Half Yearly Report

RNS Number : 5412N
Tyman PLC
29 July 2014
 



Tyman PLC

("Tyman" or the "Group" or the "Company")

INTERIM RESULTS FOR THE PERIOD ENDED 30 JUNE 2014

Tyman plc, a leading international supplier of building products to the door and window industry, announces unaudited interim results for the six months ended 30 June 2014.

 

HIGHLIGHTS - CONTINUING OPERATIONS

Financial Highlights

£'million unless stated

H1 2014

H1 2013

Change

CC LFL (1)

Revenue

£167.0m

£123.7m

+35.0%

+8.2%

Underlying Operating Profit(2)

£19.4m

£10.8m

+79.3%

+21.1%

Underlying PBT(2)

£17.2m

£9.4m

+83.3%


Underlying EPS(2)

7.32p

4.87p

+50.3%


Interim Dividend per share

2.00p

1.50p

+33.3%


Underlying Net Debt/(Cash)

£107.9m

£(25.2)m



Leverage(3)

2.21x

2.61x

(15.3)%


ROCE(4)

10.1%

7.5%

+260bps


 

(1) CC LFL = Constant Currency Like for Like (excluding acquisitions, synergies and exchange effects)

(2) 2013 comparatives have been restated for IAS 19 (as amended)

(3) 2013 Leverage is estimated as at 3 July 2013, the date of completion of the Truth acquisition

(4) ROCE = Return on Average Capital Employed

 

"Underlying" is defined as before amortisation of acquired intangible assets, deferred tax on amortisation of acquired intangible assets, impairment of acquired intangible assets, exceptional items, unwinding of discount on provisions, amortisation of borrowing costs and the associated tax effect

 

Statutory financial highlights

£'million unless stated

H1 2014

H1 2013

Profit/(Loss) before taxation

£5.0m

£(1.4)m

Basic EPS

1.63p

(1.51)p

  

Operating and corporate highlights

·           Solid six month performance in North America for Amesbury Truth together with continued delivery of integration benefits and synergies

·           Good performance in the UK with strong momentum and margin progression in Grouphomesafe

·           Higher order books in Amesbury Truth and Grouphomesafe at 30 June 2014 leaves the Group well placed for further progress in the second half

·           Variable European markets and investment in the business led to a small loss in
Schlegel International

·           Acquisition of Vedasil Brasil establishes South American manufacturing platform; integration progressing according to plan

·           Refinancing of 2011 bank facility into a Revolving Credit Facility of up to £240 million to
June 2019

 

Louis Eperjesi, Chief Executive Officer of Tyman, commented:

"We have had an encouraging first half, with good progress made on a number of fronts, including the integration of the North American salesforces, new product introductions in Grouphomesafe and the acquisition of Vedasil in Brazil.

"The Group's first half performance, current order book levels in key end markets and continued delivery of targeted synergy benefits positions us to deliver full year expectations, which remain unchanged despite the material strengthening of Sterling against international currencies."

29 July 2014

 

Enquiries:


Tyman plc

020 7976 8000

Louis Eperjesi


James Brotherton


MHP Communications

020 3128 8100

Reg Hoare


Jamie Ricketts


Jennifer Iveson




 

Analyst and Investor Presentation

Tyman will host an analyst and investor presentation at 09.30am on Tuesday 29th July 2014 at the offices of MHP Communications, 60 Great Portland Street, London, W1W 7RT.  The presentation will be webcast at www.tymanplc.com and the audio conference call details are set out below.

Conference Call Dial In Details


Dial-in number:

020 3139 4830

Participant PIN code:

38924588#

 

Overview

Tyman had an encouraging first half with Revenue increasing by 35.0 per cent. to £167.0 million (H1 2013: £123.7 million), reflecting the contributions from the strategic acquisitions of Truth and Vedasil.  Excluding the benefit of acquisitions, reported Revenue increased by 3.0 per cent. and on a constant currency, like for like basis, Revenue increased by 8.2 per cent., the difference reflecting the continued strengthening of Sterling against international currencies.

Underlying Operating Profit increased by 79.3 per cent. to £19.4 million (H1 2013 restated: £10.8 million).  Excluding the benefit of acquisitions and synergies, reported Underlying Operating Profit increased by some 13.4 per cent. and, on a constant currency, like for like basis, Underlying Operating Profit increased by 21.1 per cent..  Underlying Operating Margins increased by 290bps to 11.6 per cent. (H1 2013 restated: 8.7 per cent.).

Underlying earnings per share in the period increased by 50.3 per cent. to 7.32 pence (H1 2013 restated: 4.87 pence).

Order intake in the two largest divisions in the period was promising with order books at the half year in both Grouphomesafe and Amesbury Truth running ahead of the previous year.

While the recovery in the new build residential market in the United States eased a little in the first six months as a result of the extreme weather conditions seen in the first quarter, Amesbury Truth delivered a solid six month revenue performance and improved profitability.  In addition we made good progress in Canada, where housing completions contracted compared with the first half of 2013; however housing starts have now begun to increase and our focus on growing share is starting to yield benefits.

The UK market has continued its recovery which started at the end of the first quarter of 2013.  Despite strengthening comparatives in the second quarter, Grouphomesafe continued to grow its share of the hardware market, driven by strong performance from our Fab & Fix and ERA offerings.

European markets remained variable throughout the period, with growth in Scandinavia, Eastern Europe and the DACH regions partially offset by further contraction in France, the Benelux and Southern Europe.  Emerging markets continued to experience some growth with Brazil benefitting from the acquisition of Vedasil, and Australia and Singapore from the cross selling of Truth products.

Across the Group we have continued to see a relatively benign raw material cost backdrop in the first half of the year, and the impact of cost inflation on goods sourced from the Far East has been ameliorated by the relative strength of Sterling.  This strengthening of Sterling has, however, impacted our reported Revenue and Underlying Operating Profit, with the average Sterling: US Dollar rate in the first six months of the year being some 8.0 per cent. higher than in H1 2013 and the average Sterling: Euro rate being higher by some 3.5 per cent..  Had our 2013 pro forma results (including Truth for a full 12 months) been translated at the closing rates as at 30 June 2014, Revenue would have been c. £20.7 million lower and Underlying Operating Profit would have been c. £2.8 million lower.

Working capital remained tightly controlled and we have continued to invest in our capital expenditure programmes, aimed at increasing the quality and performance of our businesses, with a particular focus on automation in North America.  Despite this investment in the balance sheet, and the acquisition of Vedasil, which was funded from cash resources, the Group's Leverage reduced by 15.3 per cent. year on year to 2.21x Net Debt: EBITDA (H1 20131: 2.61x) and we expect our Leverage will be back within our core target range of 1.5x - 2.0x by the year end.  Our ROCE has also continued to improve and year on year was some 260bps higher at 10.1 per cent. (H1 2013: 7.5 per cent.).

Further details on trading and financial performance are contained in the Operating and Financial reviews.

1H1 2013 Leverage is estimated as at 3 July 2013, the date of completion of the Truth acquisition.

Dividend

The Board has declared an increased interim dividend of 2.00 pence per share (H1 2013: 1.50 pence per share), in line with our broad intention that the interim dividend should be approximately one third of the previous year's total dividend (2013: 6.00 pence per share).

Outlook

We expect to see further continued recovery in the United States new build market through the remainder of 2014, although probably at a slower rate than was seen in the second half of 2013.  This should be supported by continued growth in repair and remodelling which constitutes the majority of the market.  Following a stronger first half for housing starts in Canada, we now expect Canadian markets to show modest growth across 2014 as a whole compared with 2013. 

During 2014 as a whole we expect to see mid single digit growth in the North American market, where Amesbury Truth remains well positioned to grow ahead of the market as we continue to execute on our self help initiatives and to take market share.

We expect to see continued growth in the UK market across the remainder of the year as the underlying economy strengthens and consumer confidence improves.  Grouphomesafe is well placed to take advantage of this backdrop and we expect to see further growth and margin progression within Grouphomesafe in the second half, albeit at more modest levels than were seen in the first half.

European markets are expected to remain variable for the year as a whole and we do not expect to see a material improvement in these markets until 2015 at the earliest.  Schlegel International will however benefit from the acquisition of Vedasil and the ability to offer Truth products internationally, and therefore is expected to deliver a small profitable performance at the operating level in 2014.

Overall, the Group's encouraging first half performance, current order book levels in key end markets and continued delivery of targeted synergy benefits positions us to deliver full year expectations, which remain unchanged despite the material strengthening of Sterling against international currencies.

 

Operating Review

North America - Amesbury Truth

£'million except where stated

H1 2014

H1 2013

Change

CC LFL(1)

Revenue

£101.7m

£63.5m

+60.0%

+8.4%

Underlying Operating Profit

£13.7m

£6.2m

+120.9%

+26.2%

Underlying Operating Margin

13.5%

9.8%

+370bps

+160bps

(1) Constant currency, like for like - excluding acquisitions and synergy benefits

 

$'million except where stated

H1 2014

H1 2013

Change

YoY(2)

Revenue

$169.7m

$98.1m

+72.9%

+5.8%

Underlying Operating Profit

$22.9m

$9.6m

+138.7%

+16.1%

Underlying Operating Margin

13.5%

9.8%

+370bps

+120bps

(2) Year on Year - comparison of H1 2014 with pro forma H1 2013

Market and Performance

Residential housing starts in the United States increased by 6.0 per cent. and completions (our most relevant in year indicator) increased by 15.3 per cent. to the half year.  Single family housing starts increased by approximately 1.2 per cent. and completions by 9.7 per cent. in the first six months.  Repair and remodelling saw a slower start to the year due largely to the extreme weather conditions in the first quarter and overall we believe the US market for our products improved by approximately 6.2 per cent. in H1 2014.  

The Canadian market has seen a stronger first half for permits and starts than H1 2013 (which saw a significant contraction).  While total completions contracted further by some 5.3 per cent. and single family completions contracted by some 6.8 per cent., total housing starts increased by 2.5 per cent. and single family starts increased by around 1.5 per cent. compared with H1 2013 which should lead to market improvement in the second half.  Overall, we believe that the Canadian market for our products decreased by approximately 1.0 per cent. in the first half of 2014.  Combining the United States and Canadian statistics would indicate the addressable North American market grew by c. 5.25 per cent. in the first half.

Amesbury Truth combined saw a year on year increase in sales of 5.8 per cent. compared with H1 2013, with US domestic trading improving broadly in line with the market and strong growth in Canada where we have continued to take market share.  Like for like sales in the period increased by 8.4 per cent..  Export revenue has also increased significantly from a relatively low base as we start to market Truth products internationally on a more structured basis. 

Underlying Operating Profit for the combined business increased year on year by 16.1 per cent. when compared with H1 2013 and like for like Underlying Operating Profit increased by 26.2 per cent..  Improved volumes, together with further delivery of synergies and the positive margin mix effect of Truth's contribution to the portfolio, meant that Amesbury Truth's Underlying Operating Profit margin increased by c. 370bps from 9.8 per cent. reported in H1 2013 to 13.5 per cent. in H1 2014.

Amesbury Truth has seen consistent increases in order intake throughout the first half across each of the product lines and at 30 June 2014 had an order book some 18.4 per cent. higher than at the equivalent stage last year.  This leaves us well placed for further progress during the second half of the year.

Since January, Amesbury Truth has operated as a single business with a leadership team comprising individuals drawn from both Truth and Amesbury and a unified sales and marketing function.  We have continued to make good progress on delivery of our synergy targets and during the period recorded US$2.5 million of cost and revenue synergy benefits.  Our synergy targets for the combined business remain unchanged from those announced in March 2014 and we still expect to deliver US$5.0 million of synergies in 2014 and a total of US$8.0 million of synergies in 2015.  We have also continued to focus on levels of working capital at Truth and have reduced the trade working capital deployed in the Truth business by US$3.1 million, year on year, despite higher levels of trading.

Business Developments

As part of the ongoing evaluation of our North American operating footprint, during the period we completed the closure of the Covington, Atlanta facility and have relocated its manufacturing plant and machinery to our Cannon Falls and Rochester facilities.  We now have 13 manufacturing sites in 11 locations across North America and are conducting a formal review of the footprint, taking into consideration manufacturing competencies, customer locations and requirements, supply chain and nearshoring opportunities.

In the first half we completed the integration of our North American salesforces and have implemented a number of tools to support the salesforce in their efforts to sell the entire Amesbury Truth portfolio.  A second ERP implementation went live at our Fremont, Nebraska site with further implementations scheduled for the second half and four further automation projects were commissioned for delivery later in 2014.

 

Grouphomesafe

£'million except where stated

H1 2014

H1 2013

Change

Revenue

£45.9m

£41.5m

+10.6%

Underlying Operating Profit

£6.1m

£4.8m

+25.6%

Underlying Operating Margin

13.3%

11.7%

+160bps

Market and Performance

Grouphomesafe has seen a strong performance in H1 2014 against an improved economic backdrop and has continued to take market share.  FENSA statistics indicate that registered installations in the UK market increased by approximately 4.3 per cent. in the first half of the year, which together with new build starts increasing would indicate the market increased overall by c. 5.5 per cent..  The first quarter of H1 2013 was exceptionally weak so the comparatives were relatively soft, but encouragingly we have continued to see growth in the Grouphomesafe business continue into the second quarter, albeit at a somewhat reduced rate.

Grouphomesafe has also seen consistent increases in order intake throughout the first half and at 30 June 2014 had an order book some 23.8 per cent. higher than at the equivalent stage last year, which again gives us encouragement for the second half.

Fab & Fix, Balance and ERA continued to perform strongly, with further market share gains from deeper penetration of the Grouphomesafe OEM customer base, as well as a number of new OEM customer wins.  As expected, this deeper penetration has led to a margin mix improvement for the division with Underlying Operating Margins increasing by 160bps to 13.3 per cent. (H1 2013: 11.7 per cent.).  EWS and Schlegel UK each saw growth in volumes slightly ahead of the market and Ventrolla had a strong first six months, with both domestic and commercial activity increasing. 

Business Developments

Our more structured approach to the distribution sector has started to generate good business leads and the development of our UK e-commerce platform is progressing well.  Grouphomesafe has continued to deliver new product introductions to the market with the launch of the ERA InvincibleTM cylinder lock, offering significantly enhanced security features, and our new range of bi-fold hardware is starting to generate revenue.

 

Schlegel International

£'million except where stated

H1 2014

H1 2013

Change

CC LFL(1)

Revenue

£19.4m

£18.7m

+4.1%

+2.9%

Underlying Operating Loss

£(0.4)m

£(0.2)m

(70.8)%

(143.9)%

Underlying Operating Margin

n/a

n/a

n/a

n/a

(1)      Constant currency, like for like - excluding acquisitions and synergy benefits

Market and Performance

Schlegel International has seen reported local currency revenue increase slightly over the corresponding period in H1 2013 and the business again made a marginal profit in the period before the allocation of Central Overheads.  While the continued increase in the Division's Underlying Operating Loss is disappointing, the absolute increase in losses during the period was only £200k.

Half year order book levels within Schlegel International are less of an in-year lead indicator for the Division compared with Amesbury Truth and Grouphomesafe, given short lead times on products.  At H1 2014, the order book for Schlegel International was slightly lower than at the equivalent stage last year.

Quarter by Quarter Revenue performance in each of Schlegel's key geographies is broken out in the table below.

 

Country

Q3 2013

Q4 2013

Q1 2014

Q2 2014

H1 vs H1'13

Europe

(6)%

+11%

+7%

+2%

+4%












Germany

(19)%

+ 8%

(3)%

+6%

+1%

Italy

+24%

+97%

+17%

Flat

+8%

France

(10)%

(17)%

+7%

(22)%

(8)%

Russia

+2%

+ 12%

+24%

+45%

+34%

Norway

+4%

+ 4%

(2)%

(10)%

(6)%

Poland

+15%

+ 48%

+26%

+20%

+22%

Belgium

(8)%

(18)%

(7)%

(8)%

(7)%

Spain

+1%

+19%

+13%

(9)%

+2%












Australia (1)

+9%

+4%

+12%

+12%

+12%

Brazil

+27%

+18%

+26%

(7)%

+9%

Singapore (2)

+17%

+4%

+28%

+20%

+24%

(1)      Australia excluding Truth product sales: Q1: +7%; Q2: +3%; H1: +5%.

(2)      Singapore excluding Truth product sales: Q1: +2%; Q2: +3%; H1: +2%.

 

European markets generally remained inconsistent and variable; with Q4 2013 and Q1 2014 growth in Europe due principally to very soft comparables and second quarter growth of approximately 2.0 per cent. thought to be more reflective of underlying market conditions across Europe.  Our largest European market, Germany, had a quiet first quarter with some small growth coming through in the second quarter.  As expected, Italy, which saw a number of competitors exit the market in H1 2013, saw more moderate growth across the first half.  Benelux continued to contract, with France having an improved first quarter but a weaker second quarter.

Eastern European markets were significantly stronger than in the first half of 2013 with good growth seen in Poland and Russia.  Scandinavia was mixed with our largest market, Norway, trading behind H1 2013; however our Scandinavian business overall traded marginally ahead of H1 2013.  Spain saw a stronger start to the year which softened in the second quarter.

Australia and Singapore saw revenue growth, in part due to both businesses being able to offer the full Truth product range from 1 January.  Brazil made good progress in the first half, benefitting from the extension to the product range and customer base offered by the Vedasil acquisition.  We believe that the slightly slower Q2 performance in Brazil is principally attributable to the impact of the World Cup with a number of customers and suppliers reporting demand having been temporarily affected and growth is expected to return in this market in the second half. 

Profitability in Schlegel International at the operational level benefitted from the initial contributions of Vedasil and sales of Truth products, offset by higher levels of overhead as a result of the significant investment made in developing the Schlegel International management team.  We believe that Schlegel remains well positioned for growth as and when European markets recover.

Business Developments

Schlegel International has continued to develop its product portfolio in the first half, as it aims to offer a complete range of sealing solutions to the market.  New product introductions in the period included the launch at the Fensterbau Trade Show of the high performance Nova-Seal range and the introduction of the North American Foamtite seal to the European market.  In conjunction with Truth, Schlegel is also developing a lockable casement operator for the Australasian market.

In Brazil, the integration of Vedasil is progressing well.  Since completion of the transaction at the end of February, we have closed our Sao Paolo distribution centre and relocated operations to the Vedasil site in Valinhos.  A second shift has been recruited in order to increase capacity for the manufacture of pile weatherstrip product.  This eliminates the need to import product into Brazil from our European facilities, significantly shortens our supply chain and has reduced the delivered cost of our weatherstrip product.  From 1 July 2014 the enlarged business has been renamed Schlegel America Latina, reflecting our intention to use the strength of the enlarged business to target growth across Southern and Latin America.

 

 

FINANCIAL REVIEW

Revenue and operating profit

Revenue for the period ended 30 June 2014 increased by 35.0 per cent. to £167.0 million (H1 2013: £123.7 million), reflecting the increased size of the Group following the acquisitions of Truth and Vedasil.

Reported Gross Margin from continuing operations decreased slightly to 32.1 per cent. (H1 2013: 33.3 per cent.) principally arising from the realignment of costs accounted for in SG&A in H1 2013 into Direct Overhead in H1 2014 following the integration of Amesbury Truth.  On a like for like basis, after the realignment of these costs, the Group's ongoing Gross Margin increased by 70bps. 

Underlying Administrative Expenses increased by 12.3 per cent. to £34.1 million (H1 2013 restated: £30.4 million), reflecting the overhead acquired as part of the Truth and Vedasil acquisitions and increased levels of trading during the period, offset by the reclassifications into Direct Overhead referred to above.

Underlying Operating Profit increased by 79.3 per cent. to £19.4 million (H1 2013 restated: £10.8 million), and increased by 21.1 per cent. on a constant currency like for like basis.  Underlying Operating Margins increased by c. 290bps from 8.7 per cent. in H1 2013 to 11.6 per cent. in H1 2014.

Segmental Disclosures

As outlined in the 2013 Annual Report and Accounts, the Board reviewed the appropriateness of the Group's operating segment disclosures with effect from January 2014 and has concluded that the most appropriate segmental analysis is based on the three reporting Divisions - Amesbury Truth, Grouphomesafe and Schlegel International - with an allocation of Group central overheads made to each Division.

From January 2014, our North American businesses have been managed as a single entity with an integrated management team and a single P&L account.  Accordingly Truth has been incorporated into the Amesbury Truth operating segment from the start of 2014 and the 2014 Half Year Interim Results therefore do not include Truth as a distinct operating segment.

In the opinion of the Board there remains no material difference between the Group's operating segments and segments based on geographical splits.  Accordingly the Board does not consider geographically defined segments to be reportable.

Exceptional items

Exceptional charges of £2.0 million were incurred during the period (H1 2013: £4.9 million).  The exceptional charges principally concern the costs associated with the integration of the Truth and Vedasil businesses, M&A transaction costs, and the costs associated with the closure of the Covington facility.  Offsetting the exceptional charges was an exceptional gain of £0.4 million realised on the disposal of the surplus freehold property in Sioux Falls, South Dakota. 

These charges and gains are regarded by the Group as exceptional because they are both significant and non-recurring in nature. 

The gross cash costs of the exceptional items incurred in the period were approximately £0.9 million and the majority of the exceptional charges and cash costs directly associated with the Amesbury Truth integration programme have now been expensed.

Finance charges

Net bank interest payable increased in the period to £2.0 million (H1 2013: £1.2 million), reflecting the higher gross levels of borrowing of the Group following the acquisition of Truth.  Net finance charges overall increased to £3.7 million (H1 2013 restated: £0.5 million), principally due to the higher net bank interest payable, the exceptional foreign exchange gain on the Truth equity proceeds of £1.3 million realised in H1 2013 and the write off in the period of approximately £0.9 million of capitalised loan fees associated with the 2011 bank financing.

Taxation

The Group incurred an Underlying tax charge during the period of £5.0 million (H1 2013: £2.7 million) equating to an Underlying tax rate of 28.8 per cent. (H1 2013 restated: 28.8 per cent.).  Cash taxes paid during the first half decreased slightly to £0.8 million (H1 2013: £2.2 million) due to timing differences.  

Earnings per share

Underlying earnings per share increased by 50.3 per cent. to 7.32 pence (H1 2013 restated: 4.87 pence), reflecting the improvements in profitability of the existing businesses and the contributions from Truth and Vedasil, offset by the higher net finance charge and the year on year increase in the weighted average number of shares at H1 2014 compared with H1 2013.

Basic profit per share from continuing operations was 1.63 pence (H1 2013 restated: loss per share restated 1.51 pence).

Dividends

The interim dividend has been increased by 33.3 per cent. to 2.00 pence per share (H1 2013: 1.50 pence per share), in line with our intention that, in the absence of unforeseen circumstances, the interim dividend payment will be approximately one third of the total dividend declared for the previous year.

The ex-dividend date will be 6 August 2014 and the interim dividend will be paid on 5 September 2014 to shareholders on the register on 8 August 2014.  The interim dividend amounts to approximately £3.4 million.

Net Debt Position and Covenant Performance

At 30 June 2014 the Group had gross outstanding borrowings of £135.7 million (H1 2013: £78.4 million), cash balances of £27.9 million (H1 2013: £103.6 million) and undrawn borrowing facilities, including the accordion facility, of up to £162.4 million (H1 2013: £27.0 million together with the Truth acquisition facility of US$100 million).  The Group's Underlying Net Debt at the half year was £107.9 million (H1 2013: £25.2 million of Underlying Net Cash). 

At 30 June 2014, the Group had headroom on its relevant banking covenants under its bank facilities ranging from 26.2 per cent. to 57.8 per cent..  Leverage decreased by 15.3 per cent. year on year, despite the Vedasil acquisition being funded from existing cash resources, from an estimated 2.61x on 3 July 2013 (the date the Truth acquisition completed) to 2.21x at 30 June 2014 and is expected to be back within our core target range of 1.5x to 2.0x by the year end.

Banking Facilities

On 10 June 2014 the Group entered into an enlarged new banking facility (the "New Facility") of up to £240 million with six relationship banks, comprising a £180 million committed revolving credit facility and a £60 million accordion.  The New Facility offers the Group improved pricing, increased flexibility, and relaxation or removal of certain covenants.  On completion of the New Facility, the September 2011 facility was repaid in full and cancelled.  The Group's US$100 million facility remains in place and is scheduled for repayment by 30 June 2015 and the New Facility expires in June 2019.

Subject to market conditions, the Group still intends to move a portion of its borrowings into longer dated funds during the course of 2014.  This is expected to increase the blended interest rate payable on the Group's borrowings, however will diversify the Group's financing structure, extend the average tenor of borrowings and offer access to additional pools of capital.

Cash flow

Operational Cash flow in the period was strong, with the seasonal build in working capital to the half year being tightly managed across all divisions.  Cash Conversion in the twelve months to 30 June was 71.5 per cent. (H1 2013: 89.8 per cent.) reflecting higher levels of capital expenditure and working capital investment in the last year compared with the period to H1 2013.

The trade working capital build to the half year for the Group was £21.8 million, slightly ahead of our expectations coming into the year, however the majority of the increase is in net trade receivables as a function of the improved levels of trading, so we still expect substantially all of the trade working capital build will unwind over the remainder of the year.  Inventories of £45.8 million at 30 June 2014 were higher than in H1 2013 in absolute terms, principally due to the inclusion of Truth and Vedasil's inventory on the balance sheet, however the gross inventory build from 31 December 2013 to the half year has been well controlled and was only £5.3 million across the Group as a whole. 

Net tangible and intangible capital expenditure in the period, excluding the Sioux Falls property disposal proceeds of US$1.7 million, was £5.3 million (H1 2013: £4.1 million) or 1.5x depreciation as we continue to invest in the business and seek to take full advantage of the Group's strong balance sheet.

In March 2014, 1,459,867 shares were purchased by the Tyman Employee Benefit Trust (the "Trust") at a cost of £4.3 million in order to satisfy those LTIP and DSBP awards that vested in March and awards expected to vest in future years.  As at 30 June 2014 the Trust held 1,596,794 shares in Tyman, representing 0.94 per cent. of the Group's issued share capital.

Returns on Acquisition Investment

ROAI for the three principal businesses acquired since December 2011 as at H1 2014 are as follows:


Date of Acquisition

Original Investment

'000

LTM ROAI





Overland

Dec 2011

US$16,493

16.1%

Fab & Fix

Aug 2012

£15,217

28.5%

Truth

Jul 2013

US$206,438

11.8%

Vedasil, which was acquired in February 2014, will be reported for the first time as at 31 December 2014 once it has a meaningful period of time under Tyman ownership; however its performance in the first four months of ownership indicates that it should exceed our minimum returns criteria.

Return on Average Capital Employed

Our Return on Average Capital Employed has improved significantly by c. 260bps over the course of the last twelve months and at 30 June 2014 was 10.1 per cent. (H1 2013: 7.5 per cent.).  Return on Average Controllable Capital Employed also improved materially by 1200bps to 49.9 per cent. (H1 2013: 37.9 per cent.).

Currency

Currency movements have continued to be significant in the first half of 2014 with Sterling strengthening against most international currencies.  The Group's operating entities largely transact in a single currency (e.g. Euro and Euro) or a linked currency (e.g. US Dollar and Renminbi) meaning that transactional exposures to currency movements are minimised.  The key exceptions to this are Grouphomesafe's Far East purchases and Australasian purchases of hardware products from the US and China. 

Had the Group's 2013 pro forma full year results (including Truth for a full 12 months) been reported on the basis of the closing exchange rates as at 30 June 2014, the translational impact would have been as follows:

£'million unless stated

US $

Euro

AUS $

Other

Total







Average Rate FY 2013

1.5646

1.1780

1.6224



Rate at 30 June 2014

1.7038

1.2486

1.8069



% movement

(8.9)%

(6.0)%

(11.4)%



Revenue impact

(17.2)

(1.4)

(0.9)

(1.2)

(20.7)

Underlying Operating Profit impact

(2.5)

(0.0)

(0.2)

(0.1)

(2.8)

 

Summary 2014 financial guidance

Year end Leverage is expected to be back within our core target range of 1.5x - 2.0x Net Debt to EBITDA.

Underlying tax rates for the Group for 2014 are now expected to be slightly higher at c. 28 - 29 per cent. as a result of the growth in profitability of the North American operations.  The final rate for the year will depend on the Group's ultimate mix of taxable profits.  Cash taxation rates are expected to be broadly in line with the Group's Underlying tax rate.

Capital expenditure for the year is expected to be in the range £11.0 - £12.0 million.

Interest payable on borrowings for the full year under the existing facilities is expected to be c. 3.5 - 4.0 per cent. - dependent on Leverage and underlying LIBOR rates. 

2014 exceptional charges in respect of the integration of Truth into Amesbury are now expected to be c. US$2.0 million.  Cash costs incurred in connection with integration in 2014 are expected to be in the range US$2.0 - US$2.5 million.

No further share purchases are expected to be made by the Tyman Employee Benefit Trust in 2014.

Shares in issue at the half year were 170.1 million, of which 169.6 million had voting rights attached.  The weighted average shares in issue for the purposes of EPS calculation at the year end are expected to be approximately 167.6 million (basic) and 169.2 million (diluted) assuming no material changes to the Group's equity base occur in the second half of the year.

Financial reporting

This financial information has been prepared under IFRS and in accordance with the Group's accounting policies.  There have been no changes to the Group's accounting policies since the year ended 31 December 2013.

Going concern

The Directors are confident, on the basis of current financial projections and facilities available, and after considering sensitivities, that the Company and the Group has sufficient resources for its operational needs and will enable the Group to remain in compliance with the financial covenants in its bank facilities for at least the next 12 months.  Accordingly the Directors continue to adopt the going concern basis.

29 July 2014

 

Definitions

Where appropriate "Underlying" is defined as before amortisation of acquired intangible assets, deferred tax on amortisation of acquired intangible assets, impairment of acquired intangible assets, exceptional items, unwinding of discount on provisions, amortisation of borrowing costs and the associated tax effect.

"Underlying Administrative Expenses" is defined as Administrative expenses before Exceptional items, Amortisation of acquired intangible assets and Impairment of acquired intangible assets.

"Underlying Net Debt" is defined as interest bearing loans and borrowings, net of cash and cash equivalents, plus unamortised borrowing costs added back.

"Underlying Operating Profit" is defined as Operating profit before Exceptional items, Amortisation of acquired intangible assets and Impairment of acquired intangible assets.

"Operational Cash flow" is defined as Net cash inflow from operating activities before Income tax paid and Pension contributions, and after Payments to acquire property, plant and equipment and Payments to acquire intangible assets.

"Operating Cash Conversion" is defined as Operational Cash flow divided by Underlying operating profit.

"Return on Acquisition Investment" is defined as Annualised Underlying Operating Profit attributable to the acquired 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 also adjusted for seasonality where appropriate.

"Acquisition Enterprise Value" is defined as the gross consideration paid to the seller less any cash left in the acquired business plus any debt acquired with the acquired business plus the expenses of the acquisition, excluding financing expenses, plus any integration expenses booked as exceptional items.

"Return on Average Capital Employed" is defined as Underlying Operating Profit as a percentage of the 12 month average capital employed.

"Leverage" is defined as Underlying Net Debt divided by Adjusted EBITDA. Underlying Net Debt is translated at the average rate for the year. Adjusted EBITDA is Underlying Operating Profit with Depreciation and Share-based payments expenses added back plus the pre-acquisition EBITDA of businesses acquired during the year covering the relevant pre-acquisition period less the EBITDA of businesses disposed of during the year.

"Like for Like" is defined as the comparison of revenue or operating profit, as appropriate, excluding the impact of any acquisitions made during the current year and, for acquisitions made in the comparative year, excluding from the current year result the impact of the equivalent current year pre-acquisition period.

 

Exchange Rates

The following foreign exchange rates have been used in the financial statements:

Closing Rates:

H1 2014

H1 2013

FY 2013

US Dollars

1.7038

1.5212

1.6490

Euros

1.2486

1.1692

1.1978

Australian Dollars

1.8069

1.6645

1.8583

Average Rates:

H1 2014

H1 2013

FY 2013

US Dollars

1.6689

1.5447

1.5646

Euros

1.2173

1.1763

1.1780

Australian Dollars

1.8255

1.5235

1.6224

 

Roundings

Percentages have been calculated using figures rounded to the nearest thousand extracted from the financial statements, which may lead to small differences in some figures and percentages quoted. 

 

Tyman plc

Condensed consolidated interim income statement

Six months ended 30 June 2014

 

 

 


Note

Six months
ended
30 June
2014
(unaudited)
£'000

Six months
ended
30 June
2013
(unaudited and restated)
£'000

Year
ended
31 December
2013
(audited)
£'000

Revenue

4

166,981

123,686

298,054

Cost of sales


(113,453)

(82,463)

(198,758)

Gross profit


53,528

41,223

99,296

Administrative expenses


(44,818)

(42,156)

(94,985)

Operating profit/(loss)


8,710

(933)

4,311

Analysed as:





Underlying1 operating profit

4

19,382

10,812

32,348

Exceptional items

5

(2,005)

(4,897)

(10,903)

Amortisation of acquired intangible assets

10

(8,667)

(6,848)

(16,605)

Impairment of acquired intangible assets

10

-

-

(529)

Operating profit/(loss)


8,710

(933)

4,311

Finance income

6

11

80

137

Finance costs

6

(3,741)

(1,803)

(4,925)

Exceptional foreign exchange gain

6

-

1,271

1,271

Net finance costs

6

(3,730)

(452)

(3,517)

Profit/(Loss) before taxation


4,980

(1,385)

794

Income tax (charge)/credit

7

(2,244)

(691)

162

Profit/(Loss) for the period


2,736

(2,076)

956






Basic earnings/(loss) per share

8

1.63p

(1.51p)

0.63p

Diluted earnings/(loss) per share

8

1.62p

(1.51p)

0.62p






Non-GAAP measure





Basic earnings per share

8

7.32p

4.87p

13.71p

Diluted earnings per share

8

7.25p

4.82p

13.51p

Underlying1 profit before taxation from continuing operations

8

17,247

9,411

28,586

 

1 Before amortisation of acquired intangible assets, deferred tax on amortisation of acquired intangible assets, impairment of acquired intangible assets, exceptional items, unwinding of discount on provisions, amortisation of borrowing costs and the associated tax effect.

 

All results relate to continuing operations.

The notes on pages 23 to 35 are an integral part of these condensed consolidated interim financial statements.

Tyman plc

Condensed consolidated interim statement of comprehensive income

Six months ended 30 June 2014

 

 

 


Note

Six months
ended
30 June
2014
(unaudited)
£'000

Six months
ended
30 June
2013
(unaudited and restated)
£'000

Year
ended
31 December
2013
(audited)
£'000

Profit/(Loss) for the period


2,736

(2,076)

956

Other comprehensive income:





Items that will not be reclassified to profit or loss





Remeasurements of post-employment benefit obligations

13

-

143

2,300

Total items that will not be reclassified to profit or loss


-

143

2,300

Items that may be reclassified subsequently to profit or loss





Exchange differences on retranslation of foreign operations


(7,506)

10,519

(10,566)

Effective portion of changes in value of cash flow hedges


291

76

(163)

Total items that may be reclassified subsequently to profit or loss


(7,215)

10,595

(10,729)

Other comprehensive (loss)/income for the period, net of tax


(7,215)

10,738

(8,429)

Total comprehensive (loss)/income for the period


(4,479)

8,662

(7,473)

 

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 7.

The notes on pages 23 to 35 are an integral part of these condensed consolidated interim financial statements.

 

 

 

Tyman plc

Condensed consolidated interim statement of changes in equity

Six months ended 30 June 2014

 

 

 


Share
capital
£'000

Share
premium
£'000

Other
reserves1
£'000

Treasury
reserve
£'000

Hedging
reserve
£'000

Translation
reserve
£'000

Retained
earnings
£'000

Total
equity
£'000

At 1 January 2013 (audited)

6,864

101

8,920

(8,161)

(605)

24,321

216,449

247,889

Total comprehensive income/(loss)

-

-

-

-

76

10,519

(1,933)

8,662

Loss for the period

-

-

-

-

-

-

(2,076)

(2,076)

Other comprehensive income

-

-

-

-

76

10,519

143

10,738

Transactions with owners

1,641

63,439

-

5,814

-

-

(4,251)

66,643

Issue of shares

1,641

69,674

-

-

-

-

-

71,315

Share-based payments2

-

-

-

-

-

-

261

261

Dividends paid

-

-

-

-

-

-

(4,512)

(4,512)

Sale of treasury shares

-

(6,235)

-

6,235

-

-

-

-

Purchase of own shares for employee benefit trust

-

-

-

(421)

-

-

-

(421)

At 30 June 2013 (unaudited)

8,505

63,540

8,920

(2,347)

(529)

34,840

210,265

323,194

Total comprehensive (loss)/income

-

-

-

-

(239)

(21,085)

5,189

(16,135)

Profit for the period

-

-

-

-

-

-

3,032

3,032

Other comprehensive (loss)/income

-

-

-

-

(239)

(21,085)

2,157

(19,167)

Transactions with owners

-

(284)

-

(2,500)

-

-

(1,335)

(4,119)

Issue of shares

-

(284)

-

-

-

-

-

(284)

Share-based payments2

-

-

-

-

-

-

1,192

1,192

Dividends paid

-

-

-

-

-

-

(2,527)

(2,527)

Purchase of own shares for employee benefit trust

-

-

-

(2,500)

-

-

-

(2,500)

At 31 December 2013 (audited)

8,505

63,256

8,920

(4,847)

(768)

13,755

214,119

302,940

Total comprehensive income/(loss)

-

-

-

-

291

(7,506)

2,736

(4,479)

Profit for the period

-

-

-

-

-

-

2,736

2,736

Other comprehensive income/(loss)

-

-

-

-

291

(7,506)

-

(7,215)

Transactions with owners

-

-

-

105

-

-

(11,619)

(11,514)

Share-based payments2

-

-

-

-

-

-

381

381

Dividends paid

-

-

-

-

-

-

(7,558)

(7,558)

Issue of own shares by employee benefit trust

-

-

-

4,442

-

-

(4,442)

-

Purchase of own shares for employee benefit trust

-

-

-

(4,337)

-

-

-

(4,337)

At 30 June 2014 (unaudited)

8,505

63,256

8,920

(4,742)

(477)

6,249

205,236

286,947

 

1 Other reserves are non-distributable capital reserves which arose on previous acquisitions.

2 Share-based payments includes a deferred tax credit of £Nil (six months ended 30 June 2013: £Nil; year ended 31 December 2013: £772,000).

 

The notes on pages 23 to 35 are an integral part of these condensed consolidated interim financial statements.

 

 

 

Tyman plc

Condensed consolidated interim balance sheet

As at 30 June 2014

 

 

 


Note

Six months
ended
30 June
2014
(unaudited)
£'000

Six months
ended
30 June
2013
(unaudited)
£'000

Year
ended
31 December
2013
(audited and restated)
£'000

ASSETS





Non-current assets





Goodwill

9

241,101

193,644

244,740

Intangible assets

10

102,736

70,716

109,595

Property, plant and equipment

11

39,425

31,889

39,869

Deferred tax assets


7,605

9,912

12,102



390,867

306,161

406,306

Current assets





Inventories


45,763

31,115

40,668

Trade and other receivables


48,176

37,694

34,555

Cash and cash equivalents


27,870

103,583

43,607

Current tax asset


-

-

162



121,809

172,392

118,992

TOTAL ASSETS


512,676

478,553

525,298

LIABILITIES





Current liabilities





Trade and other payables


(46,952)

(42,178)

(51,393)

Current tax payable


(1,857)

(1,548)

-

Interest-bearing loans and borrowings

12

(59,376)

(10,183)

(6,834)

Provisions


(2,663)

(1,112)

(2,463)



(110,848)

(55,021)

(60,690)

Non-current liabilities





Interest-bearing loans and borrowings

12

(73,896)

(66,734)

(115,464)

Derivative financial instruments


(476)

(529)

(767)

Deferred tax liabilities


(25,277)

(10,709)

(29,292)

Retirement benefit obligations

13

(6,941)

(11,768)

(7,478)

Provisions


(6,784)

(7,254)

(7,100)

Other payables


(1,507)

(3,344)

(1,567)



(114,881)

(100,338)

(161,668)

TOTAL LIABILITIES


(225,729)

(155,359)

(222,358)

NET ASSETS


286,947

323,194

302,940

EQUITY





Capital and reserves attributable to owners of the Company





Share capital


8,505

8,505

8,505

Share premium


63,256

63,540

63,256

Other reserves


8,920

8,920

8,920

Treasury reserve


(4,742)

(2,347)

(4,847)

Hedging reserve


(477)

(529)

(768)

Translation reserve


6,249

34,840

13,755

Retained earnings


205,236

210,265

214,119

TOTAL EQUITY


286,947

323,194

302,940

 

The notes on pages 23 to 35 are an integral part of these condensed consolidated interim financial statements.

 

 

Tyman plc

Condensed consolidated interim cash flow statement

Six months ended 30 June 2014

 

 

 


Note

Six months
ended
30 June
2014
(unaudited)
£'000

Six months
ended
30 June
2013
(unaudited and restated)
£'000

Year
ended
31 December
2013
(audited)
£'000

Cash flow from operating activities





Profit/(Loss) before taxation


4,980

(1,385)

794

Adjustments

15

16,816

9,980

28,802

Changes in working capital (excluding the effects of acquisition and exchange differences on consolidation):





Inventories


(5,638)

(2,650)

759

Trade and other receivables


(13,724)

(9,700)

1,275

Trade and other payables


(3,631)

10,130

10,363

Provisions utilised


(471)

(1,223)

(2,232)

Pension contributions


(630)

(423)

(909)

Income tax paid


(766)

(2,197)

(6,209)

Net cash (used in)/generated from operating activities


(3,064)

2,532

32,643

Cash flow from investing activities





Purchases of property, plant and equipment

11

(4,638)

(3,427)

(7,359)

Purchases of intangible assets

10

(809)

(644)

(1,286)

Proceeds on disposal of property, plant and equipment


1,162

-

559

Acquisition of subsidiary undertakings, net of cash acquired

14

(6,556)

-

(131,244)

Interest received


6

80

150

Net cash used in investing activities


(10,835)

(3,991)

(139,180)

Cash flows from financing activities





Interest paid


(2,136)

(1,276)

(2,740)

Dividends paid


(7,558)

(4,512)

(7,039)

Purchase of own shares for employee benefit trust


(4,337)

(421)

(2,921)

Proceeds from issuance of ordinary shares


-

71,315

71,031

Proceeds from borrowings

12

-

-

65,738

Refinancing costs paid

12

(1,789)

-

(1,510)

Proceeds from drawdown of revolving credit facility

12

91,665

2,642

2,642

Repayment of revolving credit facility

12

(77,167)

-

(10,611)

Net cash (used in)/generated from financing activities


(1,322)

67,748

114,590

Net (decrease)/increase in cash and cash equivalents


(15,221)

66,289

8,053

Exchange (losses)/gains on cash and cash equivalents


(516)

1,437

(303)

Cash and cash equivalents at the beginning of the period


43,607

35,857

35,857

Cash and cash equivalents at the end of the period


27,870

103,583

43,607

 

The notes on pages 23 to 35 are an integral part of these condensed consolidated interim financial statements.

 

 

 

Tyman plc

Notes to the condensed consolidated interim financial statements

Six months ended 30 June 2014

 

 

1.         General information

Tyman plc ("the Company") and its subsidiaries (together, "the Group") is a leading international supplier of building products to the door and window industry. 

The Company is a public limited company listed on the London Stock Exchange.  The Company is incorporated and domiciled in England and Wales at 65 Buckingham Gate, London SW1E 6AS.

These condensed consolidated 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 2013 were approved by the Board of Directors on 11 March 2014 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.

There are no changes to the principal risks and uncertainties as set out in the annual report for 2013 which may affect the Group's performance in the next six months.  For a detailed discussion of the risks and uncertainties facing the Group, refer to the Annual Report and Accounts 2013, pages 28 and 29.

The financial information for the year ended 31 December 2013 is extracted from the Group's consolidated financial statements for that year.

The condensed consolidated interim financial statements have been reviewed, not audited. 

 

2.         Basis of preparation

These condensed consolidated interim financial statements for the six months ended 30 June 2014 have been prepared in accordance with the Disclosure and Transparency Rules of the Financial Conduct Authority (previously the Financial Services Authority) and with IAS 34, 'Interim financial reporting', as adopted by the European Union.  The condensed consolidated interim financial statements should be read in conjunction with the annual financial statements for the year ended 31 December 2013, which have been prepared in accordance with IFRSs, as adopted by the European Union.

Going concern

The Directors have made enquiries into the adequacy of the Group's financial resources through review of the Group's budget and cash flow forecasts.  On the basis of this review, and in light of the current financial position and the existing borrowing facilities, the Board believes it is appropriate to continue to adopt the going concern basis in preparing the condensed consolidated interim financial statements.

 

3.         Accounting policies

The accounting policies adopted are consistent with those of the previous financial year, except as described below. 

IAS 19, 'Employee benefits' was revised in June 2011 and the amended IAS 19 had been applied retrospectively in the Annual Report and Accounts 2013.  The main change for the Group's accounting policies was to replace the interest cost and expected return on plan assets with a net interest amount that was calculated by applying the discount rate to the net defined benefit liability. The implication of this was that the expected return on assets credited to the income statement (previously calculated based on the expected long-term return on plan assets) was based on a lower corporate bond rate, being the same rate used to discount the pension liability.  The comparative information for the six months ended 30 June 2013 has been restated accordingly and the impact of the amended IAS 19 on these comparatives is as follows:

·       Loss before taxation was approximately £0.1 million lower for the six months ended 30 June 2013, with a corresponding pre-tax increase in other comprehensive income.

·       Basic and diluted loss per share for the six months ended 30 June 2013 decreased by approximately 0.10 pence.

·       No impact on cash flows or the balance sheet at 30 June 2013 and as such, the impact of the IAS19 amendments has not been presented at 1 July 2012.

Comparative information for the year ended 31 December 2013 has been restated to account for the adjustments to the fair values of identifiable assets and liabilities assumed from the acquisition of Truth Hardware (note 14).

In preparing these condensed consolidated 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 that applied to the consolidated financial statements for the year ended 31 December 2013.  There have been no changes to significant estimates.

Amendments to IFRSs effective for the financial year commencing 1 January 2014 are not expected to have a material impact on the Group.

Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected total annual profit or loss.

 

4.         Operating segment information

The reporting segments reflect the manner in which performance is evaluated and resources allocated.  The Group has three reporting segments, namely: Amesbury Truth, Grouphomesafe and Schlegel International.  Each segment broadly represents the Group's geographical focus, being the North American, the United Kingdom and International operations respectively.  The Schlegel International segment includes Schlegel Building Products, the Group's UK-based manufacturer of pile weatherstrip and extrusions.

In 2013, our North American businesses, then comprising Amesbury and Truth Hardware, were managed as stand alone entities, each with its own CEO and management team.  From January 2014, our North American businesses have been managed as a single entity with an integrated management team.  Accordingly, Truth Hardware has been incorporated into the Amesbury Truth operating segment and the comparative numbers have been restated.

The following tables present Group revenue and profit information for the Group's product segments, which have been generated using the Group accounting policies, with no differences of measurement applied, other than those noted above.

Revenue



Six months
ended
30 June 2014
(unaudited)
£'000

Six months
ended
30 June 2013
(unaudited)
£'000

Year
ended
31 December 2013
(audited)
£'000

Amesbury Truth


101,670

63,526

175,252

Grouphomesafe


45,872

41,484

86,047

Schlegel International


19,439

18,676

36,755

Total


166,981

123,686

298,054

 

Included within the Schlegel International segment is revenue attributable to the United Kingdom of £3,418,000 (six months ended 30 June 2013: £3,366,000; year ended 31 December 2013: £6,401,000).

Result


Note

Six months
ended
30 June
2014
(unaudited)
£'000

Six months
ended
30 June
2013
(unaudited and restated)
£'000

Year
ended
31 December
2013
(audited)
£'000

Amesbury Truth


13,697

6,200

22,250

Grouphomesafe


6,088

4,848

10,496

Schlegel International


(403)

(236)

(398)

Underlying operating profit


19,382

10,812

32,348

Exceptional items

5

(2,005)

(4,897)

(10,903)

Amortisation of acquired intangible assets

10

(8,667)

(6,848)

(16,605)

Impairment of acquired intangible assets

10

-

-

(529)

Operating profit/(loss)


8,710

(933)

4,311

Net finance costs

6

(3,730)

(452)

(3,517)

Profit/(Loss) before tax


4,980

(1,385)

794

 

 

5.         Exceptional items



Six months
ended
30 June
2014
(unaudited)
£'000

Six months
ended
30 June
2013
(unaudited)
£'000

Year
ended
31 December
2013
(audited)
£'000

Redundancy, restructuring, inventory obsolescence alignment and warranty costs


(652)

(960)

(2,650)

M&A and integration costs


(1,746)

(3,937)

(5,949)

Write-off of inventory fair value adjustment


-

-

(2,304)

Gain on property disposal


393

-

-



(2,005)

(4,897)

(10,903)

Redundancy, restructuring, inventory obsolescence alignment and warranty costs

These costs principally relate to the closure of the Covington, Atlanta facility.

M&A and integration costs

Included within this category are non-recurring costs of £520,000 relating to the acquisition and integration of Vedasil Brasil.  The remaining non-recurring costs of £1,226,000 were incurred in connection with the integration of Truth. 

Write-off of inventory fair value adjustment

The charge for the year ended 31 December 2013 relates to the write off of the uplift in the book value of inventories acquired in the Truth acquisition (note 14).

Gain on property disposal

The gain on property disposal relates to the disposal of surplus freehold property in Sioux Falls, South Dakota for a net cash consideration of US$1.7 million, realising a net profit on disposal of US$0.7 million.

 

6.         Net finance costs


Note

Six months
ended
30 June
2014
(unaudited)
£'000

Six months
ended
30 June
2013
(unaudited and restated)
£'000

Year
ended
31 December
2013
(audited)
£'000

Finance income





Interest income from short-term bank deposits


11

80

137

Finance costs





Interest payable on bank loans and overdraft


(1,997)

(1,276)

(3,494)

Amortisation of borrowing costs

12

(719)

(307)

(997)

Accelerated amortisation of borrowing costs

12

(855)

-

-

Unwinding of discount on provisions


(21)

(15)

(29)

Pension interest costs

13

(149)

(205)

(405)



(3,741)

(1,803)

(4,925)

Exceptional foreign exchange gain


-

1,271

1,271

Net finance costs


(3,730)

(452)

(3,517)

Accelerated amortisation of borrowing costs relates to the write off of the remaining costs associated with the 2011 bank facility (note 12).

 

7.         Income tax (charge)/credit



Six months
ended
30 June
2014
(unaudited)
£'000

Six months
ended
30 June
2013
(unaudited)
£'000

Year
ended
31 December
2013
(audited)
£'000

Current taxation:





Current tax on profit/(loss) for the period


(2,513)

(1,810)

(4,162)

Adjustments in respect of prior periods


(23)

(148)

373

Total current taxation


(2,536)

(1,958)

(3,789)

Deferred taxation:





Origination and reversal of temporary differences


280

842

2,273

Adjustment due to deferred tax rate change


-

-

1,455

Adjustments in respect of prior periods


12

-

223

Exceptional adjustments in respect of prior periods


-

425

-

Total deferred taxation


292

1,267

3,951

Income tax (charge)/credit in the income statement


(2,244)

(691)

162

Tax (charge)/credit relating to components of other comprehensive income is as follows:





Deferred tax charge on actuarial gains and losses


-

-

(1,313)

Deferred tax credit on share-based payments


-

-

772

Income tax (charge)/credit in the statement of comprehensive income


-

-

(541)

Total current taxation


(2,536)

(1,958)

(3,789)

Total deferred taxation


292

1,267

3,410

Total taxation


(2,244)

(691)

(379)

 

8.         Earnings per share



Six months
ended
30 June
2014
(unaudited)
£'000

Six months
ended
30 June
2013
(unaudited and restated)
£'000

Year
ended
31 December
2013
(audited)
£'000

Profit/(Loss) for the period


2,736

(2,076)

956

Basic earnings/(loss) per share


1.63p

(1.51p)

0.63p

Diluted earnings/(loss) per share


1.62p

(1.51p)

0.62p

Basic earnings per share amounts are calculated by dividing net profit for the period attributable to ordinary equity holders by the weighted average number of ordinary shares outstanding during the period.

Diluted earnings per share amounts are calculated by dividing net profit attributable to ordinary equity holders by the weighted average number of ordinary shares outstanding during the period plus the weighted average number of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares.  There is no difference between the basic and diluted loss per share for the six months ended 30 June 2013 as the effect of all potentially dilutive ordinary shares outstanding was anti-dilutive.

 

8.         Earnings per share (continued)

 

The weighted average number of shares was:



Six months
ended
30 June
2014
(unaudited)
'000

Six months
ended
30 June
2013
(unaudited)
'000

Year
ended
31 December
2013
(audited)
'000

Weighted average number of shares (including treasury shares)


170,104

144,359

157,337

Treasury and employee benefit trust shares


(2,406)

(6,917)

(4,492)

Weighted average number of shares - basic


167,698

137,442

152,845

Effect of dilutive potential ordinary shares - LTIP awards and options


1,645

1,513

2,229

Weighted average number of shares - diluted


169,343

138,955

155,074

Non-GAAP measure

Underlying earnings per share

The Group presents an underlying earnings per share figure which excludes the impact of exceptional items, certain non-cash finance costs, amortisation of acquired intangible assets, impairment of acquired intangible assets and certain non-recurring items.  Underlying earnings per share has been based on underlying earnings for each financial period and on the same weighted average number of shares in issue as the earnings per share calculation. 

Underlying profit after taxation from continuing operations is derived as follows:


Note

Six months
ended
30 June
2014
(unaudited)
£'000

Six months
ended
30 June
2013
(unaudited and restated)
£'000

Year
ended
31 December
2013
(audited)
£'000

Profit/(Loss) before taxation


4,980

(1,385)

794

Exceptional items

5

2,005

4,897

10,903

Exceptional foreign exchange gain

6

-

(1,271)

(1,271)

Amortisation of borrowing costs

6

719

307

997

Accelerated amortisation of borrowing costs

6

855

-

-

Unwinding of discount on provisions

6

21

15

29

Amortisation of acquired intangible assets

10

8,667

6,848

16,605

Impairment of acquired intangible assets

10

-

-

529

Underlying profit before taxation


17,247

9,411

28,586

Income tax (charge)/credit

7

(2,244)

(691)

162

Add back: Adjustment due to deferred tax rate change

7

-

-

(1,455)

Add back: Exceptional prior period tax adjustments

7

-

(425)

-

Add back: Tax effect of exceptional items, exceptional foreign exchange gain, amortisation of borrowing costs, amortisation of acquired intangible assets and other intangible assets,  and unwinding of discount on provisions


(2,729)

(1,595)

(6,345)

Underlying profit after taxation


12,274

6,700

20,948

Underlying earnings per share is summarised as follows:



Six months
ended
30 June
2014
(unaudited)

Six months
ended
30 June
2013
(unaudited and restated)
£'000

Year
ended
31 December
2013
(audited)

Basic earnings per share


7.32p

4.87p

13.71p

Diluted earnings per share


7.25p

4.82p

13.51p

 

 

9.         Goodwill


Note

Six months
ended
30 June
2014
(unaudited)
£'000

Six months
ended
30 June
2013
(unaudited)
£'000

Year
ended
31 December
2013
(audited and restated)
£'000

Net book amount at beginning of period


244,740

184,896

184,896

Acquisition of subsidiaries

14

2,814

-

68,873

Exchange difference


(6,453)

8,748

(9,029)

Net book amount at end of period


241,101

193,644

244,740

 

10.      Intangible assets


Note

Six months
ended
30 June
2014
(unaudited)
£'000

Six months
ended
30 June
2013
(unaudited)
£'000

Year
ended
31 December
2013
(audited)
£'000

Net book amount at beginning of period


109,595

73,834

73,834

Additions


809

644

1,286

Disposals


-

(27)

-

Acquisition of subsidiaries

14

3,800

-

56,583

Amortisation charge for the period


(8,822)

(6,848)

(16,605)

Impairment of acquired intangible assets


-

-

(529)

Exchange difference


(2,646)

3,113

(4,974)

Net book amount at end of period


102,736

70,716

109,595

The amortisation charge for the period comprises £8,667,000 relating to amortisation of acquired intangible assets and £155,000 relating to amortisation of other intangible assets. 

The charge for the period has been included in administrative expenses in the income statement.

 

11.      Property, plant and equipment


Note

Six months
ended
30 June
2014
(unaudited)
£'000

Six months
ended
30 June
2013
(unaudited)
£'000

Year
ended
31 December
2013
(audited and restated)
£'000

Net book amount at beginning of period


39,869

29,785

29,785

Additions


4,638

3,427

7,359

Disposals


(943)

(32)

(601)

Acquisition of subsidiaries

14

514

-

10,943

Depreciation charge for the period


(3,595)

(2,643)

(6,337)

Exchange difference


(1,058)

1,352

(1,280)

Net book amount at end of period


39,425

31,889

39,869

The depreciation charge for the period has been included in administrative expenses in the income statement.

 

 

12.      Interest-bearing loans and borrowings



Six months
ended
30 June
2014
(unaudited)
£'000

Six months
ended
30 June
2013
(unaudited)
£'000

Year
ended
31 December
2013
(audited)
£'000

Current


(59,376)

(10,183)

(6,834)

Non-current


(73,896)

(66,734)

(115,464)



(133,272)

(76,917)

(122,298)

 

Movements in borrowings are analysed as follows:


Note

Six months
ended
30 June
2014
(unaudited)
£'000

Six months
ended
30 June
2013
(unaudited)
£'000

Year
ended
31 December
2013
(audited)
£'000

Balance at beginning of period


(122,298)

(71,096)

(71,096)

Proceeds from borrowings


-

-

(65,738)

Refinancing costs paid


1,789

-

1,510

Drawdown of revolving credit facility


(91,665)

(2,642)

(2,642)

Repayment of revolving credit facility


77,167

-

10,611

Amortisation of borrowing costs

6

(1,574)

(307)

(997)

Exchange difference


3,309

(2,872)

6,054

Balance at end of period


(133,272)

(76,917)

(122,298)

There were no defaults in interest payments in the period under the terms of the existing loan agreements.

On 10 June 2014, the Group entered into a new banking facility of up to £240 million, comprising a £180 million committed multicurrency revolving credit facility and a £60 million accordion.  On completion of the new facility, the September 2011 facility was repaid in full and cancelled.  The new banking facility extends to 10 June 2019, is unsecured and guaranteed by Tyman plc and its principal subsidiary undertakings. 

The Group has the following undrawn borrowing facility:



Six months
ended
30 June
2014
(unaudited)
£'000

Six months
ended
30 June
2013
(unaudited)
£'000

Year
ended
31 December
2013
(audited)
£'000

Floating rate:





Expiring beyond one year


(102,445)

(27,045)

(29,674)

 

 

13.      Retirement benefit obligations

 

The amounts recognised in the balance sheet were as follows:



Six months
ended
30 June
2014
(unaudited)
£'000

Six months
ended
30 June
2013
(unaudited and restated)
£'000

Year
ended
31 December
2013
(audited)
£'000

Present value of funded obligations


(20,675)

(25,665)

(21,090)

Fair value of plan assets


13,734

13,897

13,612

Liability on the balance sheet


(6,941)

(11,768)

(7,478)

 

The amounts recognised in the income statement were as follows


Note

Six months
ended
30 June
2014
(unaudited)
£'000

Six months
ended
30 June
2013
(unaudited and restated)
£'000

Year
ended
31 December
2013
(audited)
£'000

Current service costs


(167)

(151)

(298)

Administrative expenses


(10)

(51)

(101)

Net interest expense

6

(149)

(205)

(405)



(326)

(407)

(804)

The 2013 interim comparatives have been restated to take account of the IAS 19 revision, which increased the comparative's net pension charge in the income statement and reduced the charge to other comprehensive income by £143,000. 

The current service costs and expenses relating to the administration of the defined benefit schemes are included in the income statement within administrative expenses.  Net interest expense is included within net finance income and costs.  Actuarial gains and losses from participant experience, changes in demographic assumptions, changes in financial assumptions and net return on plan assets are recognised, net of the related deferred tax, in the consolidated statement of comprehensive income.

 

14.      Acquisition of subsidiaries

 

14.1    Vedasil Brasil

On 26 February 2014, the Group completed the acquisition of Vedasil Brasil ("Vedasil"), the market leader in the manufacture and supply of pile weatherseals in Brazil.  Vedasil manufactures and supplies polypropylene extruded seals under the Eco-PDM brand and other seal and screen components to the Brazilian door and window market.  This acquisition provides the Group with a market leading position and local manufacture in Brazil. 

 

Recognised amounts of identifiable assets acquired and liabilities assumed:



£'000

Intangible assets


3,800

Property, plant and equipment


514

Inventories


419

Trade and other receivables


970

Cash and cash equivalents


20

Trade and other payables


(408)

Current tax


(189)

Deferred tax liabilities


(1,288)

Provisions


(76)

Total identifiable net assets


3,762

Goodwill arising on acquisition


2,814

Total consideration


6,576

Satisfied by:



£'000

Cash


6,576

Net cash flow arising on acquisition:



£'000

Cash consideration


6,576

Less: cash and cash equivalents acquired


(20)



6,556

The fair value of financial assets includes trade receivables with a fair value of £933,000 and a gross contractual value of £1,066,000.  The best estimate at the acquisition date of the contractual cash flows not recoverable is £133,000.

The Group incurred acquisition-related costs of £107,000 for professional fees paid and legal advice.  These costs have been included in exceptional costs in the Group's condensed consolidated interim income statement (note 5).

Revenue included in the condensed consolidated interim income statement since 26 February 2014 contributed by Vedasil was £1,673,000.  Vedasil also contributed £400,000 to the profit before taxation over the same period.

Had the acquisition of Vedasil been completed on the first day of the financial period, an additional £1,041,000 of revenue and £379,000 of profit before taxation would have been contributed to the Group.

Fair values remain provisional in relation to this acquisition and the Group will complete this review by early 2015.  Any adjustment to the carrying value is unlikely to be significant to the individual acquisition.

The fair values of identifiable intangible assets recognised at acquisition include customer relations of £3,778,000 and other intangible assets of £22,000.

Goodwill arising on acquisition is attributable to the expected profitability of the acquired business and the synergies expected to arise after the Group's acquisition of Vedasil.

The estimated value of intangibles, including goodwill, deductible for tax purposes is £Nil.

 

14.2    Truth Hardware

On 3 July 2013, the Group acquired 100 per cent of the issued share capital of Truth Hardware.  At 31 December 2013, the fair values in relation to this acquisition were provisional.  The Group has completed its review and the fair value adjustments below relate to adjustments between the provisional fair values at 31 December 2013 and final fair values at 30 June 2014. 

At 30 June 2014, the recognised amounts of identifiable assets acquired and liabilities assumed were as follows:



Provisional fair value to the Group
31 December 2013
£'000

Fair value adjustments
£'000

Fair value to the Group
30 June 2014
£'000

Intangible assets


56,583

-

56,583

Property, plant and equipment


11,016

(73)

10,943

Inventories


15,539

-

15,539

Trade and other receivables


9,564

82

9,646

Cash and cash equivalents


3,289

-

3,289

Trade and other payables


(8,708)

(45)

(8,753)

Current tax


209

(37)

172

Deferred tax liabilities


(20,074)

-

(20,074)

Provisions


(1,863)

178

(1,685)

Total identifiable net assets


65,555

105

65,660

Goodwill arising on acquisition


68,978

(105)

68,873

Total consideration


134,533

-

134,533

 

Satisfied by:





£'000

Cash




134,533

 

Net cash flow arising on acquisition:





£'000

Cash consideration




134,533

Less: cash and cash equivalents acquired




(3,289)





131,244

The fair values of identifiable intangible assets recognised at acquisition include customer relations of £41,419,000, acquired brands of £15,108,000 and computer software of £56,000.

 

15.      Adjustments to cash flows from operating activities

 

The following non-cash and financing adjustments have been made to profit/(loss) before tax to arrive at operating cash flow:



Six months
ended
30 June
2014
(unaudited)
£'000

Six months
ended
30 June
2013
(unaudited and restated)
£'000

Year
ended
31 December
2013
(audited)
£'000

Net finance costs

6

3,730

452

3,517

Depreciation

11

3,595

2,643

6,337

Amortisation of acquired intangible assets

10

8,667

6,848

16,605

Amortisation of other intangible assets

10

155

-

-

Impairment of acquired intangible assets

10

-

-

529

Disposal of property, plant and equipment


(219)

59

42

Non-cash adjustments


507

(283)

1,091

Share-based payments


381

261

681



16,816

9,980

28,802

 

16.      Financial risk management and financial instruments

 

16.1    Financial risk factors

The Group's operations expose it to a variety of financial risks that include liquidity risk, credit risk, interest rate risk and foreign currency risk.  This set of condensed consolidated interim financial statements do not include all financial risk management information and should be read in conjunction with the Group's annual financial statements for the year ended 31 December 2013.

There have been no changes in the Group's risk management policy since the year ended 31 December 2013.

16.2    Fair value estimation

The Group's derivative financial instrument used for hedging is measured at fair value.  The Group uses the following hierarchy for measuring fair value:

·       Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.

·       Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

·       Level 3: Inputs for the asset or liability that is not based on observable market data.

Derivatives shown at fair value in the balance sheet have been valued by reference to level 2 techniques described above.  There were no transfers between levels during the period.

Valuation techniques used to derive level 2 fair values

Level 2 hedging derivatives comprise 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 fair value of the derivative financial instrument at 30 June 2014 is a liability of £476,000. 

There were no changes in valuation techniques during the period.

 

Group's valuation process

The Group has a team that performs the valuations of financial assets required for financial reporting purposes.  This team reports to the Chief Financial Officer and the Audit Committee.

Fair value of financial assets and liabilities measured at amortised cost

The fair value of borrowings is as follows:



Six months
ended
30 June
2014
(unaudited)
£'000

Six months
ended
30 June
2013
(unaudited)
£'000

Year
ended
31 December
2013
(audited)
£'000

Non-current


(75,271)

(67,589)

(116,421)

Current


(60,472)

(10,666)

(7,300)



(135,743)

(78,255)

(123,721)

 

The fair value of the following financial assets and liabilities approximate their carrying amounts:

·       Trade and other receivables.

·       Cash and cash equivalents.

·       Trade and other payables.

 

17.      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 for the year ending 31 December 2014.

 

 

Statement of Directors' responsibilities

 

 

The Directors confirm that these condensed consolidated interim financial statements have been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and that the interim management report includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8, namely:

•   an indication of important events that have occurred during the first six months and their impact on the condensed consolidated set of interim financial statements, and a description of the principal risks and uncertainties for the remaining six months of the financial year; and

•   material related party transactions in the first six months and any material changes in the related party transactions described in the last Annual Report.

The Directors of Tyman plc are listed in the Tyman plc Annual Report and Accounts for 31 December 2013.  A list of current Directors is maintained on the Tyman plc website: www.tymanplc.com.

The Directors are responsible for the maintenance and integrity of the Company's website.  Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

By order of the Board

  

Louis Eperjesi

Chief Executive Officer

 

29 July 2014

James Brotherton

Chief Financial Officer

 

 

 

 

Independent review report to Tyman plc

 

 

Our conclusion

We have reviewed the condensed consolidated interim financial statements, defined below, in the Interim Report of Tyman plc for the six months ended 30 June 2014. Based on our review, nothing has come to our attention that causes us to believe that the condensed consolidated interim financial statements are not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

This conclusion is to be read in the context of what we say in the remainder of this report.

What we have reviewed

The condensed consolidated interim financial statements, which are prepared by Tyman plc, comprise:

•    the condensed consolidated interim income statement for the period ended 30 June 2014;

•    the condensed consolidated interim statement of comprehensive income for the period then ended;

•    the condensed consolidated interim statement of changes in equity for the period then ended;

•    the condensed consolidated interim balance sheet as at 30 June 2014;

•    the condensed consolidated interim cash flow statement for the period then ended; and

•    the explanatory notes to the condensed consolidated interim financial statements.

As disclosed in note 2, 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.

The condensed consolidated 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 and Transparency Rules of the United Kingdom's Financial Conduct Authority.

What a review of condensed consolidated 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 Ireland) 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 condensed consolidated interim financial statements.

 

 

Independent review report to Tyman plc (continued)

 

 

Responsibilities for the condensed consolidated interim financial statements and the review

Our responsibilities and those of the Directors

The Interim Report, including the condensed consolidated 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 and Transparency Rules of the United Kingdom's Financial Conduct Authority.

Our responsibility is to express to the company a conclusion on the condensed consolidated 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 and Transparency Rules of the 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.

 

 

PricewaterhouseCoopers LLP

Chartered Accountants

29 July 2014

London


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
IR GMGZNVRMGDZM

Companies

Tyman (TYMN)
UK 100

Latest directors dealings