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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Specialist Engy | LSE:SEGR | London | Ordinary Share | IM00B511CF53 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 23.50 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From May 2019 to May 2024
TIDMHAYT
RNS Number : 1193F
Hayward Tyler Group PLC
10 November 2015
10 November 2015
Hayward Tyler Group plc
("Hayward Tyler Group", the "Group" or the "Company")
Hayward Tyler Group plc - Unaudited interim results
for the six months ended 30 September 2015
Hayward Tyler Group plc (AIM: HAYT), the specialist engineering group, today announces its interim results for the six month period ended 30 September 2015. Hayward Tyler is a market leader in the design, manufacture and service of critical application motors and pumps for the power generation and oil and gas markets.
Ewan Lloyd-Baker, Chief Executive Officer, commented:
"We continue to make strong progress in developing the core Hayward Tyler business with the hard work of the team over the past four years now enabling us to complete our first acquisition as a PLC. As with Hayward Tyler, in Peter Brotherhood, we once again have the opportunity to take an underinvested, unloved, orphan asset and transform it both through our proven focus on continuous improvement and our ability to now leverage-off the existing sales networks of the two business. The Peter Brotherhood operation has the potential to mark a significant step change in the scale and size of the overall Hayward Tyler Group.
"In relation to Hayward Tyler's performance, as signalled at the time of the finals, we anticipate the normal second-half weighting to deliver the overall growth in both revenue and profit for the year to meet management's expectations. This is likely to be driven in particular by a stronger performance from our US operation and a higher proportion of nuclear related spares. Overall the order outlook remains positive across our range of market segments, particularly in the conventional power market."
Financial Highlights:
-- Revenue for 1H2016 was GBP21.8 million (1H2015: GBP24.0 million). On a constant exchange rate** basis revenue in 1H2015 would have been higher by GBP0.9 million;
-- Trading* profit before tax level at GBP1.8 million (1H2015: GBP1.8 million) despite investment of GBP0.5 million (1H2015: GBP0.2 million) in the Luton Centre of Excellence. On a constant exchange rate** basis profit before tax in 1H2015 would have been higher by GBP0.2 million;
-- Fully diluted trading* earnings per share up 19% to 3.87 pence (1H2015: 3.26 pence);
-- Net cash generated from operating activities increased to GBP2.0 million (1H2015: GBP1.7 million);
-- As expected, the net debt to trading EBITDA*** ratio increased to 1.7 times due to investment in the Luton Centre of Excellence but it remains within the Group's target of 2.0 times (at 30 September 2014: 1.4 times). At 30 September 2015 net debt was GBP10.5 million (at 31 March 2015: GBP7.9 million); and
-- The Board is pleased to declare an interim dividend of 0.552 pence per share (prior year interim dividend: 0.525 pence), which will be paid on 25 February 2016 to all shareholders on the register on 15 January 2016, the ex-dividend date being 14 January 2016.
* trading represents the underlying performance of Hayward Tyler together with head office costs
** constant exchange rate is calculated by rebasing prior year figures at current year average rate of GBP1:USD1.5320
*** trading EBITDA is trading earnings before interest tax depreciation and amortisation excluding non-recurring items of GBP0.3 million
Business Highlights:
-- Strategically important production alliance signed with FMC Technologies, the global market leader in subsea systems to manufacture permanent magnet motors for use in FMC Technologies' 3.2MW subsea pump systems. This production alliance represents a cornerstone for the Group's subsea activity and underpins the investment in the Centre of Excellence;
-- Order intake of GBP26.6 million (1H2015: GBP27.6 million); and
-- The building project for the Luton Centre of Excellence, which is on track and on budget, set to be completed by the end of 2015 and the extended facility expected to be fully operational by June 2016.
Post-Period Highlights:
-- Acquisition of the trade and assets of the Peterborough operations of Dresser-Rand Company Limited completed on 30 October 2015. New company, Peter Brotherhood Limited, formed; and
-- Agency agreement signed with Ebara Corporation, a leading Japanese manufacturer of pumps for the energy, oil and gas, and general industry sectors to specifically supply Hayward Tyler's boiler circulating pumps in Japan and globally through Ebara with a number of major Engineering, Procurement and Construction groups.
Enquiries:
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Hayward Tyler Group plc
* Ewan Lloyd-Baker, Chief Executive Officer Tel: +44 (0)1582
731144
* Nicholas Flanagan, Chief Financial Officer
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* David Shapton Tel: +44 (0)20 7493
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* Matt Goode / Grant Bergman / Emily Watts - Corporate Tel: +44 (0)20 7220
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Chief Executive's Operational Review
Overview
I am pleased to report on another fruitful and exciting period in the development of the Hayward Tyler Group. When we published our results for FY2015 we set out our priorities for the current financial year as follows:
-- Complete the building work for the world class Centre of Excellence (ultimately to be commissioned in calendar Q2 2016);
-- Develop further strategic alliances with customers to help underpin the longer term growth of the Group;
-- Expand our overseas activities to further support growth; and
-- Look for businesses sharing similar characteristics to Hayward Tyler to buy, build and grow.
As explained below, I am delighted to say that we have made progress against all of the above priorities, in some cases significantly so, which puts us in stronger position to take the Group forward.
Performance Review
We expected the performance in the first half of this new financial year to represent around 30% to 40% of the total for the year driven by lower order intake in FY2015. As such, revenues were down 9% at GBP21.8 million (1H2015: GBP24.0 million) delivering a trading* operating profit of GBP2.0 million (1H2015: GBP2.3 million). It is worth noting that the trading operating profit is stated after deducting higher net costs of GBP0.5 million (1H2015: GBP0.2 million) relating to the Centre of Excellence. Trading profit after tax for the period was up 20% at GBP1.8 million (1H2015: GBP1.5 million), in part as a result of a lower tax charge of GBP0.1 million (1H2015: GBP0.4 million), giving a trading fully diluted earnings per share of 3.87 pence (1H2015: 3.26 pence), up 19%.
Aftermarket ("AM") revenue was 9% higher at GBP14.5 million (1H2015: GBP13.2 million) driven by demand from the Nuclear sector, whilst revenue from Original Equipment ("OE") manufacturing was GBP7.4 million (1H2015: GBP10.8 million) as a result of lower Oil and Gas revenue. That gave an AM:OE mix of 66%:34% (1H2015: 55%:45%) driven by a combination of increased Nuclear spares and fewer Oil & Gas units. From a geographical perspective the Far East was our largest market representing 36% of revenue (1H2015: 23%) with the USA remaining strong at 24% (1H2015: 19%). Both the UK and Europe increased to 15% (1H2015: 9%) and 13% (1H2015: 10%) respectively driven by the Nuclear aftermarket. From a market perspective Power remains our principal sector at 55% (1H2015: 63%) of revenue with Nuclear strongly ahead at 34% (1H2015: 10%) driven by demand for spares in the United Kingdom, Europe and the Far East. Oil and Gas fell to 5% (1H2015: 10%) although it is anticipated it will rise in 2H2016. Other fell to 6% (1H2015: 17%) reflecting lower output relating to the chemicals industry.
Gross profit margin increased to 34.3% (1H2015: 31.6%) as a result of the AM:OE mix, which increased in favour of the higher margin AM business. At 45% (1H2015: 46%), AM gross profit margin was at the low end of the typical range of 45% to 50%, which reflected the mix of business, and OE gross profit margin was 13% (1H2015: 14%).
Further details of the financial performance in 1H2016 are set out in the Financial Review.
Beyond the numbers we have continued to make progress across the business. Key points to note include the following:
-- Hayward Tyler has been short listed in three categories of The Manufacturer MX Awards for 2015, being Exporter of the Year, People & Skills and Leadership & Strategy, which are to be announced on 26 November. The business won both ICT Manufacturer of the Year and Young Manufacturer of the Year in 2013, which provided great exposure at the time and so we have high hopes for further success this year;
-- As part of our marketing efforts we show-cased Hayward Tyler at a number of trade fairs including the Offshore Technology Conference in Houston, which helped to cement our position as a key supplier to the subsea sector, and Power-Gen India, which represents a key strategic market for Hayward Tyler; and
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-- We have held a number of events across the Group with customers, suppliers, employees and other stakeholders to record the 200(th) year of Hayward Tyler. One major event based at Hayward Tyler Luton involved taking all 213 Luton employees through the planned operation of the Centre of Excellence from order intake, through design and build along the single-process flow lines, to assembly, test and despatch. The very positive level of employee engagement reinforced our conviction that development of this 21(st) century design and manufacturing facility will herald an exciting new chapter in Hayward Tyler's history.
* trading represents the underlying performance of Hayward Tyler together with head office costs
Centre of Excellence
As I have said in the past, the Centre of Excellence represents very much the future of Hayward Tyler. It includes investment into research and development, training and development, as well as the expansion of the Luton facility. This expansion involves building a c.25,000 square foot extension to the existing structure. The building project, which is on track and on budget, is set to be completed by the end of 2015 and the extended facility is expected to be fully operational by June 2016. At the time of writing the steel structure has been erected, the test pits prepared and factory floor laid-out. In addition, the roofing and cladding of the walls of the extension has now commenced. The single process flow-lines in the expanded facility are expected to increase throughput, reduce lead times, reduce working capital and enable Hayward Tyler Luton to double its capacity.
The building project is partly financed by the grant from the Regional Growth Fund, a secured loan note programme and funds generated from operations. We were delighted by the support received from institutional and high net worth investors that invested in the second issue of the programme in July, which raised approximately GBP1.4 million, taking the aggregate notes outstanding to GBP3.0 million.
Strategic Alliances
The offshore oil and gas market is of long-term strategic importance to Hayward Tyler and underpins our investment into the Centre of Excellence. In May we were delighted to announce that we had entered into a production alliance agreement with FMC Technologies, the global market leader in subsea systems. Under the terms of the agreement, Hayward Tyler will manufacture permanent magnet motors for use in FMC Technologies' 3.2MW subsea pump systems. This production alliance represents a cornerstone for our subsea activity and the on-going expansion of the Luton manufacturing facility includes a dedicated test facility for subsea motors.
At the same time we were also pleased to report the signing of a letter of intent for the latest order for four submersible motors, valued at approximately USD1.25 million, for use in the Baram field in the South China Sea as a result of Hayward Tyler's long-standing relationship with Eureka and existing relationship with the end user, Petronas. The Company has now installed over 250 submersible motors in offshore locations globally.
Furthermore as part of the Group's on-going market expansion activity the Board is pleased to announce an agency agreement with Ebara Corporation, a leading Japanese manufacturer of pumps for the energy, oil and gas, and general industry sectors. The scope of the agreement covers the supply of Hayward Tyler's boiler circulating pumps in Japan and globally through Ebara with a number of major Engineering, Procurement and Construction groups. Historically Hayward Tyler has over 40 units installed in Japan but it represents a very small fraction of overall business. The agreement with Ebara comes at a time when Japan is planning to build over 40 coal fired power stations during the next decade using ultra-super-critical and other more efficient technologies, which creates huge opportunities for both businesses from which to take advantage.
Order intake
Order intake in 1H2016 was slightly below the prior period at GBP26.6 million (1H2015: GBP27.6 million). However, this intake was 1.1x historical revenue, which satisfied our KPI target, and encouragingly the orders were across all sectors and, in particular, included strategically important oil and gas subsea orders that demonstrate the benefit of our plans for the Centre of Excellence.
Order intake for AM and OE were GBP13.8 million (1H2015: GBP17.7 million) and GBP12.8 million (1H2015: GBP9.9 million) respectively, which gave an AM:OE mix of 52%:48% (1H2015: 64%:36%). Prior year orders were skewed somewhat towards AM by the USD10.0 million order from KHNP in South Korea. From a geographical perspective the USA was our largest market for orders at 32% (1H2015: 28%) whilst the Far East was down to 24% of orders (1H2015: 44%) the prior year having included the KHNP order. Rest of the World was up at 25% (1H2015: 15%), reflecting OE and AM orders from India, a key market for the Group, whilst Europe increased to 12% (1H2015: 3%) on the back of an order from GE Oil & Gas to supply Hayward Tyler's subsea motor. The UK represented 7% (1H2015: 11%) of orders in the period. From a sector perspective Power remains our principal sector at 64% (1H2015: 51%) of orders with Nuclear down to 13% (1H2015: 34%), the prior period having included the KHNP order. Oil and gas was ahead at 15% (1H2015: 3%), which included subsea orders from FMC and GE, and Other was 8% (1H2015: 11%) of order intake.
Post-Period Acquisition of Peter Brotherhood
In October we announced the acquisition of the trade and assets of the Peter Brotherhood business from Dresser-Rand Company Ltd, a Siemens-owned business, for a total consideration of USD15.0 million, subject to an adjustment for a working capital benchmark. The consideration was paid in cash wholly funded through new facilities from National Westminster Bank (see Financial Review). The Board considers the acquisition to be of strategic significance as it brings important diversification to the Group's operations in our chosen markets, widens the customer base and offers the opportunity to cross-sell products. The Board likewise expects the acquisition to be immediately earnings enhancing whilst increasing Hayward Tyler's scale.
As announced in October, Peter Brotherhood is a UK engineering business based in Peterborough with 145 employees that can trace its history back to 1867. More recently it has focused on energy efficient solutions for land and marine based applications including steam turbines, reciprocating gas compressors and combined heat and power units for the power generation, oil and gas and marine markets. It was acquired by Dresser-Rand Inc in 2008 (a company that was subsequently acquired by Siemens) and was now a non-core disposal. Peter Brotherhood is the UK's only producer of steam turbines with an output up to 40MW which has applications in waste heat recovery, the FPSO and FLNG markets and the British Navy Astute class submarine new build programme. Steam turbines tend to have higher operational availability and lower operating costs, when compared to gas turbines. Peter Brotherhood has nearly 1,500 units that continue to operate across 100 countries globally, having supplied steam turbines to many of the world's leading operators including Woodside, SBM, Saipem, Aker, Fred Olsen, Samsung and Maersk. In the year to 31 December 2014, the Peter Brotherhood business (on a stand-alone basis) generated revenues of USD46.7 million and normalised operating profit of USD3.2 million. The net assets acquired, which include an 11.5 acre freehold property in Peterborough, plant and machinery, receivables and stock, had an adjusted unaudited value of USD16.0 million as at 30 June 2015.
Over the past near 150 years Peter Brotherhood has built up a leading reputation in its end markets for reliability and on-time delivery at a competitive price. We believe there is a significant opportunity to re-invigorate the Peter Brotherhood brand to win new business and drive revenues from its existing installed base. Furthermore we are confident that, operating within the Hayward Tyler Group, Peter Brotherhood will benefit from improved manufacturing processes, broader geographical coverage and access to overseas service facilities as well as accelerated investment in new product development and design.
Outlook
Over the last four years we have transformed Hayward Tyler into a forward-thinking, profitable market-leader in its specific niche markets. We believe the same philosophy will allow us to drive significant growth from Peter Brotherhood's strong installed base and into new market areas and technologies. This acquisition, which the Directors expect will be significantly earnings enhancing during the first full financial year following completion of the acquisition, will also underpin the strength and depth of the wider Hayward Tyler Group and set the stage for our next level of growth across the global energy sector whilst further cementing our position in the oil and gas and specialty chemical markets. The Board likewise remains fully committed to delivering on its progressive dividend policy in the current financial year.
Separately I'd like to again thank the management team, which is proving its ability to deliver, and each and every one of our employees for their unrelenting enthusiasm and drive to ensure that we continue to improve, to deliver and to take advantage of whatever opportunities arise in our chosen markets.
E Lloyd-Baker
Chief Executive Officer
10 November 2015
Financial Review
Introduction
I am pleased to report on the results for the 6 month period to 30 September 2015 (referred to below as 1H2016). The results have been compared to those for the 6 month period to 30 September 2014 (1H2015).
Basis of Reporting
The Group financial statements in this report have been prepared in accordance with International Financial Reporting Standards ("IFRSs").
Operating Results
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Revenue for 1H2016 was down 9% to GBP21.8 million (1H2015: GBP24.0 million) driven by lower OE revenue offset by higher AM revenue. Gross profit margin was higher at 34% (1H2015: 32%) as a result of the AM;OE mix. Overall the revenue and margin delivered a trading* operating profit for the period of GBP2.0 million (1H2015: GBP2.3 million) and a return on revenue of 9.2% (1H2015: 9.6%). Trading operating profit in 1H2016 is stated after deducting net operating charges relating to the development of the Centre of Excellence of GBP0.5 million (1H2015: GBP0.2 million). Trading profit before tax was GBP1.8 million (1H2015: GBP1.8 million).
There were non-trading operating charges in the period of GBP0.3 million (1H2015: GBPnil), which relate to costs incurred on the acquisition of Peter Brotherhood up to 30 September 2015. Further details of the acquisition are given in note 13 to these financial statements.
The Group is exposed to the US Dollar through its operating business in the USA and from UK exports to China. On a constant exchange rate** basis revenue and trading profit before tax in 1H2015 would have been higher by GBP0.9 million and GBP0.2 million respectively.
* trading represents the underlying performance of Hayward Tyler together with head office costs
** constant exchange rate is calculated by rebasing prior year figures at current year average rate of GBP1:USD1.5320
Finance Charges
Finance costs in the period, which mainly represent interest payable, were GBP0.3 million (1H2015: GBP0.3 million). In addition, there was a gain on the fair value of derivatives of GBP0.1 million (1H2016: loss of GBP0.2 million) that arose on the revaluation of foreign exchange hedge contracts to exchange rates that applied at 30 September 2015.
Tax
The tax charge for the period was GBP0.1 million (1H2015: GBP0.4 million). This low tax charge reflects (1) over 90% of profit before tax in the period arose in the UK at an effective tax rate of 15% and (2) a prior year tax credit in the US of GBP0.2 million.
Profit After Tax
Trading profit after tax for the period was GBP1.8 million (1H2015: GBP1.5 million), which delivered a trading basic earnings per share (EPS) up 20% over prior period of 3.91 pence (1H2015: 3.26 pence) and a trading fully diluted EPS up 19% at 3.87 pence (1H2015: 3.26 pence). Basic EPS was 3.33 pence (1H2015: 3.26 pence) and fully diluted EPS was 3.30 pence (1H2015: 3.26 pence).
Dividends
The Group paid its final dividend of 0.79 pence per share in respect of the year to 31 March 2015 in August 2015. An interim dividend in respect of the current year of 0.552 pence per share will be paid on 25 February 2016 to all shareholders on the register on 15 January 2016, the ex-dividend date being 14 January 2016.
Centre of Excellence
Purchase of fixed assets was GBP5.0 million in the period (1H2015: GBP0.7 million). The vast majority of these purchases relate to investment in the Centre of Excellence including expenditure on the building works as well as new plant and machinery.
Working Capital
Management of working capital continues to be a key focus of the Group. This focus enabled the Group to generate GBP2.0 million net cash from operating activities (1H2015: GBP1.7 million) such that headroom (cash plus undrawn borrowing facilities) at 30 September 2015 was GBP5.7 million (at 31 March 2015: GBP5.9 million).
Borrowings
In line with management's expectation net debt was higher at GBP10.5 million at 30 September 2015 (at 31 March 2015: GBP7.9 million) driven by the purchase of fixed assets in the period of GBP5.0 million (1H2015: GBP0.7 million), which mainly relates to investment in the Centre of Excellence. Net debt comprised term borrowings of GBP6.9 million (at 30 September 2014: GBP5.2 million), finance leases of GBP1.3 million (at 30 September 2014: GBP0.5 million) and drawings under revolving credit facilities of GBP5.5 million (at 30 September 2014: GBP4.0 million) offset by cash of GBP3.2 million (at 30 September 2014: GBP1.7 million). During the period just under GBP1.4 million was drawn from the loan note programme (total drawn: GBP3.0 million) to fund part of the building works at the Centre of Excellence.
The net debt to EBITDA ratio was 1.7x (at 31 March 2015: 1.2x), which is well within the Group's target of 2.0x. This ratio will increase post-period end, pursuant to the Peter Brotherhood acquisition.
Pensions
Within the UK, the Group operates a defined benefit plan, with benefits linked to final salary, and a defined contribution plan. With effect from 1 June 2003 the defined benefit plan was closed to future service accruals and new UK employees offered membership of the defined contribution plan. The majority of UK employees are members of one of these arrangements.
A full actuarial valuation of the defined benefit plan is produced every three years (the last one being as at 1 January 2014), however, a valuation is prepared at each period end for the purposes of the report and accounts by independent qualified actuaries. The net obligation at 31 March 2015 was GBP0.2 million and this has been maintained at 30 September 2015.
Further comment on pensions is given in note 10 to these financial statements.
Key Performance Indicators
As discussed in the Company's report and accounts for the year to 31 March 2015, we use various internal and external measures to assess our performance against our strategy. The key performance indicators (KPIs) set out below help to determine how successful we have been in achieving our strategic objectives:
KPI Target Progress in period
---------------- --------------------- -------------------------------
Strategic Objective - to ensure the strength of our business
------------------------------------------------------------------------
Order Intake Achieve orders On target at 1.1x
of >1.1x historical
revenue
---------------- --------------------- -------------------------------
Cash conversion Convert >85% of Strongly ahead of target
EBITDA to cash at 123% mainly reflecting
collection of receivables
---------------- --------------------- -------------------------------
Net debt to Achieve a ratio Well within target at 30
EBITDA of 2:1 or lower September 2015 at 1.7:1 in
spite of significant capital
expenditure of GBP5.0 million
in the period
---------------- --------------------- -------------------------------
KPI Target Progress in period
------------- ---------------------- --------------------------------
Strategic Objective - to increase profitability
-----------------------------------------------------------------------
Gross Profit Generate a gross Marginally below target at
% profit margin of 34.3% reflecting the AM margin
>35% at 45%, which is at the low
end of the typical range
of 45% to 50%
------------- ---------------------- --------------------------------
Trading EBIT Generate EBIT which Below target at 9.2% reflecting
% is 10-15% of revenue the gross profit margin and
for the period increased expenditure on
the Centre of Excellence
------------- ---------------------- --------------------------------
Strategic Objective - to generate positive shareholder
return
-----------------------------------------------------------------------
Trading EPS Generate year on Ahead of target at 19%
Growth year growth of
>10%
------------- ---------------------- --------------------------------
Total Equity
Total equity increased by GBP1.2 million from 31 March 2015 to GBP16.6 million as a result of the net profit in the 6 month period to 30 September 2015 (GBP1.5 million) offset by the final dividend in respect of the prior year (GBP0.3 million).
Post-Balance Sheet Event
On 30 October 2015 the Group took control of the trade and assets of Peter Brotherhood, a division of Dresser-Rand Company Limited, a Siemens owned company, for a total consideration of USD15 million, subject to an adjustment for a working capital benchmark. The acquisition was funded through a package of new committed borrowing facilities provided by the Group's existing bankers, National Westminster Bank. A summary of the additional facilities provided is as follows:
Maturity GBP million
Property term loan September 2020 2.5
Term loan September 2018 3.5
Revolving credit facility November 2018 3.0
Bridging facility October 2016 5.0
------------
14.0
Bonds and guarantees facility n/a 0.9
------------
14.9
------------
As part of the banking arrangements the maturity of the existing property term loans and revolving credit facility of Hayward Tyler were extended to September 2020 and November 2018 respectively.
N Flanagan
Chief Financial Officer
10 November 2015
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Consolidated interim income statement
Unaudited Unaudited Audited
Six months to Six months to Year to
30 September 2015 30 September 2014 31 March 2015
---------------------------------- ---------------------------------- ----------------------------------
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Notes Trading Non-Trading Total Trading Non-Trading Total Trading Non-Trading Total
--------- ------------ --------- --------- ------------ --------- --------- ------------ ---------
Revenue 21,835 - 21,835 24,005 - 24,005 48,619 - 48,619
Cost of
sales (14,352) - (14,352) (16,425) - (16,425) (31,554) - (31,554)
Gross profit 7,483 - 7,483 7,580 - 7,580 17,065 - 17,065
Gross profit
margin 34% 32% 35%
Operating
charges 13 (5,477) (270) (5,747) (5,278) - (5,278) (11,718) - (11,718)
Operating
profit 2,006 (270) 1,736 2,302 - 2,302 5,347 - 5,347
Finance
costs 6 (297) - (297) (290) - (290) (694) - (694)
Gain/(loss)
on fair
value of
derivatives 136 - 136 (168) - (168) (294) - (294)
Profit
before tax 1,845 (270) 1,575 1,844 - 1,844 4,359 - 4,359
Taxation 9 (77) 10 (67) (373) - (383) (1,210) - (1,210)
Profit for
the period 1,768 (260) 1,508 1,471 - 1,471 3,149 - 3,149
========= ============ ========= ========= ============ ========= ========= ============ =========
Basic
earnings
per share
(pence) 7 3.91 (0.58) 3.33 3.26 - 3.26 6.98 - 6.98
Diluted
earnings
per share
(pence) 7 3.87 (0.57) 3.30 3.26 - 3.26 6.98 - 6.98
Consolidated interim statement of financial position
Unaudited Unaudited Audited
At 30 September At 30 September At 31 March
2015 2014 2015
Notes GBP000 GBP000 GBP000
Non-current assets
Goodwill 2,219 2,219 2,219
Other intangible assets 981 683 1,034
Property, plant and equipment 15,824 9,214 11,288
Deferred tax assets 2,472 2,804 2,555
Other debtors 521 3,499 806
22,017 18,419 17,902
Current assets
Inventories 5,759 6,669 6,015
Trade and other receivables 15,072 11,952 16,599
Other current assets 1,305 885 1,139
Current tax assets 716 376 500
Cash and cash equivalents 3,197 1,672 1,769
26,049 21,554 26,022
Total assets 48,066 39,973 43,924
---------------- ----------------- -----------------
Current liabilities
Trade and other payables 10,925 9,874 9,976
Borrowings 6,927 5,316 4,270
Provisions 838 932 884
Current tax liabilities 712 115 1,084
Other liabilities 2,368 1,873 3,722
Financial liabilities - derivatives 12 117 127 252
Current liabilities 21,887 18,237 20,188
---------------- ----------------- -----------------
Net current assets 4,162 3,317 5,834
Total assets less current liabilities 26,179 21,736 23,736
---------------- ----------------- -----------------
Non-current liabilities
Borrowings 6,752 4,351 5,359
Pension and other employee obligations 10 179 1,538 179
Other creditors 2,642 3,374 2,757
----------------- -----------------
9,573 9,263 8,295
---------------- ----------------- -----------------
Net assets 16,606 12,473 15,441
================ ================= =================
Equity
Called-up share capital 11 458 455 455
Share premium account 28,705 28,705 28,705
Merger reserve 14,502 14,502 14,502
Treasury stock reserve - (274) (274)
Reverse acquisition reserve (19,973) (19,973) (19,973)
Other equity 52 18 18
Foreign currency translation reserve (54) (321) 238
Retained earnings (7,084) (10,639) (8,230)
Total equity 16,606 12,473 15,441
================ ================= =================
Please see note 13 for Post-Balance Sheet Event disclosure
Consolidated interim statement of comprehensive income
Unaudited Unaudited Audited
Six months to Year to
Six months to 30 September 31 March
30 September 2015 2014 2015
GBP000 GBP000
Profit for the period 1,508 1,471 3,149
Other comprehensive income/loss:
Items that will not be reclassified subsequently to profit
and loss
Remeasurement of net defined benefit liability - - 1,221
Income tax relating to items not reclassified - - (256)
Items that will be reclassified subsequently to profit and
loss
(Loss)/gain on translation of overseas subsidiaries (292) 100 659
------------------- -------------- ----------
Other comprehensive income/(charge) for the period net of
tax (292) 100 1,624
Total comprehensive profit for the period 1,216 1,571 4,773
=================== ============== ==========
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Consolidated interim statement of changes in equity
Foreign
Reverse Currency
Share Merger Acquisition Treasury Stock Other Translation Retained
Unaudited Capital Share Premium Reserve Reserve Reserve Equity Reserve Earnings Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Balance at
1 April 2015 455 28,705 14,502 (19,973) (274) 18 238 (8,230) 15,441
Dividends - - - - - - - (362) (362)
Sale of shares - - - - 274 - - - 274
Share based
compensation 3 - - - - 34 - - 37
Transactions
with owners 458 - - - 274 34 - (362) (51)
--------- ---------------- ------------- ------------------ ---------------- --------- ------------ --------- -------
Profit for the
period - - - - - - - 1,508 1,508
Other
comprehensive
income/(loss):
Loss on
translation of
overseas
subsidiaries - - - - - - (292) - (292)
--------- ---------------- ------------- ------------------ ---------------- --------- ------------ --------- -------
Total
comprehensive
income/(loss) - - - - - - (292) 1,508 1,216
--------- ---------------- ------------- ------------------ ---------------- --------- ------------ --------- -------
Balance at
30 September
2015 458 28,705 14,502 (19,973) - 52 (54) (7,084) 16,606
========= ================ ============= ================== ================ ========= ============ ========= =======
Foreign
Reverse Currency
Share Merger Acquisition Treasury Stock Other Translation Retained
Unaudited Capital Share Premium Reserve Reserve Reserve Equity Reserve Earnings Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Balance at
1 April 2014 455 28,705 14,502 (19,973) (274) 18 (421) (11,769) 11,243
Dividends - - - - - - - (341) (341)
--------- ---------------- ------------- ------------------ ---------------- --------- ------------ --------- -------
Transaction
with owners - - - - - - - (341) (341)
--------- ---------------- ------------- ------------------ ---------------- --------- ------------ --------- -------
Profit for the
period - - - - - - - 1,471 1,471
Other
comprehensive
income:
Gain on
translation of
overseas
subsidiaries - - - - - - 100 - 100
--------- ---------------- ------------- ------------------ ---------------- --------- ------------ --------- -------
Total
comprehensive
income - - - - - - 100 1,471 1,571
--------- ---------------- ------------- ------------------ ---------------- --------- ------------ --------- -------
Balance at
30 September
2014 455 28,705 14,502 (19,973) (274) 18 (321) (10,639) 12,473
========= ================ ============= ================== ================ ========= ============ ========= =======
Foreign
Reverse Treasury Currency
Share Share Merger Acquisition Stock Other Translation Retained
Audited Capital Premium Reserve Reserve Reserve Equity Reserve Earnings Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Balance at 1 April
2014 455 28,705 14,502 (19,973) (274) 18 (421) (11,769) 11,243
Dividends - - - - - - - (575) (575)
Transactions with
owners - - - - - - - (575) (575)
-------- --------- -------- ------------ --------- ------- ------------ --------- -------
Profit for the
period - - - - - - - 3,149 3,149
Actuarial gain for
the period on
pension scheme - - - - - - - 1,221 1,221
Deferred tax on
actuarial movement
on pension scheme - - - - - - - (256) (256)
Gain on translation
of overseas
subsidiaries - - - - - - 659 - 659
-------- --------- -------- ------------ --------- ------- ------------ --------- -------
Total comprehensive
income - - - - - - 659 4,114 4,773
-------- --------- -------- ------------ --------- ------- ------------ --------- -------
Balance at
31 March 2015 455 28,705 14,502 (19,973) (274) 18 238 (8,230) 15,441
======== ========= ======== ============ ========= ======= ============ ========= =======
Consolidated cash flow statement
Unaudited Unaudited Audited
Six months Six months
to to Year to
30 September 30 September 31 March
2015 2014 2015
GBP000 GBP000 GBP000
Operating activities
Profit before tax 1,575 1,844 4,359
Non-cash adjustment 772 928 2,001
Net changes in working
capital 50 (736) (1,976)
Profit on disposal of property,
plant and equipment - 67 10
Taxes paid (440) (374) (426)
Net cash generated from
operating activities 1,957 1,729 3,968
-------------- -------------- ----------
Investing activities
Purchase of property, plant
and equipment (4,998) (653) (2,944)
Purchase of intangible
assets (61) - (446)
Disposal of property, plant
and equipment - - (5)
Net cash arising used in
investing activities (5,059) (653) (3,395)
-------------- -------------- ----------
Financing activities
Proceeds from borrowings 3,915 500 4,035
Repayment of borrowings (660) (966) (4,626)
Re-banking costs - - (199)
Dividends
paid (362) (341) (575)
Sale of treasury shares 274 - -
Grant income received 962 (125) 1,138
Draw down of finance leases 1,091 62 364
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Repayment of finance leases (397) (87) (166)
Interest
paid (293) (195) (523)
Net cash generated from/(used
in) financing activities 4,530 (1,152) (552)
-------------- -------------- ----------
Net increase/(decrease)
in cash and cash equivalents 1,428 (76) 21
Cash and cash equivalents
at beginning of period 1,769 1,748 1,748
Cash and cash equivalents
at end of period 3,197 1,672 1,769
============== ============== ==========
Notes to the interim financial statements
1. General Information
Hayward Tyler Group plc's consolidated financial statements are presented in Pounds Sterling (GBP), which is also the functional currency of the ultimate parent company.
Established in 1815 in the UK, Hayward Tyler designs, manufactures and services a comprehensive range of fluid filled electric motors and pumps. These units are custom designed to meet the most demanding of applications and environments. Focused on the power generation (conventional and nuclear), oil and gas (topside and deep subsea) and industrial markets, Hayward Tyler is a market leader in its technology solutions. Furthermore, Hayward Tyler supplies and services a range of mission critical motors and pumps for the Royal Navy submarine fleet in the UK. Hayward Tyler also undertakes service, overhaul and upgrading of third party motor and pump equipment across all sectors.
In addition to the head office in Luton, England, Hayward Tyler has manufacturing and service support facilities in Kunshan (China), Delhi (India), East Kilbride (Scotland) and Vermont (USA). These facilities and staff provide cover 24 hours 7 days a week for maintenance, overhaul and repair.
2. Basis of preparation
These unaudited condensed consolidated interim financial statements of Hayward Tyler Group plc are for the six months ended 30 September 2015. They do not include all of the information required for full annual financial statements and should be read in conjunction with the consolidated financial statements of Hayward Tyler Group plc for the year ended 31 March 2015. The financial information for the year ended 31 March 2015 set out in these interim consolidated financial statements does not constitute statutory accounts as defined in the Isle of Man Companies Act 1931 to 2006. The Group's statutory financial statements for the year ended 31 March 2015 have been filed with the Companies Registry. The auditor's report on those financial statements was unqualified and did not contain a statement under section 15.4 of the Isle of Man Companies Act 1982.
3. Accounting policies
The condensed interim consolidated financial statements have been prepared in accordance with the accounting policies adopted in the last audited financial statements for the year ended 31 March 2015.
Trading and non-trading
The consolidated income statement reports the results for the period under the headings Trading and Non-trading. Trading represents the underlying performance of Hayward Tyler together with head office costs. Non-trading represents non-recurring items, which in the period relate to costs and management time incurred on the acquisition of Peter Brotherhood.
RDEC
During the period management have chosen to take advantage of the legislation which was enacted to allow UK companies to elect for the Research and Development Expenditure Credit (RDEC) on qualifying expenditure incurred since 1 April 2013, instead of the existing super-deduction rules. At the balance sheet date, management has concluded that the election will be made and therefore the RDEC is recorded as income included in profit before tax, netted against research and development expenses as the RDEC is of the nature of a government grant. The RDEC has been included for prior year periods from 1 April 2013.
Estimates
When preparing the interim financial statements, management undertakes a number of judgements, estimates and assumptions about recognition and measurement of assets, liabilities, income and expenses.
The judgements, estimates and assumptions applied in the interim financial statements, including the key sources of estimation uncertainty, were the same as those applied in the last annual financial statements for the year ended 31 March 2015.
4. Segmental reporting
Management currently identifies the Group's two service lines, original equipment manufacturing ("OE") and aftermarket services ("AM"), as operating segments.
The activities undertaken by the OE segment include the design and manufacture of motors and pumps. The AM segment provides a comprehensive range of aftermarket services and spares supporting the Group's own product range as well as those of other original equipment manufacturers.
The measurement policies the Group uses for segment reporting are the same as those used in its financial statements, except that:
- post-employment benefit expenses; - site modernisation costs and associated grant income; - expenses relating to share-based payments; - research costs relating to new business activities; and - unallocated central costs
are not included in arriving at the operating profit of the operating segments. In addition, corporate assets which are not directly attributable to the business activities of any operating segment are not allocated to a segment. There have been no changes from prior periods in the measurement methods used to determine reported segment profit of loss.
Segmental information can be analysed as follows for the reporting periods under review:
OE AM Total
GBP000 GBP000 GBP000
Six months to 30 September
2015
Segment revenues from:
External customers 7,355 14,480 21,835
Other segments - - -
Segment revenues 7,355 14,480 21,835
Cost and expenses (7,462) (11,237) (18,699)
Segment operating (loss)/profit (107) 3,243 3,136
========= ========= =========
Segment assets 19,663 17,031 36,693
========= ========= =========
OE AM Total
GBP000 GBP000 GBP000
Six months to 30 September
2014
Segment revenues from:
External customers 10,765 13,240 24,005
Other segments - - -
Segment revenues 10,765 13,240 24,005
Cost and expenses (11,225) (9,821) (21,046)
Segment operating (loss)/profit (460) 3,419 2,959
========= ========= =========
Segment assets 14,577 10,212 24,789
========= ========= =========
OE AM Total
GBP000 GBP000 GBP000
Year to 31 March 2015
Segment revenues from:
External customers 19,689 28,930 48,619
Other segments - - -
Segment revenues 19,689 28,930 48,619
Cost and expenses (19,961) (21,289) (41,250)
Segment operating (loss)/profit (272) 7,641 7,369
========= ========= =========
Segment assets 19,076 14,958 34,034
========= ========= =========
The totals presented by the Group's operating segments reconcile to the entity's key financial figures as presented in its financial statements as follows:
Six months Six months
to to Year to
30 September 30 September 31 March
2015 2014 2015
GBP000 GBP000 GBP000
Segment revenues
Segment revenues 21,835 24,005 48,619
Elimination of inter-segmental
revenues - - -
21,835 24,005 48,619
Segment profit
Segment operating profit 3,136 2,959 7,369
Centre of Excellence expenses
net of grant income (532) (188) (548)
Other operating costs not allocated (496) (568) (1,378)
Foreign currency exchange differences (102) 99 (96)
-------------- -------------- ----------
Recurring operating profit 2,006 2,302 5,347
Non-recurring expenses (270) - -
Operating profit 1,736 2,302 5,347
Finance costs plus fair value
of derivatives (161) (458) (988)
Group profit before tax 1,575 1,844 4,359
============== ============== ==========
Segment total assets
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Total segment assets 36,693 24,789 34,034
Group 49,623 55,463 48,062
Consolidation (38,250) (40,279) (38,172)
Group total assets 48,066 39,973 43,924
============== ============== ==========
The Group's revenues from external customers and its non-current assets (other than goodwill and deferred tax assets) are divided into the following geographical areas:
Six months to Six months to Year to
30 September 2015 30 September 2014 31 March 2015
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Revenue Non-current assets Revenue Non-current assets Revenue Non-current assets
United Kingdom 3,343 17,521 2,245 8,430 6,008 13,058
USA 5,139 1,258 5,250 1,293 11,577 1,205
Other countries 13,353 163 16,510 174 31,034 180
21,835 18,941 24,005 9,898 48,619 14,443
======== =================== ======== =================== ======== ===================
Revenues from external customers in the Group's domicile, United Kingdom, as well as its major market the USA have been identified on the basis of the customers' geographical location. Non-current assets are allocated based on their physical location.
5. Trading EBITDA
The trading earnings before interest, tax, depreciation and amortisation are as follows:
Six months to Six months to Year to
30 September 30 September
2015 2014 31 March 2015
GBP000 GBP000 GBP000
Trading EBITDA
Operating profit 2,006 2,302 5,347
Depreciation and
amortisation 577 470 1,013
2,583 2,772 6,360
============== ============== ==============
6. Finance costs
Six months to Six months to Year to
30 September 30 September 31 March
2015 2014 2015
GBP000 GBP000 GBP000
Interest payable on bank borrowing 203 257 496
Finance costs of pensions 31 33 62
(Gain)/loss arising on fair value of derivative contracts (136) 168 294
Finance charges - re-banking 63 - 136
161 458 988
============== ============== ==========
7. Earnings per share
Both the basic and diluted earnings per share have been calculated using the profit attributable to shareholders of the parent company (Hayward Tyler Group plc) as the numerator (i.e. no adjustments to profits were necessary during the six month periods to 30 September 2015 and 30 September 2014 or the year ended 31 March 2015).
The weighted average number of shares for the purposes of the calculation of diluted earnings per share can be reconciled to the weighted average number of ordinary shares used in the calculation of basic earnings per share as follows:
Six months to Six months to Year to
30 September 30 September 31 March
2015 2014 2015
Weighted average number of shares (used for basic earnings per share) 45,266,877 45,088,200 45,088,200
Shares deemed to be issued for no consideration
in respect of share-based payments 385,042 - -
-------------- -------------- -----------
Weighted average number of shares used in diluted earnings per share 45,651,919 45,088,200 45,088,200
-------------- -------------- -----------
8. Dividends
A final dividend of 0.79 pence per ordinary share was declared during the period representing a total of GBP361,831 (1H2015: GBP341,304). An interim dividend in respect of the current year of 0.552 pence per ordinary share will be paid in February 2016.
9. Tax
Six months to Six months to Year to
30 September 30 September 31 March
2015 2014 2015
GBP000 GBP000 GBP000
Current tax
UK tax corporation tax at 20%
(H1 2014: 21%) 74 - -
Amounts under provided in prior years 15 - -
Overseas taxation 59 (133) 674
Adjustment in respect of prior years (163) - 35
Total current tax (credit)/charge (15) (133) 709
-------------- -------------- ----------
Deferred tax
Acceleration of capital allowances (56) 44 109
Losses available for offset against future taxable income 140 277 400
Retirement benefit obligations - - 286
Less movement recorded in other comprehensive income - - (256)
Other temporary differences (19) 194 43
Derivatives 27 (35) (62)
Effect of change in tax rate - (19) (34)
Amounts (over)/under provided in prior years (10) 45 15
Deferred tax charge 82 506 501
-------------- -------------- ----------
Tax charge reported in the income statement 67 373 1,210
============== ============== ==========
Deferred tax assets are recognised to the extent that it is probable that taxable profits will be available in future against which deductible temporary differences can be utilised. This recognition is supported by the profitability of the trading operations of the business.
10. Pensions
No interim valuation of the pension liability has been carried out at 30 September 2015. As a result no actuarial gain or loss has been recognised in the consolidated statement of other comprehensive income and no change has been made to the net obligation for pensions recognised in the statement of financial position from that at 31 March 2015. The gains and losses for the full year together with any surplus or deficit at the year-end will be presented in the Annual Report and Accounts of the Group for the year to 31 March 2016.
The net obligation for pensions recognised in the statement of financial position as at 31 March 2015 was GBP0.2 million. This obligation represented the difference between the value of the scheme assets and the scheme liabilities. The value of the scheme liabilities were determined using actuarial assumptions developed by management under consideration of expert advice provided by independent actuarial advisers. The assumptions included a discount rate of 3.1%, which was based on prevailing relevant bond yields at the time, and inflation rates of 2.0% per annum in respect of CPI and 2.8% per annum in respect of RPI, based on the market's expectation of future inflation at that time.
Taking together the value of the scheme assets, the discount rate and the expectations for inflation at 30 September 2015, the value of the pension liability is not expected to have changed materially from that at 31 March 2015 of GBP0.2 million.
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