on tangible and intangible
assets net of depreciation and amortisation arising on purchase
price accounting.
Constant currency refers to the statement of prior period
results at current exchange rates to eliminate fluctuations in
translation rates and achieve a like for like comparison.
Revenue outperformance is defined as the growth in revenue at
constant currency compared to the growth in global light vehicle
production volumes.
Operating profit margin is defined as operating profit expressed
as a percentage of revenue.
Adjusted Net Income is defined as Profit or Loss for the period
attributable to the ordinary shareholders before exceptional items
adjusted to reflect associate dividends received and eliminate the
impact of net restructuring charges and foreign exchange gains or
losses.
Adjusted Basic EPS is defined as Adjusted Net Income divided by
the weighted average number of shares in issue in the period.
Free Cash Flow is defined as the total of net cash generated
from operating activities and net cash used by investing
activities.
Adjusted Free Cash Flow is defined as Free Cash Flow adjusted
for cash movements in financial assets at fair value through the
profit or loss, cash payments related to IPO costs, net cash flows
relating to restructuring and settlement of derivatives. The
restructuring cash adjustment is made to align the treatment of
restructuring with the other Adjusted measures and is applied
retrospectively.
Adjusted Income Tax before Exceptional items is defined as
income tax before exceptional items adjusted for the tax impact of
prior period tax provisions and adjustments.
Adjusted Profit before Income Tax is defined as profit before
income tax adjusted for UK losses.
Adjusted Effective Tax Rate is defined as adjusted income tax
before exceptional items as a percentage of adjusted profit before
income tax.
Net debt is defined as the total of current and non-current
borrowings excluding lease liabilities, net of cash and cash
equivalents and financial assets at fair value through the profit
and loss.
Net leverage is defined as net debt divided by last 12 months
Adjusted EBITDA.
Ronald Hundzinski
Chief Financial Officer
6 August 2021
Cautionary Statement
This announcement contains certain forward-looking statements
with respect to the financial condition, results of operations and
business of TI Fluid Systems plc (the "Group"). The words
"believe", "expect", "anticipate", "intend", "estimate",
"forecast", "project", "will", "may", "should" and similar
expressions identify forward-looking statements. Others can be
identified from the context in which they are made. By their
nature, forward-looking statements involve risks and uncertainties,
and such forward-looking statements are made only as of the date of
this presentation. Accordingly, no assurance can be given that the
forward-looking statements will prove to be accurate and you are
cautioned not to place undue reliance on forward-looking statements
due to the inherent uncertainty therein. Past performance of the
Company cannot be relied on as a guide to future performance.
Nothing in this announcement should be construed as a profit
forecast.
TABLE OF CONTENTS
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
Condensed Consolidated Income Statement
......................................................................... 23
Condensed Consolidated Statement of Comprehensive Income
............................................ 24
Condensed Consolidated Balance Sheet
................................................................................ 25
Condensed Consolidated Statement of Changes in Equity ...................................................... 26
Condensed Consolidated Statement of Cash Flows
................................................................ 27
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
Summary of Significant Accounting Policies
1 .................................................................. 28
Segment Reporting
2 ..................................................................................................... 29
Finance Income and Expenditure
3 ................................................................................ 31
Income Tax
.........................................................................................................
4 ........ 31
Earnings Per Share
5 ...................................................................................................... 33
Property, Plant and Equipment
6 ................................................................................... 34
Intangible assets and impairments
7 .............................................................................. 34
Borrowings
.........................................................................................................
8 ........ 38
Fair Values of Financial Assets and Liabilities
9 ................................................................ 4 2
Retirement Benefit Obligations
10 ................................................................................... 43
Provisions
.........................................................................................................
11 .......... 44
Cash Generated from Operations
12 ............................................................................... 45
Commitments and Contingencies
13 ................................................................................ 46
Related Party Transactions
14 .......................................................................................... 46
Independent Review Report
.................................................................................................... 47
Directors' Responsibility Statement
.......................................................................................... 49
Condensed Consolidated Income Statement
For the period ended 30 June
2021 2021 2020 2020
Before After Before After
Continuing exceptional Exceptional exceptional exceptional Exceptional exceptional
operations items items items items items items
Unaudited Note EURm EURm EURm EURm EURm EURm
----------------- ---- ------------ ----------- ------------ ------------ ----------- ---------------
Revenue 2 1,522.5 - 1,522.5 1,183.1 - 1,183.1
Cost of sales (1,334.0) - (1,334.0) (1,090.0) (120.4) (1,210.4)
Gross
profit/(loss) 188.5 - 188.5 93.1 (120.4) (27.3)
-----------------
Distribution
costs (46.1) - (46.1) (35.5) - (35.5)
Administrative
Expenses (60.2) - (60.2) (70.0) (184.2) (254.2)
Other income 1.9 - 1.9 4.4 - 4.4
Net foreign
exchange
(losses)/gains (7.6) - (7.6) 0.7 - 0.7
Operating
profit/(loss) 76.5 - 76.5 (7.3) (304.6) (311.9)
-----------------
Finance income 3 2.5 - 2.5 1.0 - 1.0
Finance expense 3 (33.3) (11.6) (44.9) (41.7) - (41.7)
Net finance
expense 3 (30.8) (11.6) (42.4) (40.7) - (40.7)
-----------------
Share of loss
of associates (1.2) - (1.2) (0.1) - (0.1)
----------------- ---- ------------ ----------- ------------ ------------ ----------- -------------
Profit/(loss)
before income
tax 44.5 (11.6) 32.9 (48.1) (304.6) (352.7)
----------------- ---- ------------ ----------- ------------ ------------ ----------- -------------
Income tax
(expense)/credit 4 (24.6) 2.8 (21.8) 2.7 29.2 31.9
Profit/(loss)
for the period 19.9 (8.8) 11.1 (45.4) (275.4) (320.8)
-----------------
Profit/(loss)
for the year
attributable
to:
Owners of the
Parent Company 19.0 (8.8) 10.2 (46.2) (275.4) (321.6)
Non-controlling
interests 0.9 - 0.9 0.8 - 0.8
----------------- ---- ------------ ----------- ------------ ------------ ----------- -------------
19.9 (8.8) 11.1 (45.4) (275.4) (320.8)
----------------- ---- ------------ ----------- ------------ ------------ ----------- -------------
Total earnings
per share (Euro,
cents)
----------------- ---- ------------ ----------- ------------ ------------ ----------- ---------------
Basic 5 1.96 (61.66)
Diluted 5 1.95 (61.66)
----------------- ---- ------------ ----------- ------------ ------------ ----------- -------------
Condensed Consolidated Statement of Comprehensive Income
For the period ended 30 June
Unaudited Unaudited
2021 2020
EURm EURm
------------------------------------------------------ --------- -----------
Profit/(loss) for the period 11.1 (320.8)
Other comprehensive income/(expense)
Items that will not be reclassified to profit or
loss
- Re-measurements of retirement benefit obligations 24.4 (23.7)
- Income tax (expense)/credit on retirement benefit
obligations (4.9) 5.2
19.5 (18.5)
------------------------------------------------------
Items that may be subsequently reclassified to profit
or loss
- Currency translation 31.8 (23.8)
- Cash flow hedges - 12.2
- Net investment hedges - 6.9
31.8 (4.7)
------------------------------------------------------
Total other comprehensive income/(expense) for the
period 51.3 (23.2)
------------------------------------------------------ --------- ---------
Total comprehensive income/(expense) for the period 62.4 (344.0)
------------------------------------------------------ --------- ---------
Attributable to:
- Owners of the Parent Company 61.6 (343.9)
- Non-controlling interests 0.8 (0.1)
------------------------------------------------------ --------- ---------
Total comprehensive income/(expense) for the period 62.4 (344.0)
------------------------------------------------------ --------- ---------
Condensed Consolidated Balance Sheet
As at 30 June and 31 December
Unaudited
2021 2020
Note EURm EURm
---------------------------------------------- ---- --------- ---------
Non-current assets
Intangible assets 7 881.3 883.8
Right-of-use assets 130.9 124.9
Property, plant and equipment 6 585.8 590.8
Investments in associates 13.3 14.6
Deferred income tax assets 4 61.0 62.4
Trade and other receivables 19.4 18.9
---------------------------------------------- ---- --------- -------
1,691.7 1,695.4
---------------------------------------------- ---- --------- -------
Current assets
Inventories 383.8 351.4
Trade and other receivables 514.5 534.8
Current income tax assets 4 13.2 13.7
Derivative financial instruments 9 1.1 0.4
Financial assets at fair value through profit
and loss 9 0.9 0.9
Cash and cash equivalents 9 469.4 485.8
---------------------------------------------- ---- --------- -------
1,382.9 1,387.0
---------------------------------------------- ---- --------- -------
Total assets 3,074.6 3,082.4
---------------------------------------------- ---- --------- -------
Equity
Share capital 6.8 6.8
Share premium 2.2 2.2
Other reserves (105.8) (137.7)
Retained earnings 986.2 987.7
---------------------------------------------- ---- --------- -------
Equity attributable to owners of the Parent
Company 889.4 859.0
---------------------------------------------- ---- --------- -------
Non-controlling interests 26.0 25.2
---------------------------------------------- ---- --------- -------
Total equity 915.4 884.2
---------------------------------------------- ---- --------- -------
Non-current liabilities
Trade and other payables 17.5 20.0
Borrowings 8 1,089.5 1,069.3
Lease liabilities 125.9 122.4
Deferred income tax liabilities 4 101.8 104.3
Retirement benefit obligations 10 139.3 160.7
Provisions 11 2.6 4.9
---------------------------------------------- ---- --------- -------
1,476.6 1,481.6
---------------------------------------------- ---- --------- -------
Current liabilities
Trade and other payables 577.4 614.1
Current income tax liabilities 4 40.5 40.7
Borrowings 8 2.0 7.4
Lease liabilities 30.5 28.6
Derivative financial instruments 9 - 0.2
Provisions 11 32.2 25.6
---------------------------------------------- ---- --------- -------
682.6 716.6
---------------------------------------------- ---- --------- -------
Total liabilities 2,159.2 2,198.2
---------------------------------------------- ---- --------- -------
Total equity and liabilities 3,074.6 3,082.4
---------------------------------------------- ---- --------- -------
Condensed Consolidated Statement of Changes in Equity
For the period ended 30 June
Ordinary Share Other Retained Non-controlling Total
shares premium reserves earnings Total interests equity
Unaudited EURm EURm EURm EURm EURm EURm EURm
-------------------------- -------- -------- --------- --------- ------ --------------- ---------
Balance at 1 January
2021 6.8 2.2 (137.7) 987.7 859.0 25.2 884.2
Profit for the
period - - - 10.2 10.2 0.9 11.1
Total other comprehensive
income for the
period - - 31.9 19.5 51.4 (0.1) 51.3
-------------------------- -------- -------- --------- --------- ------ --------------- -------
Total comprehensive
income for the
period - - 31.9 29.7 61.6 0.8 62.4
Share-based expense - - - 3.5 3.5 - 3.5
Dividends paid - - - (35.0) (35.0) - (35.0)
Issue of own shares
from Employee
Benefit Trust - - - 1.2 1.2 - 1.2
Vested share awards - - - (0.9) (0.9) - (0.9)
Balance at 30
June 2021 6.8 2.2 (105.8) 986.2 889.4 26.0 915.4
--------------------------
Ordinary Share Other Retained Non-controlling Total
shares premium reserves earnings Total interests equity
Unaudited EURm EURm EURm EURm EURm EURm EURm
--------------------- -------- -------- --------- --------- ------- --------------- ---------
Balance at 1 January
2020 6.8 2.2 (106.1) 1,261.7 1,164.6 24.5 1,189.1
(Loss)/profit
for the year - - - (321.6) (321.6) 0.8 (320.8)
Other comprehensive
expense - - (3.8) (18.5) (22.3) (0.9) (23.2)
--------------------- -------- -------- --------- --------- ------- --------------- -------
Total comprehensive
expense for the
period - - (3.8) (340.1) (343.9) (0.1) (344.0)
Share-based credit - - - (2.3) (2.3) - (2.3)
Dividends paid - - - - - (0.5) (0.5)
Balance at 30
June 2020 6.8 2.2 (109.9) 919.3 818.4 23.9 842.3
---------------------
Condensed Consolidated Statement of Cash Flows
For the period ended 30 June
Unaudited Unaudited
2021 2020
Note EURm EURm
-------------------------------------------------- ---- --------- -----------
Cash flows from operating activities
Cash generated from operations 12 150.7 142.0
Interest paid (23.9) (28.6)
Income tax paid (28.0) (20.9)
-------------------------------------------------- ---- --------- ---------
Net cash generated from operating activities 98.8 92.5
-------------------------------------------------- ---- --------- ---------
Cash flows from investing activities
Payment for property, plant and equipment (42.2) (36.3)
Payment for intangible assets (21.7) (14.3)
Proceeds from the sale of property, plant
and equipment - 1.2
Interest received 1.3 0.8
-------------------------------------------------- ---- --------- ---------
Net cash used by investing activities (62.6) (48.6)
-------------------------------------------------- ---- --------- ---------
Cash flows from financing activities
Proceeds from new borrowings 8 600.0 135.6
Fees paid on proceeds from new borrowings 8 (13.7) -
Voluntary repayments of borrowings 8 (600.0) (22.7)
Scheduled repayments of borrowings 8 (4.1) (2.2)
Lease principal repayments (16.0) (12.8)
Dividends paid (35.0) -
Dividends paid to non-controlling interests - (0.5)
-------------------------------------------------- ---- --------- ---------
Net cash (used by)/generated from financing
activities (68.8) 97.4
-------------------------------------------------- ---- --------- ---------
(Decrease)/Increase in cash and cash equivalents (32.6) 141.3
-------------------------------------------------- ---- --------- ---------
Cash and cash equivalents at the beginning
of the period 485.8 411.7
Currency translation on cash and cash equivalents 16.2 (9.6)
-------------------------------------------------- ---- --------- ---------
Cash and cash equivalents at the end of the
period 469.4 543.4
-------------------------------------------------- ---- --------- ---------
1. Summary of Significant Accounting Policies
The principal accounting policies applied in the preparation of
these condensed consolidated interim financial statements are the
same as those applied in the audited consolidated financial
statements for the year ended 31 December 2020.
1.1. Basis of Preparation
These condensed consolidated interim financial statements have
been prepared on the going concern basis. They do not constitute
statutory accounts within the meaning of section 434 of the
Companies Act 2006. Statutory accounts for the year ended 31
December 2020 have been filed with 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. These
condensed consolidated interim financial statements have been
reviewed, not audited.
These condensed consolidated interim financial statements have
been prepared in accordance with IAS 34 'Interim Financial
Reporting', as adopted by the United Kingdom and the Disclosure and
Transparency Rules of the Financial Conduct Authority. These
condensed consolidated interim financial statements need to be read
in conjunction with the annual consolidated financial statements
for the year ended 31 December 2020 which were prepared in
accordance with IFRS in conformity with the requirements of the
Companies Act 2006 and IFRS adopted pursuant to Regulation (EC) No
1606/2002 as it applies in the European Union.
For the year ending 31 December 2021, the annual financial
statements will be prepared in accordance with IFRS as adopted by
the UK Endorsement Board. This change in basis of preparation is
required by UK company law for the purposes of financial reporting
as a result of the UK's exit from the EU on 31 January 2020 and the
cessation of the transition period on 31 December 2020. This change
does not constitute a change in accounting policy but rather a
change in framework which is required to ground the use of IFRS in
company law. There is no impact on recognition, measurement or
disclosure between the two frameworks in the period reported.
1.2. New and Revised IFRS Affecting Amounts Reported in the
Current Period (and/or Prior Periods)
There are no new standards or IFRS IC interpretations effective
in the period that have a material impact on the Group.
1.3. Critical Accounting Estimates and Judgements
The preparation of financial statements requires the use of
accounting estimates and for management to exercise judgement in
applying the Group's accounting policies. Assumptions and
accounting estimates are subject to regular review, governed by
Group-wide policies and controls. Any revisions required to
accounting estimates are recognised in the period in which the
revisions are made including all future periods affected.
The judgement and estimates that have the most significant and
critical effect on the amounts included in the financial statements
are in relation to post-employment obligations, impairments of
assets, refinancing of borrowings and recognition of deferred tax
assets as described below.
1.3.1 Critical Accounting Estimates
Details of the Group's critical accounting estimates around post
employment obligations and deferred tax assets can be found in Note
1.4.1.1 of the audited consolidated financial statements for the
year ended 31 December 2020.
1.3.2 Critical Accounting Judgements
1.3.2.1 Impairments of assets
Management have exercised judgement in their interim review for
indicators of impairment. Having performed this review, management
have concluded that their findings do not represent indicators of
additional impairment or indicators for the reversal of previous
impairments. Accordingly, a full impairment test has not been
performed to estimate the recoverable amount of CGU assets as at 30
June 2021. Further discussion on this judgement is included within
Note 7.
1.3.2.2 Refinancing of borrowings
Management have used judgement in the determination of whether
the refinancing of the Group's borrowings on 16 April 2021
constituted a modification, extinguishment, or partial
extinguishment of those borrowings, see Note 8. Management have
determined that the refinancing is a partial extinguishment. The
portion of the borrowings which have been repaid are extinguished,
and the issuance discounts and fees associated with the portion
repaid of EUR11.6 million, have been expensed during the period.
The remaining portion of the borrowings are judged to have been
modified as the qualitative characteristics of the remaining
borrowings are considered to have been principally unchanged,
primarily based on the impact of the net present value of the
remaining cash flows.
Management have also used judgement in determining whether to
treat the partial write-off of the previously incurred issuance
discounts and fees, of EUR11.6 million, associated with reduction
of the Group's term loan balances as an exceptional item.
Management have made this determination based on the significant
size of the fee write-off and the relative infrequency of the
transaction.
2. Segment Reporting
In accordance with the provisions of IFRS 8 'Operating
Segments', the Group's segment reporting is based on the management
approach with regard to segment identification; under which
information regularly provided to the chief operating decision
maker ('CODM') for decision-making purposes forms the basis of the
disclosure. The Company's CODM is the Chief Executive Officer
('CEO'), Chief Operating Officer (CEO-designate) and the Chief
Financial Officer. The CODM evaluates the performance of the
Company's segments primarily on the basis of revenue and Adjusted
EBITDA, and Adjusted EBIT, both non-IFRS measures.
Two operating segments have been identified by the Group: Fluid
Carrying Systems ('FCS') and Fuel Tank and Delivery Systems
('FTDS').
Unaudited Unaudited
Half Year Half Year
2021 2020
EURm EURm
----------------------------- ----------- -----------
Revenue
- FCS - External 813.1 651.0
- Inter-segment 36.7 28.7
----------------------------- ------- -------
849.8 679.7
----------------------------- ------- -------
- FTDS - External 709.4 532.1
- Inter-segment 0.1 1.7
----------------------------- ------- -------
709.5 533.8
----------------------------- ------- -------
Inter-segment elimination (36.8) (30.4)
----------------------------- ------- -------
Total consolidated revenue 1,522.5 1,183.1
----------------------------- ------- -------
Adjusted EBITDA
- FCS 98.3 53.3
- FTDS 100.2 56.4
----------------------------- ------- -------
198.5 109.7
----------------------------- ------- -------
Adjusted EBITDA % of revenue
- FCS 12.1% 8.2%
- FTDS 14.1% 10.6%
----------------------------- ------- -------
Total 13.0% 9.3%
----------------------------- ------- -------
Adjusted EBIT
- FCS 69.6 14.1
- FTDS 58.2 13.5
----------------------------- ------- -------
127.8 27.6
----------------------------- ------- -------
Adjusted EBIT % of revenue
- FCS 8.6% 2.2%
- FTDS 8.2% 2.5%
----------------------------- ------- -------
Total 8.4% 2.3%
----------------------------- ------- -------
3. Finance Income and Expenditure
Unaudited Unaudited
Half Year Half Year
2021 2020
Note EURm EURm
--------------------------------------------------- ---- --------- -----------
Finance income
Interest on short-term deposits, other financial
assets and other interest income 1.5 1.0
Fair value gains on derivatives and foreign
exchange contracts not in hedged relationships 1.0 -
--------------------------------------------------- ---- --------- ---------
Finance income 2.5 1.0
--------------------------------------------------- ---- --------- ---------
Finance expense
Interest payable on term loans including expensed
fees 8 (21.9) (27.0)
Interest payable on unsecured senior notes
including expensed fees 8 (4.9) -
Net interest expense of retirement benefit
obligations 10 (1.3) (1.5)
Fair value net losses on derivatives and foreign
exchange contracts not in hedged relationships - (0.5)
Fair value net losses on financial instruments:
ineffectiveness - (7.1)
Net interest expense related to specific uncertain
tax positions (0.2) -
Interest payable on lease liabilities (5.0) (5.4)
Utilisation of discount on provisions and other
finance expense - (0.2)
--------------------------------------------------- ---- --------- ---------
Finance expense before exceptional items (33.3) (41.7)
Unamortised issuance discounts and fees expensed
on voluntary repayments of borrowings (11.6) -
---------------------------------------------------
Exceptional finance expense (11.6) -
--------------------------------------------------- ---- --------- ---------
Finance expense after exceptional items (44.9) (41.7)
--------------------------------------------------- ---- --------- ---------
Total net finance expense (42.4) (40.7)
--------------------------------------------------- ---- --------- ---------
Exceptional finance expenses in the period of EUR11.6 million
(2020: EURnil) relate to a release of unamortised transaction costs
following the partial extinguishment of the Group's Euro and US
dollar term loans, see Note 8.
In the prior period, the Group terminated all its forward
foreign exchange contracts designated in cash flow hedge
relationships, its forward foreign exchange contracts designated in
net investment hedges, and all its interest rate swaps. Termination
of the hedges resulted in the recognition of ineffectiveness of
EUR7.0 million.
4. Income Tax
The income tax expense for the period ending 30 June 2021 has
been recognised based on Management's estimate of the annual
effective tax rate of each company or tax groups within a country
considering projected permanent tax adjustments, tax credits that
are available and the applicable statutory tax rates for each
country. The annual estimated effective tax rates are applied to
the first half profits / losses of each company or tax groups to
determine the overall Group tax charge for the period.
This has resulted in an ordinary effective tax rate of 55.2% for
the half year ended 30 June 2021 (5.6% for the half year ended 30
June 2020). The effective tax rate is impacted by the UK book loss
of EUR26.3 million for the half year ended 30 June 2021 (EUR43.1
million for the half year ended 30 June 2020). This is not tax
effected due to the projected and historical tax loss position in
the UK and therefore has a material impact on the effective tax
rate for both periods.
The UK book loss incurred to 30 June 2021 is due to net interest
and financing expense in the amount of EUR10.8 million (30 June
2020: EUR21.1 million); net foreign exchange losses of EUR4.7
million (30 June 2020: net foreign exchange loss of EUR11.2
million) based on fluctuations in the US dollar to Euro exchange
rates related to US dollar denominated intercompany loans and other
operating expenses of EUR10.8 million (30 June 2020: EUR10.8
million).
When the UK book loss of EUR26.3 million for the half year ended
30 June 2021 (EUR43.1 million loss for the half year ended 30 June
2020), the share of the associates loss and the prior period tax
adjustments are not considered, the effective tax rate is adjusted
to 34.6% for the half year to 30 June 2021 (40.8% for the half year
ended 30 June 2020).
The effective tax rate has increased to 55.2% (half year to 30
June 2020 5.6%). The effective tax rate for 30 June 2021 was
impacted by the non recognition of the UK losses. The 30 June 2020
effective tax rate represented a small tax credit on an overall
loss for the period which was also primarily due to the non
recognition of the UK losses discussed above.
Exceptional charge / tax benefit
During April of 2021, the Group debt was refinanced which
resulted in the write-off of a portion of the US related loan fees
from prior refinancing transactions. This resulted in an
exceptional US refinancing charge of EUR11.6 million and a tax
benefit of EUR2.8 million for the half year ended 30 June 2021. The
exceptional tax benefit of EUR2.8 million results in an effective
tax rate of approximately 24% which represents the blended US
Federal and various State effective tax rates.
Other items
The table below analyses the constituent elements of the Group
income tax charge separately identifying the tax charges recognised
in respect of entities that ordinarily pay tax or where the
recognition of deferred tax assets is appropriate, the impact of
entities where the level of tax losses limits the payment of tax or
restricts the deferred tax recognition in respect of the losses,
the impact of withholding taxes suffered in the UK, Group tax
charges recognised in respect of unremitted overseas distributable
reserves and the impact of purchase accounting adjustments.
30 June 2021 30 June 2020
Profit Profit
before before
tax Tax (charge)/credit tax Tax credit/(charge)
Unaudited EURm EURm ETR EURm EURm ETR
--------------------------------- ------- ------------------- -------- ------- ------------------- -----
Results excluding exceptional
items 44.5 (24.6) 55.2% (48.1) 2.7 5.6%
Adjustments:
Share of associate losses 1.2 - 0.1 -
--------------------------------- ------- ------------------- -------- ------- ------------------- -----
45.7 (24.6) 53.8% (48.0) 2.7 5.6%
--------------------------------- ------- ------------------- ---- ------- ------------------- -----
Analysed as:
Tax charges (including deferred
tax assets) recognised 100.8 (27.8) 27.6% 33.5 (1.1) 3.2%
Tax losses where no deferred
tax assets recognised (29.1) - -% (53.0) - -0.1%
UK Withholding tax and Group
tax on Unremitted Distributable
Reserves - (3.1) - (3.3)
Annual amortisation and
depreciation
of assets with historic purchase
price accounting (26.0) 6.3 24.3% (28.5) 7.1 24.9%
--------------------------------- ------- ------------------- ---- ------- ------------------- -----
45.7 (24.6) 53.8% (48.0) 2.7 5.6%
--------------------------------- ------- ------------------- ---- ------- ------------------- -----
Deferred tax assets originating from tax loss carry forwards
mainly relate to Germany, France and Spain as at 30 June 2021.
Forecasts for Germany, France and Spain are prepared by management
on a five year basis and use external automotive industry data
sources which is consistent with the forecasts used for the going
concern and impairment models. The forecasts demonstrate several
years of continued future profitability and all have consistent
expectations of future financial performance. As a result,
management believe that the current tax losses will be
utilised.
5. Earnings Per Share
5.1. Basic and Diluted Earnings Per Share
2021 2020
--------------------------------- -----------------------------------
Profit attributable Earnings Per Profit attributable Earnings Per
to shareholders Share (EUR, to shareholders Share (EUR,
Unaudited (EURm) cents) (EURm) cents)
---------- ------------------- ------------------- --------------
Basic 10.2 1.96 (321.6) (61.66)
Diluted 10.2 1.95 (321.6) (61.66)
---------- ------------------- ------------ ------------------- ------------
5.2. Adjusted Earnings Per Share
2021 2020
Unaudited Basic Diluted Basic Diluted
----------------------------------
Adjusted Net Income (EURm) 45.4 45.4 (39.7) (39.7)
Adjusted Earnings Per Share (EUR,
in cents) 8.75 8.67 (7.61) (7.61)
---------------------------------- ----- ------- ------ -------
Adjusted Net Income is based on profit for the period
attributable to shareholders of EUR10.2 million (2020: EUR321.6
million loss) after adding back net adjustments of EUR35.2 million
(2020: EUR281.9 million).
6. Property, Plant and Equipment ("PP&E")
During the period the Group made PP&E additions of EUR37.1
million (2020 full year: EUR78.4 million). Assets with a carrying
value of EUR3.9 million (2020 full year: EUR10.7 million) were
disposed of during the period.
7. Intangible assets and impairments
7.1. Intangible Assets
Unaudited
30 June 31 December
2021 2020
EURm EURm
---------------------------------------------------- --------- -------------
Goodwill 547.9 535.9
Capitalised development expenses, computer software
and licences, technology and customer platforms 333.4 347.9
---------------------------------------------------- --------- -----------
Total intangible assets 881.3 883.8
---------------------------------------------------- --------- -----------
7.2. Goodwill
Unaudited EURm
----------------------------------------- ---------
Cost at 1 January 2021 714.2
Currency translation 14.2
----------------------------------------- -------
Cost at 30 June 2021 728.4
----------------------------------------- -------
Accumulated impairment at 1 January 2021 (178.3)
----------------------------------------- -------
Currency translation (2.2)
----------------------------------------- -------
Accumulated impairment at 30 June 2021 (180.5)
----------------------------------------- -------
Net book value at 30 June 2021 547.9
----------------------------------------- -------
7.3.
EURm
------------------------------------------- ---------
Cost at 1 January 2020 739.0
Currency translation (24.8)
------------------------------------------- -------
Cost at 31 December 2020 714.2
------------------------------------------- -------
Accumulated impairment at 1 January 2020 -
Exceptional impairment charge (184.2)
Currency translation 5.9
------------------------------------------- -------
Accumulated impairment at 31 December 2020 (178.3)
------------------------------------------- -------
Net book value at 31 December 2020 535.9
------------------------------------------- -------
7.4. Capitalised Development Expenses, Computer Software and
Licences, Technology and Customer Platforms
Capitalised Computer
development software Customer
expenses and licences Technology platforms* Total
Unaudited EURm EURm EURm EURm EURm
---------------------------- ------------ ------------- ---------- ----------- ---------
Cost at 1 January 2021 254.4 23.3 126.7 455.2 859.6
Accumulated amortisation (151.5) (12.7) (119.8) (227.7) (511.7)
---------------------------- ------------ ------------- ---------- ----------- -------
Net book value at 1 January
2021 102.9 10.6 6.9 227.5 347.9
---------------------------- ------------ ------------- ---------- ----------- -------
Additions 14.7 0.6 - - 15.3
Disposals (1.6) (0.2) - - (1.8)
Amortisation charge (12.3) (1.4) (1.1) (19.7) (34.5)
Impairments (0.5) - - - (0.5)
Currency translation 1.5 0.3 0.2 5.0 7.0
---------------------------- ------------ ------------- ---------- ----------- -------
Net book value at 30 June
2021 104.7 9.9 6.0 212.8 333.4
---------------------------- ------------ ------------- ---------- ----------- -------
Cost at 30 June 2021 262.6 23.8 129.0 466.0 881.4
Accumulated amortisation (157.9) (13.9) (123.0) (253.2) (548.0)
---------------------------- ------------ ------------- ---------- ----------- -------
Net book value at 30 June
2021 104.7 9.9 6.0 212.8 333.4
---------------------------- ------------ ------------- ---------- ----------- -------
*Customer platforms includes intangible assets relating to:
customer platforms (EUR184.1 million); aftermarket customer
relationships (EUR25.6 million); trade names & trademarks
(EUR3.1 million).
The above amortisation charges for "technology" and "customer
platforms" amounting to EUR20.8 million arise from intangible
assets recognised through purchase price accounting. Amortisation
charges are included in cost of sales.
Capitalised Computer
development software Customer
expenses and licences Technology platforms* Total
EURm EURm EURm EURm EURm
------------------------------ ------------ ------------- ---------- ----------- ---------
Cost at 1 January 2020 237.4 16.2 135.9 474.4 863.9
Accumulated amortisation (102.2) (11.3) (125.5) (181.7) (420.7)
------------------------------ ------------ ------------- ---------- ----------- -------
Net book value at 1 January
2020 135.2 4.9 10.4 292.7 443.2
------------------------------ ------------ ------------- ---------- ----------- -------
Additions 24.3 8.4 - - 32.7
Disposals (0.1) - - - (0.1)
Amortisation charge (26.7) (1.6) (2.3) (40.4) (71.0)
Impairments - exceptional
charge (21.2) (0.5) (0.7) (15.2) (37.6)
Impairments - other charges (5.7) - - - (5.7)
Currency translation (2.9) (0.6) (0.5) (9.6) (13.6)
------------------------------ ------------ ------------- ---------- ----------- -------
Net book value at 31 December
2020 102.9 10.6 6.9 227.5 347.9
------------------------------ ------------ ------------- ---------- ----------- -------
Cost at 31 December 2020 254.4 23.3 126.7 455.2 859.6
Accumulated amortisation (151.5) (12.7) (119.8) (227.7) (511.7)
------------------------------ ------------ ------------- ---------- ----------- -------
Net book value at 31 December
2020 102.9 10.6 6.9 227.5 347.9
------------------------------ ------------ ------------- ---------- ----------- -------
*Customer platforms includes intangible assets relating to:
customer platforms (EUR197.3 million); aftermarket customer
relationships (EUR27.1 million); trade names & trademarks
(EUR3.1 million).
The above amortisation charges for 'technology' and 'customer
platforms' amounting to EUR42.7 million arise from intangible
assets recognised through purchase price accounting.
7.5. Impairment Tests for Goodwill and Intangibles
At 30 June 2020, the Group recorded a EUR304.6 million
impairment charge against CGU net assets, primarily arising as a
result of the COVID-19 pandemic's negative impact on forecast
automotive sales volumes. This charge was allocated against Group
assets as follows:
H1 2020 impairment
charge
Unaudited EURm
------------------------------------- --------------------
Goodwill 184.2
Capitalised development expenses 21.2
Computer software and licences 0.5
Other intangible assets 15.9
Land & buildings 13.9
PP&E 41.6
Assets in the course of construction 10.5
Right-of-use assets 16.8
------------------------------------- ------------------
304.6
------------------------------------- ------------------
Whilst the EUR184.2 million goodwill impairment cannot be
reversed in subsequent reporting periods, the other asset
impairments totalling EUR120.4 million can be, if there is
sufficient evidence that favourable events since the date of
impairment have given rise to a sustainable increase in the asset's
recoverable amount.
Management have therefore performed a CGU-level review for both
indicators of additional impairment and indicators for the reversal
of previous impairments. This has involved reviewing: external
forecast global light vehicle production volumes (IHS Markit);
actual cash generation against budget; the impact of restructuring
activities undertaken; market developments, including changes in
customer and competitor practices and possible changes to the
underlying CGU discount and long-term growth rates used in the
calculation of recoverable amount.
Having performed this review, Management have concluded that
despite automotive sales volume forecasts demonstrating improved
confidence when compared to those that contributed to the H1 2020
impairment, the presence of a number of downside risks to the rate
and level of forecast recovery give rise to sufficient uncertainty
to prevent interpreting the emerging recovery as an indicator of
impairment reversal.
These downside risks include the recent supply chain
interruptions caused by global semi-conductor shortages and
changing consumer trends driven by climate change awareness, as
well as the continuing threat COVID-19 presents to the reopening of
global economies. Management believe that the impact of these risks
will subside in the short to medium term and therefore do not in
themselves represent indicators of additional impairment.
Management will therefore continue to monitor the recovery
profile of automotive sales volumes for the remainder of 2021, as
well as the impact of mitigating restructuring activities
undertaken, until a point that they are satisfied that a
significant and prolonged improvement in forecast operating cash
flows is evident. During the fourth quarter of 2021, the Group will
prepare its full annual budget and medium-term plan, utilising
latest volume forecasts and full market analysis covering the
period 2022 to 2026. This will provide an up to date basis from
which to perform the 2021 annual impairment test.
8. Borrowings
Unaudited
30 June 31 December
2021 2020
Note EURm EURm
----------------------------- ------- --------- -------------
Non-current:
Unsecured senior notes 591.2 -
Secured loans:
- Term loans and facilities 498.3 1,069.2
- Other secured loans - 0.1
----------------------------- ------- --------- -----------
Total non-current borrowings 1,089.5 1,069.3
----------------------------- ------- --------- -----------
Current:
Secured loans:
- Term loans and facilities 1.9 7.4
- Other secured loans 0.1 -
----------------------------- ------- --------- -----------
Total current borrowings 2.0 7.4
----------------------------- ------- --------- -----------
Total borrowings 1,091.5 1,076.7
----------------------------- ------- --------- -----------
Unsecured senior notes 8.1/8.2 591.2 -
Term loans and facilities 8.1/8.2 500.2 1,076.6
----------------------------- ------- --------- -----------
Main borrowing facilities 8.2 1,091.4 1,076.6
Other secured loans 0.1 0.1
----------------------------- ------- --------- -----------
Total borrowings 1,091.5 1,076.7
----------------------------- ------- --------- -----------
The main borrowing facilities are shown net of issuance
discounts and fees of EUR25.4 million (2020: EUR25.3 million).
8.1 Movement in Total Borrowings
Unsecured
senior Term loans
notes and facilities Other loans Total borrowings
Unaudited EURm EURm EURm EURm
-------------------------------------- --------- ---------------- ----------- ------------------
At 1 January 2021 - 1,076.6 0.1 1,076.7
Accrued interest 4.6 18.8 - 23.4
Scheduled payments (4.6) (22.9) - (27.5)
Fees expensed 0.2 3.2 - 3.4
New borrowings 600.0 - - 600.0
Fees on new borrowings (9.0) (5.7) - (14.7)
Voluntary repayments of borrowings - (600.0) - (600.0)
Fees expensed on voluntary repayments
of borrowings - 11.6 - 11.6
Currency translation - 18.6 - 18.6
-------------------------------------- --------- ---------------- ----------- ----------------
30 June 2021 591.2 500.2 0.1 1,091.5
-------------------------------------- --------- ---------------- ----------- ----------------
On 16 April 2021, the Group successfully executed a refinancing
of its external borrowings. The key elements of the transaction
were as follows:
-- The Group issued EUR600.0 million new unsecured Senior Notes
bearing an interest rate of 3.75% per annum. Interest on the Notes
is payable semi-annually in arrears on April 15 and October 15 of
each year, commencing on 15 October 2021. The maturity date of the
notes is 15 April 2029.
-- The Euro term loan of EUR497.5 million was partly repaid
using a portion of the proceeds from the issuance of the unsecured
Senior Notes. EUR232.5 million was repaid as part of the
transaction, reducing the balance outstanding on the loan to
EUR265.0 million. The remaining balance on the loan was then
extended from 16 December 2024 to 16 December 2026. The rate on the
loan was also reduced from three-month EURIBOR (minimum 0.75% p.a.)
+3.75% p.a. to three-month EURIBOR (minimum 0.0% p.a.) +3.25% p.a.
As a result of the loan principal reduction the amount repayable
per quarter on the loan has fallen from EUR1,250,000 a quarter to
EUR662,500 a quarter until the final balance falls due on 16
December 2026.
-- The US dollar term loan of $736.3 million was also partly
repaid using a portion of the proceeds from the issuance of the
unsecured Senior Notes. $436.3 million (EUR367.5 million) was
repaid as part of the transaction, reducing the balance outstanding
on the loan to $300.0 million. The remaining balance on the loan
was then extended from 16 December 2024 to 16 December 2026. The
rate on the loan was also reduced from US dollar LIBOR (minimum
0.75% p.a.) +3.75% p.a. to US-dollar LIBOR (minimum 0.5% p.a.)
+3.25% p.a. As a result of the loan reduction the amount repayable
per quarter on the loan has fallen from $1,850,000 a quarter to
$750,000 a quarter until the final balance falls due on 16 December
2026.
-- The revolving credit facility ('RCF') of $225.0 million was
extended from 16 July 2024 to 16 July 2026. The amount of the
facility remained unchanged.
The refinancing was treated as a partial extinguishment of the
Group's term loans, and as a result unamortised transaction costs
were released for the Euro and US dollar term loans in proportion
to the reduction in the loan principal outstanding. The costs
released were recognised as an exceptional finance expense in the
period of EUR11.6 million being $8.8 million (EUR7.3 million) for
the US dollar term loan and EUR4.3 million for the Euro term
loan.
Directly attributable incremental fees of EUR14.7 million were
capitalised as part of the transaction consisting of EUR1.3 million
for the Euro term loan, $3.9 million (EUR3.1 million) for the US
dollar term loan, $1.5 million for the RCF (EUR1.3 million) and
EUR9.0 million for the unsecured Senior notes. These will be
released to the Income Statement over the remaining term of the
borrowings and RCF facility. EUR13.7 million of these fees were
paid in the period and EUR1.0 million are recorded in accrued
expenses at the balance sheet date.
Main borrowing
facilities Other loans Total borrowings
EURm EURm EURm
----------------------------------- -------------- ----------- ------------------
1 January 2020 1,150.7 0.2 1,150.9
Accrued interest 47.9 - 47.9
Scheduled payments (53.1) (0.1) (53.2)
Fees expensed 8.0 - 8.0
New borrowings 213.6 - 213.6
Fees on new borrowings (17.7) - (17.7)
Voluntary repayments of borrowings (209.6) - (209.6)
Currency translation (63.2) - (63.2)
----------------------------------- -------------- ----------- ----------------
31 December 2020 1,076.6 0.1 1,076.7
----------------------------------- -------------- ----------- ----------------
New borrowings in the prior year consisted of a partial drawdown
of the asset-backed loan of $25.0 million (EUR22.6 million), a
drawdown of the revolving credit facility of $125.0 million
(EUR113.0 million) and an increase in the Euro tranche of the main
borrowings of EUR78.0 million as a result of the Group's
refinancing on 30 September 2020. Voluntary repayments of
borrowings in the prior year consisted of a repayment of the
asset-backed loan of $25.0 million drawn earlier that year (EUR22.8
million), a repayment of the revolving credit facility drawn
earlier that year of $125.0 million (EUR106.2 million) and a
repayment of the US dollar tranche of the main borrowings of $94.2
million (EUR80.6 million) as a result of the Group's refinancing on
30 September 2020.
8.2 Main Borrowing Facilities
The main borrowing facilities are comprised of unsecured Senior
Notes and a package of secured loans consisting of a Euro term
loan, a US dollar term loan, and a revolving credit facility (which
was undrawn during the period except for letters of credit).
The amounts outstanding under the agreements are:
Unaudited
30 June 31 December
2021 2020
EURm EURm
---------------------------- --------- -------------
Principal outstanding:
Unsecured senior notes 600.0 -
US term loan 252.5 603.1
Euro term loan 264.3 498.8
Total principal outstanding 1,116.8 1,101.9
----------------------------
Issuance discounts and fees (25.4) (25.3)
---------------------------- --------- -----------
Main borrowing facilities 1,091.4 1,076.6
---------------------------- --------- -----------
8.3 Movements in Net Borrowings and Lease liabilities
Non-cash changes
------------------------------------------------------
Fees
expensed
At 1 January net of Currency Remeas-urement At 30
2021 Cash flows New leases fees accrued translation and disposals June 2021
Unaudited EURm EURm EURm EURm EURm EURm EURm
------------ ------------ ---------- ---------- ------------ ------------ -------------- ------------
Cash and
cash
equivalents 485.8 (32.6) - - 16.2 - 469.4
Financial
assets
at FVTPL 0.9 - - - - - 0.9
Borrowings (1,076.7) 17.8 - (14.0) (18.6) - (1,091.5)
------------ ------------ ---------- ---------- ------------ ------------ -------------- ----------
Net
borrowings (590.0) (14.8) - (14.0) (2.4) - (621.2)
------------ ------------ ---------- ---------- ------------ ------------ -------------- ----------
Lease
liabilities (151.0) 16.0 (14.4) - (2.4) (4.6) (156.4)
------------ ------------ ---------- ---------- ------------ ------------ -------------- ----------
Net
borrowings
and lease
liabilities (741.0) 1.2 (14.4) (14.0) (4.8) (4.6) (777.6)
------------ ------------ ---------- ---------- ------------ ------------ -------------- ----------
Non-cash changes
------------------------------------------------------
At 31
At 1 January Fees Currency Remeas-urement December
2020 Cash flows New leases expensed translation and disposals 2020
EURm EURm EURm EURm EURm EURm EURm
------------- ------------ ---------- ---------- ------------ ------------ -------------- -----------
Cash and cash
equivalents 411.7 110.6 - - (36.5) - 485.8
Financial
assets
at FVTPL 0.9 - - - - - 0.9
Borrowings (1,150.9) 19.0 - (8.0) 63.2 - (1,076.7)
------------- ------------ ---------- ---------- ------------ ------------ -------------- ---------
Net
borrowings (738.3) 129.6 - (8.0) 26.7 - (590.0)
------------- ------------ ---------- ---------- ------------ ------------ -------------- ---------
Lease
liabilities (166.7) 28.6 (17.9) - 7.0 (2.0) (151.0)
------------- ------------ ---------- ---------- ------------ ------------ -------------- ---------
Net
borrowings
and lease
liabilities (905.0) 158.2 (17.9) (8.0) 33.7 (2.0) (741.0)
------------- ------------ ---------- ---------- ------------ ------------ -------------- ---------
Cash flows from financing activities arising from changes in
financial liabilities are analysed below:
Unaudited
30 June 31 December
2021 2020
EURm EURm
-------------------------------------------------- --------- -------------
Proceeds from new borrowings (600.0) (135.6)
Fees paid on proceeds from new borrowings 13.7 -
Voluntary repayments of borrowings 600.0 22.7
Scheduled repayments of borrowings 4.1 2.2
Lease principal repayments 16.0 12.8
-------------------------------------------------- --------- -----------
Cash outflows/(inflows) from financing activities
arising from changes in financial liabilities 33.8 (97.9)
-------------------------------------------------- --------- -----------
Borrowings cash flows 17.8 (110.7)
-------------------------------------------------- --------- -----------
Lease liabilities cash flows 16.0 12.8
-------------------------------------------------- --------- -----------
Cash outflows/(inflows) from financing activities
arising from changes in financial liabilities 33.8 (97.9)
-------------------------------------------------- --------- -----------
9. Fair Values of Financial Assets and Liabilities
Financial Instruments by Category
As at 30 June 2021:
Assets
at amortised Assets
Unaudited cost at FVTPL Total
Financial assets EURm EURm EURm
-------------------------------------------------- ------------- --------- -------
Cash and cash equivalents 469.4 - 469.4
Financial assets at FVTPL - 0.9 0.9
Trade and other receivables excluding prepayments 476.0 - 476.0
Derivative financial instruments:- Forward
foreign exchange contracts (cash flow hedges) - 1.1 1.1
-------------------------------------------------- ------------- --------- -----
Total at 30 June 2021 945.4 2.0 947.4
-------------------------------------------------- ------------- --------- -----
Liabilities
at amortised
Unaudited cost Total
Financial liabilities EURm EURm
--------------------------------------------------- ------------- -----------
Trade and other payables excluding deferred income (477.6) (477.6)
Borrowings (1,091.5) (1,091.5)
Lease liabilities (156.4) (156.4)
Total at 30 June 2021 (1,725.5) (1,725.5)
---------------------------------------------------
As at 31 December 2020:
Assets
at amortised Assets
cost at FVTPL Total
Financial assets EURm EURm EURm
-------------------------------------------------- ------------- --------- -------
Cash and cash equivalents 485.8 - 485.8
Financial assets at FVTPL - 0.9 0.9
Trade and other receivables excluding prepayments 496.1 - 496.1
Derivative financial instruments:- Forward
foreign exchange contracts (cash flow hedges) - 0.4 0.4
-------------------------------------------------- ------------- --------- -----
Total at 31 December 2020 981.9 1.3 983.2
-------------------------------------------------- ------------- --------- -----
Liabilities
at amortised Liabilities
cost at FVTPL Total
Financial liabilities EURm EURm EURm
----------------------------------------------- ------------- ----------- -----------
Trade and other payables excluding deferred
income (503.3) - (503.3)
Borrowings (1,076.7) - (1,076.7)
Lease liabilities (151.0) - (151.0)
Derivative financial instruments:- Forward
foreign exchange contracts (cash flow hedges) - (0.2) (0.2)
Total at 31 December 2020 (1,731.0) (0.2) (1,731.2)
-----------------------------------------------
Fair value estimates of derivatives are based on relevant market
information and information about the financial instruments, which
are subjective in nature. The fair value of these financial
instruments is estimated by discounting the future cash flows to
net present values using appropriate market rates prevailing at the
reporting date, which is a proxy for market price. All derivative
items reported are within Level 2 of the fair value hierarchy
specified in IFRS 13 'Fair Value Measurement'; their measurement
includes inputs other than quoted prices that are observable for
the asset or liability, either directly or indirectly.
The fair values of non-derivative amounts are determined in
accordance with generally accepted valuation techniques based on
discounted cash flow analysis. For the non-derivative items
reported above, it is assumed that by their nature their carrying
value approximates their fair value with the exception of unsecured
notes included within borrowings. At 30 June 2021, the borrowings
figures above include unsecured senior notes carried at a book
value of EUR591.2 million after deducting issuance discounts and
fees (31 December 2020: EURnil). The carrying value of the notes is
EUR600.0 million before deduction of these fees. The fair value of
these notes before deduction of these fees is EUR611.5 million at
30 June 2021 (31 December 2020: EURnil).
10. Retirement Benefit Obligations
Balance Sheet
The net liability for defined benefit arrangements is as
follows:
Other post-employment
Unaudited US pensions Other pensions US healthcare liabilities Total
Net liability EURm EURm EURm EURm EURm
============================ =========== ============== ============= ===================== =========
Present value of retirement
benefit obligations (204.9) (115.3) (33.5) (91.9) (445.6)
Fair value of plan assets 166.3 117.4 - 26.7 310.4
Asset ceiling - (4.1) - - (4.1)
============================ =========== ============== ============= ===================== =======
Net liability at 30 June
2021 (38.6) (2.0) (33.5) (65.2) (139.3)
============================ =========== ============== ============= ===================== =======
Other post-employment
US pensions Other pensions US healthcare liabilities Total
Net liability EURm EURm EURm EURm EURm
============================= =========== ============== ============= ===================== =========
Present value of retirement
benefit obligations (209.2) (117.9) (33.8) (95.3) (456.2)
Fair value of plan assets 156.9 115.4 - 26.8 299.1
Asset ceiling - (3.6) - - (3.6)
============================= =========== ============== ============= ===================== =======
Net liability at 31 December
2020 (52.3) (6.1) (33.8) (68.5) (160.7)
============================= =========== ============== ============= ===================== =======
Income Statement
Net (expense)/income recognised in the Income Statement is as
follows:
Other pensions Other post-employment
Unaudited US pensions EURm US healthcare liabilities Total
Net expense EURm EURm EURm EURm EURm
============================= =========== ============== ============= ===================== =======
Current service cost - (0.8) - (2.1) (2.9)
Settlement/curtailment gain - - - 0.1 0.1
Net interest expense (0.6) - (0.4) (0.3) (1.3)
============================= =========== -------------- ============= ===================== =====
Total expense for the period
ended 30 June 2021 (0.6) (0.8) (0.4) (2.3) (4.1)
============================= =========== ============== ============= ===================== =====
Other post-employment
Unaudited US pensions Other pensions US healthcare liabilities Total
Net expense EURm EURm EURm EURm EURm
============================= =========== ============== ============= ===================== =======
Current service cost (0.1) (0.6) - (3.7) (4.4)
Net interest expense (0.7) - (0.4) (0.4) (1.5)
============================= =========== ============== ============= ===================== =====
Total expense for the period
ended 30 June 2020 (0.8) (0.6) (0.4) (4.1) (5.9)
============================= =========== ============== ============= ===================== =====
At 30 June 2021, the Group reviewed the discount rates relating
to the most significant retirement benefit obligations and
determined for US pension obligations the discount rate was 2.75%
(2.40%, at 31 December 2020).
Changes resulting from these US benchmark indexes in the
first-half of 2021 and overall pension asset performance in the
same period decreased the net US pension liability by EUR13.7
million.
The decrease/(increase) in the total retirement benefit
obligations due to a +50bp/-50bp change in the discount rate is
EUR30.9m/(EUR36.2m) for all plans combined.
11. Provisions
Movements in provisions are as follows:
Product
warranty Restructuring Other Total
Unaudited EURm EURm EURm EURm
-------------------------------------- --------- ------------- ----- --------
At 1 January 2021 14.6 11.0 4.9 30.5
Provisions made during the period 1.6 17.9 - 19.5
Provisions used during the period (4.1) (10.1) - (14.2)
Provisions reversed during the period (0.7) (0.3) - (1.0)
Currency translation 0.1 - (0.1) -
-------------------------------------- --------- ------------- ----- ------
At 30 June 2021 11.5 18.5 4.8 34.8
-------------------------------------- --------- ------------- ----- ------
Product
warranty Restructuring Other Total
EURm EURm EURm EURm
------------------------------------ --------- ------------- ----- --------
At 1 January 2020 13.9 5.1 5.3 24.3
Provisions made during the year 15.0 16.1 0.2 31.3
Provisions used during the year (12.1) (2.6) (0.3) (15.0)
Provisions reversed during the year (1.5) - - (1.5)
Utilisation of discount - - (0.1) (0.1)
Non cash movements - (7.0) - (7.0)
Currency translation (0.7) (0.6) (0.2) (1.5)
------------------------------------ --------- ------------- ----- ------
At 31 December 2020 14.6 11.0 4.9 30.5
------------------------------------ --------- ------------- ----- ------
Restructuring provisions made in the period of EUR17.9 million
include EUR14.7 million in relation to reorganisation initiatives
in Germany.
The net restructuring charge of EUR17.6 million in the period
comprises EUR7.2 million in relation to the FCS division and
EUR10.4 million in relation to FTDS (year ended 31 December 2020:
EUR7.0 million and EUR9.1 million respectively).
12. Cash Generated from Operations
Unaudited Unaudited
Half Year Half Year
2021 2020
EURm EURm
------------------------------------------------------- --------- -----------
Profit/(Loss) for the period 11.1 (320.8)
Income tax expense/(credit)before exceptional items 24.6 (2.7)
Exceptional income tax credit (2.8) (29.2)
------------------------------------------------------- --------- ---------
Profit/(Loss) before income tax 32.9 (352.7)
------------------------------------------------------- --------- ---------
Adjustments for:
Depreciation, amortisation and impairment charges 96.8 110.6
Exceptional impairment charges - 304.6
Loss on disposal of PP&E and intangible assets 0.3 0.2
Share-based expense/(credit) excluding social security
costs 3.5 (2.3)
Net finance expense 42.4 40.7
Unremitted share of loss from associates 1.2 0.6
Net foreign exchange losses/(gains) 7.6 (0.7)
Changes in working capital:
- Inventories (24.3) (11.5)
- Trade and other receivables 38.0 181.9
- Trade and other payables (50.8) (127.7)
Change in provisions 4.3 (2.4)
Change in retirement benefit obligations (1.2) 0.7
------------------------------------------------------- --------- ---------
Total 150.7 142.0
------------------------------------------------------- --------- ---------
The changes in working capital (movements in inventories, trade
and other receivables and trade and other payables) reflect a
number of non-cash transactions. The most significant of these
arises from movements due to changes in foreign exchange rates, on
translation of the Group's overseas operations into the Group's
presentation currency, Euro.
13. Commitments and Contingencies
Capital Commitments
Expenditure on non-current assets authorised and contracted for
at the end of the period but not yet incurred is as below:
Unaudited
30 June 31 December
2021 2020
EURm EURm
------------------------------ --------- -------------
Intangible assets 10.8 10.4
Property, plant and equipment 44.8 47.3
------------------------------ --------- -----------
Total 55.6 57.7
------------------------------ --------- -----------
14. Related Party Transactions
14.1 Transactions with Group Companies
Balances and transactions between Group companies have been
eliminated on consolidation, and are not disclosed in this note
except for subsidiaries that are not wholly owned. Transactions
with those companies are made on the Group's standard terms of
trade.
There have been no significant changes in the nature of
transactions between subsidiaries that are not wholly owned, or
associates, and other group companies that have materially affected
the condensed group financial statements in the period.
14.2 Ultimate controlling party
Certain funds managed by Bain Capital, through BC Omega Holdco
Ltd, have been the Group's ultimate controlling party since
incorporation up until 15 April 2021, when it was announced that
approximately 10% of the holding of BC Omega Holdco Ltd was sold,
via a placing, reducing its holding in the ordinary share capital
of TI Fluid Systems plc, to 44.4%. TI Fluid Systems plc did not
receive any proceeds from the placing. As a result, at 30 June 2021
there is now no ultimate controlling party of TI Fluid Systems
plc.
Independent review report to TI Fluid Systems plc
Report on the condensed consolidated interim financial
statements
Our conclusion
We have reviewed TI Fluid Systems plc's condensed consolidated
interim financial statements (the "interim financial statements")
in the Half year results 2021 of TI Fluid Systems plc for the 6
month period ended 30 June 2021 (the "period").
Based on our review, nothing has come to our attention that
causes us to believe that the interim financial statements are not
prepared, in all material respects, in accordance with 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.
What we have reviewed
The interim financial statements comprise:
-- the Condensed Consolidated Balance Sheet as at 30 June 2021;
-- the Condensed Consolidated Income Statement and Condensed
Consolidated Statement of Comprehensive Income for the period then
ended;
-- the Condensed Consolidated Statement of Cash Flows for the period then ended;
-- the Condensed Consolidated Statement of Changes in Equity for the period then ended; and
-- the explanatory notes to the Condensed Consolidated interim financial statements.
The interim financial statements included in the Half year
results 2021 of TI Fluid Systems plc have been prepared in
accordance with 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.
Responsibilities for the interim financial statements and the
review
Our responsibilities and those of the directors
The Half year results 2021, including the interim financial
statements, is the responsibility of, and has been approved by the
directors. The directors are responsible for preparing the Half
year results 2021 in accordance with the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial
Conduct Authority.
Our responsibility is to express a conclusion on the interim
financial statements in the Half year results 2021 based on our
review. This report, including the conclusion, has been prepared
for and only for the company for the purpose of complying with the
Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority and for no other purpose. We
do not, in giving this conclusion, accept or assume responsibility
for any other purpose or to any other person to whom this report is
shown or into whose hands it may come save where expressly agreed
by our prior consent in writing.
What a review of interim financial statements involves
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, 'Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity' issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, 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.
We have read the other information contained in the Half year
results 2021 and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the interim financial statements.
PricewaterhouseCoopers LLP
Chartered Accountants
Birmingham
6 August 2021
Directors' Responsibility Statement
The Directors of the Company confirm that these half year
condensed group financial statements have been prepared in
accordance with the basis of preparation (Note 1.1) and that they
include a fair review of the information required, namely:
-- An indication of important events that have occurred during
the first six months and their impact on the half year condensed
group financial statements, and a description of the principal
risks and uncertainties for the remaining six months of the
financial year; and
-- Material related party transactions in the first six months
and any material changes in the related party transactions
described in the last annual report for the year ended 31 December
2020.
By order of the Board
Bill Kozyra
President and CEO
6 August 2021
Ronald Hundzinski
Chief Financial Officer
6 August 2021
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END
IR VVLFBFVLFBBQ
(END) Dow Jones Newswires
August 09, 2021 02:00 ET (06:00 GMT)
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