TYMAN PLC
RESULTS FOR THE YEAR ENDED 31 DECEMBER 2023
Tyman plc (TYMN.L) announces
results for the year ended 31 December 2023.
Summary Group Results
£m unless stated
|
2023
|
2022
|
Change
|
LFL
(1)
|
|
Revenue
|
657.6
|
715.5
|
-8%
|
-8%
|
|
Adjusted operating
profit*
|
84.4
|
94.6
|
-11%
|
-13%
|
|
Adjusted operating margin*
|
12.8%
|
13.2%
|
-40bps
|
-60bps
|
|
Operating profit
|
60.2
|
70.7
|
-15%
|
|
|
Adjusted profit before
taxation*
|
75.0
|
85.8
|
-13%
|
|
|
Profit before taxation
|
50.0
|
61.4
|
-19%
|
|
|
Adjusted EPS*
|
30.1p
|
34.7p
|
-13%
|
|
|
Basic EPS
|
19.6p
|
24.6p
|
-20%
|
|
|
Dividend per share
|
13.7p
|
13.7p
|
-
|
|
|
Leverage (2)
|
1.1x
|
1.0x
|
+0.1x
|
|
|
Return on capital
employed*
|
11.7%
|
13.3%
|
-160bps
|
|
|
*
Alternative
performance measures. These "adjusted" metrics are
before
amortisation of acquired intangible assets, impairment of acquired
intangible assets, impairment of goodwill, and adjusting
items. These measures provide additional information to shareholders
on the underlying performance of the business and are used
consistently through the statement. Further details can be
found on pages 37 to 42.
(1) LFL = constant currency
like-for-like (see APMs on page 38).
(2) Leverage is calculated in accordance with the
debt covenant methodology (see APMs on pages 39 to
41).
Highlights:
• Robust
overall performance in line with expectations despite challenging
market conditions
• Revenue
decline reflected significant reduction in volumes partially offset
by the carryover benefit of pricing actions and share
gains
• Adjusted
operating profit decline primarily reflected negative operating
leverage from significant reduction in volumes, partially offset by
an initial contribution from Lawrence
• North
America adjusted operating margin increase of 130bps to 15.5%,
benefitting from the reversal of the pricing lag and the
contribution from Lawrence; division represents >70% of Group
adjusted operating profit
• Excellent
adjusted operating cash conversion of 143%, reflecting a £34
million reduction in inventory and enabling a net debt reduction
despite acquiring Lawrence for £44 million
• Good
progress with our strategic initiatives to gain share and
structurally improve margin
• Best ever
safety performance, with LTIFR of 1.0 and TRIR reducing by 26% to
4.2
• Near-term
carbon reduction targets validated by the Science Based Targets
initiative
• Full-year
dividend per share maintained at 13.7 pence, reflecting confidence
in the Group's future growth prospects
Jason Ashton, Interim Chief
Executive Officer at 31 December 2023,
commented: "The Group performed
robustly in a volatile and challenging environment in 2023, with
good margin progression in North America and excellent operating
cash conversion. The agility of our management teams in flexing
cost, together with the reversal of the pricing lag in North
America, enabled us to deliver full-year adjusted operating profit
in line with market expectations.
We also reduced net debt, despite acquiring Lawrence for £44
million, and have maintained the full-year dividend, reflecting our
confidence that the Group remains well-positioned to take advantage
of the positive structural growth drivers when the housing market
backdrop improves.
Pleasingly, the Group achieved its best ever safety
performance and had its near-term carbon reduction targets
validated by the Science Based Targets
initiative."
Rutger Helbing, Chief
Executive Officer from 2 January 2024, commented:
"Since I joined
Tyman, I have had the opportunity to visit 14 of our manufacturing
sites so far, encompassing all three divisions. These visits have
enabled me to better understand our market-leading brands and
differentiated products, and to meet many of our passionate and
dedicated employees.
The structural growth drivers for the Group remain
attractive, although leading indicators for our major markets are
currently signalling a challenging market outlook for 2024.
However, given our self-help measures and a full-year contribution
from Lawrence, the Board expects the Group to make progress in
2024."
7
March 2024
Enquiries
Tyman plc
|
020 7976
8000
|
Rutger Helbing - Chief Executive
Officer
|
investor.relations@tymanplc.com
|
Jason Ashton - Chief Financial
Officer
|
|
Matt Jones - Head of Investor
Relations
|
|
|
|
MHP
|
07827
662 831
|
Reg Hoare / Rachel Farrington /
Matthew Taylor
|
tyman@mhpgroup.com
|
Analyst and investor presentation
Tyman will host an analyst and
investor presentation at 9.30 a.m. today, Thursday 7 March 2024, at
the offices of Deutsche Numis, 45 Gresham Street, London, EC2V
7BF.
The presentation will be webcast
at: https://brrmedia.news/TYMN_FY23.
The audio conference call details
are:
Number
|
+44 (0)
33 0551 0200
|
Password (if prompted)
|
Tyman
Full Year
|
Notes to editors
Tyman (TYMN: LSE) is a leading
international supplier of engineered fenestration components and
access solutions to the construction industry. The company designs
and manufactures products that enhance the comfort, sustainability,
security, safety and aesthetics of residential homes and commercial
buildings. Tyman's portfolio of leading brands serve their markets
through three divisions: Tyman North America, Tyman UK &
Ireland and Tyman International. Headquartered in London, the Group
employs approximately 3,600 people with facilities in 15 countries
worldwide. Further information is available at
www.tymanplc.com.
Overview of results
Performance in 2023
Tyman delivered a robust overall
performance in 2023 against a strong comparative period and despite
a continuation of the challenging markets experienced since the
second half of 2022. Revenue declined by 8% to £657.6 million
(2022: £715.5 million), reflecting a like-for-like ("LFL") decline
of 8%, a 1% decline from foreign exchange movements and 1% growth
from the acquisition of Lawrence Industries ("Lawrence") in July
2023. The LFL decline reflected the impact of a significant
reduction in volumes due to underlying demand softness and customer
destocking, which more than offset the benefit from the carryover
of pricing actions and share gains.
Residential housebuilding and RMI
activity across the Group's major markets were impacted by the
combination of elevated consumer inflation and interest rates. In
addition, volumes were impacted by customer destocking, notably in
our seals businesses, and the withdrawal of various government
fiscal stimulus programmes, which had boosted market activity in
the International division in 2022. Whilst market demand remained
soft throughout the year, the comparators eased in the second half,
particularly in the North America and International divisions,
resulting in a marked reduction in the LFL revenue decline in the
second half of the year as compared to the first half.
The Group's profitability in 2023
reflected the positive impact of prior year pricing actions. The
strength of the Group's brands enabled pricing power to be
maintained, and it was pleasing to see the reversal of the pricing
lag that negatively impacted operating margins in North America
during 2021 and 2022. Commodity cost inflation in general eased
during the year, but labour markets have remained competitive,
especially in the US, resulting in wage inflation remaining above
long-term averages.
The Group responded to the soft
demand backdrop with adjustments to production shifts, targeted
headcount reductions, reductions in temporary labour, allowing
natural labour attrition and tight control of discretionary costs.
In addition, measures were taken during the year to reduce the
fixed element of the cost base, including ceasing manufacturing
operations in Brazil and taking the decision to exit the Chinese
commercial market at the end of 2023. These cost actions will
benefit future profitability but were not able to fully offset the
significant under-absorption of fixed costs in the year, with
production volumes declining by more than sales volumes in order to
reduce inventory levels. As a result, adjusted operating profit
declined by 11% on a reported basis (reflecting a LFL decline of
13%, a 1% impact from foreign exchange movements and a 3%
contribution from Lawrence) and the adjusted operating margin
declined by 40bps to 12.8%. Both adjusted operating profit and the
adjusted operating margin improved markedly in the second half of
the year as compared to the first half. Notably, the full-year
adjusted operating margin in North America increased by 75bps
compared to 2022 on a LFL basis.
Reflecting the progress on
inventory, which decreased by £34.1 million, adjusted operating
cash conversion improved significantly to 143% (2022: 64%). The
average adjusted operating cash conversion rate over the last five
years now stands at 107%.
Health and safety
The health and safety of our
people is the Group's top priority and is embedded in our culture
through our "Safety is our First Language" programme. Pleasingly,
the Group achieved a lost time incident frequency rate ("LTIFR") of
1.0 in 2023, a 29% improvement on 2022 and a 79% improvement versus
the 2018 baseline LTIFR of 4.8. To ensure that the significant
progress made in recent years is maintained and improved upon, a
safety leadership refresher course has been deployed across the
business.
Having now almost achieved its
ambitious goal of a LTIFR of less than 1.0, the Group is shifting
its focus to the total recordable incident rate ("TRIR"), a more
rounded measure of safety performance that captures all incidents
requiring medical intervention beyond first aid. The Group's TRIR
of 4.2 in 2023 represented a 26% improvement on 2022 and the
Group's best performance on this measure to date. A target has been
set to achieve a world-class TRIR of less than 3.0 by
2026.
Strategic progress
The Group has continued to
progress its Focus, Define, Grow strategy, all of which is
underpinned by sustainability.
Within the Focus strategic pillar,
the project to consolidate two manufacturing sites into one in
Owatonna in the US began in 2023 and is progressing to plan. The
multi-year programme to roll-out a new ERP system across North
America continued in the year with a further two sites successfully
going live in March. This programme will enable enhanced customer
service levels, greater efficiencies, and improved decision making.
The European seals manufacturing optimisation programme progressed,
with the transfer of production lines from Germany to the Newton
Aycliffe facility in the UK, and there was further optimisation of
our international footprint to reduce the fixed cost base. The
consolidation of the UK commercial access solutions business into a
single site in Wolverhampton in the UK also completed during the
year.
In the first half of 2023 the
Science Based Targets initiative validated the Group's targets to
reduce absolute Scope 1 and Scope 2 greenhouse gas ("GHG")
emissions by 46.2% by 2030 from a 2019 base year, and to reduce
absolute Scope 3 GHG emissions from purchased goods and services by
27.5% within the same timeframe. 100% renewable electricity tariffs
are now in place for all manufacturing plants in Europe and plans
are well progressed to extend them to the Group's Mexican plants.
Tyman hosted an energy and waste Kaizen event with a major US
customer in the second half of the year, in the process
successfully identifying almost 90 opportunities to reduce
electricity, water and waste, with a combined estimated annual
saving of US$0.4 million.
Within the Define strategic
pillar, leaders from across the Group met with Tyman's major
Chinese suppliers in June. After several challenging COVID-19
years, this event was welcomed by suppliers to be able to meet with
the divisional Presidents and allowed all three divisions to
re-engage with suppliers on many topics, including quality, cost,
lead times and sustainability. The Group also continued the
development of groupwide leadership competencies, and pulse surveys
were used to assess progress against the action plans developed
from the 2022 employee engagement survey results, with the next
full employee engagement survey planned for 2024.
Activities to Grow market share
continued to yield positive results. In North America, further net
customer wins were achieved, aided by the distribution centre that
was opened in late 2022 in Phoenix, Arizona that is enabling
greater penetration of the western US market. In International
markets, further progress was made in growing partnerships with
system houses, with revenue from this channel now comprising 22% of
divisional revenue (2022: 21%). New product launches have performed
well in the UK and there have been notable share gains in this
market, particularly in the distribution channel. Enabling
customers to innovate through more sustainable solutions is a key
area of differentiation for the Group. During 2023, the percentage
of Group revenue derived from products and solutions that
positively impact one or more of the UN Sustainable Development
Goals ("SDGs") in use increased to 23% (2022: 22%), and several of
the Group's products achieved Environmental Product Declaration
("EPD") certification.
In July 2023, Tyman acquired
Lawrence for an initial consideration of US$57 million. Lawrence
adds an exciting new product category, high-performance composite
hung window hardware, to Tyman's portfolio of window and door
hardware for the US residential housing market, which has
attractive long-term growth prospects. The integration of Lawrence
is progressing well and delivering commercial and procurement
synergies as expected.
The Group retains a good pipeline
of targets that meet our commercial and strategic objectives and
will continue to pursue a disciplined M&A strategy, whilst
remaining cognisant of its target leverage range.
Outlook
The structural growth drivers for
the Group remain attractive, although leading indicators for our
major markets are currently signalling a challenging market outlook
for 2024. However, given our self-help measures and a full-year
contribution from Lawrence, the Board expects the Group to make
progress in 2024.
Jason
Ashton
Interim Chief Executive
Officer at 31 December 2023
Tyman North America
£m except where stated
|
2023
|
2022
|
Change
|
LFL
|
Revenue
|
432.3
|
471.9
|
-8%
|
-9%
|
Adjusted operating
profit
|
67.1
|
66.9
|
-
|
-5%
|
Adjusted operating margin
|
15.5%
|
14.2%
|
+130bps
|
+75bps
|
Markets
Activity in the US residential
housing market has been constrained by elevated interest rates and
inflation since the second half of 2022. According to the US Census
Bureau, US housing starts declined by 9% in 2023, whilst single
family starts, to which the division has proportionally higher
exposure, declined by 6%. The single family new build market
improved as the year progressed, as pent-up demand was captured by
national homebuilders offering incentives that enabled homeowners
to cope with historically high mortgage rates.
In contrast, the RMI market
softened as the year progressed. According to LIRA (Leading
Indicator of Replacement Activity), the rate of growth in the
annual spend on repair and remodelling in the US, which
incorporates cost inflation, slowed from 16% in the fourth quarter
of 2022 to 2% in the fourth quarter of 2023.
The US commercial market remained
resilient in 2023, driven by education and commercial building
investment, whilst government legislation is providing some
stimulus to the public infrastructure market. In Canada, which was
also impacted by elevated inflation and interest rates, housing
starts declined by 7%.
Business performance and developments
Reported revenues declined by 8%,
reflecting a LFL decrease of 9% offset by a 1% contribution from
Lawrence, with negligible impact from foreign exchange movements.
LFL revenues were impacted by a decline in volumes resulting from
the challenging market backdrop and customer destocking, notably in
the seals business, which more than offset the benefits from prior
year pricing actions and net customer wins. The rate of volume
decline moderated during the fourth quarter, mainly reflecting an
easier comparator.
The division made good progress
with its strategic initiatives aimed at driving share gains,
reducing cost and complexity, and improving operational resilience.
Central to this is the implementation of a new ERP system to enable
more streamlined ordering and logistics processes for customers and
to provide a more consistent customer experience, drive further
back-office efficiencies, and improve the business's decision
support capabilities. This multi-year programme is progressing
well, with two key sites successfully going live in March and
another two sites going live in early 2024.
The distribution site in Phoenix,
which was added in late 2022 to service the western US market, is
performing well, whilst the consolidation of two manufacturing sites into one in Owatonna is progressing
to schedule, with product line transfers and process flow
improvements underway and capital investment in a new paint line on
order. In addition to cost savings, there will be significant
safety, sustainability and service benefits on completion of this
project in 2025, as well as helping to alleviate the tight labour
situation.
During 2023, the business achieved
incremental net customer wins despite exiting some low
profitability business as a result of taking a disciplined approach
to pricing. These losses were more than offset by wins gained from
new products, such as the entry-price point sliding patio door
solution, and benefits of the new distribution centre in Phoenix.
After several years when customers have been focused on managing
COVID-19, disrupted supply chains and significant cost inflation,
new product development is now a priority again for customers as
they look to position for future growth. The division is responding
to this by accelerating its new product pipeline with increased
engineering resources. Products such as a magnetic casement window
handle solution, an "around the corner" seal, and a low-priced
flood tight floor access door are examples of new products coming
to the market in early 2024.
A major development in 2023 was
the acquisition of Lawrence.
Lawrence designs,
manufactures and sells high-performance composite hardware for
sliding and hung windows to North American PVC window fabricators,
and is a beneficiary of the growing demand for affordable homes in
North America. Lawrence has performed to plan since acquisition,
with the combination of AmesburyTruth and
Lawrence already proving to represent a strong value proposition
for customers.
Input cost inflation in general
eased during 2023, although certain commodity prices remained high
and labour inflation continued at historically high levels. The
labour availability and retention challenges experienced in 2022
improved across most of the network, and the resultant workforce
stabilisation is enabling a focus on continuous improvement
projects to improve efficiency, enhance supply chain resiliency and
reduce inventory.
As expected, the natural lag in
the recovery of input cost inflation via pricing actions that
impacted the division's adjusted operating margin in 2021 and 2022
reversed in 2023. This enabled the division to largely offset the
negative effect on fixed cost absorption from the significant
decline in volumes, with production volumes being down even more
than sales volumes to enable a reduction in inventory of c.US$30
million. This limited the decline in LFL adjusted operating profit
to 5%. Adjusted operating profit was flat on a reported basis,
reflecting a 5% contribution from Lawrence, with negligible effect
of foreign exchange. As a result, the division delivered a LFL
adjusted operating margin increase of 75 basis points to
15.5%.
Outlook
The underlying fundamentals of the
US housing market remain strong, with years of supply lagging
demand creating a significant housing deficit. Economists are
forecasting that the easing in inflation that began in 2023 will
lead to interest rate reductions in the first half of 2024, which
could alleviate the recent constraints on market demand and
stimulate activity later in the year. The NAHB currently forecasts
a 5.5% increase in single family housing starts, whilst LIRA
projects that the spend on repair and remodelling will decline by
mid to high single digits.
Against this backdrop, the
division will maintain its focus on gaining market share, notably
in the western US, by further exploiting the commercial
opportunities from the Lawrence acquisition and continuing to
develop its new product pipeline. Work to streamline the supply
chain and return operational efficiencies across the network to
normalised levels will remain a focus, along with progressing the
consolidation of two sites into one in Owatonna and continuing the
ERP implementation. Together with a full-year contribution from
Lawrence, these actions will support further improvement in
2024.
Tyman UK & Ireland
£m except where stated
|
2023
|
2022
|
Change
|
LFL
|
Revenue
|
97.3
|
103.3
|
-6%
|
-6%
|
Adjusted operating
profit
|
12.0
|
14.5
|
-17%
|
-17%
|
Adjusted operating margin
|
12.3%
|
14.0%
|
-170bps
|
-170bps
|
Markets
Activity in the UK residential RMI
market, to which the division is predominantly exposed, remained
subdued in 2023, impacted by the pressure on household incomes from
elevated levels of inflation and interest rates. This negative
impact was amplified by customer destocking following the
higher-than-normal inventory levels that had been built during the
post-pandemic market rebound and associated supply chain
challenges. The most recent CPA forecast projected spending in the
private RMI market to have declined by 11% in 2023.
Whilst the UK construction PMI
("CPMI") has posted readings slightly above the neutral 50 level
for much of the year, the housing component of the CPMI was below
50 throughout and took a notable step down in the autumn of 2023 to
the mid 40's and has since been stuck around this level, with the
weakness in housing spreading to the previously growing segments of
infrastructure and commercial. As a result, the CPA forecasts the
infrastructure segment to have been broadly flat in 2023 and
commercial end markets to have experienced a slight decline, both
of which represent a softening compared to projections at the start
of the year.
Business performance and developments
Revenue decreased by 6% in 2023 on
a LFL and reported basis as a result of a decline in hardware
volumes, reflecting the above-mentioned challenges in the
residential RMI market. This decline accelerated slightly in the
second half of the year, mirroring the stepdown in the CPMI. In
addition, there was a fall in revenue in the commercial access
solutions business, which was impacted by the continued effect of
delays with new automation equipment as well as a slowdown in the
commercial market in the second half of the year.
Despite the challenging market
conditions, the hardware business continued with its strategic
initiatives and achieved meaningful share gains in 2023 across all
major routes to market and notably with major distributors, where
the strength of the brands and the close customer collaboration are
differentiators. The work that has been taking place in recent
years to improve the new product development processes and pipeline
is delivering benefits, with revenues from new products in
categories such as friction stays, door closers, hinges and
letterplates running ahead of the prior year, despite the tough
market backdrop.
Raw material prices eased during
the year and air freight costs were lower, although the benefit of
this was partially offset by ongoing wage inflation. Given this,
the hardware business remained agile with regards to pricing, and
responded to competitive pressures with targeted price
adjustments.
As part of the Group's
sustainability roadmap, the hardware business has continued its
development of sustainable packaging solutions and the elimination
of hazardous substances, such as chromium VI, from products. Given
the division sources much of its products from Asia, the
achievement of these goals relies on key Chinese suppliers and
formed a major topic of discussion at a Tyman supplier conference
in Ningbo to ensure the engagement, alignment and support of
suppliers in producing and delivering sustainable solutions for
customers.
Access 360, the division's
commercial access solutions business, completed the final steps in
the consolidation of the three heritage Access 360 sites (Profab,
Howe Green and the Bilco warehouse) into a single highly automated
facility in Wolverhampton during the first half of the year. The
business experienced delays with the new equipment for the
facility, which significantly impacted its operational and
financial performance. As these issues were overcome, the business'
operating efficiency and financial performance improved
progressively during the second half despite the above-mentioned
softening of its end markets.
LFL and reported adjusted
operating profit decreased by 17%. This was primarily attributable
to the above-mentioned challenges that affected Access 360's
performance, as the hardware business was able to partially offset
the negative operating leverage impact from lower hardware volumes
with tight cost control.
Outlook
The UK residential RMI market is
expected to remain challenging during 2024, with the CPA currently
forecasting a further 4% decline, leading to a competitive market
landscape. Against this backdrop, the hardware business will
continue to focus on new product development, share gains and
enhancing its supply chain resilience to ensure customer service
levels are maintained, whilst continuing to tightly manage
discretionary costs.
The operational challenges
experienced by Access 360 in the first half of 2023 have been
overcome and the commercial pipeline is improving, and, absent any
further softening of end markets, we anticipate that the business
will show progress in 2024.
Tyman International
£m except where stated
|
2023
|
2022
|
Change
|
LFL
|
Revenue
|
128.0
|
140.3
|
-9%
|
-6%
|
Adjusted operating
profit
|
13.5
|
21.3
|
-37%
|
-31%
|
Adjusted operating profit margin
|
10.5%
|
15.2%
|
-470bps
|
-380bps
|
Markets
The decline in demand levels that
began in the second half of 2022 across most of the division's key
markets continued throughout 2023. Elevated interest rates and
inflation had a negative effect on consumer confidence across
Europe, which accounts for approximately 65% of divisional revenue,
and this in turn reduced activity levels in the private RMI and
housebuilding markets across the region. The Eurozone Construction
PMI remained stuck in the mid 40's throughout 2023, indicative of a
construction sector in contraction. The data for the division's
largest market, Italy, was better than the Eurozone average,
running in the high 40's for much of the year and rising above 50
in the final few months of 2023. During 2022, market demand had
benefitted from various government fiscal stimulus programmes
across Europe, notably in Italy, France and Spain, and the gradual
reduction in funding for these programmes in 2023 negatively
impacted market activity levels.
Elsewhere, there continued to be
favourable market conditions in the Gulf Cooperation Council
("GCC") cluster of markets, but most other export markets remained
weak.
Business performance and developments
Revenue declined by 9% in the
period on a reported basis and by 6% on a LFL basis against a
strong comparative. The drivers of this were the challenging market
conditions experienced throughout the year, which were amplified by
significant customer destocking in the seals business, and more
than offset the benefit from the carryover of prior year pricing
actions. There was a marked improvement in the LFL revenue decline
in the second half of the year, mainly reflecting weaker
comparators.
The business performed creditably
given the tough market environment, notably continuing to gain
traction with system houses in Europe and the GCC. This channel now
represents 22% of the division's revenue (compared to 21% in 2022)
and is expected to continue to grow faster than the market, as
system houses are reacting quicker to building regulation changes
and driving innovation and sustainability in the industry. Tyman is
well placed to grow with this group of customers by working closely
with them to create innovative solutions, with multiple systems
deploying newly developed Giesse hardware and Schlegel seal
products delivered to the market in 2023 and due for launch in
2024. Further dedicated sales resource has been added specifically
to accelerate this initiative and organisation changes are underway
to ensure excellent service and new product development
capabilities are provided to this channel.
Sustainability continues to be a
key differentiator for Tyman across Europe, and during 2023 two
major product ranges, the CHIC concealed hinges for tilt and turn
casement windows and Fulcra door hinges, achieved Environmental
Product Declaration ("EPD") certification, creating additional
revenue opportunities as EPD certification becomes a prerequisite
for an increasing number of tenders in the market.
Work to optimise the division's
seals manufacturing business continued following the closure of the
German seals manufacturing plant at the end of 2022, with the
transfer of its production to the Newton Aycliffe facility in the
UK now completed. This consolidation will deliver structural
improvements to profitability and enhanced customer service levels.
The business also took further action to reduce the fixed cost
base, including closing its manufacturing operation in Brazil in
July 2023, and exiting completely from the loss-making Chinese
market at the end of the year. In the division's largest hardware
manufacturing facility in Italy there has been significant
investment during 2023 in process automation and robotics to
enhance safety, capacity and efficiency.
Prior year pricing actions largely
offset raw material and wage inflation but the significant decline
in sales and production and the consequential negative effect on
fixed cost absorption resulted in a LFL adjusted operating profit
decline of 31%, with the adjusted operating margin decreasing to
10.5%. On a reported basis, adjusted operating profit decreased by
37%, reflecting the impact of foreign exchange.
Outlook
Recent construction PMI data
suggests that the market is likely to remain challenging in the
first half of 2024. GlobalData currently forecasts that the
European residential RMI market will decline by almost 5% in 2024,
whilst Euroconstruct forecasts a 4% contraction.
Offsetting the anticipated market
weakness, the division's revenue performance in 2024 is expected to
benefit from ongoing share gains, an absence of customer
destocking, as well as continued growth from the GCC cluster, which
is expected to maintain its recent growth trend.
The priorities remain to capture
share growth opportunities through ongoing innovation and system
house expansion activities, whilst continuing to tightly manage the
cost base. The division will also continue to take measures to
reduce the fixed element of its cost base to reduce its operating
leverage and will benefit in 2024 from both the absence of losses
in China and the operational improvements
at its Newton Aycliffe seals facility.
Financial review
Income statement
Revenue and profit
Reported revenue for the year
decreased by 8.1% to £657.6 million (2022: £715.5 million), against
a strong comparator, largely reflecting a decline in volumes of
c.£108 million, driven by the weaker global macroeconomic
conditions, which began to take effect in the second half of 2022,
and unfavourable foreign exchange movements of £6.4 million. The
volume shortfall was partially offset by the benefit of the
carryover of prior year price increases of £32.6 million and
surcharges of £16.8 million to recover the significant input cost
inflation experienced across 2021 and 2022, for which there was a
lag in recovery. There was also a £7.1 million contribution from
Lawrence, which was acquired in July 2023. On a LFL basis, which
excludes the revenue generated from Lawrence and the adverse impact
of foreign exchange, revenue decreased 8.3% compared to
2022.
Operating profit decreased by
14.9% to £60.2 million (2022: £70.7 million). The impact of the
drop through of lower sales volumes was c.£35 million. Production
volumes were down more than sales volumes in order to reduce
inventory levels, and although significant cost reductions were
achieved in response to lower demand, the net effect on fixed cost
absorption was significant, and this, combined with the knock-on
effect of machinery delays on the Access 360 site consolidation,
impacted profitability by c.£10.2 million. The carryover of pricing
actions and tariffs of £49.4 million more than offset in-year
material, wages and salary, and other input cost inflation of £14.5
million, with the significant lag experienced over the last two
years now reversed. Operating profit was also impacted by adverse
transactional foreign exchange movements of £1.4 million
and adjusting items,
which included restructuring costs, M&A activity, CEO
transition costs, and the impact of the significant devaluation of
the Argentinean Peso in December 2023 on retranslating
Euro-denominated payables. The acquisition of Lawrence benefitted
operating profit by £3.1 million. Adjusted operating profit, which
excludes the adjusting items and amortisation of acquired
intangibles, decreased by 10.8% to £84.4 million (2022: £94.6
million).
Operating margin decreased by 70
bps to 9.2% (2022: 9.9%) and adjusted operating margin decreased by
40 bps to 12.8% (2022: 13.2%), largely as a result of the lower
sales and production volumes, and the challenges with the Access
360 site consolidation. On a LFL basis, excluding the adverse
impact of foreign exchange and benefit from Lawrence, adjusted
operating margin decreased by 64 bps.
Reported profit before taxation
decreased by 18.6% to £50.0 million (2022: £61.4 million),
primarily as a result of the lower operating profit and an increase
in net finance costs, driven by increases in global interest rates
and debt drawn down to fund the Lawrence acquisition. Adjusted
profit before tax decreased by 12.6% to £75.0 million (2022: £85.8
million), as a result of the lower adjusted operating profit and
higher interest charge.
Materials and input costs
Materials(1)
|
2023
£m
|
Average(2)
|
Spot(3)
|
Aluminium
|
17.9
|
-25%
|
-31%
|
Polypropylene
|
39.3
|
-26%
|
-11%
|
Stainless steel
|
59.4
|
-14%
|
-40%
|
Zinc
|
29.4
|
-11%
|
-18%
|
Far East
components(4)
|
17.2
|
-6%
|
+3%
|
|
|
|
| |
(1) 2023 materials cost of sales for
raw materials, components and hardware for overall
category.
(2) Average 2023 tracker price
compared with average 2022 tracker price.
(3) Spot tracker price as at 31
December 2023 compared with spot tracker price at 31 December
2022.
(4) Pricing on a representative
basket of components sourced from the Far East by Tyman UK &
Ireland.
Both spot and average prices
across all major categories moderated in 2023, except for the spot
rate on Far East components, following significant inflation over
the previous two years. However, as higher priced inventory carried
into the year was still being sold through, the Group only began to
realise the benefit of input cost reductions towards the end of the
year. Previously implemented price increases and surcharges are now
recovering the gap experienced over the last two years as a result
of the timing lag driven by the magnitude and frequency of cost
increases, as well as customer pricing mechanisms.
Selling, general and administrative
expenses
Selling, general and
administrative expenses increased to £157.1 million (2022: £151.2
million), predominantly due to salary and other cost inflation, the
acquisition of Lawrence and adjusting items of £10.6 million (2022:
£6.3 million), partially offset by lower amortisation of acquired
intangibles, the effect of cost control measures implemented in
response to weaker demand and foreign exchange movements. Adjusted
selling, general and administrative costs, which excludes the
impact of adjusting items and amortisation of acquired intangibles,
increased to £132.9 million (2022: £127.3 million).
Adjusting items
Certain items that are considered
to be significant in nature and/or quantum have been excluded from
adjusted measures, such that the effect of these items on the
Group's results can be understood and to enable an analysis of
trends in the Group's underlying trading performance.
|
|
2023
£m
|
2022
£m
|
Restructuring costs
|
|
(6.7)
|
(6.3)
|
CEO transition costs
|
|
(1.3)
|
-
|
M&A costs
|
|
(1.4)
|
-
|
Argentina devaluation
charge
|
|
(1.2)
|
-
|
Total adjusting items
|
|
(10.6)
|
(6.3)
|
The restructuring costs of £6.7
million comprise costs related to the Access 360 site
consolidation, costs related to a targeted reduction in workforce
in North America, and costs associated with the streamlining of the
International division operations, including the final costs
relating to the closure of the Hamburg facility, cessation of
manufacturing in Brazil and closure of the Chinese
business.
The CEO transition costs of £1.3
million include exit costs relating to the former CEO, as well as
recruitment costs for the new CEO.
M&A costs of £1.4 million
comprise costs associated with the Lawrence acquisition, including
due diligence, legal fees, and other acquisition-related costs, as
well as a charge associated with the estimated earn-out, which
under accounting standards is treated as post-combination
remuneration rather than consideration due to it being conditional
on the continuing employment of a key employee.
The Argentina devaluation charge
of £1.2 million relates to the impact of the significant
devaluation of the Argentinian peso in December 2023, following the
change in government, on retranslating Euro-denominated
payables.
Finance costs
Net finance costs increased to
£10.2 million
(2022: £9.3 million).
Interest payable on bank loans,
private placement notes and overdrafts increased to
£10.8 million
(2022: £6.9 million), predominantly reflecting a significantly higher weighted average interest
rate, a draw-down of the revolving credit facility to fund the
Lawrence acquisition consideration of £43.8 million,
and a favourable impact of foreign exchange. The
weighted average interest rate increased to 5.1% (2022: 3.4%),
driven by the effect of a significant increase in
global base interest rates on floating rate RCF debt, which more
than offset the improved coupon rates on the USPP debt issued in
April 2022. Finance costs were also
impacted by a loss on revaluation of derivative financial
instruments of £0.3 million (2022: £0.1 million gain), driven by
the movement in foreign exchange rates.
Interest on lease liabilities
decreased slightly to £2.6 million (2022: £3.0 million), reflecting
a lower average lease liability, partially offset by the impact of
higher interest rates on new leases. Finance costs also included
amortisation of capitalised borrowing costs of £0.5 million (2022:
£0.6 million) and pension interest costs of £0.2 million (2022:
£nil).
Interest income from short-term
bank deposits amounted to £3.4 million (2022: £0.9 million),
reflecting an increase in base interest rates.
Forward exchange contracts
At 31 December 2023, the Group's
portfolio of forward exchange contracts at fair value amounted to a
net liability of £0.5 million (2022: net liability of £0.2 million). The notional
value of the portfolio was £34.8
million (2022: £19.8 million), comprising US
dollar and Euro forward exchange contracts with notional values of
US$43.9 million
and €0.4 million
respectively (2022: US$23.3 million; €0.7 million). These contracts
have a range of maturities up to 15 January 2025. During the year,
a loss of £0.3 million (2022: gain of £0.1 million) was recognised directly
in the income statement.
Interest rate swaps
In 2022, the Group entered into a
cross-currency interest rate swap, swapping US$10 million of the
USPP debt for £3.7 million and €5.0 million to fund the Group's UK
and International operations. At 31 December 2023, the fair value
of these swaps amounted to a net liability of £0.3 million (2022: net asset of £0.2
million), with a fair value loss through OCI of
£0.5 million
(2022: gain of £0.2 million) recognised.
Taxation
The Group reported an income tax
charge of £11.8 million (2022: £13.6 million), comprising a current tax
charge of £14.5 million (2022: £17.6 million) and a deferred tax credit of
£2.7 million
(2022: credit of £4.0 million). The effective tax rate was
23.6% (2022: 22.0%),
with the increase reflecting that 2022 benefitted from the release
of transfer pricing provisions no longer required.
The adjusted tax charge was
£16.4 million
(2022: £18.5 million) representing an adjusted effective tax rate
of 21.9% (2022:
21.6%).
During the period, the Group paid
corporation tax of £15.5
million (2022: £21.5 million). This reflects a
cash tax rate on adjusted profit before tax of 20.7% (2022: 25.1%).
The decrease reflects the timing of payments on
account, with a refund of previously overpaid tax being received in
2023.
Earnings per share
Basic earnings per share decreased
by 20.4%
to 19.6 pence
(2022: 24.6 pence), and adjusted earnings per share decreased by
13.3% to 30.1 pence (2022: 34.7 pence), reflecting the decrease in
profit after tax. There is no material difference between these
calculations and the fully diluted earnings per share
calculations.
Cash generation, funding and liquidity
Cash and cash conversion
Net cash generated from operating
activities increased by 79.5% to £108.8 million (2022: £60.6
million), reflecting a working capital inflow of £29.8 million
compared to a working capital outflow of £31.4 million in 2022,
primarily as a result of actions taken to reduce inventory in the
period following a significant build in 2022. This was partially
offset by lower profit before tax and cash outflows on provisions
relating to restructuring activities. Adjusted operating cash flow,
which excludes cash flows from adjusting items, increased to £120.4
million (2022: £60.1 million), reflecting the higher net cash from
operating activities and lower capital expenditure.
Free cash flow of £85.0 million in
the period was higher than 2022 (2022: £27.1 million),
as a result of the higher adjusted operating cash
flow and lower income tax payments, offset by higher pension
contributions and adjusting item cash costs.
Debt facilities
Bank and US private placement
facilities available to the Group as at 31 December 2023 were as
follows:
Facility
|
Maturity
|
Committed
|
2022 Facility
(multi-currency)
|
Dec
2027
|
£210.0m(1)
|
5.37% USPP
|
Nov
2024
|
US$45.0m
|
3.51%
USPP
|
April
2029
|
US$40.0m
|
3.62% USPP
|
April
2032
|
US$35.0m
|
(1) The Group also has potential access to an uncommitted
£100.0 million accordion facility.
The option to extend the
multi-currency revolving credit facility by one year was exercised
during the year, giving a maturity date of December 2027. There
were no other changes to the revolving credit facility and US
private placement notes during the period, details of which are
outlined in the Annual Report and Accounts for the year ended 31
December 2022.There were no defaults in the period under the terms
of loan agreements.
Both the USPP notes and the RCF
incorporate sustainability performance targets that align with
Tyman's sustainability roadmap (see note 8). These incentive mechanisms result in a modest reduction or
increase in the interest rate depending on performance against
these targets.
Liquidity
At 31 December 2023, the Group had
gross debt of £231.4 million (2022: £250.1 million) and net debt of
£167.7 million (2022: £175.5 million). Adjusted net debt, which
excludes lease liabilities and capitalised borrowing costs, was
£110.3 million (2022: £115.9 million), with the decrease reflecting
operating cash generation, including the lower working capital, as
well as a benefit from foreign exchange movements. This reduction
was achieved despite completing the acquisition of Lawrence for
cash consideration of £43.8
million.
The Group had cash balances of
£63.7 million (2022: £74.6 million), bank overdrafts of £25.4
million (2022: £16.4 million) and committed but undrawn facilities
of £144.8 million (2022: £125.8 million). This provides immediately
available liquidity of £183.1 million (2022: £184.0
million). The Group also has potential
access to the uncommitted £100.0 million accordion facility, which
has remained unchanged from the previous year.
Covenant performance
At 31 December 2023
|
Test
|
Performance(1)
|
Headroom(2)
|
Leverage
|
<
3.0×
|
1.1x
|
£65.4m
(65%)
|
Interest cover
|
>
4.0×
|
13.2x
|
£68.0m
(70%)
|
(1) Calculated covenant performance
consistent with the Group's banking covenant test (banking
covenants exclude the effect of IFRS 16). See APMs on page 40 for
interest cover and page 41 for leverage.
(2) The approximate amount by which
covenant adjusted EBITDA would need to decline before the relevant
covenant is breached.
At 31 December 2023, the Group
retained significant headroom on its banking covenants. Leverage at
the year end was 1.1x (2022: 1.0x), reflecting the funding of the
Lawrence acquisition, partially offset by the strong free cash
flow. Interest cover at 31 December 2023 was 13.2x (2022:
18.2x).
Balance sheet - assets and liabilities
Trade working capital
£m
|
2022
|
Movement
|
Acquisitions
|
FX
|
2023
|
Inventories
|
153.1
|
(28.7)
|
0.5
|
(5.9)
|
119.0
|
Receivables
|
67.5
|
2.7
|
1.0
|
(3.0)
|
68.2
|
Payables
|
(55.8)
|
(2.7)
|
(0.1)
|
1.9
|
(56.7)
|
Working capital
|
164.8
|
(28.7)
|
1.4
|
(7.0)
|
130.5
|
Trade working capital at the year
end was £130.5 million (2022: £164.8 million). The trade working capital reduction at average exchange rates
was £28.7 million
(2022: £25.3 million build). The acquisition of Lawrence
contributed an additional £1.4 million to trade working
capital.
The decrease in inventory at
average exchange rates was £28.7
million (2022: £4.8 million increase).
This was driven by initiatives implemented to
bring inventory down to more normalised levels, following a build
driven by supply chain disruption through 2022. Trade receivables increased due to
an increase in sales levels towards the end of the year, and trade
payables increased as a result of the timing of inventory
purchases.
Trade working capital decreased by
£7.0 million
(2022: £10.2 million) due to foreign exchange movements.
Capital expenditure
Gross capital expenditure
decreased to £15.6 million (2022: £24.1 million) or 1.1x depreciation (excluding RoU
asset depreciation) (2022: 1.7x). The reduction reflected timing of
investments, with 2022 including spend associated with footprint
projects, and some catch up of expenditure deferred from prior
years. Net capital expenditure was £15.5 million (2022: £24.0
million).
Goodwill and intangible assets
At 31 December 2023, the carrying
value of goodwill and intangible assets was £465.5 million (2022:
£457.0 million). The acquisition of Lawrence increased goodwill and
intangible assets by £39.7 million, which was partially offset by
the impact of foreign exchange of £18.4 million, a write-off of
£1.0 million relating to the closure of the China business, and
amortisation of intangible assets through the income statement of
£16.3 million (2022: £19.6 million).
Provisions
Provisions at 31 December 2023
decreased to £5.5 million (2022: £7.9 million), reflecting the
utilisation of the provision made in the prior year for the closure
of the Hamburg facility, partially offset by a provision made for
costs of the closure of the China business, expected to be utilised
in the first half of 2024.
Defined benefit pension scheme
The Group's net defined benefit
pension liability decreased to £2.6 million (2022: £4.3 million),
reflecting the termination of the two US defined benefit pension
schemes. The process to terminate the schemes commenced in 2021 and
completed in 2023, with the final funding payments amounting to
£2.4 million being made. Termination of these schemes reduces
income statement volatility, administration costs, and future cash
outflows. The remaining £2.6 million liability relates to the
statutory pension obligation in Italy, which is
unfunded.
Balance sheet - equity
Shares in issue
At 31 December 2023, the total
number of shares in issue was 196.8 million (2022: 196.8 million),
of which 0.4 million shares were held in treasury (2022: 0.5
million).
Employee Benefit Trust purchases
At 31 December 2023, the Employee
Benefit Trust ("EBT") held 1.4 million shares (2022: 2.1 million).
During the period, the EBT purchased 0.2 million shares in Tyman
plc at a total cost of £0.5 million (2022: 2.0 million shares at a
total cost of £6.6 million).
Dividends
A final dividend of 9.5 pence per
share (2022: 9.5 pence), equivalent to £18.5 million based on the
shares in issue as at 31 December 2023, will be proposed at the
Annual General Meeting (2022: £18.4 million). The total dividend
declared for the 2023 financial year is therefore 13.7 pence per
share (2022: 13.7 pence). This equates to a Dividend Cover of 2.2x,
within the Group's target range of 2.0x to 2.5x adjusted
EPS.
The ex-dividend date will be 25
April 2024 and the final dividend will be paid on 29 May 2024 to
shareholders on the register at 26 April 2024.
Only dividends paid in the year
have been charged against equity in the 2023 financial statements.
Dividend payments of £26.6 million were paid to shareholders during
2023 (2022: £25.4 million).
Other financial matters
Return on capital employed
ROCE decreased by 160 bps to 11.7%
(2022: 13.3%) primarily as a result of the lower adjusted operating
profit, partly offset by lower average working capital.
Return on acquisition investment
Lawrence was acquired in July 2023
for consideration of £43.8 million. As the acquisition was only
completed in the second half of the year, ROAI will be reported in
2024. Lawrence has performed encouragingly in the period since
acquisition, has good prospects and is on track to exceed the
minimum return threshold of 14% within two years of acquisition.
Currency
Currency in the consolidated
income statement
The principal foreign currencies
that impact the Group's results are the US dollar and the
Euro. In 2023, Sterling was slightly
stronger against the US dollar and weaker against the Euro when
compared with the average exchange rates in 2022.
Translational exposure
Currency
|
US$
|
Euro
|
Other(3)
|
Total
|
% movement in average
rate
|
0.6%
|
(2.0%)
|
-
|
-
|
£m Revenue impact
(1)
|
(2.4)
|
1.5
|
(11.2)
|
(12.1)
|
£m Profit impact
(1)
|
(0.3)
|
0.2
|
(4.2)
|
(4.3)
|
1c decrease impact
(2)
|
£401k
|
£60k
|
-
|
-
|
(1) Calculated
based on 2023 revenue and adjusted operating profit at 2022
exchange rates.
(2) Defined as the
approximate favourable translation impact of a 1c decrease in the
Sterling exchange rate of the respective currency on the Group's
2023 adjusted operating profit.
(3) Other
currencies include the Argentinian Peso, which was significantly
impacted by devaluation in 2023.
The net effect of currency
translation caused revenue and adjusted operating profit from
ongoing operations to decrease by £12.1 million and £4.3 million
respectively compared with 2022.
Transactional exposure
Divisions that purchase or sell
products in currencies other than their functional currency will
potentially incur transactional exposures. For purchases by the UK
& Ireland division from the Far East, these exposures are
principally Sterling against the US dollar or Chinese
renminbi.
The Group's policy is to recover
adverse transactional currency movements through price increases or
surcharges. Divisions typically buy currency forward to cover
expected future purchases for up to six months. The objective is to
achieve an element of certainty in the cost of landed goods and to
allow sufficient time for any necessary price changes to be
implemented.
The loss on foreign exchange
derivatives in 2023 is £0.5
million (2022: £0.2 million gain). The Group's
other transactional exposures generally benefit from the existence
of natural hedges and are immaterial.
2024 technical guidance
The working capital cycle is
expected to normalise, with minimal net cash outflow across the
year following a seasonal build at the half year of c.£20-25
million.
Capital expenditure is expected to
be c.£25 million, reflecting ongoing investment in new product
development, operational excellence, and systems
upgrades.
Adjusted operating cash conversion
is expected to return closer to the target average of 90%,
reflecting more normalised working capital movements.
Leverage is expected to be below
the target range of 1.0x to 1.5x covenant adjusted EBITDA
absent any M&A activity.
Net interest charge is expected to
be c.£8-10 million, reflecting lower average net debt.
The adjusted effective tax rate is
expected to be c.24.0-26.0%.
Juliette Lowes
Interim Chief Financial
Officer at 31 December 2023
Consolidated income
statement
For the year ended 31 December
2023
|
Note
|
2023
£m
|
2022
£m
|
Revenue
|
3
|
657.6
|
715.5
|
Cost of sales
|
|
(439.5)
|
(493.2)
|
Gross profit
|
|
218.1
|
222.3
|
Selling, general and
administrative expenses
|
|
(157.1)
|
(151.2)
|
Net impairment losses on financial
assets
|
|
(0.8)
|
(0.4)
|
Operating profit
|
|
60.2
|
70.7
|
|
|
|
|
Finance income
|
|
3.4
|
1.0
|
Finance costs
|
|
(13.6)
|
(10.3)
|
Net finance costs
|
|
(10.2)
|
(9.3)
|
|
|
|
|
Profit before taxation
|
3
|
50.0
|
61.4
|
Income tax charge
|
5
|
(11.8)
|
(13.6)
|
Profit for the year
|
|
38.2
|
47.8
|
|
|
|
|
Basic earnings per
share
|
6
|
19.6p
|
24.6p
|
Diluted earnings per
share
|
6
|
19.5p
|
24.5p
|
|
|
|
|
Consolidated statement of
comprehensive income
For the year ended 31 December
2023
|
|
2023
£m
|
2022
£m
|
Profit for the year
|
|
38.2
|
47.8
|
Other comprehensive (expense)/income
|
|
|
|
Items that will not be reclassified to profit or
loss
|
|
|
|
Remeasurements of post-employment
benefit obligations
|
|
(1.7)
|
-
|
Total items that will not be
reclassified to profit or loss
|
|
(1.7)
|
-
|
Items that may be reclassified subsequently to profit or
loss
|
|
|
|
Exchange differences on
translation of foreign operations
|
|
(31.9)
|
54.1
|
Change in fair value of net
investment hedge
|
|
5.4
|
(11.7)
|
Effective portion of changes in
value of fair value hedges
|
|
(0.5)
|
0.2
|
Total items that may be
reclassified (from)/to profit or loss
|
|
(27.0)
|
42.6
|
Other comprehensive
(expense)/income for the year
|
|
(28.7)
|
42.6
|
|
|
|
|
Total comprehensive income for the year
|
|
9.5
|
90.4
|
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
5.
Consolidated balance
sheet
As at 31 December 2023
|
Note
|
2023
£m
|
2022
£m
|
TOTAL ASSETS
|
|
|
|
Non-current assets
|
|
|
|
Goodwill
|
7
|
399.3
|
399.3
|
Intangible assets
|
7
|
66.2
|
57.7
|
Property, plant and
equipment
|
|
71.1
|
74.6
|
Right-of-use assets
|
|
55.4
|
57.3
|
Financial assets at fair value
through profit or loss
|
|
1.2
|
1.2
|
Derivative financial
instruments
|
|
-
|
0.2
|
Deferred tax assets
|
|
1.4
|
1.7
|
|
|
594.6
|
592.0
|
Current assets
|
|
|
|
Inventories
|
|
119.0
|
153.1
|
Trade and other
receivables
|
|
85.6
|
81.4
|
Cash and cash
equivalents
|
8
|
63.7
|
74.6
|
Current tax asset
|
|
2.3
|
-
|
|
|
270.6
|
309.1
|
Assets classified as held for
sale
|
|
2.4
|
-
|
|
|
273.0
|
309.1
|
TOTAL ASSETS
|
|
867.6
|
901.1
|
LIABILITIES
|
|
|
|
Current liabilities
|
|
|
|
Trade and other
payables
|
|
(94.8)
|
(88.3)
|
Derivative financial
instruments
|
|
(0.5)
|
(0.2)
|
Borrowings
|
8
|
(60.2)
|
(15.9)
|
Lease liabilities
|
|
(7.1)
|
(6.8)
|
Current tax liabilities
|
|
(2.0)
|
(1.8)
|
Provisions
|
|
(2.1)
|
(5.0)
|
|
|
(166.7)
|
(118.0)
|
Non-current liabilities
|
|
|
|
Borrowings
|
8
|
(111.5)
|
(172.5)
|
Lease liabilities
|
|
(52.6)
|
(54.9)
|
Deferred tax
liabilities
|
|
(4.9)
|
(6.9)
|
Derivative financial
instruments
|
|
(0.3)
|
-
|
Retirement benefit
obligations
|
|
(2.6)
|
(4.3)
|
Provisions
|
|
(3.4)
|
(2.9)
|
|
|
(175.3)
|
(241.5)
|
TOTAL LIABILITIES
|
|
(342.0)
|
(359.5)
|
NET ASSETS
|
|
525.6
|
541.6
|
EQUITY
|
|
|
|
Capital and reserves attributable to owners of the
Company
|
|
|
|
Share capital
|
|
9.8
|
9.8
|
Share premium
|
|
0.1
|
-
|
Treasury reserve
|
|
(7.0)
|
(8.7)
|
Hedging reserve
|
|
(0.3)
|
0.2
|
Translation reserve
|
|
65.1
|
91.6
|
Retained earnings
|
|
457.9
|
448.7
|
TOTAL EQUITY
|
|
525.6
|
541.6
|
Consolidated cash flow
statement
For
the year ended 31 December 2023
|
Note
|
2023
£m
|
2022
£m
|
Cash flow from operating activities
|
|
|
|
Profit before taxation
|
3
|
50.0
|
61.4
|
Adjustments
|
10
|
51.3
|
53.0
|
Changes in working
capital:
|
|
|
|
Inventories
|
|
28.7
|
(4.8)
|
Trade and other
receivables
|
|
(6.7)
|
5.6
|
Trade and other
payables
|
|
7.8
|
(32.2)
|
Provisions utilised
|
|
(4.2)
|
(0.7)
|
Pension contributions
|
|
(2.6)
|
(0.2)
|
Income tax paid
|
|
(15.5)
|
(21.5)
|
Net cash generated from operating activities
|
|
108.8
|
60.6
|
Cash flow from investing activities
|
|
|
|
Purchases of property, plant and
equipment
|
|
(11.1)
|
(19.2)
|
Purchases of intangible
assets
|
7
|
(4.5)
|
(4.9)
|
Proceeds on disposal of property,
plant and equipment
|
|
0.1
|
0.1
|
Acquisition of subsidiary
undertakings, net of cash acquired
|
9
|
(43.8)
|
-
|
Interest received
|
|
3.4
|
0.9
|
Net cash used in investing activities
|
|
(55.9)
|
(23.1)
|
Cash flow from financing activities
|
|
|
|
Interest paid
|
|
(11.7)
|
(9.5)
|
Dividends paid
|
|
(26.6)
|
(25.4)
|
Proceeds from issue of own shares
from Employee Benefit Trust
|
|
0.4
|
-
|
Purchase of own shares for
Employee Benefit Trust
|
|
(0.5)
|
(6.6)
|
Refinancing costs paid
|
|
(0.6)
|
(2.1)
|
Proceeds from drawdown of
borrowings
|
|
84.7
|
122.3
|
Repayments of
borrowings
|
|
(103.7)
|
(113.0)
|
Principal element of lease
payments
|
|
(7.1)
|
(6.2)
|
Net cash used in financing activities
|
|
(65.1)
|
(40.5)
|
Net decrease in cash and cash equivalents and bank
overdrafts
|
|
(12.2)
|
(3.0)
|
Exchange (loss)/gain on cash and
cash equivalents and bank overdrafts
|
|
(7.7)
|
3.1
|
Cash and cash equivalents and bank
overdrafts at beginning of year
|
|
58.2
|
58.1
|
Cash and cash equivalents and
bank overdrafts at end of year
|
8
|
38.3
|
58.2
|
Notes to the financial
statements
For the year ended 31 December
2023
1. General information
Tyman plc is a leading
international supplier of engineered fenestration and access
solutions to the construction industry. The Group designs and
manufactures products that enhance the comfort, sustainability,
security, safety and aesthetics of residential homes and commercial
buildings. Tyman serves its markets through three regional
divisions. Headquartered in London, the Group employs approximately
3,600 people with facilities in 15 countries.
Tyman plc is a public limited
company listed on the London Stock Exchange, incorporated and
domiciled in the United Kingdom. The Company is registered in
England & Wales and the address of the Company's registered
office is 29 Queen Anne's Gate, London, SW1H 9BU.
2. Accounting policies and basis of
preparation
The consolidated financial
statements of Tyman plc have been prepared in accordance with the
UK-adopted International Accounting Standards and with the
requirements of the Companies Act 2006 as applicable to companies
reporting under those standards.
The consolidated financial
statements have been prepared on a historical cost basis, except
for items that are required by IFRS to be measured at fair value,
principally certain financial instruments.
The financial information included
in the full year results announcement does not constitute statutory
accounts of the Company for the years ended 31 December 2023 and
2022. Statutory accounts for the year ended 31 December 2022 have
been reported on by the Company's auditor and delivered to the
Registrar of Companies. Statutory accounts for the year ended 31
December 2023 have been audited and will be delivered to the
Registrar of Companies following the Company's Annual General
Meeting. The report of the auditors for both years was (i)
unqualified, (ii) did not include a reference to any matters to
which the auditors drew attention by way of emphasis without
qualifying their report, and (iii) did not contain a statement
under Section 498 (2) or (3) of the Companies Act 2006. The
consolidated financial statements have been prepared using
consistent accounting policies with those of the previous financial
year.
These results were approved by the
Board of Directors on 6 March 2024.
2.1 Going
concern
The Group's business activities,
financial performance and position, together with factors likely to
affect its future development and performance, are described in the
Chief Executive Officer's review on pages 4 to 6.
As at 31 December 2023, the Group
had net cash and cash equivalents of £38.3 million, and an undrawn
RCF available of £144.8 million, giving liquidity headroom of
£183.1 million. The Group also has potential access to an
uncommitted accordion facility of £100 million. The RCF matures in
December 2027.
The Group is subject to leverage
and interest cover covenants tested in June and December and had
significant headroom on both covenants at 31 December 2023, with
£65.4 million (65%) of EBITDA headroom on the leverage covenant and
£68.0 million (70%) of EBITDA headroom on the interest cover
covenant.
The Group has performed an
assessment of going concern through reviewing liquidity headroom
and covenant compliance under the Board-approved financial forecast
and modelling several downside scenarios. In all scenarios
modelled, the Group would retain significant liquidity and covenant
headroom throughout the going concern period.
Reverse stress-testing has also
been performed to model a scenario that would result in the
elimination of covenant headroom within the going concern
assessment period. Revenue would need to decrease significantly, to
an extent not considered reasonably possible, for the covenants to
be breached. As part of this assessment, the Group has considered
the risks relating to climate change. As this risk relates to the
medium-to-long term, there is no impact on the short-term going
concern assessment and, as a result, we have not included any
impact in either the base case or any of the downside scenarios of
the going concern assessment.
Having reviewed the various
scenario models, available liquidity and taking into account
current trading, the Directors are satisfied that the Group has
sufficient financial resources to continue in operation for the
foreseeable future, which is considered to be a period of not less
than twelve months from the date of this report. Accordingly, the
consolidated and Company financial information has been prepared on
a going concern basis.
2.2 Changes in accounting policies and
disclosures
2.2.1 New, revised and amended standards and interpretations
adopted by the Group
The accounting standards and
interpretations that became applicable in the year did not
materially impact the Group's accounting policies and did not
require retrospective adjustments.
2.2.2 New, revised and amended accounting standards not yet
adopted
Certain new accounting standards,
amendments to accounting standards and interpretations have been
published that are not mandatory for 31 December 2023 reporting
periods and have not been early adopted by the Group. These
standards, amendments or interpretations are not expected to have a
material impact on the Group in the current or future reporting
periods and on foreseeable future transactions.
3. Segment reporting
3.1 Segment
information
The reporting segments reflect the
manner in which performance is evaluated and resources are
allocated. The Group operates through three clearly defined
divisions: Tyman North America, Tyman UK & Ireland and Tyman
International.
North America comprises all the
Group's operations within the US, Canada and Mexico. UK &
Ireland comprises the Group's UK & Ireland hardware business,
together with Access 360 and Tyman Sourcing Asia. International
comprises the Group's remaining businesses outside the US, Canada,
Mexico and the UK (although it includes the two UK seal
manufacturing plants that are managed by the Tyman International
leadership team). Centrally incurred functional costs that are
directly attributable to a division are allocated or recharged to
the division. All other centrally incurred costs and eliminations
are disclosed as a separate line item in the segment
analysis.
In the opinion of the Board, there
is no material difference between the Group's operating segments
and segments based on geographical splits. Accordingly, the Board
does not consider geographically defined segments to be
reportable.
The following tables present Group
revenue and profit information for the Group's reporting segments,
which have been generated using the Group accounting policies, with
no differences of measurement applied, other than those noted
above.
3.2
Revenue
|
2023
|
2022
|
|
Segment
revenue
£m
|
Inter-segment
revenue
£m
|
External
revenue
£m
|
Segment
revenue
£m
|
Inter-segment revenue
£m
|
External
revenue
£m
|
North America
|
434.5
|
(2.2)
|
432.3
|
474.9
|
(3.0)
|
471.9
|
UK & Ireland
|
97.5
|
(0.2)
|
97.3
|
103.5
|
(0.2)
|
103.3
|
International
|
129.8
|
(1.8)
|
128.0
|
143.4
|
(3.1)
|
140.3
|
Total revenue
|
661.8
|
(4.2)
|
657.6
|
721.8
|
(6.3)
|
715.5
|
Included within the Tyman
International segment is revenue generated from the UK of
£26.4 million (2022:
£24.7 million).
3.3 Profit before
taxation
|
Note
|
2023
£m
|
2022
£m
|
North America
|
|
67.1
|
66.8
|
UK & Ireland
|
|
12.0
|
14.5
|
International
|
|
13.5
|
21.3
|
Operating segment
profit
|
|
92.6
|
102.6
|
Centrally incurred
costs
|
|
(8.2)
|
(8.0)
|
Adjusted operating profit
|
|
84.4
|
94.6
|
Adjusting items
|
4
|
(10.6)
|
(6.3)
|
Amortisation of acquired
intangible assets
|
7
|
(13.6)
|
(17.6)
|
Operating profit
|
|
60.2
|
70.7
|
Net finance costs
|
|
(10.2)
|
(9.3)
|
Profit before taxation
|
|
50.0
|
61.4
|
4.
Adjusting items
|
|
2023
£m
|
2022
£m
|
Restructuring costs
|
|
(6.7)
|
(6.3)
|
CEO transition costs
|
|
(1.3)
|
-
|
M&A costs
|
|
(1.4)
|
-
|
Argentina devaluation
charge
|
|
(1.2)
|
-
|
Total adjusting items
|
|
(10.6)
|
(6.3)
|
|
|
|
|
For further information on
adjusting items, see the financial review on pages 14 and 15 and
the alternative performance measures on page 37.
5. Taxation
5.1 Taxation - income statement and other comprehensive
income
|
|
2023
£m
|
2022
£m
|
Current taxation
|
|
|
|
Current tax on profit for the
year
|
|
(16.5)
|
(19.1)
|
Prior year adjustments
|
|
2.0
|
1.5
|
Total current taxation
|
|
(14.5)
|
(17.6)
|
Deferred taxation
|
|
|
|
Origination and reversal of
temporary differences
|
|
3.4
|
4.6
|
Rate change adjustment
|
|
-
|
0.1
|
Foreign exchange
difference
|
|
0.1
|
-
|
Prior year adjustments
|
|
(0.8)
|
(0.7)
|
Total deferred taxation
|
|
2.7
|
4.0
|
Income tax charge in the income statement
|
|
(11.8)
|
(13.6)
|
Total charge relating to components of other comprehensive
income
|
|
|
|
Current tax credit/(charge) on
translation
|
|
0.1
|
(0.3)
|
Deferred tax charge on defined
benefit obligations
|
|
(1.3)
|
-
|
Deferred tax charge on share-based
payments
|
|
-
|
(0.2)
|
Income tax charge in the statement of other comprehensive
income
|
|
(1.2)
|
(0.5)
|
Total current taxation
|
|
(14.4)
|
(17.9)
|
Total deferred taxation
|
|
1.4
|
3.8
|
Total taxation
|
|
(13.0)
|
(14.1)
|
The standard rate of corporation
tax in the UK changed from 19.0% to 25.0% with effect from 1 April
2023. Accordingly, the Group's UK profits for this financial year
are taxed at a weighted average rate of 23.5% (2022: 19.0%). The
deferred tax balances have been measured using the applicable
enacted rates they are expected to unwind at in their respective
territories.
Taxation for other jurisdictions
is calculated at rates prevailing in those respective
jurisdictions.
5.2 Reconciliation of the
total tax charge
The tax assessed for the year
differs from the weighted average rate of 23.5% (2022: 19.0%). The
differences are explained below:
|
2023
£m
|
2022
£m
|
Profit before taxation
|
50.0
|
61.4
|
Profit before taxation multiplied
by the weighted average rate of corporation tax in the UK of 23.5%
(2022: 19.0%)
|
(11.8)
|
(11.7)
|
Effects of:
|
|
|
Expenses not deductible for tax
purposes
|
(0.1)
|
(0.2)
|
Overseas tax rate
differences
|
(1.2)
|
(2.5)
|
Rate change adjustment
|
-
|
0.1
|
Foreign exchange
difference
|
0.1
|
-
|
Prior year adjustments
|
1.2
|
0.7
|
Income tax charge in the income statement
|
(11.8)
|
(13.6)
|
6. Earnings per share
6.1 Earnings per
share
|
2023
|
2022
|
Profit for the year
(£m)
|
38.2
|
47.8
|
Basic earnings per share
(p)
|
19.6p
|
24.6p
|
Diluted earnings per share
(p)
|
19.5p
|
24.5p
|
Basic earnings per share amounts
are calculated by dividing net profit for the year attributable to
ordinary equity holders by the weighted average number of ordinary
shares outstanding during the year.
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 year, 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.
6.1.1 Weighted average number of
shares
|
2023
'm
|
2022
'm
|
Weighted average number of shares
(including treasury shares)
|
196.8
|
196.8
|
Treasury shares
|
(0.4)
|
(0.5)
|
Employee Benefit Trust
shares
|
(1.4)
|
(2.1)
|
Weighted average number of shares - basic
|
195.0
|
194.2
|
Effect of dilutive potential
ordinary shares - LTIP awards and options
|
1.4
|
1.0
|
Weighted average number of shares - diluted
|
196.4
|
195.2
|
7. Goodwill and intangible assets
7.1 Carrying amount of
goodwill
Net carrying value
|
Note
|
£m
|
At 1 January 2022
|
|
363.3
|
Exchange difference
|
|
36.0
|
At 31 December 2022
|
|
399.3
|
Acquisition of
subsidiary
|
9
|
17.6
|
Write off of goodwill
|
|
(1.0)
|
Exchange difference
|
|
(16.6)
|
At 31 December 2023
|
|
399.3
|
Goodwill is monitored principally
on an operating segment basis and the net book value of goodwill is
allocated by CGU as follows:
|
2023
£m
|
2022
£m
|
North America
|
304.2
|
302.7
|
UK & Ireland
|
60.2
|
60.2
|
International
|
34.9
|
36.4
|
|
399.3
|
399.3
|
7.2 Carrying amount of
intangible assets
|
Note
|
Computer
software
£m
|
Acquired
brands
£m
|
Customer
relationships
£m
|
Other
intangibles
£m
|
Total
£m
|
Cost
|
|
|
|
|
|
|
At 1 January 2022
|
|
15.5
|
82.1
|
252.5
|
-
|
350.1
|
Additions
|
|
4.7
|
-
|
-
|
0.2
|
4.9
|
Disposals
|
|
(0.4)
|
-
|
-
|
-
|
(0.4)
|
Transfers between
categories
|
|
0.1
|
(0.1)
|
-
|
-
|
-
|
Exchange difference
|
|
1.8
|
7.8
|
24.3
|
-
|
33.9
|
At 31 December 2022
|
|
21.7
|
89.8
|
276.8
|
0.2
|
388.5
|
Additions
|
|
4.4
|
0.1
|
-
|
-
|
4.5
|
Disposals
|
|
(1.1)
|
(0.1)
|
-
|
-
|
(1.2)
|
Acquisition of
subsidiary
|
9
|
-
|
1.5
|
20.6
|
-
|
22.1
|
Transfer between
categories
|
|
(0.1)
|
0.1
|
-
|
-
|
-
|
Exchange difference
|
|
(1.1)
|
(3.7)
|
(11.0)
|
-
|
(15.8)
|
At 31 December 2023
|
|
23.8
|
87.7
|
286.4
|
0.2
|
398.1
|
|
|
|
|
|
|
|
Accumulated amortisation
|
|
|
|
|
|
|
At 1 January 2022
|
|
(8.4)
|
(59.4)
|
(215.5)
|
-
|
(283.3)
|
Amortisation charge for the
year
|
|
(2.0)
|
(5.4)
|
(12.2)
|
-
|
(19.6)
|
Disposals
|
|
0.4
|
-
|
-
|
-
|
0.4
|
Impairment
|
|
(0.1)
|
(0.1)
|
-
|
-
|
(0.2)
|
Exchange difference
|
|
(0.9)
|
(5.9)
|
(21.3)
|
-
|
(28.1)
|
At 31 December 2022
|
|
(11.0)
|
(70.8)
|
(249.0)
|
-
|
(330.8)
|
Amortisation charge for the
year
|
|
(2.7)
|
(4.2)
|
(9.4)
|
-
|
(16.3)
|
Disposals
|
|
1.1
|
0.1
|
-
|
-
|
1.2
|
Exchange difference
|
|
0.6
|
3.0
|
10.4
|
-
|
14.0
|
At 31 December 2023
|
|
(12.0)
|
(71.9)
|
(248.0)
|
-
|
(331.9)
|
|
|
|
|
|
|
|
Net carrying value
|
|
|
|
|
|
|
At 1 January 2022
|
|
7.1
|
22.7
|
37.0
|
-
|
66.8
|
At 31 December 2022
|
|
10.7
|
19.0
|
27.8
|
0.2
|
57.7
|
At 31 December 2023
|
|
11.8
|
15.8
|
38.4
|
0.2
|
66.2
|
The amortisation charge for the
year has been included in selling, general and administrative
expenses in the income statement and comprises £13.6 million
(2022: £17.6 million) relating to amortisation of acquired
intangible assets and £2.7 million (2022: £2.0 million)
relating to amortisation of other intangible
assets.
8. Borrowings
8.1 Carrying amounts of
borrowings
Unsecured borrowings at amortised cost:
|
|
2023
£m
|
2022
£m
|
Bank borrowings
|
|
(54.3)
|
(74.9)
|
Bank overdrafts
|
|
(25.4)
|
(16.4)
|
Senior notes
|
|
(94.3)
|
(99.2)
|
Capitalised borrowing
costs
|
|
2.3
|
2.1
|
|
|
(171.7)
|
(188.4)
|
Analysed as:
|
|
|
|
Current liabilities
|
|
(60.2)
|
(15.9)
|
Non-current liabilities
|
|
(111.5)
|
(172.5)
|
|
|
(171.7)
|
(188.4)
|
There were no defaults in interest
payments in the year under the terms of the existing loan
agreements. Non-cash movements in the carrying amount of
interest-bearing loans and borrowings relate to the amortisation of
borrowing costs.
The carrying amounts of
interest-bearing loans and borrowings (excluding lease liabilities)
are denominated in the following currencies:
|
2023
£m
|
2022
£m
|
Sterling1
|
(31.2)
|
(24.2)
|
US dollars
|
(100.1)
|
(121.5)
|
Euros
|
(40.4)
|
(42.7)
|
|
(171.7)
|
(188.4)
|
1 Includes capitalised borrowing costs
8.1.1 Bank borrowings
Multi-currency revolving credit facility
In December 2022, the Group
refinanced its revolving credit facility, securing a new £210
million sustainability-linked Revolving Credit
Facility, which may be increased through an
accordion option of up to £100 million. During the current
year, the Group exercised its option to extend the RCF by an
additional year to December 2027. The banking facility is unsecured
and is guaranteed by Tyman plc and its principal subsidiary
undertakings. A portion of the loan margin is linked to the
performance of the Group on three sustainability metrics, which
align with Tyman's immediate sustainability priorities and its 2030
sustainability roadmap.
Progress against these
sustainability metrics will be independently verified on an annual
basis. If Tyman achieves some, or all of these metrics, then the
loan pricing will be reduced for the following year; a shortfall
against the metrics will result in Tyman paying a similar premium
to a nominated charity.
As at 31 December 2023, the Group
has undrawn amounts committed under the multi-currency revolving
credit facility of £144.8 million (2022: £125.8 million). These
amounts are floating rate commitments which expire beyond twelve
months.
8.1.2 Private placement
notes
The Group's private placement
notes of US$120 million are notes issued to US financial
institutions. These comprise:
· US$45.0 million issued in November 2014, with a 10-year
maturity from inception at a coupon of 5.37%, due for repayment in
November 2024.
· US$75
million issued in April 2022. US$40 million of these notes have a
term of seven years maturing in April 2029, with a coupon rate of
3.51%, and US$35 million have a term of ten years maturing in April
2032, with a coupon rate of 3.62%. These notes incorporate three
sustainability performance targets, which
align with Tyman's sustainability roadmap. This incentive mechanism
results in a modest reduction or increase in the coupon rate
depending on performance against these targets.
8.2 Net
debt
8.2.1 Net debt summary
|
2023
£m
|
2022
£m
|
Borrowings
|
(171.7)
|
(188.4)
|
Lease liabilities
|
(59.7)
|
(61.7)
|
Cash
|
63.7
|
74.6
|
At 31 December
|
(167.7)
|
(175.5)
|
8.2.3 Net debt reconciliation
|
|
Liabilities from financing
activities
|
Other
assets
|
|
|
|
Borrowings1
|
Lease
liabilities
|
Subtotal
|
Net cash
and bank overdrafts
|
Total
|
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
At 1 January 2022
|
|
(149.1)
|
(54.8)
|
(203.9)
|
58.1
|
(145.8)
|
Financing cash flows (excluding
interest)
|
|
(9.3)
|
6.2
|
(3.1)
|
(2.9)
|
(6.0)
|
Interest expense
|
|
(6.9)
|
(3.0)
|
(9.9)
|
-
|
(9.9)
|
Interest payments
|
|
6.5
|
3.0
|
9.5
|
-
|
9.5
|
Disposals
|
|
-
|
0.1
|
0.1
|
-
|
0.1
|
New leases
|
|
-
|
(8.3)
|
(8.3)
|
-
|
(8.3)
|
Lease modifications
|
|
-
|
(0.1)
|
(0.1)
|
-
|
(0.1)
|
Lease extensions
|
|
(14.7)
|
(4.8)
|
(19.5)
|
3.0
|
(16.5)
|
Foreign exchange
adjustments
|
|
2.1
|
-
|
2.1
|
-
|
2.1
|
Amortisation of borrowing
costs
|
|
(0.6)
|
-
|
(0.6)
|
-
|
(0.6)
|
At 31 December 2022
|
|
(172.0)
|
(61.7)
|
(233.7)
|
58.2
|
(175.5)
|
Financing cash flows (excluding
interest)
|
|
19.0
|
7.1
|
26.1
|
(12.2)
|
13.9
|
Interest expense
|
|
(10.8)
|
(2.6)
|
(13.4)
|
-
|
(13.4)
|
Interest payments
|
|
9.1
|
2.6
|
11.7
|
-
|
11.7
|
Accrued interest
|
|
1.7
|
-
|
1.7
|
-
|
1.7
|
Disposals
|
|
-
|
0.1
|
0.1
|
-
|
0.1
|
New leases
|
|
-
|
(3.6)
|
(3.6)
|
-
|
(3.6)
|
Lease modifications
|
|
-
|
(3.7)
|
(3.7)
|
-
|
(3.7)
|
Foreign exchange
adjustments
|
|
6.6
|
2.1
|
8.7
|
(7.7)
|
1.0
|
Financing costs
capitalised
|
|
0.6
|
-
|
0.6
|
-
|
0.6
|
Amortisation of borrowing
costs
|
|
(0.5)
|
-
|
(0.5)
|
-
|
(0.5)
|
At 31 December 2023
|
|
(146.3)
|
(59.7)
|
(206.0)
|
38.3
|
(167.7)
|
1
Borrowings exclude bank overdrafts of £25.4
million (2022: £16.4 million).
8.3 Net cash and cash
equivalents
|
2023
£m
|
2022
£m
|
Cash at bank and on
deposits
|
63.7
|
74.6
|
Bank overdrafts
|
(25.4)
|
(16.4)
|
Net cash and cash equivalents and bank overdrafts at 31
December
|
38.3
|
58.2
|
9. Business combination
9.1 Summary of Lawrence acquisition
On 12 July 2023, the Group
completed the acquisition of 100% of the share capital of Barry G
Lawrence, Inc., which trades as Lawrence Industries ("Lawrence").
Lawrence designs, manufactures and sells high-performance composite
hardware for sliding and hung windows to North American window
fabricators, and is based in North Carolina, USA.
Lawrence was acquired for initial
consideration of £43.8 million (US$56.6 million), with further
contingent consideration of up to £9.8 million (US$12.5 million)
payable based on the achievement of stretching growth targets in
respect of the financial results for the two years up to, and
including, 31 December 2024 and key employment milestones being
met. The earn-out consideration has been treated as post-employment
remuneration due to this being contingent on certain employees
remaining with the business and included in adjusting
items.
The following table summarises the
provisional consideration paid and the provisional fair values of
assets acquired and liabilities assumed at the acquisition date.
The fair values will be finalised within twelve months of the
acquisition date.
|
Note
|
Lawrence
£m
|
Intangible asset
|
7
|
22.1
|
Property, plant and
equipment
|
|
2.7
|
Inventories
|
|
0.5
|
Trade and other
receivables
|
|
1.0
|
Cash and cash
equivalents
|
|
0.2
|
Trade and other
payables
|
|
(0.3)
|
Total identifiable net
assets
|
|
26.2
|
Goodwill arising on
acquisition
|
7
|
17.6
|
Total consideration
|
|
43.8
|
Satisfied by:
|
|
|
Cash
|
|
44.0
|
Consideration adjustment
receivable
|
|
(0.2)
|
Total consideration
|
|
43.8
|
Net cash outflow arising on
acquisition:
|
|
|
Cash consideration
|
|
(44.0)
|
Net cash and cash
equivalents
|
|
0.2
|
Net cash outflow
|
|
(43.8)
|
10.
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:
|
Note
|
2023
£m
|
2022
£m
|
Net finance costs
|
|
10.2
|
9.3
|
Depreciation of property, plant
and equipment
|
|
12.0
|
12.4
|
Depreciation of right-of-use
assets
|
|
7.9
|
7.1
|
Amortisation of intangible
assets
|
7
|
16.3
|
19.6
|
Impairment of intangible
assets
|
7
|
-
|
0.2
|
Write off of goodwill
|
7
|
1.0
|
-
|
Impairment of property, plant and
equipment
|
|
-
|
0.7
|
Impairment of right-of-use
assets
|
|
-
|
0.2
|
Loss on disposal of property,
plant and equipment
|
|
0.2
|
0.1
|
Pension service costs and
administration costs
|
|
0.3
|
0.3
|
Non-cash provision
movements
|
|
1.9
|
2.1
|
Share-based payments
|
|
1.5
|
1.0
|
|
|
51.3
|
53.0
|
11. Events after the balance sheet date
There were no events after the
balance sheet date.
Alternative performance
measures
The Group uses adjusted figures as
key performance measures in addition to those reported under IFRS,
as management believes these measures enable management and
stakeholders to assess the underlying trading performance of the
businesses as they exclude certain items that are considered to be
significant in nature and/or quantum, foreign exchange movements
and the impact of acquisitions and disposals. The alternative
performance measures ("APMs") are consistent with how the
businesses' performance is planned and reported within the internal
management reporting to the Board and Operating Committees. Some of
these measures are used for the purpose of setting remuneration
targets. The key APMs that the Group uses include like-for-like
("LFL") performance measures and adjusted measures for the income
statement, together with adjusted financial position and cash flow
measures. Explanations of how they are calculated and how they are
reconciled to an IFRS statutory measure are set out
below.
Limitations of APMs
APMs should not be viewed in
isolation and are designed to provide supplementary information.
These may not be comparable to similarly labelled measures used by
other companies. Other limitations of the Group's adjusted measures
are that they exclude the amortisation of intangibles acquired in
business combinations, but do not similarly exclude the related
revenue and profits, and they exclude the cost of major
restructuring programmes but do not similarly exclude the financial
benefits derived from these.
Adjusted operating profit and adjusted operating margin
Definition
Operating profit before
amortisation of acquired intangible assets, impairment of acquired
intangible assets and goodwill and adjusting items.
Adjusted operating margin is
adjusted operating profit divided by revenue.
Purpose
This measure is used to evaluate
the trading operating performance of the Group.
Adjusting items are excluded from
this measure to provide an understanding of the elements of
financial performance during the year to facilitate comparison with
prior periods and to assess the trends in financial
performance.
Adjusting items include
significant one-off redundancy and restructuring costs, transaction
and integration costs associated with merger and acquisition
activity, impairment charges for intangible asset upgrades, gains
or losses relating to disposal of businesses, property provision
releases and other items significant to understanding underlying
performance. In the current year, this includes the effect of a
significant devaluation of the Argentinian Peso due to government
action on a foreign denominated payable balance and the CEO
transition costs. These items are not considered to be a part of
the ordinary course of the Group's business.
Amortisation of acquired
intangible assets is excluded from this measure as this is a
significant non-cash fixed charge that is not affected by the
trading performance of the business.
Impairment of acquired intangible
assets and goodwill is excluded, as this can be a significant
non-cash charge.
Reconciliation/calculation
|
2023
£m
|
2022
£m
|
Operating profit
|
60.2
|
70.7
|
Adjusting items (note
4)
|
10.6
|
6.3
|
Amortisation of acquired
intangible assets
|
13.6
|
17.6
|
Adjusted operating profit
|
84.4
|
94.6
|
Like-for-like or LFL revenue and operating
profit
Definition
The comparison of revenue or
adjusted operating profit, as appropriate, excluding the impact of
any acquisitions made during the current year and, for acquisitions
made in the comparative year, excluding from the current year
result the impact of the equivalent current year pre-acquisition
period. For disposals, the results are excluded for the whole of
the current and prior period. The prior period comparative is
retranslated at the current period average exchange rate. The Group
considers these amendments provide shareholders with a comparable
basis from which to understand the organic trading performance in
the year.
Purpose
This measure is used by management
to evaluate the Group's organic growth in revenue and adjusted
operating profit year on year, excluding the impact of M&A and
currency movements.
Reconciliation/calculation
|
2023
£m
|
2022
£m
|
Reported revenue
|
657.6
|
715.5
|
Contribution from Lawrence
acquisition during the year
|
(7.1)
|
-
|
Effect of exchange
rates
|
-
|
(6.4)
|
Like-for-like revenue
|
650.5
|
709.1
|
|
|
|
Adjusted operating profit
|
84.4
|
94.6
|
Contribution from Lawrence
acquisition during the year
|
(3.1)
|
-
|
Effect of exchange
rates
|
-
|
(1.4)
|
Like-for-like adjusted operating profit
|
81.3
|
93.2
|
Adjusted profit before tax and adjusted profit after
tax
Definition
Profit before amortisation of
acquired intangible assets, deferred tax on amortisation of
acquired intangible assets, impairment of acquired intangible
assets and goodwill, adjusting items, gains and losses on the fair
value of derivative financial instruments, amortisation of
borrowing costs and the associated tax effect.
Purpose
This measure is used to evaluate
the profit generated by the Group through trading activities. In
addition to the items excluded from operating profit above, the
gains and losses on the fair value of derivative financial
instruments, amortisation of borrowing costs and the associated tax
effect are excluded. These items are excluded as they are of a
non-trading nature and can fluctuate significantly year on
year.
Reconciliation/calculation
|
|
2023
£m
|
2022
£m
|
Profit before taxation
|
|
50.0
|
61.4
|
Adjusting items
|
|
10.6
|
6.3
|
Loss/(gain) on revaluation of
derivative instrument
|
|
0.3
|
(0.1)
|
Amortisation of borrowing
costs
|
|
0.5
|
0.6
|
Amortisation of acquired
intangible assets
|
|
13.6
|
17.6
|
Adjusted profit before taxation
|
|
75.0
|
85.8
|
Income tax charge
|
|
(11.8)
|
(13.6)
|
Add back: Adjusted tax
effect1
|
|
(4.6)
|
(4.9)
|
Adjusted profit after taxation
|
|
58.6
|
67.3
|
1 Tax effect of adjusting items, amortisation of borrowings
costs, amortisation of acquired intangible assets and gain or loss
on revaluation of fair value hedge.
Adjusted earnings per share
Definition
Adjusted profit after tax divided
by the basic weighted average number of ordinary shares in issue
during the year, excluding those held as treasury
shares.
Purpose
This measure is used to determine
the improvement in EPS from underlying trading activity for our
shareholders.
Reconciliation/calculation
Refer to note 6.1.1 for the
calculation of the basic weighted average number of
shares.
|
|
2023
|
2022
|
Adjusted profit after taxation -
£m
|
|
58.6
|
67.3
|
Weighted average number of shares
(million) - basic
|
|
195.0
|
194.2
|
Adjusted earnings per share
|
|
30.1p
|
34.7p
|
Covenant EBITDA and covenant adjusted
EBITDA
Definition
Covenant EBITDA: Adjusted
operating profit with depreciation, amortisation of computer
software, and share-based payments expenses added back, less RoU
depreciation and interest payable on lease liabilities.
Covenant adjusted EBITDA: EBITDA
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.
Purpose
This measure is used as the
numerator in calculating covenants under the terms of the Group's
revolving credit facility.
Reconciliation/calculation
|
2023
£m
|
2022
£m
|
Adjusted operating
profit
|
84.4
|
94.6
|
Depreciation of property, plant
and equipment and RoU assets
|
19.9
|
19.5
|
Amortisation of computer
software
|
2.7
|
2.0
|
Interest payable on lease
liabilities
|
(2.6)
|
(3.0)
|
RoU assets depreciation
|
(7.9)
|
(7.1)
|
Share-based payments - equity
settled
|
1.1
|
0.8
|
Covenant EBITDA
|
97.6
|
106.8
|
Lawrence pre acquisition
EBITDA
|
3.3
|
-
|
Covenant adjusted EBITDA
|
100.9
|
106.8
|
Interest cover
Definition
Covenant EBITDA divided by the net
interest payable on bank loans, private placement notes and
overdrafts and interest income from short-term bank
deposits.
Purpose
This measure is used to evaluate
the profit available to service the Group's interest costs. This is
one of the covenants the Group is subject to under the terms of its
revolving credit facility.
Reconciliation/calculation
|
2023
£m
|
2022
£m
|
Covenant EBITDA
|
97.6
|
106.8
|
Covenant net interest
|
7.4
|
5.9
|
Interest cover (x)
|
13.2x
|
18.2x
|
Adjusted net debt and covenant net debt
Definition
Borrowings, net of cash and cash
equivalents, plus capitalised borrowing costs and lease liabilities
added back. For the purposes of bank covenants net debt used in the
leverage calculation is calculated based on the weighted average
exchange rates in line with the banking agreements.
Purpose
This gives a measure of the gross
amount owed to lenders, without the effect of unamortised borrowing
costs.
Reconciliation/calculation
|
2023
£m
|
2022
£m
|
Net debt
|
(167.7)
|
(175.5)
|
Lease liabilities
|
59.7
|
61.7
|
Capitalised borrowing
costs
|
(2.3)
|
(2.1)
|
Adjusted net debt
|
(110.3)
|
(115.9)
|
Adjustment to weighted average
exchange rate
|
3.8
|
4.4
|
Covenant net debt
|
(106.5)
|
(111.5)
|
Leverage
Definition
Adjusted net debt translated at the
average exchange rate for the year divided by covenant adjusted
EBITDA, as defined in the banking agreements.
Purpose
This measure is used to evaluate
the ability of the Group to generate sufficient cash flows to cover
its contractual debt servicing obligations.
Reconciliation/calculation
|
2023
£m
|
2022
£m
|
Covenant net debt (at average
exchange rate)
|
106.5
|
111.5
|
Covenant adjusted
EBITDA
|
100.9
|
106.8
|
Leverage (x)
|
1.1x
|
1.0x
|
Gross debt and adjusted gross debt
Definition
Gross debt is borrowings and lease
liabilities. Adjusted gross debt is gross debt, with capitalised
borrowing costs added back.
Purpose
This gives a measure of the gross
amount owed to lenders, without the effect of unamortised borrowing
costs for which cash outflow has already occurred.
Reconciliation/calculation
|
2023
£m
|
2022
£m
|
Borrowings
|
(171.7)
|
(188.4)
|
Lease liabilities
|
(59.7)
|
(61.7)
|
Gross debt
|
(231.4)
|
(250.1)
|
Capitalised borrowing
costs
|
(2.3)
|
(2.1)
|
Adjusted gross debt
|
(233.7)
|
(252.2)
|
Return on capital employed
(ROCE)
Definition
Adjusted operating profit as a
percentage of the last thirteen-month average capital
employed.
Purpose
This measure is used to evaluate
how efficiently the Group's capital is being employed to improve
profitability.
Reconciliation/calculation
|
2023
£m
|
2022
£m
|
Adjusted operating
profit
|
84.4
|
94.6
|
Average capital
employed
|
720.3
|
710.7
|
ROCE (%)
|
11.7%
|
13.3%
|
Average
capital employed can be reconciled to the balance sheet as
follows:
|
|
|
|
2023
£'m
|
2022
£'m
|
Inventories
|
|
|
|
119.0
|
153.1
|
Trade and other
receivables
|
|
|
|
85.6
|
81.4
|
Intangible assets
|
|
|
|
66.2
|
57.7
|
Property, plant &
equipment
|
|
|
|
71.1
|
74.6
|
Right-of-use asset
|
|
|
|
55.4
|
57.3
|
Goodwill
|
|
|
|
399.3
|
399.3
|
Deferred tax asset
|
|
|
|
1.4
|
1.7
|
Trade and other
payables
|
|
|
|
(94.8)
|
(88.2)
|
Net current tax
asset/(liability)
|
|
|
|
0.3
|
(1.8)
|
Provisions - current
|
|
|
|
(2.1)
|
(5.0)
|
Provisions -
non-current
|
|
|
|
(3.4)
|
(2.9)
|
Deferred tax
liabilities
|
|
|
|
(4.9)
|
(6.9)
|
Financial asset at FV through
P&L
|
|
|
|
1.2
|
1.2
|
Total capital employed
|
|
|
|
694.3
|
721.5
|
Adjustment to 13-month
average
|
|
|
|
26.0
|
(10.8)
|
Average capital employed
|
|
|
|
720.3
|
710.7
|
Adjusted operating cash conversion and adjusted operating
cash flow
Definition
Adjusted operating cash
flow
Net cash generated from operations
before income tax paid, adjusting item costs cash settled in the
year and pension contributions, and after proceeds on disposal of
property, plant and equipment, payments to acquire property, plant
and equipment and payments to acquire intangible assets.
Adjusted operating cash
conversion
Adjusted operating cash flow
divided by adjusted operating profit.
Purpose
These measures are used to
evaluate the cash flow generated by operations in order to pay down
debt, return cash to shareholders and make further investment in
the business.
Reconciliation/calculation
|
2023
£m
|
2022
£m
|
Net cash generated from operating
activities
|
108.8
|
60.6
|
Income tax paid
|
15.5
|
21.5
|
Adjusting item cash
costs
|
9.0
|
1.8
|
Pension contributions
|
2.6
|
0.2
|
Proceeds on disposal of
PPE
|
0.1
|
0.1
|
Payments to acquire PPE and
intangible assets
|
(15.6)
|
(24.1)
|
Adjusted operating cash flow
|
120.4
|
60.1
|
|
|
|
Adjusted operating cash
flow
|
120.4
|
60.1
|
Adjusted operating
profit
|
84.4
|
94.6
|
Adjusted operating cash conversion (%)
|
142.6%
|
63.5%
|
Definitions and glossary of
terms
APM
|
Alternative performance
measure
|
bps
|
Basis points
|
CGU
|
Cash generating unit
|
CHIC
|
Concealed hardware innovative
components
|
CPA
|
Construction Products
Association
|
CPMI
|
Construction Purchasing Managers'
Index
|
EBT
|
The Tyman Employees' Benefit
Trust
|
EBITDA
|
Earnings before interest, taxation,
depreciation and amortisation
|
EPD
|
Environmental product
declaration
|
EPS
|
Earnings per share
|
ERP
|
Enterprise resource
planning
|
GCC
|
Gulf Cooperation Council
|
GHG
|
Greenhouse gas
|
IFRS
|
International Financial Reporting
Standards
|
Lawrence
|
Barry G. Lawrence, Inc. (trading as
Lawrence Industries)
|
LFL
|
Like-for-like
|
LIRA
|
Leading indicator of remodelling
activity
|
LTIFR
|
Lost time incident frequency
rate
|
LTIP
|
Long term incentive plan
|
M&A
|
Mergers and acquisitions
|
NAHB
|
National Association of Home
Builders
|
P&L
|
Profit & Loss
|
PMI
|
Purchasing Managers'
Index
|
PPE
|
Property, plant and
equipment
|
RCF
|
Revolving credit facility
|
RMI
|
Renovation, maintenance and
improvement
|
ROAI
|
Return on acquisition
investment
|
ROCE
|
Return on capital
employed
|
RoU
|
Right of use
|
SDG
|
United Nations Sustainable
Development Goals
|
TRIR
|
Total recordable incident
rate
|
USPP
|
US private placement
|
The following principal exchange
rates have been used in the financial information to translate
amounts into Sterling:
Closing rates:
|
2023
|
2022
|
US dollars
|
1.2731
|
1.2097
|
Euros
|
1.1532
|
1.1298
|
Australian dollars
|
1.8690
|
1.7743
|
Canadian dollars
|
1.6871
|
1.6386
|
Average rates:
|
2023
|
2022
|
US dollars
|
1.2438
|
1.2370
|
Euros
|
1.1499
|
1.1732
|
Australian dollars
|
1.8734
|
1.7795
|
Canadian dollars
|
1.6782
|
1.6078
|
Roundings
Percentage numbers have been
calculated using unrounded figures, which may lead to small
differences in some figures and percentages quoted.