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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Tyman Plc | LSE:TYMN | London | Ordinary Share | GB00B29H4253 | ORD 5P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 4.00 | 1.07% | 378.00 | 376.00 | 378.50 | 381.00 | 368.50 | 368.50 | 717,369 | 16:29:55 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Construction Matl-whsl, Nec | 657.6M | 25.1M | 0.1279 | 29.55 | 742.01M |
From Apr 2019 to Apr 2024
TIDMTYMN
RNS Number : 9486L
Tyman PLC
25 July 2017
TYMAN PLC
("Tyman" or the "Group" or the "Company")
INTERIM RESULTS FOR THE SIX MONTHSED 30 JUNE 2017
Tyman plc, a leading international supplier of engineered components to the door and window industry, announces unaudited interim results for the six months ended 30 June 2017.
Financial highlights
GBP'm unless stated H1 2017 H1 2016 Change CC LFL(1) ----------------------- -------- -------- --------- ---------- Revenue 260.4 201.0 + 30 % + 2 % Underlying Operating Profit 35.5 27.2 + 31 % + 4 % Underlying Operating 13.6 13.5 + 20 Margin % % + 10 bps bps Underlying Profit before Taxation(2) 31.4 23.8 + 32 % + 4 % Underlying EPS(2) 12.09p 9.69p + 25 % Dividend per share 3.50p 3.00p + 17 % Underlying Net Debt 190.4 144.9 + 31 % Reported Leverage 2.05x 1.81x + 0.24x Pro forma Leverage(3) 2.05x 2.35x (0.30)x Return on Capital 13.8 13.1 Employed % % + 70 bps ----------------------- -------- -------- --------- ---------- (1) CC LFL = Constant Currency Like for Like (see Alternative Performance Measures on page 41)
(2) H1 2016 comparatives for Underlying Profit before Taxation and Underlying EPS have been restated (see Alternative Performance Measures on page 41)
(3) Pro forma Leverage comparator is the Leverage on 1 July 2016, the date of completion of the Bilco acquisition
Statutory financial highlights
Hot Features
Premium
GBP'm unless stated H1 2017 H1 2016 Change
------------------------ -------- -------- -------
+ 130
Profit before Taxation 17.8 7.8 %
+ 113
Basic EPS 6.65p 3.13p %
Net Debt 189.5 143.5 + 32 %
------------------------ -------- -------- -------
Business highlights
-- Solid underlying trading performance against a relatively strong comparator period and in line with expectations
-- Synergy expectations for the Giesse acquisition increased by 50 per cent. to EUR6.0 million by March 2018
-- Continued strong cash generation and year on year deleveraging -- Indications of input cost inflation moderating during the second quarter -- North American and International markets remain positive, UK more subdued -- Well positioned for further progress in the second half
Louis Eperjesi, Chief Executive, commented:
"In the first half, Tyman has delivered a solid trading performance against a relatively strong comparator period and made further progress in the integration of the businesses acquired in 2016 and 2017. As a consequence, we are now in a position to raise the cumulative synergy guidance for the Giesse acquisition by 50 per cent. to EUR6.0 million by March 2018.
"North American markets showed modest growth in the period with Canadian markets improving and, while UK markets remain relatively subdued, there continues to be consistent and sustained growth in Continental Europe.
"Trading across the Group continues to be in line with management expectations with good cash generation. Tyman is well positioned for further progress in the second half."
Enquiries: Tyman plc 020 7976 8000 Louis Eperjesi - Chief Executive Officer www.tymanplc.com James Brotherton - Chief Financial Officer MHP Communications 020 3128 8100 Reg Hoare Ivana Petkova Nessyah Hart
Tyman will host an analyst and investor presentation at 09h30 a.m. today, Tuesday 25 July 2017, at the offices of MHP Communications, 6 Agar Street, London, WC2N 4HN.
The presentation will be webcast at the Group's website - www.tymanplc.com - and the audio conference call details are set out below.
Conference Call Dial In Details
Toll number +44 33 3300 0804 Toll-free number 0800 358 9473 Participant PIN 81445389#
Forthcoming dates
Ex-dividend date 3 August 2017 Dividend record date 4 August 2017 DRIP elections last day 11 August 2017 Dividend payment date 7 September 2017 Autumn trading update 7 November 2017 Full year results announcement 6 March 2018
Notes to editors
Tyman plc is a leading international supplier of engineered components to the door and window industry. The Group's three Divisions - AmesburyTruth, ERA and Schlegel International - are market leaders in their respective geographies.
The Group employs over 3,500 people and operates facilities in 19 countries worldwide. Tyman is listed on the London Stock Exchange under the ticker TYMN.
Further information on the Group and the Group's products are available at the Group's website - www.tymanplc.com.
results overview
Tyman delivered a solid trading performance in the first half against a relatively strong comparator period and made further progress in the integration of the businesses acquired in 2016 and 2017. Trading across the Group continues to be in line with management expectations with good cash generation.
North American markets showed modest growth in the period with Canadian markets improving and, while UK markets remain relatively subdued, there continues to be consistent and sustained growth in Continental Europe.
Revenue recorded in the period was GBP260.4 million (H1 2016: GBP201.0 million) an increase of 29.5 per cent. on a reported basis and 2.0 per cent. on a constant currency, like for like basis, with the difference due to the relative weakness of Sterling compared with H1 2016 and contributions from acquisitions.
Underlying Operating Profit increased to GBP35.5 million (H1 2016: GBP27.2 million), an increase of 30.6 per cent. on a reported basis and 3.9 per cent. on a constant currency, like for like basis. The Group's Underlying Operating Margin increased slightly to 13.6 per cent. (H1 2016: 13.5 per cent.), despite the dilutive impact of the lower margin Bilco business, with the constant currency like for like Underlying Operating Margin increasing by 20 bps.
During the period, ERA completed the acquisition of Howe Green and responsibility for Bilco UK was transferred to ERA as part of the development of a meaningful commercial offering for the UK market.
Synergy benefits were recorded from both the Bilco and Giesse acquisitions and the Group has increased the targeted cumulative synergies for the Giesse acquisition by 50 per cent. to EUR6.0 million over the two years to March 2018. These increased synergies will more than offset the reduced savings expected to be derived in 2017 from the North American footprint consolidation project. AmesburyTruth remains committed to the targeted savings from this project of US$10.0 million from 2020.
Input costs increased in most of the Group's markets in the first quarter; with some signs of input cost inflation moderating during the second quarter. The consequent impact on profitability continues to be managed proactively through a combination of effective purchasing, price management and cost reduction programmes.
Operational cash generation was strong in the period, in part due to the Group's 2017 capital investment programme being more weighted towards the second half of the year. Operating Cash Conversion in the twelve months to 30 June 2017 was 99.3 per cent. (LTM to H1 2016: 96.9 per cent.).
Leverage at the period end was 2.05x (H1 2016: 1.81x) which compares favourably with the pro forma Leverage of 2.35x at 1 July 2016, the date the Bilco acquisition completed; and demonstrates the cash generative nature of the Group's businesses. Leverage is projected to reduce over the second half of the year to within the Group's year end target range of 1.5x to 2.0x.
An interim dividend for the 2017 year of 3.50 pence per share (H1 2016: 3.00 pence per share) will be paid on 7 September 2017 to shareholders on the register at close of business on 4 August 2017.
Board Changes
A number of changes to the Board composition and roles took place in the first half of the year. Jamie Pike stepped down as Non-executive Chairman of the Group following the conclusion of the 2017 Annual General Meeting and Martin Towers succeeded him as Non-executive Chairman. Helen Clatworthy became Chair of the audit committee from the same date.
Following a review of the Executive Directors' roles, with effect from 1 August 2017, James Brotherton will take Board responsibility for Group strategy, corporate development and M&A in addition to his existing duties as Chief Financial Officer. In light of his additional responsibilities, his salary will be increased from this date. At the increased level his salary will be around the median salary of Chief Financial Officers for companies of similar size and complexity to Tyman. Full details of his revised remuneration package are set out at the Group's website, www.tymanplc.com.
Outlook
AmesburyTruth expects trading in US residential will remain consistent over the balance of the year with modest growth in both new build and repair and remodelling markets. Further growth is forecast in US commercial in the second half and AmesburyTruth will benefit from its broader commercial product offering. The improving market and business performance in Canada is expected to continue in the second half.
ERA expects the relatively weak residential UK RMI market conditions will persist over the balance of the year with the overall UK residential market remaining flat to down. While cost inflation pressures are not expected to be as severe as they were in the second half of 2016, ERA will not have the benefit of the currency hedges that were put in place prior to the EU Referendum last year and raw material costs are still much higher than they were at H1 2016. The Underlying Operating Margin for the full year for the ERA Division is therefore expected to remain lower than in 2016.
Schlegel International expects to see further growth in EMEAI across the balance of year with Continental Europe continuing to improve and Middle East Revenue being more weighted towards the second half. Asia Pacific markets, other than Australia, are expected to remain stable; however Latin American markets will stay challenging. Profitability in Schlegel International will benefit from the increased levels of synergies generated as the integration of Giesse concludes.
The Board continues to review opportunities to fill the gaps in Tyman's product portfolio and geographical coverage through cross selling of the product range, new product development and value adding acquisitions. The Group is well positioned to make further progress across the balance of the year, particularly in North American and International markets, and continues to trade in line with expectations with good cash generation.
OPERATIONAL REVIEW
AmesburyTruth
GBP'm except where H1 2017 H1 2016 Change CC LFL stated ---------------------- -------- -------- ------- ------- Revenue 166.1 126.8 + 31% Flat Underlying Operating Profit 27.4 21.8 + 26% + 1 % Underlying Operating 16.5 17.2 (70) + 20 Margin % % bps bps ---------------------- -------- -------- ------- ------- US$'m except where H1 2017 H1 2016 Change LFL stated ---------------------- -------- -------- ------- ------ Revenue 209.0 181.7 + 15% Flat Underlying Operating Profit 34.5 31.2 + 11% + 1 % Underlying Operating 16.5 17.2 (70) + 20 Margin % % bps bps ---------------------- -------- -------- ------- ------
Markets
US residential new build permits for single family homes fell back slightly while starts grew in the first half of the year and completions remained strong. Multi family buildings, in which the Division has proportionally lower exposure, has continued to weaken with starts down approximately 13.0 per cent. year on year.
Residential repair and remodelling markets in the US were slightly improved in the first quarter with the NAHB RMI index averaging 58 compared with 54 in Q1 2016; however this index fell back in the second quarter to 55. The LIRA index improved by 2.8 per cent. from the year end.
US commercial markets remain positive with total construction put in place increasing by 1.0 per cent. in the period (H1 2016: 0.1 per cent.) and the Dodge Momentum Index at 30 June 2017 some 11.8 per cent. higher than a year ago.
The market in Canada is showing sustained improvement and single family housing starts at the half year were approximately 13.5 per cent. higher than at H1 2016. Multi family starts are broadly in line with this time last year.
Business Performance and Developments
AmesburyTruth's like for like US Dollar Revenue was broadly flat with the North American residential business trading in line with 2016 throughout the period. Reported US Dollar Revenue increased by 15.0 per cent. due to the six month contribution from Bilco. Reported Revenue benefitted from the relative strength of the US Dollar against Sterling compared with H1 2016. At the half year, like for like order books were 5.6 per cent. ahead of the prior year.
Like for like US Dollar Revenue generated in the US in the period was slightly behind the same period last year, reflecting general market conditions and the required ramp up of window balance production to target levels in the first quarter. Like for like Canadian Revenue increased by approximately 10.4 per cent., due to the recovering market and some customer and product wins. Bilco's US Dollar Revenue in the period was slightly ahead of 2016 with a good performance in commercial. In residential, Bilco saw the slower trading recorded in H2 2016 sustained into the first quarter, although trading picked up in the second quarter.
US Dollar Underlying Operating Profit increased by 10.4 per cent. to US$34.5 million with, as expected, the Division's Underlying Operating Margin in the period somewhat diluted by the lower margin of the Bilco business.
Tier three and four account coverage
In June, the Division transferred its tier three and four account coverage to a national sales representative network. Previously tier three and four coverage was managed through State or Regional representatives, which led to some inconsistencies in service depending on location. This is the first stage in the development of a differentiated approach to service and distribution of product for AmesburyTruth's smaller customers.
Footprint consolidation project
The North American footprint consolidation project is on schedule. During the first half, the Canton, South Dakota site closed with the freehold sold to a third party and the Sioux Falls, South Dakota site was returned to the landlord. Net cash proceeds received from these two site closures totalled US$2.1 million. Construction of the new facility in Statesville, North Carolina is well advanced and AmesburyTruth expects to start production there during the fourth quarter.
The Juarez, Mexico facility is operating at target production levels after a longer than predicted ramp up of window balance production through 2016 and through the first half of 2017. The new facility in Sioux Falls, South Dakota was completed in the first quarter and is operating as expected.
While AmesburyTruth remains committed to the US$10.0 million of cumulative P&L savings from the footprint consolidation project from 2020, the delay in meeting Mexican target production levels in H1 2017 means that 2017 savings are likely to be between US$0.5 and US$1.0 million; with the shortfall being made up in future years.
Bilco Integration
The integration of Bilco has seen encouraging progress made in the areas of freight, procurement, HR and warehousing. In the first half US$0.8 million of cost and revenue synergies were recorded in respect of the Bilco integration. The Division is on course to deliver the targeted US$2.5 million run rate of cost and revenue synergies by the end of 2017.
Outlook
AmesburyTruth expects trading in US residential will remain consistent over the balance of the year with modest growth in both new build and repair and remodelling markets. Further growth is forecast in US commercial in the second half and the Division will benefit from its broader commercial product offering. The improving market and business performance in Canada is expected to continue in the second half.
ERA
GBP'm except where H1 2017 H1 2016 Change LFL
stated
---------------------- -------- -------- ------- ------
+ 13
Revenue 39.9 35.4 % + 5 %
Underlying Operating (12)
Profit 5.6 5.8 (3) % %
Underlying Operating 14.1 16.3 (220) (260)
Margin % % bps bps
---------------------- -------- -------- ------- ------
Markets
As expected the UK market remained relatively subdued in the first half of the year. New build has continued to strengthen; however RMI investment, which comprises the substantial majority of the market, was lower than in the first half of 2016.
Business performance and developments
ERA's like for like Revenue improved by 4.6 per cent. with the increase principally due to pricing and surcharge actions more than offsetting slight volume decreases. On a reported basis, Revenue increased by 12.7 per cent.; due to the incremental contributions from Bilco UK and Howe Green. Like for like order books excluding Response across the Division were 8.1 per cent. higher at the half year compared with H1 2016, principally due to the impact of pricing.
As expected, like for like Underlying Operating margins in ERA were lower than in the first half of 2016 reflecting the impact of exchange on imported products and increases in underlying raw material costs; partially offset by the pricing and surcharge actions taken in the second half of 2016. On a reported basis, Underlying Operating Profit was slightly behind 2016.
Distribution and OEM
ERA made further progress in the distribution sector with further new listings secured in both the UK and Ireland. Despite the tougher market, volumes were only slightly down in OEM with sustained strong performance from bifold hardware and encouraging take up of new product introductions. An increasing number of sales are being made through the Division's web portal "ERA Everywhere" which was launched at the end of 2016.
Howe Green and Bilco UK
During the period, ERA assumed responsibility for both the Howe Green and Bilco UK businesses. Accordingly ERA's results for the period include the post acquisition contribution from Howe Green and a full six month contribution from Bilco UK. The two businesses performed encouragingly in the first half of the year and have a promising pipeline of opportunities for the second half. In aggregate, Bilco UK and Howe Green contributed GBP3.0 million to the Division's Revenue in the period.
Ventrolla
Ventrolla, the Division's sash window refurbishment business, completed its move to new premises in Harrogate during March 2017 which will allow the business to increase its output of new timber window frames. Revenue in the period was in line with the prior year with stronger demand for commercial projects offsetting lower demand for domestic renovations.
New Facility
Construction of the Division's new facility in the West Midlands is proceeding to plan. The Division will start to occupy the premises in the fourth quarter of the year with full occupancy scheduled for the start of 2018. Three existing facilities in the West Midlands will close once the move to the new site has completed.
Outlook
ERA expects the relatively weak residential RMI market conditions will persist over the balance of the year with the overall residential market remaining flat to down.
While cost inflation pressures are not expected to be as severe as they were in the second half of 2016, ERA will not have the benefit of the currency hedges that were put in place prior to the EU Referendum last year and raw material costs are still much higher than they were at H1 2016. The Underlying Operating Margin for the full year for the ERA Division is therefore expected to remain lower than in 2016.
SCHLEGEL INTERNATIONAL
GBP'm except where H1 2017 H1 2016 Change CC LFL stated ---------------------- -------- -------- ------- ------- Revenue 54.4 38.9 + 40 % + 7 % Underlying Operating + 50 Profit 6.3 3.3 + 90 % % Underlying Operating 11.6 + 310 + 340 Margin % 8.6 % bps bps ---------------------- -------- -------- ------- -------
Markets
In EMEAI, markets in Continental Europe have continued their gradual recovery with most countries showing sustained period on period growth. Markets in the Middle East remain positive.
Chinese construction markets are still to expanding, albeit at a slower pace than in recent years, and most other Asia Pacific markets showed some growth, with the exception of Australia. The challenging market environments encountered in Brazil and Argentina last year have persisted but not deteriorated further in 2017.
Business performance and developments
Schlegel International's constant currency like for like Revenue improved by 7.4 per cent. with the increase principally due to pricing actions supported by slightly higher volumes. On a reported basis, Revenue increased by 39.8 per cent.; due to exchange translation benefits and consolidation of Giesse's performance for the full six month period. Order books across the Division at the half year were in line with H1 2016 other than in China where the route to market was changed last year and the order book is lower as a consequence.
Underlying Operating Profit increased by 90.2 per cent. and Underlying Operating Margins in Schlegel International expanded to 11.6 per cent. (H1 2016: 8.6 per cent.), reflecting the benefits of the Giesse acquisition and swift progress made on integration, as the Division continues to make good progress towards its medium term Underlying Operating Margin target of 15 per cent..
EMEAI
Performance in Continental Europe was encouraging; particularly in Russia, Spain and Turkey and the business took further market share in India. Despite generally positive markets, Revenue in the Middle East was lower than in H1 2016 due to distribution customers running down existing inventories. The Division expects to see an improved second half in the Middle East.
China and Asia Pacific
There was good performance, particularly from hardware products, in most Asia Pacific markets. As expected, Revenue in China was in line with H1 2016, following the changes made to the route to market last year. Revenue in Australasia was ahead of H1 2016 principally due to a strong performance in New Zealand; with Australia, other than New South Wales, fairly subdued.
Latin America
Revenue in Latin America was lower than H1 2016 as a consequence of the poor market conditions; however the business is profitable, cash generative and makes operating margins in line with the rest of the Division.
Giesse Integration
Integration initiatives have continued within Schlegel International. The Division's integrated European salesforce started operating from the turn of the year and progress to date has been encouraging with early cross selling orders secured from both Schlegel and Giesse customers. Sales of Giesse product into the other two Divisions increased in the period and there is a good level of interest in the Giesse product range from other Group customers.
During the period there were a number of changes made to the Division's commercial structures with new general managers appointed for the Australasia, China, and Middle East businesses and a new Divisional CFO recruited.
In the second half the Division plans to consolidate the two Giesse facilities in Bologna, Italy onto the larger manufacturing site, retaining an offsite logistics warehouse for the storage and despatch of finished goods.
In 2017 to date EUR2.4 million of synergies have been realised, bringing the aggregate synergies delivered from the integration of Giesse since acquisition to approximately EUR4.8 million. Schlegel International expects that the total synergy benefits to be delivered from the Giesse acquisition by March 2018 will be not less than EUR6.0 million; an increase of 50 per cent. over the original target set out at the time of the acquisition.
Outlook
Schlegel International expects to see further growth in EMEAI across the balance of the year with Continental Europe continuing to improve and Middle East Revenue being more weighted towards the second half. Asia Pacific markets, other than Australia, are expected to remain stable; however Latin American markets will stay challenging. Profitability in Schlegel International will benefit from the increased levels of synergies generated as the integration of Giesse concludes.
FINANCIAL REVIEW
INCOME STATEMENT
Revenue and profit
Reported Group Revenue in the period increased by 29.5 per cent. to GBP260.4 million (H1 2016: GBP201.0 million). On a constant currency, like for like basis, Group Revenue increased by 2.0 per cent. period on period.
Underlying Administrative Expenses increased to GBP60.8 million (H1 2016: GBP44.9 million), reflecting the enlarged size and geographic reach of the Group. Corporate costs in the period were well controlled at GBP3.8 million (H1 2016: GBP3.7 million).
Underlying Operating Profit increased by 30.6 per cent. to GBP35.5 million (H1 2016: GBP27.2 million) and by 3.9 per cent. on a constant currency like for like basis. Pricing actions and favourable exchange rate movements increased Underlying Operating Profit by GBP4.1 million and GBP4.4 million respectively. These were partially offset by higher input costs and other inflationary increases of GBP5.4 million. The Group's Underlying Operating Margin increased by 10 bps to 13.6 per cent. (H1 2016: 13.5 per cent.).
Underlying Profit before Taxation increased by 31.6 per cent. to GBP31.4 million (H1 2016 restated: GBP23.8 million) and by 4.2 per cent. on a constant currency like for like basis. Reported Profit before Taxation increased by 129.5 per cent. to GBP17.8 million (H1 2016: GBP7.8 million).
Materials and input costs
Average
Overall category FY 2016 tracker Spot tracker
GBP'm unless Materials price price
stated COS(1) Tracker purchases mvt(2) mvt(3)
------------------ ----------- ------------------ --------- -------------
+ 3.7 + 1.8
Aluminium 16.2 Euro Aluminium % %
+ 9.8 + 15.9
Oil derivatives 23.8 Euro Polypro % %
+ 4.7 + 14.1
Steel 33.1 US Stainless % %
+ 9.4 + 29.0
Zinc 29.5 US Zinc % %
UK Far East + 17.3 (3.8)
Components 32.2 UK Basket % %
------------------ ----------- ------------------ --------- -------------
(1) FY 2016 materials cost of sales for raw materials, components and hardware for overall category
(2) Average LTM 2017 tracker price compared with average LTM 2016 tracker price at 30 June (3) Spot tracker price as at 30 June 2017 compared with spot tracker price at 31 December 2016
Raw material costs increased in H1 2017 with average prices across all commodity categories higher than H1 2016. At the period end, most commodities were more expensive on a spot basis compared with 31 December 2016 confirming the Group's view that commodity cycles have turned with input costs mainly trending upwards. There were some signs of input cost inflation moderating during the second quarter.
Exceptional items
GBP'm H1 2017 H1 2016 ---------------------------------------------- -------- -------- Footprint restructuring (0.2) (0.9) M&A and integration (0.7) (1.6) Write-off of inventory fair value adjustment - (4.1) Profit on disposal of business - 0.3 ---------------------------------------------- -------- -------- Total exceptional items (0.9) (6.3) ---------------------------------------------- -------- --------
As announced in March 2015 and reported in previous periods, footprint restructuring principally relates to directly attributable costs incurred in the ongoing North American footprint project. Gross costs attributable to footprint restructuring in the period amounted to GBP2.0 million. Against this has been credited GBP1.0 million of profit realised on disposal of the Canton, South Dakota facility and GBP0.8 million of proceeds received from the exit from the Sioux Falls, South Dakota facility. The North American footprint project is expected to conclude by 2020.
M&A and integration costs of GBP0.7 million relate to legal, financial, taxation and consultancy costs associated with the Howe Green acquisition and the integration of the businesses acquired in the 2016 and 2017 years.
Write-off of inventory fair value adjustments in H1 2016 is a non cash adjustment relating to the IFRS 3 requirement that finished goods held in inventory must be revalued to their market value on acquisition. The equivalent revaluation for Howe Green inventory acquired in March 2017 was immaterial.
Profit on disposal of business relates to the net deferred consideration for EWS received in H1 2016.
These items are regarded by the Group as exceptional as they are significant and non-recurring in nature.
Finance costs
Net finance costs increased to GBP4.9 million (H1 2016: GBP2.9 million) and Underlying net finance costs increased by GBP0.8 million to GBP4.1 million (H1 2016: GBP3.3 million).
Interest payable on bank loans, private placement notes and overdrafts increased to GBP4.0 million (H1 2016: GBP3.4 million) reflecting additional finance charges incurred on higher drawdowns.
Non-cash movements charged to net finance costs in the period include amortisation of capitalised borrowing costs of GBP0.2 million (H1 2016: GBP0.2 million), a loss on the revaluation of fair value currency hedges of GBP0.6 million (2016: gain of GBP0.7 million), and pension interest cost of GBP0.2 million (H1 2016: GBP0.2 million).
Income from short term bank deposits decreased to GBP0.1 million (H1 2016: GBP0.2 million).
Taxation
The Group reported an income tax charge of GBP6.1 million (H1 2016: GBP2.5 million), comprising a current tax charge of GBP7.7 million (H1 2016: GBP3.5 million) and a deferred tax credit of GBP1.6 million (H1 2016: GBP1.0 million).
The Underlying tax charge was GBP9.9 million (H1 2016 restated: GBP7.5 million) representing an effective Underlying tax rate of 31.7 per cent. (H1 2016 restated: 31.3 per cent.). This is the Group's current best estimate of the Underlying tax rate for the 2017 full year.
During the period, the Group paid corporation tax of GBP11.2 million (H1 2016: GBP4.4 million) with the increased level of US taxation payments on account.
Earnings per share
Basic Earnings Per Share increased by 112.6 per cent. to 6.65 pence (H1 2016: 3.13 pence). Underlying Earnings Per Share increased by 24.8 per cent. to 12.09 pence (H1 2016 restated: 9.69 pence). 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
GBP'm H1 2017 H1 2016 ----------------------------------------- -------- -------- Net cash generated from operations 9.3 15.3 Add: Pension contributions 0.6 0.3 Add: Income tax paid 11.2 4.4 Less: Purchases of property, plant and equipment (5.8) (7.6) Less: Purchases of intangible assets (0.4) (1.4) Add: Proceeds on disposal of PPE 1.8 0.2 ----------------------------------------- -------- -------- Operational Cash Flow after exceptional cash costs 16.7 11.2 Exceptional cash costs 2.5 4.3 ----------------------------------------- -------- -------- Operational Cash Flow 19.2 15.5 Less: Pension contributions (0.6) (0.3) Less: Income tax paid (11.2) (4.4) Less: Net interest paid (3.7) (2.7) Less: Exceptional cash costs (2.5) (4.3) ----------------------------------------- -------- -------- Free Cash Flow 1.2 3.8 ----------------------------------------- -------- --------
Operational Cash Flow in the period increased by 23.6 per cent. to GBP19.2 million (H1 2016: GBP15.5 million). This is after adding back GBP2.5 million (H1 2016: GBP4.3 million) of exceptional costs cash settled in the period, GBP0.2 million of which were accrued in prior periods. Free cash flow in the period was GBP1.2 million (H1 2016: GBP3.8 million) and was impacted by the increased level of US taxation payments on account.
Operating Cash Conversion in the twelve months to 30 June 2017 remained strong at 99.3 per cent. (LTM to H1 2016: 96.9 per cent.) in part due to the Group's 2017 capital investment programme being weighted towards the second half of the year.
Liquidity
At 30 June 2017 the Group had gross outstanding borrowings of GBP224.7 million (H1 2016: GBP250.5 million), cash balances of GBP34.3 million (H1 2016: GBP105.6 million) and committed but undrawn facilities of GBP34.9 million (H1 2016: GBP14.5 million) as well as potential access to the uncommitted GBP60.0 million accordion facility.
Underlying Net Debt at the period end was GBP190.4 million (H1 2016: GBP144.9 million). Under IFRS, which reduces gross debt by the unamortised portion of finance arrangement fees, net debt at 30 June 2017 was GBP189.5 million (H1 2016: GBP143.5 million).
Covenant performance
Covenant Headroom Headroom
At 30 June 2017 Test performance GBP'm %
----------------- --------- ------------- --------- ---------
Leverage < 3.00x 2.05x 29.3 31.5 %
Interest Cover > 4.00x 11.57x 60.5 65.4 %
----------------- --------- ------------- --------- ---------
Calculated covenant performance consistent with the Group's banking covenant test
At the half year, the Group retained significant headroom on its banking covenants. Leverage at the period end was 2.05x which compares favourably with the pro forma Leverage of 2.35x at 1 July 2016, the date the Bilco acquisition completed, and the Group's Interest Cover was 0.61x higher than H1 2016.
BALANCE SHEET - ASSETS AND LIABILITIES
Working capital
FY 2016 H1
GBP'm (restated) Mvt Acqns(1) FX 2017
------------------- ------------ ------ --------- ------ -------
Inventories 71.1 11.9 0.1 (2.3) 80.8
Trade receivables 55.3 13.4 0.7 (1.2) 68.2
Trade payables (37.8) (5.5) (0.1) 0.5 (42.9)
------------------- ------------ ------ --------- ------ -------
Trade working
capital 88.6 19.8 0.7 (3.0) 106.1
------------------- ------------ ------ --------- ------ -------
(1) The fair value of working capital items assumed at the acquisition date less IFRS 3 exceptional inventory fair value adjustments
At the half year trade working capital, net of provisions, was GBP106.1 million (H1 2016: GBP94.2 million; FY 2016 restated: GBP88.6 million). The trade working capital build to the half year at average exchange rates was GBP19.8 million (H1 2016 restated: GBP14.1 million) which is towards the top end of the Group's target build range coming into 2017. A significant proportion of the trade working capital is expected to unwind over the balance of the year. The inventory build to the half year at average exchange rates was GBP11.9 million (H1 2016 restated: GBP9.7 million).
Trade working capital at the half year was GBP106.1 million (H1 2016: GBP94.2 million). Of the year on year increase, GBP11.0 million related to acquisitions and GBP1.1 million related to exchange.
Capital expenditure
Gross capital expenditure decreased to GBP6.2 million (H1 2016: GBP9.0 million) or 0.91x depreciation (H1 2016: 1.73x), owing to the Group's 2017 capital investment programme being more weighted towards the second half of the year. Intangible asset capital expenditure decreased to GBP0.4 million (H1 2016: GBP1.4 million), principally due to the conclusion of the AmesburyTruth ERP project in Q4 2016.
BALANCE SHEET - EQUITY
Employee Benefit Trust purchases
At 30 June 2017, the EB Trust held 779,746 shares (H1 2016: 989,780). On 9 March 2017, the EB Trust purchased 267,752 shares in Tyman plc at a total cost of GBP0.8 million to satisfy certain share awards vested in March 2017 as well as future obligations under the Group's various share plans.
Dividend
The interim dividend for the 2017 year of 3.50 pence per share (H1 2016: 3.00 pence per share) will be paid on 7 September 2017 to shareholders on the register at close of business on 4 August 2017.
OTHER FINANCIAL MATTERS
Returns on Acquisition Investment
Original
Acquisition Annualised
Investment ROAI ROAI
Acquisition Date '000 H1 2017 H1 2017
------------ ------------------ ------------- --------- -----------
Giesse Mar 2016 EUR56,723 29.9 % 22.0 %
Bilco Jul 2016 $64,937 10.7 % 10.7 %
Howe Green Mar 2017 GBP6,175 5.8 % 18.9 %
------------ ------------------ ------------- --------- -----------
See Alternative Performance Measures on page 41
Giesse has made a significant contribution to the Group since its acquisition in March 2016 and is already exceeding the target return threshold.
At 30 June 2017, Bilco has been owned by the Group for twelve months. Synergy benefits from the Bilco acquisition are starting to come through with US$0.8 million recorded in H1 2017 and the ROAI is expected to increase further over the next twelve months towards the target return threshold.
Howe Green has been owned by the Group for four months at the interim reporting date and has performed encouragingly in the period under ownership.
Currency
Currency in the consolidated income statement
The principal foreign currencies that impact the Group's results are the US Dollar, the Euro, the Australian Dollar and the Canadian Dollar. In 2017 to date each of these currencies was materially stronger against Sterling when compared with the prevailing average exchange rates in H1 2016.
Translational exposure
Currency US$ Euro AUS$ CA$ Total(1) ----------------------- ---------- --------- -------- -------- --------- % mvt in average (12.2) (9.5) (14.6) (12.0) rate % % % % GBP'm Revenue impact 19.8 3.0 0.7 0.4 23.9 GBP'm Profit impact(2) 3.3 0.5 0.1 - 3.9 1c decrease impact(3) + GBP211k + GBP42k + GBP3k + GBP2k ----------------------- ---------- --------- -------- -------- --------- (1) Impact of other currencies is immaterial (2) Underlying 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 Underlying Operating Profit
The net effect of currency translation caused Revenue and Underlying Operating Profit from ongoing operations to increase by GBP23.9 million and GBP3.9 million respectively compared with H1 2016. This result is driven by the enlarged size of the Group as well as the depreciation of Sterling compared with a number of major currencies since June 2016.
Transactional exposure
In the LTM to June 2017, the negative transactional impact of the weakness in Sterling against the US Dollar and Renminbi on the reported profits of the ERA Division was approximately GBP1.8 million, offset only slightly by hedging.
The Group's other transactional exposures generally benefit from the existence of natural hedges and are immaterial.
Alternative Performance Measures
A detailed description of the APMs used by the Group is included on page 128 of the 2016 Report and Accounts. The H1 2017 APMs have been consistently applied and calculated with the equivalent calculations made at H1 2016 other than the calculation of Underlying Interest which, as disclosed in the 2016 Report and Accounts, now excludes gains and losses on fair value of derivative financial instruments. The H1 2016 comparatives have been restated to reflect this amendment to the Underlying Interest APM. Summary definitions of APMs used in this document are on page 41.
Reconciliation of reported Profit before taxation to the Underlying Profit after taxation APM:
GBP'm H1 2017 H1 2016(1) ------------------------------------- -------- ----------- Profit before taxation 17.8 7.8 Exceptional items 0.9 6.3 Amortisation of borrowing costs 0.2 0.2 Loss/(Gain) on revaluation of fair value hedge 0.6 (0.7) Unwinding of discount on provisions - - Amortisation of acquired intangible assets 11.9 10.2 ------------------------------------- -------- ----------- Underlying profit before taxation 31.4 23.8 Income tax charge (6.1) (2.5) Add back: Underlying tax effect(2) (3.9) (4.9) ------------------------------------- -------- ----------- Underlying profit after taxation 21.4 16.4 ------------------------------------- -------- ----------- (1) H1 2016 comparatives restated
(2) Tax effect of exceptional items, amortisation of borrowing costs, amortisation of acquired intangible assets, impairment of acquired intangible assets, gain or loss on revaluation of fair value hedge and unwinding of discount on provisions
Underlying profit and earnings per share measures provide additional useful information to shareholders on the underlying performance of the business. These measures are consistent with how business performance is measured internally by the Group. Underlying profit is not recognised under IFRS and may not be comparable with underlying profit measures used by other companies. APMs are not intended to be superior to or a substitute for GAAP measures.
2017 Summary guidance
Summary guidance for the year remains unchanged from that given at the time of the 2016 full year results other than the following areas:
The Underlying tax rate for Tyman in 2017 is expected to be c. 31.0 - 32.0 per cent. reflecting an Underlying tax rate of 31.7 per cent. used in the interim financial statements. The Underlying tax rate for the year will principally depend on the Group's final geographical mix of taxable profits. 2017 cash taxation rates are still expected to be slightly lower than the Group's 2017 Underlying tax rate.
Trade working capital peak to trough to the year end is expected to be between GBP12.5 million and GBP17.5 million.
Incremental synergy benefits are estimated at c. US$2.0 million (US$2.5 million run rate) by the year end from the integration of Bilco and c. EUR3.4 million delivered during the year from the integration of Giesse. The North American footprint project is now expected to deliver c. US$0.5 - US$1.0 million of incremental benefit during the year.
PRINCIPAL RISKS AND UNCERTAINTIES
The Group's principal risks and uncertainties are identified on page 31 of the Group's Report and Accounts for the year ended 31 December 2016, which is available at the Group's website. In the opinion of the Directors, the principal risks and uncertainties remain as set out in the 2016 Report and Accounts.
25 July 2017
Tyman plc
Condensed consolidated income statement
Year
Six months ended Six months ended ended
30 June 30 June 31 December
2017 2016 2016
(unaudited) (unaudited) (audited)
Note GBP'000 GBP'000 GBP'000
-------------------------------------------- ----- ----------------- ----------------- --------------
Revenue 3 260,402 201,040 457,644
Cost of sales (164,094) (128,923) (290,385)
-------------------------------------------- ----- ----------------- ----------------- --------------
Gross profit 96,308 72,117 167,259
Administrative expenses (73,570) (61,464) (130,069)
-------------------------------------------- ----- ----------------- ----------------- --------------
Operating profit 22,738 10,653 37,190
Analysed as:
Underlying(1) operating profit 3 35,497 27,170 69,803
Exceptional items 4 (891) (6,327) (10,900)
Amortisation of acquired intangible assets 9 (11,868) (10,190) (21,713)
-------------------------------------------- ----- ----------------- ----------------- --------------
Operating profit 22,738 10,653 37,190
Finance income 5 96 897 853
Finance costs 5 (4,986) (3,773) (8,667)
-------------------------------------------- ----- ----------------- ----------------- --------------
Net finance costs 5 (4,890) (2,876) (7,814)
-------------------------------------------- ----- ----------------- ----------------- --------------
Profit before taxation 17,848 7,777 29,376
Income tax charge 6 (6,059) (2,492) (8,641)
Profit for the period 11,789 5,285 20,735 -------------------------------------------- ----- ----------------- ----------------- -------------- Basic earnings per share 7 6.65p 3.13p 11.98p -------------------------------------------- ----- ----------------- ----------------- -------------- Diluted earnings per share 7 6.63p 3.12p 11.93p -------------------------------------------- ----- ----------------- ----------------- -------------- Non-GAAP alternative performance measures(1) Underlying operating profit 3 35,497 27,170 69,803 -------------------------------------------- ----- ----------------- ----------------- -------------- Underlying profit before taxation 7 31,361 23,831 62,079 -------------------------------------------- ----- ----------------- ----------------- -------------- Basic underlying earnings per share 7 12.09p 9.69p 25.41p -------------------------------------------- ----- ----------------- ----------------- -------------- Diluted underlying earnings per share 7 12.05p 9.67p 25.31p -------------------------------------------- ----- ----------------- ----------------- --------------
1 Before amortisation of acquired intangible assets, deferred taxation on amortisation 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 and the associated tax effect. See definitions on page 41 for non-GAAP alternative performance measures.
The notes on pages 25 to 37 are an integral part of these condensed consolidated financial statements.
Tyman plc
Condensed consolidated statement of comprehensive income
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2017 2016 2016
(unaudited) (unaudited) (audited and restated(1) )
GBP'000 GBP'000 GBP'000
-------------------------------------------------- --- -------------- -------------- -----------------------------
Profit for the period 11,789 5,285 20,735
------------------------------------------------------- -------------- -------------- -----------------------------
Other comprehensive (expense)/income
Items that will not be reclassified to profit or loss
Remeasurements of post-employment benefit obligations - - (489)
Total items that will not be reclassified to profit or
loss - - (489)
------------------------------------------------------- -------------- -------------- -----------------------------
Items that may be reclassified subsequently to
profit or loss
Exchange differences on translation of foreign
operations (15,197) 31,470 48,751
Effective portion of changes in value of cash flow
hedges 91 162 (206)
Total items that may be reclassified to profit or loss (15,106) 31,632 48,545
------------------------------------------------------- -------------- -------------- -----------------------------
Other comprehensive (expense)/income for the period,
net of tax (15,106) 31,632 48,056
------------------------------------------------------- -------------- -------------- -----------------------------
Total comprehensive (expense)/income for the period (3,317) 36,917 68,791
------------------------------------------------------- -------------- -------------- -----------------------------
1 Restated for fair value adjustments made in respect of business combinations completed in the 2016 financial year. See note 13.2.
Items in the statement above are disclosed net of tax. The income tax relating to each component of other comprehensive income is disclosed in note 6.
The notes on pages 25 to 37 are an integral part of these condensed consolidated financial statements.
Tyman plc
Condensed consolidated statement of changes in equity
Other
Share Share reserves(1) Treasury Hedging Translation Retained Total
capital premium reserve reserve reserve earnings equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------------- -------- -------- ------------ --------- -------- ------------ --------- ---------
At 1 January 2016 (audited) 8,505 63,256 8,920 (4,321) (85) 31,384 198,572 306,231
Total comprehensive income - - - - 162 31,470 5,285 36,917
Profit for the period - - - - - - 5,285 5,285
Other comprehensive income - - - - 162 31,470 - 31,632
----------------------------- -------- -------- ------------ --------- -------- ------------ --------- ---------
Transactions with owners 424 18,151 - 983 - - (12,377) 7,181
Share-based payments(2) - - - - - - 732 732
Dividends paid - - - - - - (10,266) (10,266)
Issue of shares(3) 424 18,151 - - - - - 18,575
Issue of own shares to
Employee Benefit Trust - - - 2,843 - - (2,843) -
Purchase of own shares for
Employee Benefit Trust - - - (1,860) - - - (1,860)
----------------------------- -------- -------- ------------ --------- -------- ------------ --------- ---------
At 30 June 2016 (unaudited) 8,929 81,407 8,920 (3,338) 77 62,854 191,480 350,329
Total comprehensive income - - - - (368) 17,281 14,961 31,874
Profit for the period - - - - - 15,450 15,450
Other comprehensive
(expense)/income - - - - (368) 17,281 (489) 16,424
----------------------------- -------- -------- ------------ --------- -------- ------------ --------- ---------
Transactions with owners - - - - - - (5,112) (5,112)
----------------------------- -------- -------- ------------ --------- -------- ------------ --------- ---------
Share-based payments(2) - - - - - - 200 200
Dividends paid - - - - - - (5,312) (5,312)
----------------------------- -------- -------- ------------ --------- -------- ------------ --------- ---------
At 31 December 2016
(audited and restated(4) ) 8,929 81,407 8,920 (3,338) (291) 80,135 201,329 377,091
Total comprehensive expense - - - - 91 (15,197) 11,789 (3,317)
Profit for the period - - - - - - 11,789 11,789
Other comprehensive
income/(expense) - - - - 91 (15,197) - (15,106)
----------------------------- -------- -------- ------------ --------- -------- ------------ --------- ---------
Transactions with owners - - - 470 - - (13,707) (13,237)
Share-based payments(2) - - - - - - 903 903
Dividends paid - - - - - - (13,293) (13,293)
Issue of own shares to
Employee Benefit Trust - - - 1,317 - - (1,317) -
Purchase of own shares for
Employee Benefit Trust - - - (847) - - - (847)
----------------------------- -------- -------- ------------ --------- -------- ------------ --------- ---------
At 30 June 2017 (unaudited) 8,929 81,407 8,920 (2,868) (200) 64,938 199,411 360,537 ----------------------------- -------- -------- ------------ --------- -------- ------------ --------- --------- 1 Other reserves are non-distributable capital reserves which arose on previous acquisitions.
2 Share-based payments include a deferred tax debit of GBPNil (six months ended 30 June 2016: GBPNil; year ended 31 December 2016: GBP0.3 million) and a release of the deferred share-based payment bonus accrual of GBP0.4 million (six months ended 30 June 2016: GBP0.2 million; year ended 31 December 2016: GBP0.2 million).
3 On 21 June 2016, the Group issued 8,478,128 shares by way of a placing with institutional investors.
4 Restated for fair value adjustments made in respect of business combinations completed in the 2016 financial year. See note 13.2.
The notes on pages 25 to 37 are an integral part of these condensed consolidated financial statements.
Tyman plc
Condensed consolidated balance sheet
30 June 30 June 31 December
2017 2016 2016
(unaudited) (unaudited) (audited and restated(1) )
Note GBP'000 GBP'000 GBP'000
--------------------------------------- ------ --------------- -------------- -----------------------------
ASSETS
Non-current assets
Goodwill 8 333,741 293,781 344,873
Intangible assets 9 117,024 109,598 130,684
Property, plant and equipment 10 68,723 69,135 71,459
Other investment 1,154 - -
Deferred tax assets 13,666 15,717 15,933
534,308 488,231 562,949
--------------------------------------- ------ --------------- -------------- -----------------------------
Current assets
Inventories 80,797 72,512 71,091
Trade and other receivables 82,612 77,242 67,254
Cash and cash equivalents 34,282 105,585 40,917
Derivative financial instruments - 936 506
197,691 256,275 179,768
--------------------------------------- ------ --------------- -------------- -----------------------------
TOTAL ASSETS 731,999 744,506 742,717
--------------------------------------- ------ --------------- -------------- -----------------------------
LIABILITIES
Current liabilities
Trade and other payables (78,349) (74,630) (71,197)
Derivative financial instruments (249) - (291)
Borrowings 11 - (588) -
Current tax liabilities (1,242) (34) (4,337)
Provisions (5,374) (4,326) (4,544)
(85,214) (79,578) (80,369)
--------------------------------------- ------ --------------- -------------- -----------------------------
Non-current liabilities
Borrowings 11 (223,734) (248,542) (216,470)
Deferred tax liabilities (38,233) (36,710) (42,658)
Retirement benefit obligations (16,448) (11,168) (17,108)
Provisions (6,763) (14,400) (8,124)
Other payables (1,070) (3,779) (897)
(286,248) (314,599) (285,257)
--------------------------------------- ------ --------------- -------------- -----------------------------
TOTAL LIABILITIES (371,462) (394,177) (365,626)
--------------------------------------- ------ --------------- -------------- -----------------------------
NET ASSETS 360,537 350,329 377,091
--------------------------------------- ------ --------------- -------------- -----------------------------
EQUITY
Capital and reserves attributable to owners of the Company
Share capital 8,929 8,929 8,929
Share premium 81,407 81,407 81,407
Other reserves 8,920 8,920 8,920
Treasury reserves (2,868) (3,338) (3,338)
Hedging reserve (200) 77 (291)
Translation reserve 64,938 62,854 80,135
Retained earnings 199,411 191,480 201,329
TOTAL EQUITY 360,537 350,329 377,091
--------------------------------------- ------ --------------- -------------- -----------------------------
1 Restated for fair value adjustments made in respect of business combinations completed in the 2016 financial year. See note 13.2.
The notes on pages 25 to 37 are an integral part of these condensed consolidated financial statements.
Tyman plc
Condensed consolidated cash flow statement
Year
Six months ended Six months ended ended
30 June 30 June 31 December
2017 2016 2016
(unaudited) (unaudited) (audited)
Note GBP'000 GBP'000 GBP'000
--------------------------------------------------------- ----- ----------------- ----------------- --------------
Cash flow from operating activities
Profit before taxation 3 17,848 7,777 29,376
Adjustments 14 23,742 23,266 47,994
Changes in working capital (excluding the effects of
acquisition and exchange differences
on consolidation):
Inventories (11,917) (9,680) (2,368)
Trade and other receivables (16,213) 1,175 16,647
Trade and other payables 8,293 (1,304) (8,230)
Provisions utilised (622) (1,208) (2,543)
Pension contributions (572) (264) (940)
Income tax paid (11,219) (4,437) (12,651)
Net cash generated from operations 9,340 15,325 67,285
--------------------------------------------------------- ----- ----------------- ----------------- --------------
Cash flow from investing activities
Purchases of property, plant and equipment 10 (5,831) (7,609) (12,615)
Purchases of intangible assets 9 (352) (1,353) (2,818)
Proceeds on disposal of property, plant and equipment 1,780 161 172
Acquisitions of subsidiary undertakings, net of cash
acquired 13 (5,136) (44,480) (96,383)
Proceeds on disposal of subsidiary undertakings - - 250
Purchase of other investment (1,154) - -
Interest received 334 223 330
Net cash used in investing activities (10,359) (53,058) (111,064)
--------------------------------------------------------- ----- ----------------- ----------------- -------------- Cash flow from financing activities Interest paid (4,052) (2,892) (7,339) Dividend paid (13,293) (10,266) (15,578) Net proceeds on issue of shares - 18,575 18,575 Purchase of own shares from Employee Benefit Trust (847) (1,860) (1,860) Refinancing costs paid 11 - - (12) Proceeds from drawdown of revolving credit facility 11 28,756 126,293 132,630 Repayments of revolving credit facility 11 (16,514) (22,029) (72,740) Net cash (used in)/generated from financing activities (5,950) 107,821 53,676 --------------------------------------------------------- ----- ----------------- ----------------- -------------- Net (decrease)/increase in cash and cash equivalents (6,969) 70,088 9,897 Exchange gains on cash and cash equivalents 334 5,522 1,045 Cash and cash equivalents at the beginning of the period 40,917 29,975 29,975 Cash and cash equivalents at the end of the period 34,282 105,585 40,917 --------------------------------------------------------- ----- ----------------- ----------------- --------------
The notes on pages 25 to 37 are an integral part of these condensed consolidated financial statements.
Tyman plc
Notes to the condensed consolidated financial statements
1. General information
Tyman and its subsidiaries is a leading international manufacturer and supplier of engineered components to the door and window industry.
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 25 July 2017.
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 2016 were approved by the Board of Directors on 8 March 2017 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.
These Interim Financial Statements have been reviewed, not audited.
The financial information for the year ended 31 December 2016 is extracted from the Group's consolidated financial statements for that year apart from any restatements made for fair value adjustments in respect of business combinations completed in the 2016 financial year (see note 13.2).
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', as adopted by the European Union. The Interim Financial Statements should be read in conjunction with the annual financial statements for the year ended 31 December 2016, which have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union.
2.2 Changes in accounting policies and disclosures
2.2.1 New, revised and amended EU endorsed accounting standards
There were no new or amended accounting standards relevant to the Group's results that are effective for the first time in 2017 that have a material impact on the Group's consolidated financial statements.
2. Accounting policies and basis of preparation (continued)
2.2.2 New, revised and amended accountings standards not yet effective
The following standards issued by the IASB have not yet been adopted by the Group:
-- IFRS 9 - Financial instruments (effective in the year beginning 1 January 2018);
-- IFRS 15 - Revenue from contracts with customers (effective in the year beginning 1 January 2018); and
-- IFRS 16 - Leases (effective in the year beginning 1 January 2019), subject to EU endorsement.
The Group has commenced an initial assessment of the impact of these standards on the consolidated financial statements.
The adoption of IFRS 9 and IFRS 15 are not expected to have a material impact on the financial statements of the Group in future periods.
The adoption of IFRS 16 is expected to have a relatively significant impact on the Group's reported results and balance sheet. The Group is conducting an assessment of the likely impact of IFRS 16 on the Group's reported results and expects to report on this at the time of the full year results in March 2018.
Until the assessments of the above standards are completed, no reliable estimate of the impact on the financial statements will be disclosed.
2.3 Going concern
The Directors are confident, based on current financial projections and the banking facilities available to the Group, and after considering sensitivities, that the Company and the Group have sufficient resources for their operational needs that will enable the Group to remain in compliance with its financial covenants in its bank facilities for at least the next twelve months. Accordingly, the Directors continue to adopt the going concern basis in preparing the Interim Financial Statements.
2.4 Accounting policies
The accounting policies adopted are consistent with those of the previous financial year. 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 2016. There have been no changes in significant estimates.
3. Segment reporting
The reporting segments reflect the manner in which performance is evaluated and resources are allocated. The Group operates through three clearly defined divisions: AmesburyTruth, ERA and Schlegel International.
AmesburyTruth comprises all the Group's operations within the US, Canada and Mexico. ERA comprises the Group's UK and Ireland hardware business, together with Ventrolla and Tyman Sourcing Asia. During the period, ERA assumed responsibility for the Howe Green and Bilco UK businesses and these businesses are now included in the ERA reporting segment with the 2016 full year comparatives restated for the AmesburyTruth and ERA segments. Schlegel International comprises all the Group's other businesses outside of the US, Canada and Mexico as well as two UK seal manufacturing plants.
Centrally incurred functional costs that are directly attributable to a division are allocated or recharged to that 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 are no material differences 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 operating data for business carried on in the UK that is not accounted for in the ERA Division 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 in measurement applied, other than those noted above.
3.1 Revenue
Six months ended Six months ended Year ended
30 June 30 June 31 December
2017 2016 2016
(unaudited) (unaudited) (audited and restated)
GBP'000 GBP'000 GBP'000
------------------------ --- ----------------- ----------------- -------------------------
AmesburyTruth 166,052 126,762 290,051
ERA 39,944 35,413 73,016
Schlegel International 54,406 38,865 94,577
Revenue 260,402 201,040 457,644
----------------------------- ----------------- ----------------- -------------------------
Included within the Schlegel International segment is revenue attributable to the UK of GBP9.7 million (six months ended 30 June 2016: GBP8.4 million; year ended 31 December 2016 restated: GBP18.2 million).
3. Segment reporting (continued)
3.2 Profit before taxation
Six months ended Six months ended Year ended
30 June 30 June 31 December
2017 2016 2016
(unaudited) (unaudited) (audited and restated)
Note GBP'000 GBP'000 GBP'000
-------------------------------------------- ----- ----------------- ----------------- -------------------------
AmesburyTruth 27,395 21,784 54,635
ERA 5,628 5,772 11,735
Schlegel International 6,321 3,324 9,413
-------------------------------------------- ----- ----------------- ----------------- -------------------------
Operating segment result 39,344 30,880 75,783
Centrally incurred costs (3,847) (3,710) (5,980)
-------------------------------------------- ----- ----------------- ----------------- -------------------------
Underlying operating profit 35,497 27,170 69,803
Exceptional items 4 (891) (6,327) (10,900)
Amortisation of acquired intangible assets 9 (11,868) (10,190) (21,713)
-------------------------------------------- ----- ----------------- ----------------- -------------------------
Operating profit 22,738 10,653 37,190
Net finance costs 5 (4,890) (2,876) (7,814)
Profit before taxation 17,848 7,777 29,376
-------------------------------------------- ----- ----------------- ----------------- -------------------------
4. Exceptional items
Year
Six months ended Six months ended ended
30 June 30 June 31 December
2017 2016 2016
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
----------------------------------------------- --- ----------------- ----------------- --------------
Footprint restructuring (196) (872) (2,672)
M&A and integration (695) (1,556) (2,994)
Write-off of inventory fair value adjustments - (4,149) (5,698)
Profit on disposal of business - 250 250
Property provision releases and disposals - - 214
(891) (6,327) (10,900)
--------------------------------------------------- ----------------- ----------------- --------------
Footprint restructuring
As announced in March 2015 and reported in previous periods, footprint restructuring principally relates to directly attributable costs incurred in the ongoing North American footprint project. Gross costs attributable to footprint restructuring in the period amounted to GBP2.0 million. Against this has been credited GBP1.0 million of profit realised on disposal of the Canton, South Dakota facility and GBP0.8 million of proceeds received from the exit from the Sioux Falls, South Dakota facility. The North American footprint project is expected to conclude by 2020.
M&A and integration
M&A and integration costs of GBP0.7 million relate to legal, financial, taxation and consultancy costs associated with the Howe Green acquisition and the integration of businesses acquired in the 2016 and 2017 years.
Write-off of inventory fair value adjustments
Write-off of inventory fair value adjustments in H1 2016 is a non cash adjustment relating to the IFRS 3 requirement that finished goods held in inventory must be revalued to their market value on acquisition. The equivalent revaluation for Howe Green inventory acquired in March 2017 was immaterial.
4. Exceptional items (continued)
Profit on disposal of business
The profit on disposal of business relates to the net deferred consideration for EWS received in H1 2016.
Property provision releases and disposals
The property provision releases and disposals comprises surplus onerous lease provisions released during the 2016 year.
These items are regarded by the Group as exceptional as they are significant and non-recurring in nature.
5. Finance income and costs
Year
Six months ended Six months ended ended
30 June 30 June 31 December
2017 2016 2016
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
----------------------------------------------------------- --- ----------------- ----------------- --------------
Finance income
Interest income from short term bank deposits 96 219 525
Gain on revaluation of fair value hedge - 678 328
96 897 853
--------------------------------------------------------------- ----------------- ----------------- --------------
Finance costs
Interest payable on bank loans, private placement notes and
overdrafts (3,991) (3,353) (7,760)
Amortisation of borrowing costs (200) (212) (412)
Unwinding of discount on provision - (3) (6)
Pension interest cost (241) (205) (489)
Loss on revaluation of fair value hedge (554) - -
(4,986) (3,773) (8,667)
--------------------------------------------------------------- ----------------- ----------------- --------------
Net finance costs (4,890) (2,876) (7,814)
---------------------------------------------------------------- ----------------- ----------------- --------------
6. Taxation - income statement and other comprehensive income
Year
Six months ended Six months ended ended
30 June 30 June 31 December
2017 2016 2016
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
----------------------------------------------------------- --- ----------------- ----------------- --------------
Current taxation
Current tax on profit for the period (7,648) (3,518) (12,203)
Adjustments in respect of prior periods (35) (3) 812
Total current taxation (7,683) (3,521) (11,391)
---------------------------------------------------------------- ----------------- ----------------- --------------
Deferred taxation
Origination and reversal of temporary differences 1,353 1,005 3,147
Adjustments in respect of prior periods 271 24 (397)
Total deferred taxation 1,624 1,029 2,750
---------------------------------------------------------------- ----------------- ----------------- --------------
Income tax charge in the income statement (6,059) (2,492) (8,641) ---------------------------------------------------------------- ----------------- ----------------- -------------- Total charge relating to components of other comprehensive income Deferred tax credit on actuarial gains and losses - - 267 Deferred tax charge on share-based payments - - (316) Income tax charge in the statement of other comprehensive income - - (49) ---------------------------------------------------------------- ----------------- ----------------- -------------- Total current taxation (7,683) (3,521) (11,391) Total deferred taxation 1,624 1,029 2,701 Total taxation (6,059) (2,492) (8,690) ---------------------------------------------------------------- ----------------- ----------------- --------------
7. Earnings per share
7.1 Basic and diluted earnings per share
Year
Six months ended Six months ended ended
30 June 30 June 31 December
2017 2016 2016
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
---------------------------- --- ----------------- ----------------- --------------
Profit for the period 11,789 5,285 20,735
Basic earnings per share 6.65p 3.13p 11.98p
Diluted earnings per share 6.63p 3.12p 11.93p
--------------------------------- ----------------- ----------------- --------------
Basic earnings 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 diluted potential ordinary shares into ordinary shares.
7. Earnings per share (continued)
7.2 Weighted average number of shares
Year
Six months ended Six months ended ended
30 June 30 June 31 December
2017 2016 2016
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
----------------------------------------------------------- --- ----------------- ----------------- --------------
Weighted average number of shares (including treasury shares) 178,583 170,570 174,598
Treasury and Employee Benefit Trust shares (1,406) (1,640) (1,585)
---------------------------------------------------------------- ----------------- ----------------- --------------
Weighted average number of shares - basic 177,177 168,930 173,013
Effect of dilutive potential ordinary shares - LTIP awards and
options 717 387 741
Weighted average number of shares - diluted 177,894 169,317 173,754
---------------------------------------------------------------- ----------------- ----------------- --------------
7.3 Non-GAAP alternative performance measure: underlying earnings per share
The Group presents an underlying 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. Underlying earnings per share has been calculated using the underlying profit before taxation and using the same weighted average number of shares in issue as the earnings per share calculation. See Alternative Performance Measures on page 41.
Underlying profit after taxation is derived as follows:
Year
Six months ended Six months ended ended
30 June 30 June 31 December
2017 2016 2016
(unaudited) (unaudited and restated) (audited)
Note GBP'000 GBP'000 GBP'000
----------------------------------------------- ----- ----------------- --------------------------- --------------
Profit before taxation 17,848 7,777 29,376
Exceptional items 4 891 6,327 10,900
Amortisation of borrowing costs 5 200 212 412
Loss/(Gain) on revaluation of fair value hedge 5 554 (678) (328)
Unwinding of discount on provisions 5 - 3 6
Amortisation of acquired intangible assets 9 11,868 10,190 21,713
----------------------------------------------- ----- ----------------- --------------------------- --------------
Underlying profit before taxation 31,361 23,831 62,079
Income tax charge 6 (6,059) (2,492) (8,641)
Add back: tax effect of exceptional items,
amortisation of borrowing costs, amortisation
of
acquired intangible assets, impairment of
acquired intangible assets, gain or loss on
revaluation
of fair value hedge and unwinding of discount
on provisions (3,873) (4,970) (9,469)
Underlying profit after taxation 21,429 16,369 43,969
----------------------------------------------- ----- ----------------- --------------------------- --------------
7. Earnings per share (continued)
Underlying earnings per share is summarised as follows:
Year
Six months ended Six months ended ended
30 June 30 June 31 December
2017 2016 2016
(unaudited) (unaudited and restated) (audited)
---------------------------------------
Basic underlying earnings per share 12.09p 9.69p 25.41p
-------------------------------------------- ----------------- --------------------------- --------------
Diluted underlying earnings per share 12.05p 9.67p 25.31p
-------------------------------------------- ----------------- --------------------------- --------------
8. Goodwill
30 June 30 June 31 December
2017 2016 2016
(unaudited) (unaudited) (audited and restated)
Note GBP'000 GBP'000 GBP'000
------------------------------------------------ ----- -------------- -------------- -------------------------
Net book amount at the beginning of the period 344,873 253,718 253,718
Acquisitions of subsidiaries 13 3,220 13,748 41,196
Exchange difference (14,352) 26,315 49,959
Net book amount at the end of the period 333,741 293,781 344,873
------------------------------------------------ ----- -------------- -------------- -------------------------
A review of the carrying amount of goodwill and intangible assets across the Group will be carried out at year end. Taking into account current trading conditions and future projections, the Board believes that the carrying amounts of goodwill and intangible assets in each of the Group's CGUs remains sustainable.
9. Intangible assets
30 June 30 June 31 December
2017 2016 2016
(unaudited) (unaudited) (audited and restated)
Note GBP'000 GBP'000 GBP'000
------------------------------------------------ ----- -------------- -------------- -------------------------
Net book amount at the beginning of the period 130,684 86,772 86,772
Additions 352 1,353 2,818
Acquisitions of subsidiaries 13 2,823 22,770 45,496
Disposals - (104) -
Amortisation charge for the period (12,539) (10,631) (22,662)
Transfers to property, plant and equipment (228) (93) -
Exchange difference (4,068) 9,531 18,260
Net book amount at the end of the period 117,024 109,598 130,684
------------------------------------------------ ----- -------------- -------------- -------------------------
The amortisation charge for the period includes GBP11.9 million relating to amortisation of acquired intangible assets (six months ended 30 June 2016: GBP10.2 million; year ended 31 December 2016: GBP21.7 million) and GBP0.6 million relating to amortisation of other intangible assets (six months ended 30 June 2016: GBP0.4 million; year ended 31 December 2016: GBP1.0 million). The amortisation charge for the period is included in administrative expenses in the income statement.
10. Property, plant and equipment
30 June 30 June 31 December
2017 2016 2016
(unaudited) (unaudited) (audited and restated)
Note GBP'000 GBP'000 GBP'000
------------------------------------------------ ----- -------------- -------------- -------------------------
Net book amount at the beginning of the period 71,459 42,845 42,845
Additions 5,831 7,609 12,615
Acquisitions of subsidiaries 13 170 17,791 18,735
Disposals (805) - (235)
Depreciation charge for the period (6,138) (4,747) (10,701)
Impairment charge for the period - - (1,107)
Transfers from intangible assets 228 93 -
Exchange difference (2,022) 5,544 9,307
Net book amount at the end of the period 68,723 69,135 71,459
------------------------------------------------ ----- -------------- -------------- -------------------------
The depreciation charge for the period is included in administrative expenses in the income statement.
11. Interest-bearing loans and borrowings
30 June 30 June 31 December
2017 2016 2016
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
------------- --- -------------- -------------- ------------
Non-current (223,734) (248,542) (216,470)
Current - (588) -
(223,734) (249,130) (216,470)
----------------- -------------- -------------- ------------
Movements in interest-bearing loans and borrowings are analysed as follows:
30 June 30 June 31 December
2017 2016 2016
(unaudited) (unaudited) (audited)
Note GBP'000 GBP'000 GBP'000
---------------------------------------- ----- -------------- -------------- ------------
Balance at the beginning of the period (216,470) (111,558) (111,558)
Acquisitions of subsidiaries 13 (46) (15,411) (19,251)
Refinancing costs paid - - 12
Drawdown of revolving credit facility (28,756) (126,293) (132,630)
Repayment of revolving credit facility 16,514 22,029 72,740
Amortisation of borrowing costs (200) (212) (412)
Exchange difference 5,224 (17,685) (25,371)
Balance at the end of the period (223,734) (249,130) (216,470)
---------------------------------------- ----- -------------- -------------- ------------
There were no defaults in interest payments in the period under the terms of existing loan agreements.
The Group has the following undrawn committed multi-currency revolving credit facility:
30 June 30 June 31 December
2017 2016 2016
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
------------------------------- --- -------------- -------------- ------------
Floating rate
Expiring beyond twelve months (34,867) (14,464) (45,370)
------------------------------------ -------------- -------------- ------------
The Group also has access to the uncommitted GBP60.0 million accordion facility and at 30 June 2017 held aggregate cash balances of GBP34.3 million (30 June 2016: GBP105.6 million; 31 December 2016: GBP40.9 million).
12. Financial risk management and financial instruments
12.1 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 2016.
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 on bases other than fair value.
12.2 Level 2 and level 3 fair values
At 30 June 2017 derivative financial liabilities of GBP0.2 million were categorised at level 2 (30 June 2016: net asset of GBP0.1 million; 31 December 2016: net asset of GBP0.2 million).
At 30 June 2017 other investments of GBP1.2 million were categorised at level 3 (30 June 2016: GBPNil; 31 December 2016: GBPNil).
12.3 Fair value of financial assets and liabilities measured at amortised cost
The fair values of borrowings are as follows:
30 June 30 June 31 December
2017 2016 2016
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
------------- --- -------------- -------------- ------------
Non-current (223,907) (247,422) (216,763)
Current - (588) -
(223,907) (248,010) (216,763)
----------------- -------------- -------------- ------------
The fair values of trade and other receivables, cash and cash equivalents, and trade and other payables approximate their carrying amounts.
13. Business combinations
13.1 Acquisition of Howe Green
On 3 March 2017, the Group's ERA division acquired Howe Green, a UK manufacturer of engineered floor and ceiling access hatches sold into the commercial and infrastructure markets. ERA paid a cash consideration of GBP5.8 million with deferred consideration of GBP0.4 million payable within twelve months of the date of acquisition.
The consideration paid and the fair value of net assets assumed are as follows:
Note GBP'000
------------------------------------------ ----- --------
Intangible assets 9 2,823
Property, plant and equipment 10 170
Inventories 95
Trade and other receivables 669
Cash and cash equivalents 689
Trade and other payables (420)
Borrowings 11 (46)
Current tax liabilities (280)
Deferred tax liabilities (545)
Retirement benefit obligations -
Provisions (200)
------------------------------------------ ----- --------
Total identifiable net assets 2,955
Goodwill arising on acquisition 8 3,220
Total consideration 6,175
------------------------------------------ ----- --------
Satisfied by:
Cash 5,825
Deferred consideration 350
Total consideration 6,175
------------------------------------------ ----- --------
Net cash outflow arising on acquisition:
Cash consideration 5,825
Net cash and cash equivalents acquired (689)
Net cash outflow 5,136
------------------------------------------ ----- --------
Acquisition related costs of GBP0.2 million have been included in exceptional costs in the Group's consolidated income statement (note 4).
The fair value of trade and other receivables is GBP0.7 million and includes trade receivables with a fair value of GBP0.7 million. The gross contractual amount for trade receivables due is GBP0.7 million, of which GBPNil are expected to be uncollectible.
Revenue in the consolidated income statement since 3 March 2017 contributed by Howe Green was GBP1.0 million. Howe Green also contributed GBP0.3 million of profit before taxation over the same period.
Had the acquisition of Howe Green been completed on the first day of the financial period, an additional GBP0.7 million of revenue and GBP0.1 million of profit before taxation would have been contributed to the Group.
13. Business combinations (continued)
Goodwill arising on acquisition is attributable to the expected profitability of the acquired business arising through savings and benefits from:
-- the development and extension of ERA's product portfolio into the commercial sector; -- access to the commercial and infrastructure customer base.
The estimated value of intangibles, including goodwill, deductible for tax purposes is GBPNil.
13.2 Fair value adjustments made in respect of 2016 acquisitions
The following table summarises the fair value adjustments made in the period in respect of business combinations completed in the 2016 financial year, restated as at 31 December 2016.
Fair value Fair value
As reported at 31 December adjustment adjustment Restated at 31 December
2016 Giesse Response 2016
GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- --------------------------- ------------ ------------ ----------------------------
Intangible assets 45,342 154 - 45,496
Property, plant and
equipment 18,992 (257) - 18,735
Inventories 19,255 359 (25) 19,589
Trade and other receivables 42,452 (968) - 41,484
Cash and cash equivalents (6,447) - - (6,447)
Trade and other payables (37,212) 4,486 (41) (32,767)
Borrowings (19,251) - - (19,251)
Current tax liabilities (1,383) - - (1,383)
Deferred tax liabilities (7,951) - - (7,951)
Retirement benefit
obligations (3,585) - - (3,585)
Provisions (4,711) 491 - (4,220)
----------------------------- --------------------------- ------------ ------------ ----------------------------
Total identifiable net
assets 45,501 4,265 (66) 49,700
Goodwill arising on
acquisition 45,395 (4,265) 66 41,196
Total consideration 90,896 - - 90,896
----------------------------- --------------------------- ------------ ------------ ----------------------------
Satisfied by:
Cash 89,936 - - 89,936
Deferred consideration 960 - - 960
Total consideration 90,896 - - 90,896
----------------------------- --------------------------- ------------ ------------ ----------------------------
Net cash outflow arising on
acquisition:
Cash consideration 89,936 - - 89,936
Net cash and cash
equivalents acquired 6,447 - - 6,447
Net cash outflow 96,383 - - 96,383
----------------------------- --------------------------- ------------ ------------ ----------------------------
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:
Year
Six months ended Six months ended ended
30 June 30 June 31 December
2017 2016 2016
(unaudited) (unaudited) (audited)
Note GBP'000 GBP'000 GBP'000
--------------------------------------------------------- ----- ----------------- ----------------- --------------
Net finance costs 4,890 2,876 7,814
Depreciation 10 6,138 4,747 10,701
Amortisation of intangible assets 9 12,539 10,631 22,662
Impairment of property, plant and equipment 10 - - 1,107
Disposal of property, plant and equipment (975) (57) 63
Write-off of inventory fair value adjustments - 4,149 5,698
Pension current service cost and expected administration
costs 290 238 886
Non-cash provision movements (43) (25) (1,943)
Profit on disposal of business - - (250)
Share-based payments 903 732 1,047
Other non-cash adjustments - (25) 209
23,742 23,266 47,994
--------------------------------------------------------- ----- ----------------- ----------------- --------------
15. Capital commitments
At 30 June 2017 the Group has capital commitments of GBP2.1 million for the purchase of property, plant and equipment (30 June 2016: GBP5.3 million; 31 December 2016: GBP5.8 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 2017.
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 2016. A list of the current Directors is maintained at the Tyman website: www.tymanplc.com.
By order of the Board
Louis Eperjesi James Brotherton Chief Executive Officer Chief Financial Officer
25 July 2017
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 six month period ended 30 June 2017. 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 2017;
-- 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 explanatory notes to the interim 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.
As disclosed in note 2 to the interim financial statements, the financial reporting framework that has been applied in the preparation of the full annual financial statements of the Group is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.
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
25 July 2017
Alternative Performance Measures - Definitions
Adjusted EBITDA Underlying Operating Profit with
Depreciation and Share-based payments
expenses added back plus the pre-acquisition
EBITDA of businesses acquired during
the period covering the relevant
pre-acquisition period less the
EBITDA of businesses disposed of
during the period.
Acquisition The gross consideration paid to
Enterprise the seller less cash acquired with
Value the acquired business plus debt
acquired with the acquired business
plus the expenses of the acquisition,
excluding financing expenses, plus
any integration expenses booked
as exceptional items.
Constant Currency Comparison with the comparative
or CC period translated at the current
period's average or closing exchange
rate as applicable.
Leverage Underlying Net Debt translated at
the average exchange rate for the
period divided by Adjusted EBITDA.
Like for Like The comparison of Revenue or Operating
or LFL Profit, as appropriate, excluding
the impact of any acquisitions made
during the current period and, for
acquisitions made in the comparative
period, excluding from the current
period result the impact of the
equivalent current period pre-acquisition
result. For disposals, the results
are excluded for the whole of the
current and prior period.
Operating Cash Operational Cash Flow divided by
Conversion Underlying Operating Profit.
Operational Net cash inflow from operating activities
Cash Flow before Income tax paid, exceptional
costs cash settled in the period
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.
Return on Acquisition Annualised Underlying Operating
Investment Profit attributable to the acquired
or ROAI business divided by the Acquisition
Enterprise Value less the fair value
of controllable capital employed
as at the date of acquisition plus
the value of controllable capital
employed at the date of measurement.
The denominator is adjusted for
seasonality where appropriate.
Return on Capital Underlying Operating Profit as a
Employed or percentage of the twelve month average
ROCE capital employed.
Underlying Administrative Expenses before Exceptional
Administrative items, Amortisation of acquired
Expenses intangible assets, Impairment of
acquired intangible assets and Impairment
of acquired goodwill.
Underlying Interest bearing loans and borrowings,
Net Debt net of cash and cash equivalents,
plus unamortised borrowing costs
added back.
A reconciliation between statutory reported measures and the APMs noted above are included on page 18 of this Interim Report.
Definitions
Bilco The Bilco Company acquired by the
Group's AmesburyTruth Division on
1 July 2016.
EB Trust The Tyman Employees: Benefit Trust.
Giesse Giesse Group acquired by the Group's
Schlegel International Division
on 7 March 2016.
Howe Green Howe Green Limited acquired by the
Group on 3 March 2017.
Interim Financial The condensed consolidated interim
Statements financial statements of Tyman plc
for the six months ended 30 June
2017.
Interim Report The interim report of Tyman plc
for the six months ended 30 June
2017 containing the Interim Financial
Statements.
Response or Response Electronics Limited, acquired
Response Electronics by the Group's ERA Division on 3
March 2016.
Revenue The gross inflow of economic benefits
(cash, receivables, other assets)
arising from the ordinary operating
activities of the Group.
GBP or Sterling The lawful currency of the United
or British Kingdom.
Pounds
US$ The lawful currency of the United
States of America.
Glossary of Terms
APM Alternative Performance Measure
bps Basis points
CGU Cash Generating Unit
Dodge Momentum A monthly measure published by Dodge
Index Data and Analytics of the first
(or initial) report for non-residential
building projects in planning
DRIP Dividend Reinvestment Plan
EBITDA Earnings before Interest, Taxation,
Depreciation and Amortisation
EMEAI Europe, Middle East and Africa and
India region
EU European Union
IFRS International Financial Reporting
Standards
JCHS Joint Centre for Housing Studies
of Harvard University
LIRA Leading Indicator of Remodelling
Activity published quarterly by
JCHS
NAHB National Association of Home Builders
OEM Original equipment manufacturer
PPE Property, plant and equipment
RMI Renovation, maintenance and improvement
Exchange Rates
The following foreign exchange rates have been used in the financial information to translate amounts into Sterling:
Closing Rates: H1 2017 H1 2016 FY 2016 -------------------- -------- -------- -------- US Dollars 1.3003 1.3392 1.2341 Euros 1.1383 1.2060 1.1729 Australian Dollars 1.6917 1.7995 1.7136 Canadian Dollars 1.6881 1.7352 1.6589 Brazilian Real 4.2986 4.3268 4.0176 -------------------- -------- -------- -------- Average Rates: H1 2017 H1 2016 FY 2016 -------------------- -------- -------- -------- US Dollars 1.2586 1.4336 1.3554 Euros 1.1626 1.2846 1.2243 Australian Dollars 1.6694 1.9556 1.8252 Canadian Dollars 1.6799 1.9084 1.7965 Brazilian Real 4.0012 5.3112 4.7437 -------------------- -------- -------- --------
Roundings
Percentage numbers have been calculated using figures rounded to the nearest thousand from the financial statements, which may lead to small differences in some figures and percentages quoted.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR DZLFLDDFLBBL
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July 25, 2017 02:00 ET (06:00 GMT)
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