TIDMTYMN
RNS Number : 5273G
Tyman PLC
27 July 2021
TYMAN PLC
RESULTS FOR THE SIX MONTHSED 30 JUNE 2021
Tyman plc (TYMN.L) announces results for the six months ended 30
June 2021.
Summary Group Results
LFL(1) LFL(1)
GBPm unless stated H1 2021 H1 2020 H1 2019 vs 2020 vs 2019
----------------------------- -------- -------- -------- --------- ---------
Revenue 312.5 254.1 301.9 +32% +10%
Adjusted operating profit* 47.8 31.3 41.9 +60% +20%
Adjusted operating margin* 15.3% 12.3% 13.9% +260bps +120bps
Operating profit 39.0 21.0 18.5
Adjusted profit before
taxation* 43.4 24.7 34.7
Profit before taxation 34.3 14.7 11.0
Adjusted EPS* 17.1p 9.9p 13.1p
Basic EPS 13.5p 6.4p 4.1p
Dividend per share 4.0p - 3.9p
Leverage (2) 0.9x 1.8x 2.2x
Return on capital employed* 15.5% 10.8% 12.7%
----------------------------- -------- -------- -------- --------- ---------
* Alternative performance measures. These "Adjusted" metrics are
before amortisation of acquired intangible assets, impairment of
acquired intangible assets, impairment of goodwill, and exceptional
items. These measures provide additional information to
shareholders on the underlying performance of the business and are
used consistently through the statement. Further details can be
found on page 39.
(1) LFL = constant currency like-for-like (see APMs on page
39)
(2) Leverage is calculated in accordance with the debt covenant
methodology (see APMs on page 39)
Highlights:
-- Results exceeded expectations with LFL revenue growth of 10%
against H1 2019, due to strong market demand and market share
gains
-- Volume recovery, pricing benefits and self-help initiatives
delivered LFL adjusted operating profit up 20% against H1 2019
-- Performance achieved despite unprecedented industrywide
inflationary pressures and supply chain challenges, including raw
material and labour shortages
-- ROCE improvement of 280bps against H1 2019 to 15.5%
-- Reduction in leverage to 0.9x
-- Interim dividend reinstated at 4p per share, representing a
4% increase over 2019 and reflecting the strong performance and
confidence in outlook
Jo Hallas, Chief Executive Officer, commented : "We are
optimistic that the momentum seen in the first half will continue
through the remainder of the year, however raw material and labour
availability, as well as input cost inflation continue to be
headwinds. Consequently, we expect full year adjusted operating
profit will be slightly above the top end of the current range of
analyst expectations(1) .
"We are pleased to have reinstated the progressive dividend,
signalling our confidence in the future. The Group is well
positioned for future growth, benefiting from long-term structural
industry growth drivers, our strategic initiatives and building on
our portfolio of differentiated products, market-leading brands and
deep customer relationships. "
(1) Company compiled analyst consensus range: GBP88.6 million -
GBP90.7 million. Details can be found at:
https://www.tymanplc.com/investor-relations/analysts-consensus
27 July 2021
Enquiries
Tyman plc investor.relations@tymanplc.com
Jo Hallas - Chief Executive Officer
Jason Ashton - Chief Financial Officer
MHP Communications 020 3128 8100
Reg Hoare / Rachel Farrington / Ailsa Prestige tyman@mhpc.com
Analyst and investor presentation
Tyman will host an analyst and investor presentation at 9.30
a.m. today, Tuesday 27 July 2021, which will be webcast at:
https://webcasting.brrmedia.co.uk/broadcast/60d99be10bb2806642d65d9f
The audio conference call details are:
Number +44 (0) 330 336 9434
Confirmation code 1398757
Notes to editors
Tyman (TYMN: LSE) is a leading international supplier of
engineered fenestration components and access solutions to the
construction industry. The company designs and manufactures
products that enhance the comfort, sustainability, security, safety
and aesthetics of residential homes and commercial buildings.
Tyman's portfolio of leading brands serve their markets through
three divisions: Tyman North America, Tyman UK and Ireland and
Tyman International. Headquartered in London, the Group employs
approximately 4,300 people with facilities in 17 countries
worldwide. Further information is available at www.tymanplc.com
.
Overview of results
Performance in H1 2021
The momentum seen in late 2020 continued into the first half of
2021, with favourable structural drivers, particularly in
residential markets, resulting in strong growth ahead of
expectation. Revenue for the period was GBP312.5 million (H1 2020:
GBP254.1 million), an increase on a LFL basis of 32% compared to H1
2020 and more importantly 10% LFL growth over H1 2019. Reported
revenue increased 23% compared to H1 2020, being impacted by the
strengthening of Sterling and the divestment of the Ventrolla
business in November 2020.
The new and accelerated trends arising from COVID-19 have
continued across most territories, with consumers spending more
time at home and therefore seeking more space or adapting existing
space for flexible use. Household savings ratios have increased,
and consumers are prioritising expenditure on the home over leisure
activities. Increased mortgage lending and low interest rates have
also supported housing market activity, particularly in the US and
UK, as has fiscal stimulus, such as the stamp duty holiday in the
UK and the 'super bonus' incentive for home improvements in Italy.
In the US, the lack of inventory for both new and existing homes,
affordability, and the increasing rate of millennial household
formation have also continued to contribute to strong growth in
both single-family starts and RMI activity.
The high levels of demand have continued to put pressure on
service levels industrywide in most of the Group's territories,
exacerbated by raw material availability issues and global
logistics disruption. The US has also suffered from a very tight
labour market, resulting in operational challenges which have
impacted production and shipping levels. Steps have been taken to
increase capacity and throughput, including expanding operating
hours, increasing wage rates and other incentives, and implementing
various productivity improvement initiatives. This also includes a
number of capital investment projects to structurally expand
capacity. The business is working closely with customers to manage
demand and with suppliers to secure inventory.
The spike in demand for goods globally has also driven
significant increases in commodity costs and freight costs, with
the US also seeing significant labour cost inflation. The Group has
implemented price increases and temporary surcharges to recover
cost inflation, although with some customer pricing mechanisms,
there is a lag in recovery.
Despite the operational challenges and cost inflation, the
strong revenue growth and impact of pricing combined with the
benefit of self-help initiatives, resulted in LFL adjusted
operating profit growth of 60% compared to H1 2020 and 20% compared
to H1 2019. Reported adjusted operating profit increased 53%, with
the unfavourable impact of exchange rates offset by a benefit from
the disposal of the loss-making Ventrolla business. Adjusted
operating margin expanded from 12.3% to 15.3%.
Dividend
Due to the continued strength of performance and confidence in
the outlook, the Board is pleased to be able to reinstate the
dividend in line with the Group's progressive dividend policy. An
interim dividend of 4.0 pence per share will be paid on 10
September 2021 to shareholders on the register at close of business
on 6 August 2021. This represents growth of 4% compared to H1
2019.
Health and safety
The health and safety of our people is the Group's top priority,
with this culture now increasingly embedded through the 'safety is
our first language' engagement programme. This led to continued
improvement in underlying safety performance, although the high
level of operational intensity meant this was not as significant as
expected. The lost time incident frequency rate including COVID-19
cases resulting from workplace transmission increased to 5.7
incidents per million hours worked (H1 2020: 1.5). Excluding these
COVID-19 cases, the lost time incident frequency rate was 1.4, a 3%
reduction compared to H1 2020.
Strategic progress
The Group has continued to progress its Focus, Define, Grow
strategy, which is underpinned by the three sustainability pillars
of Sustainable Operations, Sustainable Culture, and Sustainable
Solutions. The strategy was discussed in more detail at the Capital
Markets Event held in May 2021.
The Focus activities have continued to progress and the benefits
from the various initiatives to streamline operations completed in
2020 are being realised as planned. Further inter-site line
transfers in North America were completed, although there were some
delays so as not to further compromise service levels. Work also
commenced with optimising the distribution footprint in the western
US, and upgrading IT systems to enhance customer service levels,
generate efficiencies and improve decision-making. Progress has
also been made with the Sustainable Operations activities. A new
water recirculation system at the most water intensive plant has
been fully commissioned and is delivering good reductions in
municipal water consumption. Tyman's two-year programme to define
science-based targets is underway, with a detailed analysis of
carbon footprint across the value chain now in progress. As part of
the Task Force for Climate-related Financial Disclosures (TCFD)
compliance journey, an in-depth review of the risks and
opportunities of climate change on the Group's operations and
supply chain has also been initiated.
The Define strategic pillar, which centres on building cultural
cohesion across the Group has continued to gain momentum, with
deployment of the new purpose, values, and Code of Business Ethics
now well progressed. This 'One Tyman' culture will underpin the
Group's Sustainable Culture initiatives. Development of the 'Tyman
Excellence System' has also continued, with a focus on Lean
Excellence.
The activities to Grow market share have yielded positive
results, with strong service levels relative to competitors
delivering further net customer wins in North America, a series of
new products successfully launched in the period, and a strong
pipeline of launches scheduled for the second half. Channel
expansion activities also continued to progress, with increased
systems house partnership activity. New product development
activities included developing Sustainable Solutions to grow the
proportion of revenues from positive impact products. Various
initiatives are also underway across the Group to improve the
sustainability of packaging and reduce the use of hazardous
substances in production. This includes testing the use of
bio-based and 100% recycled plastics and evaluating the use of more
environmentally friendly alloys in hardware products. Building on
the Cradle2Cradle(TM) certification for Q-Lon seals previously
achieved, work is underway to certify additional product lines.
Outlook
The momentum seen in residential markets in the first half of
the year is expected to continue through the remainder of the year,
driven by the favourable structural and economic trends.
Availability of labour and building products, as well as price
inflation of housing and RMI activity may lead to a slowing in
demand later in the year, particularly in North America. Some
uncertainty also remains over the impact of the eventual ending of
government support measures, as well as the easing of COVID
restrictions allowing increased travel and leisure activities to
take place at the expense of home improvement spending. Commercial
markets are expected to continue to recover from delayed project
activity, supported by increased investment in public
infrastructure projects.
Several activities are underway to improve productivity levels
and increase capacity to meet both current and expected longer-term
demand. This includes investments in additional urethane seals
capacity in both the UK and North America, with this additional
capacity due to come online between Q4 2021 and Q2 2022.
Investments are also being made to increase capacity for hardware
production, including new equipment and further inter-site line
transfers to optimise the network and improve resilience.
Full year adjusted operating profit is expected to be slightly
above the top end of the current range of analyst expectations.
Further pricing actions will be implemented where necessary to
recover cost inflation, which is expected to continue to be a
headwind for the remainder of the year.
In summary, the Group is well positioned for future growth,
benefiting from long-term structural industry growth drivers, our
strategic initiatives and building on our portfolio of
differentiated products, market-leading brands and deep customer
relationships.
Jo Hallas
Chief Executive Officer
Tyman North America
GBPm except where H1 H1 H1 2019 LFL LFL
stated
2021 2020 vs 2020 vs 2019
-------------------- ------ ------ -------- --------- ---------
Revenue 191.6 168.2 187.0 +25% +10%
Adjusted Operating
Profit 34.0 24.8 31.4 +49% +17%
Adjusted Operating
Margin 17.7% 14.7% 16.8% +290bps +100bps
-------------------- ------ ------ -------- --------- ---------
Markets
The US residential market has reached post-recession record
levels, driven by the limited supply of new and existing homes,
demographic shifts and the "urban flight" and "nesting" trends. H1
2021 housing starts grew 25% (28% vs H1 2019), with single family
starts, to which the division has proportionally higher exposure,
increasing 31% compared to the same period in 2020 (31% vs H1
2019). Residential housing permits, a key leading indicator, are up
31%, with single family permits up 35% compared to 2020 (41% vs H1
2019).
The repair and remodelling market continued to experience strong
growth due to the strength of the housing market, availability of
affordable credit, and people spending more time at home. The
Leading Indicator of Replacement Activity (LIRA) index estimates
remodelling activity was up 6% to the end of June 2021 and NAHB's
RMI average index was significantly higher at 87 compared to June
2020 of 73 (June 2019: 54).
Commercial construction markets were more mixed, with signs of
recovery in certain sectors. Non-building construction starts rose
4%, while non-residential building starts were slightly ahead of H1
2020. Environmental public works starts, to which the commercial
access business is particularly exposed, were up c. 35% in H1
2021.
The Canadian residential market has seen a robust recovery and
momentum continued through H1 2021. Total housing starts increased
47% compared to H1 2020, with single family up 55%.
Business performance and developments
The North America division started the year very strongly, with
LFL revenue growth of 25% compared to H1 2020 and 10% compared to
H1 2019, driven by the positive momentum in the US and Canadian
housing markets, pricing actions and continued share gain. This
growth was however constrained by industrywide raw material and
labour availability issues, which particularly impacted production
and shipping rates in May and June.
Labour availability has been a widespread problem across the US
manufacturing sector as demand for goods increased sharply while
government support measures remained in place. This created
operational challenges in certain facilities, requiring increased
overtime and impacting productivity levels. The division has
implemented extensive employee engagement and retention activities,
including wage increases and retention bonuses to alleviate the
situation. These measures have delivered some improvement; however,
activities will continue to attract and retain quality labour. The
division has implemented a series of price increases and temporary
surcharges to recover input cost inflation, although with some
customer pricing mechanisms, there is a lag in recovery.
The strong revenue growth including price increases, combined
with benefits being realised from continuous improvement
activities, resulted in LFL adjusted operating profit growth of 49%
in H1 2021 compared to H1 2020 and 17% growth compared to H1 2019.
Adjusted operating margin expanded by 300 bps to 17.7%.
The business continued to build on its strong value proposition
to gain market share, with net business wins of c. $1.9m annualised
achieved in the period, in part due to the strength of service
provided relative to peers. Good progress was made with the product
portfolio harmonisation initiative, with the current focus being on
rationalisation and repositioning of the sliding patio door and
casement lock portfolios.
The division continued to drive continuous improvement
activities, with near-term focus on increasing capacity and
throughput to meet heightened demand. This has included some
temporary outsourcing to increase capacity at facilities that have
been particularly constrained. Work to optimise the distribution
footprint in the western US commenced, with consolidation to a
single warehousing site in Dallas and further inter-site line
transfers to create space in the Sioux Falls facility underway. In
line with the Group's plans to upgrade the IT landscape, work has
started to develop a new integrated ERP platform which will enable
a more streamlined ordering process for customers, enable shared
services and improve our analytical capabilities.
LFL revenue growth for the division's access solutions business,
Bilco, was 22% higher than H1 2020 and 11% higher than H1 2019,
which was ahead of the commercial market to which this business is
more exposed. Sales of residential products were strong, and roof
hatches and safety products gained momentum through the period,
aided by wholesale roofing distribution partners normalising
inventory levels after destocking in 2020.
New product development
The division continues to achieve success bringing new products
to market, in line with our strategy to create differentiated value
to customers, with incremental revenue delivered in line with
expectations. During H1 2021, the division launched the new
Pinnacle(TM) balance, with encouraging levels of early sales
through development partners. The Pinnacle(TM) is designed to
enhance performance, minimize customer SKU complexity, and reduce
room in the window jamb enabling customers to add features or
remove material costs from the window. The main focus of innovation
activity for H2 is on the development of the entry price point
sliding patio door solution, which has been redesigned to compete
more effectively in this growing segment.
Outlook
The market strength is expected to continue through the
remainder of the year, although availability of materials and
skilled US labour, inflationary pressure, and interest rate
uncertainty may create headwinds which could limit market activity
later in the year. US single family residential starts are
projected to increase 13% for the full year relative to 2020.
Repair and remodelling activity is expected to remain strong, with
LIRA projecting growth of c. 8% for the full year. The commercial
market is projected to continue a modest recovery, with
non-residential building starts projected to end the year 5% ahead
of 2020. The Canadian market is expected to moderate in the second
half of the year, after unprecedent demand in H1, as interest rates
begin to rise and COVID restrictions are further eased.
The division's primary focus in the second half will be on
increasing capacity in order to meet heightened demand. This
includes investing in additional urethane seal manufacturing
capacity, due to be commissioned in early 2022. The division will
continue to monitor cost inflation and adjust pricing mechanisms
accordingly. Work will also continue on optimising the distribution
footprint, driving share gains and completing the current phases of
the product portfolio harmonisation initiative.
Tyman UK & Ireland
GBPm except where H1 H1 H1 LFL LFL
stated
2021 2020 2019 vs 2020 vs 2019
-------------------- ------ ------ ------ --------- ---------
Revenue 54.3 39.1 54.0 +44% +7%
Adjusted Operating
Profit 7.8 3.8 7.0 +70% +5%
Adjusted Operating
Margin 14.3% 9.7% 13.0% +210bps -30bps
-------------------- ------ ------ ------ --------- ---------
Markets
The momentum seen in the UK residential RMI market at the end of
2020 continued through H1 2021, supported by the UK Government
stamp duty holiday, high consumer savings ratios, and the
favourable structural trends in the housing market accelerated by
COVID-19. The IHS Markit / CIPS UK Construction PMI was at 66 in
June 2021 (June 2019: 43), signalling the highest rate of
construction output growth since June 1997. The number of housing
transactions was c. 50% higher than the same period in 2019.
The commercial market has recovered at a slower rate than the
residential market, with project delays and the impact of social
distancing measures on construction sites.
Business performance and developments
The UK & Ireland division achieved LFL revenue growth of 44%
compared to H1 2020, and 7% compared to H1 2019. This reflects the
buoyant residential RMI market and the effect of pricing actions,
partially offset by the impact of the weaker commercial market. On
a reported basis, revenue was 39% ahead of H1 2020 and 1% ahead of
H1 2019, reflecting the disposal of Ventrolla, the Group's sash
window repair business, which was sold in November 2020.
This performance was achieved despite constraints arising from
industrywide supply chain pressures driven by material shortages
and global shipping disruption, which have impacted service levels.
Actions have been taken to resolve shortages, including the use of
expedited freight services.
Increases in material and transport costs were partially
mitigated through price increases and the favourable impact of
foreign exchange on material purchases, with LFL adjusted operating
profit 70% higher than H1 2020 and 5% higher than H1 2019. LFL
adjusted operating margin expanded by 210bps against H1 2020, in
spite of H1 2020 benefitting from COVID-related cost-saving actions
and GBP1.5 million in receipts from the UK Government Job Retention
Scheme, which were subsequently repaid in December 2020. Compared
to H1 2019, LFL adjusted operating margin was 30bps lower due to
material and freight cost inflation. On a reported basis, adjusted
operating profit was 104% higher than H1 2020, reflecting the
disposal of Ventrolla, which was loss-making.
Hardware sales into both the OEM and distribution channels
continued to be strong in H1 2021, driven by the strong housing and
RMI market. Traction is being gained with the ERA Protect(TM)
product range, albeit at a slower rate than planned, as sales of
home security products have been subdued as a result of consumers
spending more time at home. The division has continued to invest in
enhancing its e-commerce platform, with a new consumer focussed
microsite for ERA Protect(TM) expected to go live in the second
half of the year to expand sales through the growing e-commerce
channel.
Access 360, the division's commercial access portfolio, has had
a challenging start to the year, with customer-driven delays to a
number of commercial projects. The business has continued to focus
on increasing its offering in the specification market and has
expanded its online technical CPD webinars, improving engaging with
architects and specifiers. This has generated a positive pipeline
of projects for delivery over the course of the next 12 months.
New product development
Several new products were launched in the period, in line with
our strategy to broaden our certified products portfolio and extend
our ranges. This included a new contemporary lever range, with high
corrosion resistance and durability, along with fire door approval
enabling use in both commercial and residential applications.
Initial feedback from customers has been very positive.
An adjustable riser door frame product, which addresses an
industrywide challenge with installing riser doors, is due for
launch in the second half of 2021 . The product removes the need
for installers to use separate packers which can impact fire
integrity, and also integrates an intumescent strip to avoid the
need to apply intumescent mastic. This solution reduces door
installation time by up to 50%, delivering significant productivity
and efficiency savings to customers.
Outlook
The momentum seen in the RMI market is expected to continue
through Q3, supported by a high level of housing transactions.
There remains some uncertainty beyond this as the stamp duty
holiday and other government support measures come to an end and
COVID restrictions ease further, with the risk that consumers
divert a greater share of income to travel and leisure activities
rather than home improvements. The commercial market is expected to
continue to recover more slowly, with CPA forecasts indicating it
will be 2022 before output returns to 2019 levels. A number of
large infrastructure projects have commenced, which are expected to
benefit the commercial access business.
Increases in material and shipping costs will continue to create
headwinds for at least the remainder of the year and pricing
actions will be taken as required to manage cost inflation.
The division's focus in H2 2021 will continue to be driving
momentum with new product launches, including the expansion of the
ERA Protect range, enhancing the e-commerce experience, and
optimising the cost base through continued integration of the
Access 360 business.
Tyman International
GBPm except where H1 H1 H1 LFL LFL
stated
2021 2020 2019 vs 2020 vs 2019
-------------------- ------ ------ ------ --------- ---------
Revenue 66.6 46.8 60.9 +45% +13%
Adjusted Operating
Profit 10.5 4.6 7.7 +132% +41%
Adjusted Operating
Margin 15.7% 9.9% 12.6% +590bps +310bps
-------------------- ------ ------ ------ --------- ---------
Markets
Market demand was strong in the period across all key
International division markets, in spite of some level of continued
COVID-19 restrictions. The IHS Markit Eurozone Construction PMI
rose to 50.3 in June 2021, bringing it back in line with the level
at June 2019 (50.8), although there is wide regional variation
within this. The Q2 PMI for the division's largest market, Italy of
57.9 was the highest level seen since Q2 2001, with near-record
rates of growth in both housing and commercial activity.
Continental Europe has seen broad-based growth in demand,
spanning both the residential and commercial sectors. Consumers are
continuing to invest in their homes, supported by government
stimulus measures, such as the Italian energy efficiency
'super-bonus' scheme, easing of COVID-19 restrictions and improved
consumer confidence. The picture is similar in markets outside of
Europe, with a notable pickup in the Australian housing market
driven by their government stimulus package for home building and
renovation projects. The GCC cluster is also seeing a strong
uplift, coming predominantly from the commercial sector through
increased project activity.
Business performance and developments
The International division had a very strong start to the year.
LFL revenue grew 45% in H1 2021 against H1 2020 and 13% against H1
2019. This was largely driven by market buoyancy, share growth in
many of the division's key markets, as well as pricing and
surcharges. This growth was achieved despite uncertainty brought on
by Brexit and global shipping challenges. The division's top
markets representing c. 90% of revenue all grew compared to 2019.
Sales in Italy, the division's largest market, increased 13%
compared to 2019, reflecting both underlying market growth as well
as share gain.
The combination of strong revenue growth and the resulting
effect on fixed cost absorption, favourable market mix and
self-help actions taken in 2019/20, has generated LFL adjusted
operating profit growth of 132% compared to H1 2020 and 41%
compared to H1 2019. Adjusted operating margin expanded 580bps to
15.7% (310bps vs H1 2019). In H1 2020, the division benefitted from
government job retention support and various cost-saving actions,
with all salary reductions and UK job retention receipts
subsequently repaid in December 2020.
The high activity levels have put strain on the supply chain,
resulting in industrywide raw material availability issues and cost
inflation, particularly affecting the seals business early in the
period. The business has taken steps to increase production,
including additional shifts and temporary labour. The impact of
cost inflation has been mitigated through two price increases
implemented during the year as well as temporary materials
surcharges on certain products.
Good progress has been made on the divisional strategic
initiatives. Partnership activity with key systems houses has
further expanded, with long-term business opportunities being
created through development of bespoke or customised products. The
division has started a programme to drive greater levels of
automation in the Budrio hardware manufacturing facility. Work has
continued on sustainability activities, including developing new
products to enhance sustainability, and new processes for existing
products that will reduce the division's carbon footprint.
New product development
The business continued its focus on new product development
throughout the pandemic and launched a number of new products in H1
2021, capitalising on aesthetic, safety and sustainability trends.
This included the GOS Pull & Slide system, which combines the
benefits of a lift-and-slide system, with a perfectly flush glass
surface when closed, minimal frame widths, and a new generation
roller system with excellent load bearing ability. Also launched in
the period was the CHIC concealed hinge for bottom-hung windows
with high load capacity and wide sash opening of up to 180deg, as
well as providing the aesthetic benefits enabled by concealed
hardware.
In H2, the business will launch a fire-retardant urethane seal,
which will combine the existing acoustic, thermal performance and
durability benefits of Q-Lon with fire-rated performance. This
addresses the growing market for fire-rated products in line with
enhanced fire safety regulations.
Outlook
The momentum seen in the first half of the year is expected to
continue through the second half, with indicators in core markets
remaining positive, albeit with some uncertainty over the effect of
government support measures coming to an end and potential
diversion of consumer spending to travel and leisure as COVID
restrictions lift.
The key priority for the division in H2 will be to continue
servicing the high levels of demand. In response to this, the
business has invested in additional urethane seal manufacturing
capacity, due to be commissioned in Q4 2021 at the Newton Aycliffe,
UK site. Further investments in technology and capacity are also
planned to support anticipated growth in the hardware business. The
division will continue to drive share gains in core markets through
new product launches and channel expansion activities.
FINANCIAL REVIEW
Income statement
Revenue and profit
Reported revenue in the period increased by 23% to GBP312.5
million (H1 2020: GBP254.1 million), reflecting a significant
increase in volume driven by the recovery from COVID-19 and
strength of underlying demand, as well as pricing actions of GBP5.5
million, offset by adverse foreign exchange movements of GBP16.2
million and the impact of the disposal of Ventrolla of GBP1.5
million. On a LFL basis, revenue increased 32% compared to H1 2020.
Compared to H1 2019, which provides a more normalised comparator in
light of COVID-19, reported revenue increased 4%, and LFL revenue
increased 10%, reflecting the favourable market conditions.
Adjusted administrative expenses increased to GBP 61.2 million
(H1 2020: GBP48.6 million), as a result of the reversal of the
temporary cost-management actions taken in H1 2020 to mitigate the
impact of COVID-19. This included significant curtailment of
discretionary expenditure, salary reductions, cancellation of the
senior management bonus scheme, as well as utilisation of available
government job retention schemes in various territories. The Group
received a total of GBP3.3 million in H1 2020 from government job
retention schemes across various territories, with GBP2.3 million
of UK government support being subsequently repaid in December 2020
once the impact of COVID-19 had become clear. Adjusted
administrative expenses were flat against H1 2019 (GBP61.4
million).
Adjusted operating profit increased by 53 % to GBP 47.8 million
(H1 2020: GBP31.3 million). This was positively impacted by the
increase in revenue, productivity improvements from continuous
improvement initiatives of c. GBP6.3 million, and GBP0.8 million
from the disposal of the loss-making Ventrolla business. These
benefits were partially offset by the impact of raw material and
freight inflation over and above pricing actions, labour rate
increases, the reversal of the temporary COVID-related
cost-savings, and GBP2.2 million of adverse foreign exchange
movements. On a LFL basis, adjusted operating profit increased 60%.
Compared to H1 2019, LFL adjusted operating profit increased by
20%, reflecting the revenue growth and benefits from self-help
initiatives. The Group's adjusted operating profit margin increased
300 bps to 15.3% (H1 2020: 12.3%)
Adjusted profit before tax increased by 76% to GBP43.4 million
(H1 2020: GBP24.7 million) and on a LFL basis increased by 81%,
benefiting from lower finance costs due to the reduction in net
debt. Reported profit before taxation increased by 133% to GBP34.3
million (H1 2020: GBP14.7 million), reflecting lower exceptional
items.
Materials and input costs
GBPm except where stated FY 2020 Materials(1) Average(2) Spot(3)
-------------------------- --------------------- ----------- --------
Aluminium 14.8 +18.8% +34.1%
Polypropylene 30.9 +66.7% +31.8%
Stainless steel 54.8 +5.3% +26.1%
Zinc 27.5 +11.0% +27.3%
Far East components(4) 37.4 +6.9% +6.8%
-------------------------- --------------------- ----------- --------
(1) FY 2020 materials cost of sales for raw materials,
components and hardware for overall category. Only major materials
categories are presented
(2) Average H1 2021 tracker price compared with average H1 2020 tracker price
(3) Spot tracker price as at 30 June 2021 compared with spot tracker price at 30 June 2020
(4) Pricing on a representative basket of components sourced
from the Far East by the UK & Ireland division
Both spot and average prices across all categories rose
significantly in H1 2021. Price increases and surcharges have been
implemented to recover cost increases, albeit due to customer
pricing mechanisms, there is a timing lag in recovery.
Exceptional items
Certain items have been drawn out as exceptional such that the
effect of these items on the Group's results can be better
understood and to enable a clearer analysis of trends in the
Group's underlying performance.
GBPm H1 2021 H1 2020
------------------------------ -------- --------
Footprint restructuring 0.1 -
M&A and integration - (0.5)
Redundancy and restructuring - (0.3)
0.1 (0.8)
------------------------------ -------- --------
Footprint restructuring
The footprint restructuring credit relates to release of an
excess provision made in the prior year related to the streamlining
of the International footprint. The classification as exceptional
is consistent with the original charge.
M&A and integration
M&A and integration costs of GBP0.5 million in the prior
period relate to costs associated with the integration of
businesses acquired in 2018, predominantly Ashland.
Redundancy and restructuring
Redundancy and restructuring costs of GBP0.3 million in the
prior period relate primarily to costs associated with a workforce
reduction.
Finance costs
Net finance costs decreased to GBP4.7 million (H1 2020: GBP6.3
million).
Interest payable on bank loans, private placement notes and
overdrafts decreased to GBP3.1 million (H1 2020: GBP5.0 million),
predominantly reflecting the reduction in net debt. Interest on
lease liabilities of GBP1.2 million reduced slightly (H1 2020:
GBP1.5 million) as a result of a reduction in lease
liabilities.
Non-cash movements charged to net finance costs in the period
include amortisation of capitalised borrowing costs of GBP0.3
million (H1 2020: GBP0.3 million) and pension interest costs of
GBP0.1 million (H1 2020: GBP0.1 million).
Taxation
The Group reported an income tax charge of GBP8.0 million (H1
2020: GBP2.3 million), comprising a current tax charge of GBP10.3
million (H1 2020: GBP2.9 million) and a deferred tax credit of
GBP2.3 million (H1 2020: credit of GBP0.6 million), representing an
effective tax rate of 23.3% (H1 2020: 15.6%). The adjusted
effective tax rate was 23.3% (H1 2020: 21.7%). The increase in the
effective tax rate reflects the one-off release of an excess
provision and utilisation of available tax credits in the prior
period. This is the Group's current best estimate of the effective
tax rate for the 2021 full year.
During the period, the Group paid corporation tax of GBP9.2
million (H1 2020:
GBP1.3 million). The increase is a result of the increase in
profit levels as well as payment deferrals granted by the US and
Italian governments H1 2020 in light of COVID-19.
Earnings per share
Basic earnings per share increased by 112% to 13.5 pence (H1
2020: 6.4 pence), and adjusted earnings per share increased to 17.1
pence (H1 2020: 9.9 pence), reflecting the increase in profit after
tax.
There is no material difference between these calculations and
the fully diluted earnings per share calculations.
Cash generation, funding and liquidity
Cash and cash conversion
GBPm H1 2021 H1 2020
----------------------------------------- -------- --------
Net cash generated from operations 24.1 33.6
Add: Pension contributions 0.4 0.2
Add: Income tax paid 9.2 1.3
Less: Purchases of property, plant and
equipment (5.5) (3.7)
Less: Purchases of intangible assets (1.5) (0.4)
Add: Proceeds on disposal of PPE 0.7 -
----------------------------------------- -------- --------
Operational cash flow after exceptional
cash costs 27.4 31.0
Exceptional cash costs 0.2 2.2
----------------------------------------- -------- --------
Operational cash flow 27.6 33.2
Less: Pension contributions (0.4) (0.2)
Less: Income tax paid (9.2) (1.3)
Less: Net interest paid(1) (4.4) (6.6)
Less: Exceptional cash costs (0.2) (2.2)
----------------------------------------- -------- --------
Free cash flow 13.4 22.9
----------------------------------------- -------- --------
Operational cash flow in the period decreased by 17% to GBP27.6
million, predominantly due to a higher working capital outflow, and
an increase in capital expenditure. The working capital outflow in
H1 2021 was GBP24.9 million compared to GBP7.3 million in H1 2020,
due to the effect of COVID-19 on the typical seasonal build in
2020. H1 2020 also benefitted from deferred government payments
granted due to COVID-19 of c. GBP4 million. Operating cash
conversion in H1 2021 was 58% (H1 2020: 106%).
Free cash flow in the period was lower than H1 2020 at GBP13.4
million (H1 2020: GBP22.9 million) as a result of a lower
operational cash flow, higher income tax payments on account, lower
interest payments and lower levels of exceptional cash flows.
Debt facilities
Bank and US private placement facilities available to the Group,
as at 30 June 2021, were as follows:
Facility Maturity Currency Committed Uncommitted
----------------- --------- -------------- ---------- ------------
2018 Facility Feb 2024 Multicurrency GBP240.0m GBP70.0m
4.97 % USPP Nov 2021 US$ US$55.0m -
5.37 % USPP Nov 2024 US$ US$45.0m -
Other facilities Various EUR EUR0.1m -
----------------- --------- -------------- ---------- ------------
Liquidity
At 30 June 2021 the Group had gross outstanding borrowings of
GBP208.8 million (H1 2020: GBP301.1 million), cash balances of
GBP61.1 million (H1 2020: GBP79.9 million) and committed but
undrawn facilities of GBP153.1 million (H1 2020: GBP78.7 million).
This provides immediately available liquidity of GBP214.2 million
(H1 2020: GBP158.6 million). The Group also has potential access to
the uncommitted GBP70.0 million accordion facility.
Net debt at the period end was GBP146.8 million (H1 2020:
GBP219.8 million). Adjusted net debt, which excludes lease
liabilities and unamortised finance arrangement fees was GBP95.9
million (H1 2020: GBP160.5 million), reflecting strong operational
cash generation and movements in foreign exchange.
Covenant performance
Performance Headroom Headroom
At 30 June 2021 Test (1) (2) (2)
----------------- -------- ------------ --------- ---------
Leverage < 4.0x 0.9x 85.5m 77.5%
Interest Cover > 4.0x 15.8x 81.3m 74.7%
----------------- -------- ------------ --------- ---------
(1) Calculated covenant performance consistent with the Group's
banking covenant test (banking covenants set on a frozen GAAP basis
and not impacted by IFRS 16)
(2) The approximate amount by which adjusted EBITDA would need
to decline before the relevant covenant is breached
At the half year, the Group retained significant headroom on its
banking covenants. Leverage at the period end was 0.9x (H1 2020:
1.8x), reflecting the higher EBITDA and lower level of net debt.
Interest cover at the period end was 15.8x (H1 2020: 8.4x),
reflecting the lower interest expense and an increase in adjusted
EBITDA.
In the prior year, in order to provide additional headroom
during the period of uncertainty arising from COVID-19, the Group
agreed a temporary relaxation of the leverage covenant with its
lenders from 3.0x adjusted EBITDA to 3.5x at December 2020 and 4.0x
at 30 June 2021. From December 2021, this reverts back to 3.0x
adjusted EBITDA.
Balance sheet - assets and liabilities
Working capital
GBPm FY 2020 Mvt FX H1 2021
----------------------- -------- ------- ------ --------
Inventories 84.0 27.9 (1.3) 110.6
Trade receivables 63.1 10.9 (1.3) 72.7
Trade payables (55.1) (10.4) 1.0 (64.5)
----------------------- -------- ------- ------ --------
Trade working capital 92.0 28.4 (1.6) 118.8
----------------------- -------- ------- ------ --------
Trade working capital at the half year, net of provisions, was
GBP118.8 million (H1 2020: GBP114.4 million; FY 2020: GBP92.0
million). The trade working capital build to the half year at
average exchange rates was GBP28.4 million (H1 2020: GBP6.9
million).
The inventory build at average exchange rates was GBP27.9
million (H1 2020: GBP2.0 million). Inventory has increased
significantly as a result of the increase in demand, as well as
delays in shipping finished goods in North America due to workforce
availability issues. Trade receivables and trade payables increased
in the period due to the increased trading activity in the
period.
The year to date increase in trade working capital was partially
offset by a GBP1.6 million adverse exchange movement.
Capital expenditure
Gross capital expenditure increased to GBP7.0 million (H1 2020:
GBP4.1 million) or 1.1x depreciation (H1 2020: 0.6x), as the Group
resumed investment following deferral of most non-essential
expenditure in H1 2020 in light of COVID-19. Capital expenditure
for the full year is expected to be GBP18 - GBP23 million, slightly
lower than previous due to the level of operational intensity. The
Group is prioritising those projects that have the most short-term
impact on capacity.
Balance sheet - equity
Shares in issue
At 30 June 2021, the total number of shares in issue was 196.8
million (H1 2020: 196.8 million) of which 0.5 million shares were
held in treasury (H1 2020: 0.5 million).
Employee Benefit Trust purchases
At 30 June 2021, the EBT held 0.8 million shares (H1 2020: 1.1
million). During the period, the EBT purchased 0.1 million shares
in Tyman plc at a total cost of GBP0.3 million.
Other financial matters
Return on capital employed
ROCE increased by 470 bps to 15.5% (H1 2020: 10.8%) as a result
of the strong adjusted operating profit, the lower carrying value
of intangible assets through amortisation, and the impact of
foreign exchange on goodwill.
Currency
The principal foreign currencies that impact the Group's results
are the US dollar, the Euro, the Australian dollar and the Canadian
dollar. In H1 2021, the Sterling was stronger against the US
dollar, only slightly stronger against the Euro and Canadian
dollar, and weaker against the Australian dollar when compared with
the average exchange rates in H1 2020.
Translational exposure
Currency US$ Euro AUS$ CA$ Other Total
------------------------ -------- ------- ------- ------ ------ -------
% mvt in average rate 10.1% 0.7% (6.2)% 0.7%
GBPm Revenue impact(1) (19.0) (0.3) 0.3 - (2.0) (21.0)
GBPm Profit impact
(1)(2) (3.1) (0.1) 0.1 - (0.3) (3.4)
1c decrease impact GBP217k GBP60k GBP5k GBP9k
(3)
------------------------ -------- ------- ------- ------ ------ -------
(1) Calculated based on H1 2021 financial information
(2) Adjusted Operating Profit impact
(3) Defined as the approximate favourable translation impact of
a 1c decrease in the Sterling exchange rate of the respective
currency on the Group's Adjusted Operating Profit
The net effect of currency translation caused revenue and
adjusted operating profit from ongoing operations to decrease by
GBP21.0 million and GBP3.4 million respectively compared with H1
2020.
Transactional exposure
Divisions that purchase or sell products in currencies other
than their functional currency will potentially incur transactional
exposures. For purchases by the UK & Ireland division from the
Far East, these exposures are principally Sterling/US dollar or
Chinese renminbi. The Group's policy is to recover adverse
transactional currency movements through price increases or
surcharges. Currency forwards are used to cover expected future
purchases for up to six months. The objective is to achieve an
element of certainty in the cost of landed goods and to allow
sufficient time for any necessary price changes to be
implemented.
The gain on foreign exchange hedges in H1 2021 is minimal (H1
2020: gain of GBP0.6 million). The Group's other transactional
exposures generally benefit from the existence of natural hedges
and are immaterial.
Jason Ashton
Chief Financial Officer
Tyman plc
Condensed consolidated income statement
Six months Six months
ended ended Year ended
30 June 30 June 2020 31 December
2021 (unaudited) (unaudited) 2020 (audited)
Note GBPm GBPm GBPm
------------------------------------- ----- ------------------ -------------- ----------------
Revenue 3 312.5 254.1 572.8
Cost of sales (203.5) (174.2) (380.7)
------------------------------------- ----- ------------------ -------------- ----------------
Gross profit 109.0 79.9 192.1
Administrative expenses (70.0) (58.9) (132.4)
------------------------------------- ----- ------------------ -------------- ----------------
Operating profit 39.0 21.0 59.7
Analysed as:
------------------------------------- ----- ------------------ -------------- ----------------
Adjusted(1) operating profit 3 47.8 31.3 80.3
Exceptional items 4 0.1 (0.8) (1.8)
Amortisation of acquired intangible
assets 9 (8.9) (9.5) (18.8)
Operating profit 39.0 21.0 59.7
Finance income 5 - 0.6 0.3
Finance costs 5 (4.7) (6.9) (12.4)
------------------------------------- ----- ------------------ -------------- ----------------
Net finance costs 5 (4.7) (6.3) (12.1)
------------------------------------- ----- ------------------ -------------- ----------------
Profit before taxation 34.3 14.7 47.6
Income tax charge 6 (8.0) (2.3) (10.4)
Profit for the period 26.3 12.4 37.2
------------------------------------- ----- ------------------ -------------- ----------------
Basic earnings per share 7 13.5p 6.4p 19.1p
Diluted earnings per share 7 13.4p 6.4p 19.0p
------------------------------------- ----- ------------------ -------------- ----------------
Non-GAAP alternative performance
measures(1)
Adjusted(1) operating profit 47.8 31.3 80.3
------------------------------------- ----- ------------------ -------------- ----------------
Adjusted(1) profit before
taxation 43.4 24.7 68.4
------------------------------------- ----- ------------------ -------------- ----------------
Basic Adjusted earnings per
share 7 17.1p 9.9p 27.2p
------------------------------------- ----- ----------------
Diluted Adjusted earnings
per share 7 17.0p 9.9p 27.1p
------------------------------------- ----- ------------------ -------------- ----------------
(1) Before amortisation of acquired intangible assets, deferred
taxation on amortisation of acquired intangible assets, impairment
of goodwill, exceptional items, gains and losses on the fair value
of derivative financial instruments, amortisation of borrowing
costs, and the associated tax effect. See definitions on page 39
for non-GAAP alternative performance measures.
Tyman plc
Condensed consolidated statement of comprehensive income
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2021 (unaudited) 2020 (unaudited) 2020 (audited)
GBPm GBPm GBPm
------------------------------------------- ------------------ ------------------ ----------------
Profit for the period 26.3 12.4 37.2
------------------------------------------- ------------------ ------------------ ----------------
Other comprehensive income/(expense)
Items that will not be reclassified
to profit or loss
Remeasurements of post-employment
benefit obligations 1.5 (0.8) 1.4
Total items that will not be reclassified
to profit or loss 1.5 (0.8) 1.4
------------------------------------------- ------------------ ------------------ ----------------
Items that may be reclassified
subsequently to profit or loss
Exchange differences on translation
of foreign operations (5.1) 19.9 (12.7)
Effective portion of changes in
value of cash flow hedges - 0.2 0.3
Total items that may be reclassified
to profit or loss (5.1) 20.1 (12.4)
------------------------------------------- ------------------ ------------------ ----------------
Other comprehensive income/(expense)
for the period (3.6) 19.3 (11.0)
------------------------------------------- ------------------ ------------------ ----------------
Total comprehensive income for
the period 22.7 31.7 26.2
------------------------------------------- ------------------ ------------------ ----------------
Tyman plc
Condensed consolidated statement of changes in equity
Share Treasury Hedging Translation Retained Total
capital reserve reserve reserve earnings equity
GBPm GBPm GBPm GBPm GBPm GBPm
----------------------------- --------- --------- --------- ------------ ---------- --------
At 1 January 2020
(audited) 9.8 (4.3) (0.3) 59.5 351.6 416.3
Total comprehensive
income - - 0.2 19.9 11.6 31.7
Profit for the period - - - - 12.4 12.4
Other comprehensive
income/(expense) - - 0.2 19.9 (0.8) 19.3
----------------------------- --------- --------- --------- ------------ ---------- --------
Transactions with
owners - 0.8 - - (0.7) 0.1
Share-based payments(1) - - - - 0.4 0.4
Issue of own shares
from EBT - 1.1 - - (1.1) -
Purchase of own shares
for EBT - (0.3) - - - (0.3)
----------------------------- --------- --------- --------- ------------ ---------- --------
At 30 June 2020 (unaudited) 9.8 (3.5) (0.1) 79.4 362.5 448.1
Total comprehensive
income/(expense) - - 0.1 (32.6) 27.0 (5.5)
Profit for the period - - - - 24.8 24.8
Other comprehensive
income/(expense) - - 0.1 (32.6) 2.2 (30.3)
----------------------------- --------- --------- --------- ------------ ---------- --------
Transactions with
owners - 0.1 - - 0.4 0.5
Share-based payments(1) - - - - 0.5 0.5
Issue of own shares
from EBT - 0.1 - - (0.1) -
At 31 December 2020
(audited) 9.8 (3.4) - 46.8 389.9 443.1
Total comprehensive
income/(expense) - - - (5.1) 27.8 22.7
Profit for the period - - - - 26.3 26.3
Other comprehensive
income/(expense) - - - (5.1) 1.5 (3.6)
----------------------------- --------- --------- --------- ------------ ---------- --------
Transactions with
owners - 0.7 - - (8.2) (7.5)
Share-based payments(1) - - - - 0.6 0.6
Dividends paid - - - - (7.8) (7.8)
Issue of own shares
from EBT - 1.0 - - (1.0) -
Purchase of own shares
for EBT - (0.3) - - - (0.3)
----------------------------- --------- --------- --------- ------------ ---------- --------
At 30 June 2021 (unaudited) 9.8 (2.7) - 41.7 409.5 458.3
----------------------------- --------- --------- --------- ------------ ---------- --------
(1) Share-based payments include a tax debit of GBPNil (six
months ended 30 June 2020: GBPNil; year ended 31 December 2020: tax
credit of GBP0.2 million)
Tyman plc
Condensed consolidated balance sheet
30 June 30 June 31 December
2021 (unaudited) 2020 (unaudited) 2020 (audited)
Note GBPm GBPm GBPm
----------------------------------- ----- ------------------ ------------------ ----------------
TOTAL ASSETS
Non-current assets
Goodwill 8 357.2 393.2 361.9
Intangible assets 9 74.5 100.4 84.1
Property, plant and equipment 10 58.4 66.4 60.7
Right of use assets 49.8 59.5 51.8
Financial assets at fair value
through profit or loss 13 1.1 1.1 1.1
Deferred tax assets 15.8 17.2 16.3
----------------------------------- ----- ------------------ ------------------ ----------------
556.8 637.8 575.9
Current assets
Inventories 110.6 95.1 84.0
Trade and other receivables 83.8 79.0 72.8
Cash and cash equivalents 61.1 79.9 69.7
Derivative financial instruments 13 - 0.1 -
----------------------------------- ----- ------------------ ------------------ ----------------
255.5 254.1 226.5
TOTAL ASSETS 812.3 891.9 802.4
----------------------------------- ----- ------------------ ------------------ ----------------
LIABILITIES
Current liabilities
Trade and other payables (98.4) (81.4) (84.4)
Derivative financial instruments 13 (0.2) - (0.2)
Borrowings 11 (39.8) - (40.3)
Lease liabilities (5.0) (6.3) (5.4)
Current tax liabilities (7.7) (8.3) (6.8)
Provisions (1.4) (1.3) (1.3)
----------------------------------- ----- ------------------ ------------------ ----------------
(152.5) (97.3) (138.4)
Non-current liabilities
Borrowings 11 (116.3) (238.9) (128.8)
Lease liabilities (46.8) (54.5) (48.4)
Deferred tax liabilities (24.4) (31.6) (26.8)
Retirement benefit obligations (6.3) (12.9) (8.9)
Provisions (7.2) (8.1) (7.6)
Other payables (0.5) (0.5) (0.4)
----------------------------------- ----- ------------------ ------------------ ----------------
(201.5) (346.5) (220.9)
TOTAL LIABILITIES (354.0) (443.8) (359.3)
----------------------------------- ----- ------------------ ------------------ ----------------
NET ASSETS 458.3 448.1 443.1
----------------------------------- ----- ------------------ ------------------ ----------------
EQUITY
Capital and reserves attributable
to owners of the Company
Share capital 12 9.8 9.8 9.8
Treasury reserve (2.7) (3.5) (3.4)
Hedging reserve - (0.1) -
Translation reserve 41.7 79.4 46.8
Retained earnings 409.5 362.5 389.9
TOTAL EQUITY 458.3 448.1 443.1
----------------------------------- ----- ------------------ ------------------ ----------------
Tyman plc
Condensed consolidated cash flow statement
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2021 (unaudited) 2020 (unaudited) 2020 (audited)
Note GBPm GBPm GBPm
-------------------------------------------- ----- ------------------ ------------------ ----------------
Cash flow from operating activities
Profit before taxation 3 34.3 14.7 47.6
Adjustments 14 24.3 27.9 55.9
Changes in working capital(1)
:
Inventories (27.9) (2.0) 3.3
Trade and other receivables (12.5) (0.5) 1.7
Trade and other payables 15.5 (4.8) 3.3
Provisions utilised - (0.2) (0.4)
Pension contributions (0.4) (0.2) (1.7)
Income tax paid (9.2) (1.3) (13.8)
Net cash generated from operations 24.1 33.6 95.9
-------------------------------------------- ----- ------------------ ------------------ ----------------
Cash flow from investing activities
Purchases of property, plant
and equipment 10 (5.5) (3.7) (9.9)
Purchases of intangible assets 9 (1.5) (0.4) (0.6)
Proceeds on disposal of PPE 0.7 - -
Acquisitions of subsidiary undertakings(2) - (1.5) (1.5)
Net cash used in investing activities (6.3) (5.6) (12.0)
-------------------------------------------- ----- ------------------ ------------------ ----------------
Cash flow from financing activities
Interest paid (4.4) (6.6) (12.5)
Dividends paid (7.8) - -
Purchase of own shares for EBT (0.3) (0.3) (0.3)
Drawdown of revolving credit
facility - 83.4 91.6
Repayments of revolving credit
facility (9.2) (71.6) (135.7)
Principal element of lease payments (3.2) (3.3) (6.4)
Net cash generated (used in)/from
financing activities (24.9) 1.6 (63.3)
-------------------------------------------- ----- ------------------ ------------------ ----------------
Net (decrease)/increase in cash
and cash equivalents (7.1) 29.6 20.6
Exchange (losses)/gains on cash (1.5) 1.3 0.1
Cash and cash equivalents at
start of period 69.7 49.0 49.0
Cash and cash equivalents at
the end of period 61.1 79.9 69.7
-------------------------------------------- ----- ------------------ ------------------ ----------------
(1) Excluding the effects of acquisition and exchange differences on consolidation.
(2) Net of cash acquired.
Tyman plc
Notes to the condensed consolidated financial statements
1. General information
Tyman plc is a leading international supplier of engineered
fenestration and access solutions to the construction industry. The
Group designs and manufactures products that enhance the comfort,
sustainability, security, safety and aesthetics of residential
homes and commercial buildings. Tyman serves its markets through
three regional divisions. Headquartered in London, the Group
employs approximately 4,300 people with facilities in 17 countries
worldwide.
Tyman is a public limited company listed on the London Stock
Exchange, incorporated and domiciled in England and Wales. The
address of the Company's registered office is 29 Queen Anne's Gate,
London, SW1H 9BU.
These Interim Financial Statements were approved for issue on 27
July 2021 and have been reviewed, not audited, by PwC, the Group's
auditors.
These Interim Financial Statements do not comprise statutory
accounts within the meaning of Section 434 of the Companies Act
2006. Statutory accounts for the year ended 31 December 2020 were
approved by the Board of Directors on 4 March 2021 and delivered to
the Registrar of Companies. The report of the auditors on those
accounts was unqualified, did not contain an emphasis of matter
paragraph and did not contain any statement under Section 498 of
the Companies Act 2006.
The financial information for the year ended 31 December 2020 is
extracted from the Group's consolidated financial statements for
that year.
2. Accounting policies and basis of preparation
2.1 Basis of preparation
The Interim Financial Statements have been prepared in
accordance with the Disclosure and Transparency Rules of the
Financial Conduct Authority and with International Accounting
Standard 34, 'Interim Financial Reporting'. The Interim Financial
Statements should be read in conjunction with the annual financial
statements for the year ended 31 December 2020 and any public
announcements made by Tyman plc during the interim reporting
period.
2.2 Changes in accounting policies and disclosures
2.2.1 New accounting standards effective in period
The accounting standards that became applicable in the period
did not impact on the Group's accounting policies and did not
require retrospective adjustments.
In April 2021, the IFRS Interpretations Committee confirmed
their decision regarding the accounting for Configuration and
Customisation ('CC') costs in a Cloud Computing Arrangements
(Software as a Service 'SaaS') under IAS 38. This does not have an
impact on the current period's results but may impact the treatment
of implementation costs associated with certain system upgrades
planned later in 2021 and 2022. This means that implementation
costs that would previously have been capitalised as intangible
assets may need to be expensed upfront unless they meet the
definition of separable intangible assets. The Group will assess
the appropriate treatment for each system implementation based on
the circumstances. This is not expected to have a material impact
on 2021.
2.2.2 New, revised and amended accounting standards not yet
effective
None of the standards which have been issued by the IASB but are
not yet effective are expected to have a material impact on the
Group.
2.3 Going concern
The Group's business activities, financial performance and
position, together with factors likely to affect its future
development and performance are described in the overview of
results on pages 3 to 5. There have been no changes to the Group
principal risks and uncertainties from those outlined in the annual
report for the year ended 31 December 2020.
As at 30 June 2021, the Group had cash and cash equivalents of
GBP61.1 million and an undrawn RCF available of GBP153.1 million,
giving liquidity headroom of GBP214.2 million. The Group also has
potential access to an uncommitted accordion facility of GBP70
million.
The Group is subject to leverage and interest cover covenants
tested in June and December and had significant headroom on both
covenants at 30 June 2021. In the previous year, to provide
increased headroom during the period of uncertainty arising from
COVID-19, the Group agreed a relaxation of the leverage covenant
from 3.0x adjusted EBITDA to 3.5x at 31 December 2020 and 4.0x at
30 June 2021. The Group has GBP85.5 million of EBITDA headroom on
the leverage covenant (77.5%) and GBP81.3 million on the interest
cover covenant (74.7%).
The Group has modelled a base case scenario and a severe but
plausible downside scenario. The base case scenario reflects the
latest forecast for the remainder of 2021 and 2022, which assumes
current trading conditions continue. The downside scenario assumes
a deterioration of current trading conditions, with revenue falling
5% below the base case in H2 2021 and 12% below the base case in
2022. This scenario could arise if the raw material and labour
availability issues worsen or demand slows as COVID restrictions
continue to ease.
In both scenarios modelled, the Group would retain significant
liquidity and covenant headroom throughout the period to 31
December 2022. Having reviewed the scenario models, available
liquidity and taking into account current trading, the Directors
are satisfied that the Group has sufficient resources to continue
in operation for the foreseeable future, a period of not less than
12 months from the date of this report. Accordingly, the
consolidated financial information has been prepared on a going
concern basis.
2.4 Accounting policies
The accounting policies adopted are consistent with those of the
previous financial year and corresponding interim reporting period.
Taxes on income in the interim periods are accrued using tax rates
that would be applicable to expected total annual profit or
loss.
2.5 Accounting judgements and estimates
The preparation of financial statements requires management to
exercise judgement in applying the Group's accounting policies. It
also requires the use of certain critical accounting estimates and
assumptions that affect the reported amounts of assets,
liabilities, income and expenses. Actual amounts may differ from
these estimates.
In preparing these Interim Financial Statements, the significant
judgements made by management in applying the Group's accounting
policies and the key sources of estimation uncertainty were the
same as those applied to the consolidated financial statements for
the year ended 31 December 2020.
3. Segment reporting
Segment information
The reporting segments reflect the manner in which performance
is evaluated and resources are allocated. The Group operates
through three clearly defined divisions: Tyman North America, Tyman
UK & Ireland and Tyman International.
North America comprises all the Group's operations within the
US, Canada and Mexico. UK & Ireland comprises the Group's UK
and Ireland hardware business, together with Access 360 and Tyman
Sourcing Asia. International comprises the Group's remaining
businesses outside the US, Canada, Mexico and the UK (although
includes the two UK seal manufacturing plants). Centrally incurred
functional costs that are directly attributable to a division are
allocated or recharged to the division. All other centrally
incurred costs and eliminations are disclosed as a separate line
item in the segment analysis.
Each reporting segment broadly represents the Group's
geographical focus, being the North American, UK and International
operations respectively. In the opinion of the Board, there is no
material difference between the Group's operating segments and
segments based on geographical splits. Accordingly, the Board does
not consider geographically defined segments to be reportable. For
completeness, the Group discloses certain financial data for
business carried on in the UK that is not accounted for in Tyman UK
& Ireland in note 3.1.
The following tables present Group revenue and profit
information for the Group's reporting segments, which have been
generated using the Group accounting policies, with no differences
of measurement applied, other than those noted above.
3.1 Revenue
Six months ended Six months ended
30 June 2021 (unaudited) 30 June 2020 (unaudited)
GBP'm GBP'm
--------------- ------------------------------------ ------------------------------------
Segment Inter-segment External Segment Inter-segment External
revenue revenue revenue revenue revenue revenue
--------------- --------- -------------- --------- --------- -------------- ---------
North America 192.7 (1.1) 191.6 169.4 (1.2) 168.2
UK & Ireland 54.5 (0.2) 54.3 39.4 (0.3) 39.1
International 68.2 (1.6) 66.6 47.9 (1.1) 46.8
Total revenue 315.4 (2.9) 312.5 256.7 (2.6) 254.1
--------------- --------- -------------- --------- --------- -------------- ---------
Year ended
31 December 2020 (audited)
GBP'm
--------------- ------------------------------------
Segment Inter-segment External
revenue revenue revenue
--------------- --------- -------------- ---------
North America 374.8 (2.7) 372.1
UK & Ireland 92.8 (0.6) 92.2
International 110.9 (2.4) 108.5
Total revenue 578.5 (5.7) 572.8
--------------- --------- -------------- ---------
Included within the International segment is revenue
attributable to the UK of GBP11.2 million (six months ended 30 June
2020: GBP7.5 million; year ended 31 December 2020: GBP17.2
million).
3.2 Profit before taxation
Six months Six months
ended ended Year ended
30 June 2021 30 June 2020 31 December
(unaudited) (unaudited) 2020 (audited)
Note GBPm GBPm GBPm
--------------------------- ----- -------------- -------------- ----------------
North America 34.0 24.8 64.5
UK & Ireland 7.8 3.8 8.8
International 10.5 4.6 12.3
--------------------------- ----- -------------- -------------- ----------------
Operating segment result 52.3 33.2 85.6
Centrally incurred costs (4.5) (1.9) (5.3)
--------------------------- ----- -------------- -------------- ----------------
Adjusted operating profit 47.8 31.3 80.3
Exceptional items 4 0.1 (0.8) (1.8)
Amortisation of acquired
intangible assets 9 (8.9) (9.5) (18.8)
Operating profit 39.0 21.0 59.7
Net finance costs 5 (4.7) (6.3) (12.1)
Profit before taxation 34.3 14.7 47.6
--------------------------- ----- -------------- -------------- ----------------
4. Exceptional items
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2021 (unaudited) 2020 (unaudited) 2020 (audited)
GBP'm GBP'm GBP'm
----------------------------------- ------------------ ------------------ ----------------
Footprint restructuring - credits 0.1 - 0.2
----------------------------------- ------------------ ------------------ ----------------
Footprint restructuring - net 0.1 - 0.2
M&A and integration - costs - (0.5) (0.8)
M&A and integration - credits - - 0.6
----------------------------------- ------------------ ------------------ ----------------
M&A and integration - net - (0.5) (0.2)
Redundancy and restructuring - (0.3) -
Loss on disposal of business - - (1.8)
0.1 (0.8) (1.8)
----------------------------------- ------------------ ------------------ ----------------
Footprint restructuring
The footprint restructuring credit relates to release of an
excess provision made in the prior year related to the streamlining
of the International footprint. The classification as exceptional
is consistent with the original charge.
M&A and integration
M&A and integration costs in previous periods relate to
costs associated with the integration of businesses acquired in
2018, predominantly Ashland. The M&A and integration credits at
year end 2020 related to the release of an excess warranty
provision made on a previous acquisition.
Redundancy and restructuring
Redundancy and restructuring costs of GBP0.3 million in the
previous period relate primarily to costs associated with a
workforce reduction.
Loss on disposal of business
The loss on disposal of business in the year ended 31 December
2020 related to the loss on disposal of the Ventrolla business,
which was divested on 5 November 2020.
5. Finance income and costs
Six months Six months
ended ended Year ended
30 June 2021 30 June 31 December
(unaudited) 2020 (unaudited) 2020 (audited)
GBPm GBPm GBPm
----------------------------------------- -------------- ------------------ ----------------
Finance income
Gain on revaluation of fair value
hedge - 0.6 0.3
- 0.6 0.3
----------------------------------------- -------------- ------------------ ----------------
Finance costs
Interest payable on bank loans,
private placement notes and overdrafts (3.1) (5.0) (8.9)
Interest on lease liabilities (1.2) (1.5) (2.8)
Amortisation of borrowing costs (0.3) (0.3) (0.5)
Pension interest cost (0.1) (0.1) (0.2)
(4.7) (6.9) (12.4)
----------------------------------------- -------------- ------------------ ----------------
Net finance costs (4.7) (6.3) (12.1)
----------------------------------------- -------------- ------------------ ----------------
6. Taxation
The Group reported an income tax charge to the income statement
of GBP8.0 million (H1 2020: GBP2.3 million), comprising a current
tax charge of GBP10.3 million (H1 2020: GBP2.9 million) and a
deferred tax credit of GBP2.3 million (H1 2020: GBP0.6
million).
The tax charge has been calculated using an effective tax rate
of 23.3% (H1 2020: 15.6%) based on tax rates substantively enacted
at 30 June 2021. The adjusted effective tax rate was 23.3% (H1
2020: 21.7%). This is the Group's current best estimate of the
effective tax rate for the 2021 full year.
Deferred tax balances have been calculated at the substantively
enacted rates they are expected to unwind at in their respective
territories. In the UK, legislation to increase the standard rate
of corporation tax to 25% from 1 April 2023 was substantively
enacted in the Finance Act 2021 on 10 June 2021, and consequently
deferred tax has been remeasured to reflect this.
An actuarial gain on defined benefit pension plans has resulted
in a tax credit to the statement of other comprehensive income of
GBP0.6m.
During the period, the Group paid corporation tax of GBP9.2
million (H1 2020: GBP1.3 million). The increase reflects the ending
of prior year payment deferrals granted by the US and Italian
governments in light of COVID-19.
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2021 (unaudited) 2020 (unaudited) 2020 (audited)
GBPm GBPm GBPm
--------------------------------------- ------------------ ------------------ ----------------
Current taxation
Current tax on profit for the
period (10.3) (4.4) (15.5)
Prior year adjustments - 1.5 1.4
Total current taxation (10.3) (2.9) (14.1)
--------------------------------------- ------------------ ------------------ ----------------
Deferred taxation
Origination and reversal of temporary
differences 2.4 0.6 3.6
Tax rate change adjustment (0.1) - 0.1
Total deferred taxation 2.3 0.6 3.7
--------------------------------------- ------------------ ------------------ ----------------
Income tax charge in the income
statement (8.0) (2.3) (10.4)
--------------------------------------- ------------------ ------------------ ----------------
Income tax charge in the statement
of other comprehensive income (0.6) - (0.1)
--------------------------------------- ------------------ ------------------ ----------------
Total current taxation (10.3) (2.9) (14.2)
Total deferred taxation 2.3 0.6 3.7
Total taxation (8.6) (2.3) (10.5)
--------------------------------------- ------------------ ------------------ ----------------
On 25 April 2019, the European Commission published its final
decision regarding its investigation into the UK CFC rules,
concluding that the exemption applied to income derived from UK
activities constituted a breach of EU State Aid rules.
The Group had previously disclosed a contingent liability but
had not recognised a provision based on analysis performed and the
level of uncertainty in respect of the potential liability. On 29
June 2021, HMRC notified the Group that it had concluded its review
and determined that no State Aid had been provided. As such, there
is no longer a contingent liability at 30 June 2021.
7. Earnings per share
7.1 Basic and diluted earnings per share
Six months Six months
ended ended Year ended
30 June 2021 30 June 31 December
(unaudited) 2020 (unaudited) 2020 (audited)
---------------------------- -------------- ------------------ ----------------
Basic earnings per share 13.5p 6.4p 19.1p
Diluted earnings per share 13.4p 6.4p 19.0p
----------------------------- -------------- ------------------ ----------------
Basic earnings per share amounts are calculated by dividing net
profit for the period attributable to ordinary equity holders by
the weighted average number of ordinary shares outstanding during
the period.
Diluted earnings per share amounts are calculated by dividing
the net profit attributable to ordinary equity holders by the
weighted average number of ordinary shares outstanding during the
period plus the weighted average number of ordinary shares that
would be issued on the conversion of all the dilutive potential
ordinary shares into ordinary shares.
7.2 Weighted average number of shares
Six months Six months
ended ended Year ended
30 June 2021 30 June 31 December
(unaudited) 2020 (unaudited) 2020 (audited)
m m m
--------------------------------------- -------------- ------------------ ----------------
Weighted average number of shares
(1) 196.8 196.8 196.8
Treasury and Employee Benefit
Trust shares (1.5) (1.8) (1.7)
--------------------------------------- -------------- ------------------ ----------------
Weighted average number of shares
- basic 195.3 195.0 195.1
Effect of dilutive potential ordinary
shares (2) 0.7 0.4 0.7
Weighted average number of shares
- diluted 196.0 195.4 195.8
--------------------------------------- -------------- ------------------ ----------------
(1) Including treasury shares
(2) LTIP awards and options
7.3 Non-GAAP alternative performance measure: Adjusted earnings
per share
The Group presents an adjusted earnings per share measure which
excludes the impact of exceptional items, certain non-cash finance
costs, amortisation of acquired intangible assets and certain
non-recurring items. Adjusted earnings per share has been
calculated using the Adjusted profit after taxation and using the
same weighted average number of shares in issue as the earnings per
share calculation. See Alternative Performance Measures on page
39.
Six months Six months
ended ended Year ended
30 June 2021 30 June 31 December
(unaudited) 2020 (unaudited) 2020 (audited)
----------------------------------- -------------- ------------------ ----------------
Basic adjusted earnings per share 17.1p 9.9p 27.2p
Diluted adjusted earnings per
share 17.0p 9.9p 27.1p
----------------------------------- -------------- ------------------ ----------------
8. Goodwill
30 June 30 June 31 December
2021 (unaudited) 2020 (unaudited) 2020 (audited)
GBPm GBPm GBPm
----------------------------------- ------------------ ------------------ ----------------
Net book amount at the beginning
of the period 361.9 371.3 371.3
Exchange difference (4.7) 21.9 (9.4)
Net book amount at the end of the
period 357.2 393.2 361.9
------------------------------------ ------------------ ------------------ ----------------
Goodwill is monitored principally on an operating segment basis
and the net book value of goodwill is allocated by CGU as
follows:
30 June 2021 30 June 31 December
(unaudited) 2020 (unaudited) 2020 (audited)
GBPm GBPm GBPm
----------------------------------- ------------- ------------------ ----------------
North America 261.9 296.4 265.6
UK & Ireland 60.2 60.2 60.2
International 35.1 36.6 36.1
Net book amount at the end of the
period 357.2 393.2 361.9
------------------------------------ ------------- ------------------ ----------------
Impairment assessment
The Directors have considered whether there are any impairment
indicators at the interim and have concluded that there are no
indicators that would require the Group to perform a full
impairment test at 30 June 2021.
9. Intangible assets
30 June 2021 30 June 31 December
(unaudited) 2020 (unaudited) 2020 (audited)
Note GBPm GBPm GBPm
------------------------------------ ------- ------------- ------------------ ----------------
Net book amount at the beginning
of the period 84.1 104.0 104.0
Additions 1.5 0.4 0.6
Disposals - - (0.2)
Amortisation charge for the period (9.5) (10.2) (20.3)
Transfers to property, plant and
equipment - - 0.1
Exchange difference (1.6) 6.2 (0.1)
Net book amount at the end of
the period 74.5 100.4 84.1
--------------------------------------------- ------------- ------------------ ----------------
The amortisation charge for the period includes GBP8.9 million
relating to amortisation of acquired intangible assets (six months
ended 30 June 2020: GBP9.5 million; year ended 31 December 2020:
GBP18.8 million) and GBP0.6 million relating to amortisation of
other intangible assets (six months ended 30 June 2020: GBP0.7
million; year ended 31 December 2020: GBP1.5 million). The
amortisation charge for the period is included in administrative
expenses in the income statement.
10. Property, plant and equipment
30 June 2021 30 June 31 December
(unaudited) 2020 (unaudited) 2020 (audited)
Note GBPm GBPm GBPm
------------------------------------ ------ ------------- ------------------ ----------------
Net book amount at the beginning
of the period 60.7 65.8 65.8
Additions 5.5 3.7 9.9
Disposals (0.9) - (1.3)
Depreciation charge for the period (5.7) (6.6) (12.7)
Impairment charge for the period (0.2) (0.2) (0.5)
Transfers from intangible assets - - (0.1)
Exchange difference (1.0) 3.7 (0.4)
Net book amount at the end of
the period 58.4 66.4 60.7
-------------------------------------------- ------------- ------------------ ----------------
The depreciation charge for the period is included in
administrative expenses in the income statement.
11. Interest-bearing loans and borrowings
31 December
30 June 30 June 2020
2021 (unaudited) 2020 (unaudited) (audited)
GBPm GBPm GBPm
------------- ---- ------------------ ------------------ ------------
Current (39.8) - (40.3)
Non-current (116.3) (238.9) (128.8)
(156.1) (238.9) (169.1)
------------------ ------------------ ------------------ ------------
Movements in interest-bearing loans and borrowings are analysed
as follows:
30 June 30 June 31 December
2021 (unaudited) 2020 (unaudited) 2020 (audited)
Note GBPm GBPm GBPm
---------------------------------- ------ ------------------ ------------------ ----------------
Balance at the beginning of the
period (169.1) (211.8) (211.8)
Drawdown of revolving credit
facility - (83.4) (91.6)
Repayment of revolving credit
facility 9.2 71.6 135.6
Amortisation of borrowing costs (0.3) (0.3) (0.5)
Exchange difference 4.1 (15.0) (0.8)
Balance at the end of the period (156.1) (238.9) (169.1)
------------------------------------------ ------------------ ------------------ ----------------
There were no defaults in the period under the terms of loan
agreements. In July 2020, in order to provide increased headroom in
the period of uncertainty caused by COVID-19, the Group agreed a
temporary relaxation of the leverage covenant with its lenders from
3.0x adjusted EBITDA to 3.5x at December 2020 and 4.0x at 30 June
2021. The Group has significant headroom in both covenants.
The Group has the following undrawn committed multi-currency
revolving credit facility:
30 June 30 June 31 December
2021 (unaudited) 2020 (unaudited) 2020 (audited)
GBPm GBPm GBPm
------------------------- ------------------ ------------------ ----------------
Floating rate
Expiry beyond 12 months (155.5) (81.1) (143.1)
-------------------------- ------------------ ------------------ ----------------
The Group also has access to the uncommitted GBP70.0 million
accordion facility and at 30 June 2021 held aggregate cash balances
of GBP61.1 million (30 June 2020: GBP79.9 million; 31 December
2020: GBP69.7 million).
12. Share capital
Number of Ordinary
shares shares
'000 GBPm
------------------------------ ---------- ---------
At 30 June 2020, 31 December
2020 and 30 June 2021 196.8 9.8
------------------------------- ---------- ---------
13. Financial risk management and financial instruments
13.1 Financial risk factors and fair value estimation
The Group is exposed to risks arising from the international
nature of its operations and the financial instruments which fund
them, in particular to foreign currency, interest rate and
liquidity risks. Full details of the Group's policies for managing
these risks are disclosed in the Group's annual financial
statements for the year ended 31 December 2020.
Since the date of that report there have been no significant
changes in:
-- the nature of the financial risks to which the Group is exposed;
-- the nature of the financial instruments which the Group uses;
-- the Group's contractual cash outflows and the committed
facilities available to fund them; or
-- difference between book value and fair value of any financial instruments.
During the period the Group held no level 1 financial
instruments, there were no transfers between levels and no changes
were made to valuation techniques.
Derivatives shown at fair value in the Group's balance sheet
comprise level 2 interest rate swaps fair valued using forward
interest rates extracted from observable yield curves. The effects
of discounting are generally insignificant for level 2
derivatives.
The Group's other financial instruments are measured at
amortised cost.
13.2 Level 2 and level 3 fair values
The Group has the following financial assets and liabilities
categorised at levels 2 and 3:
31 December
2020
30 June 2021 30 June
(unaudited) 2020 (unaudited) (audited)
GBPm GBPm GBPm
---------------------------------- ------------- ------------------ ------------
Level 2
Derivative financial assets - 0.1 -
Derivative financial liabilities (0.2) - (0.2)
Level 3
Financial assets at fair value
through profit or loss 1.1 1.1 1.1
---------------------------------- ------------- ------------------ ------------
13.3 Fair value of financial assets and liabilities measured at
amortised cost
The fair values of borrowings are as follows:
31 December
2020
30 June 30 June
2021 (unaudited) 2020 (unaudited) (audited)
GBPm GBPm GBPm
------------- ---- ------------------ ------------------ ------------
Current (44.8) - (45.7)
Non-current (111.1) (238.2) (177.2)
(155.9) (238.2) (222.9)
------------------ ------------------ ------------------ ------------
The fair values of trade and other receivables, cash and cash
equivalents, and trade and other payables approximate their
carrying amounts.
14. Adjustments to cash flows from operating activities
The following non-cash and financing adjustments have been made
to profit before taxation to arrive at operating cash flow:
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2021 (unaudited) 2020 (unaudited) 2020 (audited)
Note GBPm GBPm GBPm
------------------------------------ ----- ------------------ ------------------ ----------------
Net finance costs 5 4.7 6.3 12.1
Depreciation of PPE 10 5.7 6.6 12.7
Depreciation of right of use
assets 3.5 3.9 7.7
Amortisation of intangible
assets 9 9.5 10.2 20.3
Impairment of PPE 10 0.2 0.2 0.5
Impairment of ROU assets - - 0.3
Loss on disposal of PPE 0.1 - 1.3
Pension service costs and expected
administration costs 0.2 0.2 0.4
Non-cash provision movements (0.2) 0.1 (0.1)
Share-based payments 0.6 0.4 0.7
24.3 27.9 55.9
------------------------------------ ----- ------------------ ------------------ ----------------
15. Capital commitments
At 30 June 2021, the Group has capital commitments of GBP8.1
million for the purchase of property, plant and equipment and
intangible assets (30 June 2020: GBP0.2 million; 31 December 2020:
GBP1.1 million).
16. Related party transactions
There were no material related party transactions requiring
disclosure, other than compensation of key management personnel
which will be disclosed in the Group's Annual Report and Accounts
for the year ending 31 December 2021.
Statement of Directors' responsibilities
Each of the Directors of Tyman plc confirms, to the best of his
or her knowledge, that:
-- the Interim Financial Statements have been prepared in
accordance with IAS 34 'Interim Financial Reporting' as issued by
the IASB and endorsed and adopted by the EU and give a true and
fair view of the assets, liabilities, financial position and profit
and loss of Tyman plc;
-- the interim report includes a fair review of the information required by:
-- DTR 4.2.7R of the Disclosure Guidance and Transparency Rules
sourcebook of the United Kingdom's Financial Conduct Authority,
being an indication of important events that have occurred during
the first six months of the financial year and their impact on the
interim financial statements; and a description of the principal
risks and uncertainties for the remaining six months of the year;
and
-- DTR 4.2.8R of the Disclosure Guidance and Transparency Rules
sourcebook of the United Kingdom's Financial Conduct Authority,
being related party transactions that have taken place in the first
six months of the current financial year and that have materially
affected the financial position or performance of the Group during
that period; and any changes in the related party transactions
described in the last annual report that could do so.
The Directors of Tyman plc are listed in the Group's Annual
Report and Accounts for the year ending 31 December 2020.
A list of the current Directors is maintained at the Tyman
website: www.tymanplc.com.
By order of the Board
Jo Hallas Jason Ashton
Chief Executive Officer Chief Financial Officer
27 July 2021
Independent review report to Tyman plc
Report on the interim financial statements
Our conclusion
We have reviewed Tyman plc's interim financial statements (the
"interim financial statements") in the interim report of Tyman plc
for the 6 months period ended 30 June 2020. 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 International Accounting Standard 34,
'Interim Financial Reporting', as adopted by the European Union 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 cash flow statement for the period then ended;
-- the Condensed consolidated statement of changes in equity for the period then ended; and
-- the Notes to the condensed consolidated financial statements .
The interim financial statements included in the interim report
have been prepared in accordance with International Accounting
Standard 34, 'Interim Financial Reporting', as adopted by the
European Union 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 interim report, including the interim financial statements,
is the responsibility of, and has been approved by, the directors.
The directors are responsible for preparing the interim report 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 interim report 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 interim
report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the interim financial statements.
PricewaterhouseCoopers LLP
Chartered Accountants
London
27 July 2021
Alternative Performance Measures
The Group uses a number of Alternative Performance Measures
(APMs). APMs provide additional useful information to shareholders
on the underlying performance of the business. These APMs are
consistent with how business performance is measured internally by
the Group, align with the Group's strategy, and remuneration
policies. These measures are not recognised under IFRS and may not
be comparable with similar measures used by other companies. APMs
are not intended to be superior to or a substitute for GAAP
measures.
The following table summarises the key APMs used, why they are
used by the Group, and how they are calculated. Where appropriate,
a reconciliation to the nearest GAAP number is presented. Details
of other APMs are included on the Group's website. Measures
formerly referred to as 'Underlying' are now referred to as
'Adjusted'.
Adjusted operating profit and adjusted operating margin
Definition
Operating profit before amortisation of acquired intangible
assets, impairment of acquired intangible assets, impairment of
goodwill, and exceptional items.
Adjusted operating margin is calculated as adjusted operating
profit divided by revenue, expressed as a percentage.
Purpose
This measure is used to evaluate the trading operating
performance of the Group.
Exceptional items are excluded from this measure as they are
largely one off and non-trading in nature and therefore drawing
these out aids the understanding of performance.
Amortisation of acquired intangible assets is excluded from this
measure as this is a significant non-cash fixed charge that is not
affected by the trading performance of the business.
Impairment of acquired intangible assets and goodwill is
excluded, as this can be a significant non-cash charge.
Reconciliation/calculation
Adjusted operating profit is reconciled on the face of the
income statement on page 20.
Like-for-like or LFL revenue and adjusted operating profit
Definition
The comparison of revenue or operating profit, as appropriate,
excluding the impact of any acquisitions made during the current
year and, for acquisitions made in the comparative year, excluding
from the current year result the impact of the equivalent current
year pre-acquisition period. For disposals, results are excluded
for the whole of the current and prior period. The prior period
comparative is retranslated at the current period average exchange
rate. The Group considers these amendments provide shareholders
with a comparable basis from which to understand the organic
trading performance in the year.
Purpose
This measure is used by management to evaluate the Group's
organic growth in revenue and adjusted operating profit, excluding
the impact of M&A and currency movements.
Reconciliation/calculation
Six months Six months
ended ended
30 June 30 June
2021 (unaudited) 2020 (unaudited)
GBP'm GBP'm
---------------------------------- ------------------ ------------------
Reported revenue 312.5 254.1
Disposal of Ventrolla - (1.5)
Effect of exchange rates - (16.2)
Like-for-like revenue 312.5 236.4
------------------------------------ ------------------ ------------------
Adjusted operating profit 47.8 31.3
Disposal of Ventrolla - 0.8
Effect of exchange rates - (2.2)
Like-for-like adjusted operating
profit 47.8 29.9
------------------------------------ ------------------ ------------------
Adjusted profit before and after tax
Definition
Profit before amortisation of acquired intangible assets,
deferred tax on amortisation of acquired intangible assets,
impairment of acquired intangible assets, impairment of goodwill,
exceptional items, unwinding of discount on provisions, gains and
losses on the fair value of derivative financial instruments,
amortisation of borrowing costs, accelerated amortisation of
borrowing costs and the associated tax effects.
Purpose
This measure is used to evaluate the profit generated by the
Group through trading activities. In addition to the items excluded
from operating profit above, the gains and losses on the fair value
of derivative financial instruments, amortisation of borrowing
costs, accelerated amortisation of borrowing costs and the
associated tax effect are excluded. These items are excluded as
they are of a non-trading nature.
Reconciliation/calculation
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2021 (unaudited) 2020 (unaudited) 2020 (audited)
GBPm GBPm GBPm
------------------------------------- ------------------ ------------------ ----------------
Profit before taxation 34.3 14.7 47.6
Exceptional items (0.1) 0.8 1.8
Loss on revaluation of fair
value hedge - (0.6) (0.3)
Amortisation of borrowing costs 0.3 0.3 0.5
Amortisation of acquired intangible
assets 8.9 9.5 18.8
Adjusted profit before taxation 43.4 24.7 68.4
Income tax charge (8.0) (2.3) (10.4)
Add back: Adjusted tax effect(1) (2.1) (3.1) (4.9)
Adjusted profit after taxation 33.3 19.3 53.1
-------------------------------------- ------------------ ------------------ ----------------
(1) Tax effect of exceptional items, amortisation of borrowing
costs, amortisation of acquired intangible assets, and gain or loss
on revaluation of fair value hedge.
Adjusted earnings per share
Definition
Adjusted profit after tax divided by the basic weighted average
number of ordinary shares in issue during the year, excluding those
held as treasury shares.
Purpose
This measure is used to determine the improvement in adjusted
EPS for the Group's shareholders.
Reconciliation/calculation
Adjusted profit after tax is reconciled above and the number of
shares can be found in note 7.
Leverage
Definition
Adjusted net debt translated at the average exchange rate for
the year divided by adjusted EBITDA as defined in the lending
agreement.
Purpose
This measure is used to evaluate the ability of the Group to
generate sufficient cash flows to cover its contractual debt
servicing obligations.
Reconciliation/calculation
Six months Six months
ended ended
30 June 30 June
2021 (unaudited) 2020 (unaudited)
GBP'm GBP'm
--------------------------------------------- ----------------- -----------------
Adjusted net debt (at average exchange rate) 99.4 155.6
Adjusted EBITDA 110.4 88.3
--------------------------------------------- ----------------- -----------------
Leverage 0.9x 1.8x
--------------------------------------------- ----------------- -----------------
Net debt and adjusted net debt
Definition
Interest-bearing loans and borrowings, net of cash and cash
equivalents, plus unamortised borrowing costs added back.
Purpose
This gives a measure of the gross amount owed to lenders,
without the effect of unamortised borrowing costs.
Reconciliation/calculation
Six months Six months
ended ended
30 June 30 June
2021 (unaudited) 2020 (unaudited)
GBP'm GBP'm
---------------------------- ----------------- -----------------
Borrowings (208.8) (301.2)
Cash 61.1 79.9
Unamortised borrowing costs 0.9 1.5
---------------------------- ----------------- -----------------
Net debt (146.8) (219.8)
---------------------------- ----------------- -----------------
Lease liabilities 51.8 60.8
Unamortised borrowing costs (0.9) (1.5)
---------------------------- ----------------- -----------------
Adjusted net debt (95.9) (160.5)
---------------------------- ----------------- -----------------
Return on Capital Employed (ROCE)
Definition
LTM adjusted operating profit as a percentage of the last
thirteen-month average capital employed.
Purpose
This measure is used to evaluate how efficiently the Group's
capital is being employed to improve profitability.
Reconciliation/calculation
12 months 12 months
ended ended
30 June 30 June
2021 (unaudited) 2020 (unaudited)
GBP'm GBP'm
--------------------------------------------- ----------------- -----------------
LTM adjusted Operating Profit 96.8 74.8
Last thirteen-month average capital employed 624.8 694.8
--------------------------------------------- ----------------- -----------------
ROCE 15.5% 10.8%
--------------------------------------------- ----------------- -----------------
Operating cash conversion and operational cash flow
Definition
Operational cash flow
Net cash generated from operations before Income tax paid,
exceptional costs cash settled in the year and pension
contributions, and after proceeds on disposal of property, plant
and equipment, payments to acquire property, plant and equipment
and payments to acquire intangible assets.
Adjusted operational cash flow
Operational cash flow, less lease payments.
Operating cash conversion
Operational cash flow divided by adjusted operating profit.
Purpose
These measures are used to evaluate the cash flow generated by
the business operations in order to pay down debt, return cash to
shareholders and invest in acquisitions.
Reconciliation/calculation
A reconciliation is included in the financial review on page
16.
DEFINITIONS AND GLOSSARY OF TERMS
Access 360 The Access Solutions business of ERA, constituting
Bilco UK, Profab and Howe Green
APM Alternative Performance Measure
ASEAN Association of Southeast Asian Nations
bps Basis points
CGU Cash Generating Unit
CIPS Chartered Institute of Purchasing and Supply
CMHC Canada Mortgage and Housing Corporation
Dodge Momentum Monthly measure of the initial report for non-residential
Index building projects in planning
EBITDA Earnings before Interest, Taxation, Depreciation
and Amortisation
EBT Employee Benefit Trust
EPS Earnings per Share
GCC The Cooperation Council for the Arab States
of the Gulf
IASB International Accounting Standards Board
IFRS International Financial Reporting Standards
Interim Financial The condensed consolidated interim financial
Statements statements of Tyman plc for the six months
ended 30 June 2021
Interim Report The interim report of Tyman plc for the six
months ended 30 June 2021
IoT Internet of Things
LIRA Leading Indicator of Replacement Activity
LTM Last twelve months
M&A Mergers and acquisitions
NAHB The National Association of Home Builders
NPD New product development
OEM Original equipment manufacturer
PMI Purchasing Managers' Index
PPE Personal protective equipment
Tyman Any references to Tyman, the Group, or the
Company refer to Tyman plc and its subsidiaries
USPP US private placement
EXCHANGE RATES
The following foreign exchange rates have been used in the
financial information to translate amounts into Sterling:
Closing Rates: H1 2021 H1 2020 FY 2020
-------------------- -------- -------- --------
US Dollars 1.3836 1.2327 1.3650
Euros 1.1648 1.0978 1.1129
Australian Dollars 1.8431 1.7925 1.7708
Canadian Dollars 1.7151 1.6817 1.7393
Brazilian Real 6.8786 6.6954 7.0898
-------------------- -------- -------- --------
Average Rates: H1 2021 H1 2020 FY 2020
-------------------- -------- -------- --------
US Dollars 1.3882 1.2607 1.2836
Euros 1.1520 1.1441 1.1251
Australian Dollars 1.8003 1.9192 1.8626
Canadian Dollars 1.7313 1.7189 1.7200
Brazilian Real 7.4790 6.1795 6.6115
-------------------- -------- -------- --------
ROUNDINGS
Percentage numbers have been calculated using unrounded figures,
which may lead to small differences in some figures and percentages
quoted.
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END
IR BQLLLFDLEBBV
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July 27, 2021 02:00 ET (06:00 GMT)
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