Tyman Regulatory News (TYMN)

Tyman PLC

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

INTERIM RESULTS FOR THE PERIOD ENDED 30 JUNE 2013

Tyman plc, the leading international supplier of building products to the door and window industry, announces unaudited interim results for the six month period ended 30 June 2013.

HIGHLIGHTS - CONTINUING OPERATIONS

Financial Highlights

All numbers stated are from continuing operations i.e. excluding Gall Thomson and Composite Doors

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

2. 2012 comparatives are stated before the impact of Peterlee property releases

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

Operating and corporate highlights

· Name change to Tyman plc

· $200 million acquisition of Truth Hardware completed on 3 July 2013, financed by a well supported equity issue of £73.4 million and a new US$100 million bank facility

· Move from AiM to the Official List of the London Stock Exchange

· On the back of improving markets, satisfactory progress in North America

· Strong performance in the UK with good momentum in the business

· Difficult European markets led to a small loss in Schlegel International

· Higher order books across all businesses at 30 June 2013

Louis Eperjesi, Chief Executive Officer, commented:

"The first half of the financial year has again seen considerable activity and saw the Group deliver an encouraging overall result, with satisfactory growth in North America and a strong performance in the UK offset in part by continued weakness in Europe. Order books at the half year were stronger across all of our businesses and in our key markets of North America and the UK have continued to grow across the summer months. We expect the broad pattern of trading seen in the first half will continue for the balance of the year.

"The acquisition of Truth Hardware, which completed shortly after the half year, gives the Group a significant opportunity to enhance its hardware offering in North America."

30 August 2013

Tyman will host an analyst presentation at 09.30am on Friday 30th August 2013 at the offices of MHP Communications, 60 Great Portland Street, London, W1W 7RT.

Overview

The first half of the financial year saw the Group deliver an encouraging overall result with Revenue from continuing operations increasing to £123.7 million and Underlying Operating Profit in line with prior year at £10.9 million. Underlying earnings per share, before 2012 property provision releases, increased by 7.3 per cent. to 4.98 pence.

Order intake across the Group in the period was very promising with order books at the half year in each of the businesses running ahead of the previous year.

The continued recovery in the new build residential market in the United States led to a solid six month revenue performance for Amesbury. The UK market was subdued in the first quarter and Grouphomesafe had a slow start to the year as a consequence; however the second quarter saw an improvement in market conditions and further share gains through our Fab & Fix and ERA hardware offerings. European markets remained very depressed throughout the period and contracted further, impacting Schlegel International, although emerging markets continued to experience some growth.

Across the Group we have seen muted raw material cost inflation in the first half of the year, however currency weakness in the UK, Brazil and Australia has impacted the cost of imported finished goods in those markets.

Working capital across the Group remained tightly controlled and we have continued to invest in our capital expenditure programmes aimed at increasing the quality and performance of our businesses.

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

Acquisition of Truth Hardware and Move to the Main Market

The acquisition of Truth Hardware ("Truth") was completed on 3 July 2013 for a net cash consideration of approximately US$200 million, financed by a well supported equity issue which raised gross proceeds of £73.4 million and a new US$100 million bank facility raised from our existing banking group.

Under Melrose's ownership, in the six months to 30 June 2013, Truth reported revenue of approximately US$62.6 million (2012: US$61.9 million) and operating profit of approximately US$10.1 million (2012: US$9.6 million) with similar revenue performance seen in US markets to Amesbury, offset in part by some contraction in Canadian revenue.

Integration initiatives are now well underway and proceeding to plan, with synergy targets unchanged, and we will report in greater detail on these initiatives at the time of our year end results. Our initial review of the business following acquisition has confirmed our confidence in the strategic opportunity to enhance the Group's position in the North American door and window market and to accelerate our long term growth.

On 8 July 2013, the Group completed the move from AiM to the Main Market of the London Stock Exchange. 

Dividend

The Board has declared a significantly increased interim dividend of 1.50 pence per share (2012: 1.00 pence), reflecting a rebasing in line with our broad intent of the interim dividend being approximately one third of the previous year's total dividend of 4.50 pence.

The ex-dividend date will be 11 September 2013 and the interim dividend will be paid on 11 October 2013 to shareholders on the register at close of business on 13 September 2013.

Outlook

Amesbury and Truth expect to show further growth in revenue and operating profit across the remainder of 2013, with accelerating new build continuing to drive the residential market in the United States. Repair and remodelling, which constitutes the majority of the US residential market, has historically lagged new build by between 18 months and two years and both Amesbury and Truth are well positioned to benefit from its eventual recovery. The Canadian market, which comprises approximately one third of Truth's revenue, is expected to contract across the year as a whole; although not to the same extent seen in the first half.

In the UK, the Group still expects the overall market to contract modestly in 2013; however Grouphomesafe has continued its good momentum into the second half and should see further growth in revenue and operating profit as a result of new customer wins, new product introductions, and further growth in the Fab & Fix offering.

European markets are expected to remain very subdued for the year as a whole and, accordingly, in 2013 Schlegel International is only expected to make a marginal profit at the operating level (before the allocation of central overheads); a significantly lower result than in 2012.

Overall, we expect the broad pattern of trading seen in the first half will continue for the balance of the year and are encouraged by the strong order intake across the Group. The results for the full year will be impacted by the decline in profitability in Schlegel International but will also include a six month contribution from Truth Hardware, which we continue to expect to be accretive to the Group's earnings per share in its first full financial year of our ownership.

Operating Review

Amesbury

In North America, the continuing recovery in new build residential construction has assisted market demand; although there is yet to be a significant improvement in repair and remodelling which constitutes around 70 per cent. of the overall residential market.

Amesbury saw revenue increase in the first half by 6.0 per cent. in dollar terms with profitability in the period somewhat impacted by levels of investment in the business ahead of the second half. Amesbury has seen consistent increases in order intake throughout the first half across all its businesses and at 30 June had an order book some 16 per cent. higher than at the equivalent stage last year which gives us encouragement for the second half.

Our hardware businesses generated encouraging growth in the period with the integration of Unique, acquired in April 2012, into our Statesville facility now completed. Our sealing businesses had a strong first half with increased demand for both pile and foam seal products. Recovery in the extrusion market continues to be more patchy than in our other Amesbury businesses, although there have been increased levels of new business wins through our Atlanta facility.

In preparation for the integration of the Truth and Amesbury businesses, in July we announced a structural reorganisation of Amesbury, moving the business from a divisional product led structure to a unified management structure. This reorganisation is the logical extension of the positioning of Amesbury in the market over the past three years as a national provider offering reliable resources and superior solutions to the North American Door and Window market.

The new structure will lead to clearer lines of reporting, improved allocation of resources and will allow us to eliminate some duplicate costs across the divisions. The new organisational structure is also key to the smooth integration of Truth into our North American business which is now some 65 per cent. larger in annual revenue terms than previously reported.

Dollar revenue in the period for Amesbury were $98.1 million (2012: $92.3 million) and Underlying Operating Profit was $9.7 million (2012: $9.4 million).

Grouphomesafe

Grouphomesafe has seen a strong performance in the first half of the financial year against a slightly improved market backdrop and has continued to take market share. After a slow first quarter, activity in the UK residential markets picked up somewhat in the second quarter, with increased demand seen from the larger OEM fabricators who constitute our core customer base. While the order book in Grouphomesafe was only slightly ahead of 2012 at the half year, a function of the sluggish start to the year, order intake in the UK has continued to gain momentum across the summer months.

On a like for like basis, revenue was slightly lower than in 2012, principally due to lower steel input costs affecting pricing at our reinforcer business. Our smaller niche portfolio businesses in the UK continue to gain share and performed well in the period.

Fab & Fix continued its strong performance under Tyman ownership with an all time record sales month during the first half and a number of product account wins from existing Grouphomesafe customers starting to produce revenue. There were a number of new product launches in the first half across the Grouphomesafe business and a more structured approach to UK marketing has started to generate good business leads.

In the second half of 2013 we will complete the integration of the Fab & Fix and Grouphomesafe salesforces and will consolidate some of our niche hardware distribution activities into a single site.

Schlegel International

Schlegel International has seen local currency revenue slightly behind the corresponding period in 2012 and made a marginal profit in the period before the allocation of Central Overheads. At the half year the order book within Schlegel International was higher than at the equivalent stage last year, an element of which is due to blanket orders received for delivery over the next 18 months.

Our largest International business, Germany, had a very difficult six months with revenue and orders from the domestic market and the key export markets of Eastern Europe and Scandinavia significantly lower than in 2012. Southern European markets remain very depressed, although our Italian business is starting to show some signs of a return to growth, as competitors exit the market, albeit from a very low base.

Our Australasian business traded strongly in the first half, against a mixed market backdrop, and will benefit from the addition of Truth products to its portfolio. Brazil saw significant growth in the period and took further market share. Our Singapore business has had a solid first six months to the year following its establishment as a standalone entity at the start of 2013.

Production at our Belgian Building Products business ceased in December 2012 and was transferred to our Spanish and Linear pile manufacturing plants during the first quarter of 2013. Output suffered somewhat in the first half due to start up inefficiencies in the new facilities however the Group now has clearly defined centres of excellence for the manufacture of pile weatherstrip and foam compression seals in Europe.

During the first half we have continued to develop the Schlegel International management team, hiring a new sales director and a director of business development. We have also increased levels of investment in new product development in order to underpin the strength of the Schlegel brand.

While trading conditions in Europe are expected to remain difficult for the remainder of 2013, we remain committed to our investment plans for our International business and are confident that we now have the right operational platform and infrastructure to drive growth in Schlegel International from 2014.

FINANCIAL REVIEW

Revenue and operating profit

Revenue from continuing operations increased by 10.6 per cent. to £123.7 million (2012: £111.8 million). On a constant currency, like for like basis, Group revenue was slightly ahead of 2012.

Gross margins from continuing operations improved from 32.8 per cent. in H1 2012 to 33.3 per cent. in 2013 reflecting a six month contribution from Fab & Fix and changes in business mix; offset somewhat by the falls in demand seen in continental Europe.

Underlying Administrative Expenses increased by approximately £4.6 million principally reflecting the administrative overhead acquired with Fab & Fix and the investments made in marketing and commercial support for Schlegel International and Amesbury.

Underlying Operating Profit of £10.9 million (2012: £10.9 million) was broadly in line with 2012, although on a constant currency like for like basis was approximately 12.5 per cent. behind 2012.

Exceptional items

Exceptional charges of £4.9 million were incurred during the period (2012: £0.4 million) comprising £3.9 million of costs associated with the acquisition of Truth Hardware and approximately £1.0 million of costs associated with the Schlegel International restructuring and the Unique site relocation.

Finance costs

Net finance charges in the period reduced from £2.8 million to £1.7 million, reflecting a full six months of the Group's improved margin grid together with lower amortisation of historic arrangement fees, and the benefits from the revised hedging arrangements put in place in 2012.

The exceptional foreign exchange gain of £1.3 million in the period relates to the conversion of the £73.4 million gross proceeds of the equity issue into dollars to facilitate the completion of the acquisition of Truth on 3 July.

Taxation

The Group incurred an Underlying tax charge during the period of £2.7 million (2012: £3.1 million) equating to an Underlying tax rate of 28.4 per cent.(2012: 29.4 per cent.).

Cash taxes paid during the period decreased slightly to £2.2 million (2012: £3.3 million), and reflect an Underlying cash tax rate of 23.0 per cent. (2012: 30.5 per cent.), which is consistent with the Underlying cash tax rate for the full year 2012. This cash tax rate is expected to increase going forward and converge towards the Underlying tax rate in the income statement.

Earnings per share

Underlying earnings per share, before property provision releases, increased by 7.3 per cent. to 4.98 pence, reflecting the lower net finance charge, offset in part by the increased number of shares in issue in the period following the admission of the new ordinary shares in May 2013.

Basic loss per share from continuing operations was 1.41 pence (2012: earnings per share 44.66 pence).

Dividends

The interim dividend has been rebased to 1.50 pence per share (2012: 1.00 pence per share), an increase of 50 per cent.. The ex-dividend date will be 11 September 2013 and the interim dividend will cost the Group approximately £2.6 million and will be paid on 11 October 2013 to shareholders on the register on 13 September 2013.

With effect from the 2013 interim dividend, in the absence of unforeseen circumstances, the Group intends that the interim dividend payment will be one third of the total dividend declared for the previous year.

Segmental Analysis

Prior year disclosures have been amended to take account of the disposal of the Composite Doors business and to reflect the revised operating segments announced at the time of the full year results. Linear, which was previously reported as part of the UK geographic disclosure, is now reported as part of the Schlegel International operating segment.

Cash Position and Covenant Performance

At 30 June 2013 the Group's Underlying Net Cash balances were £25.2 million(2012: £34.2 million of Underlying Net Debt), reflecting the fact that the proceeds of the equity issue were on the balance sheet at the period end and had yet to be paid over to Melrose.

At 30 June 2013, the Group had headroom on its relevant banking covenants under the revised bank facilities entered into in September 2011 ranging from 58.3 per cent. to 59.6 per cent.. As the Group was in a net cash position at the half year the Net Debt: EBITDA covenant test is effectively disregarded.

Cash flow

Operational Cash flow in the period was strong with the seasonal build in working capital to the half year being tightly managed across all divisions. Inventories at 30 June 2013 were higher than in 2012 in absolute terms, principally due to the inclusion of Fab & Fix on the balance sheet which has an extended Far East supply chain. Overall, our working capital metrics remain in line with our expectations.

Net tangible and intangible capital expenditure in the period was £4.1 million (2012: £3.6 million) as we continue to invest in the business and seek to take full advantage of the Group's strong balance sheet.

Summary 2013 financial guidance

Underlying tax rates for the Group for 2013 are expected to be c. 30 per cent. with US marginal corporate taxation rates outweighing the benefits of further UK corporation tax reductions. Cash taxation rates are expected to be broadly in line with the Group's Underlying tax rate.

Capital expenditure for the year is now expected to be in the range £6.0 to £8.0 million.

Net interest charge for the year is expected to be c. £3.5 to £4.0 million - dependent on leverage.

Expenses associated with the Truth acquisition and move to the Main Market will total approximately £8.0 million, £2.5 million of which will be written off against the share premium account and £4.0 million of which will be charged as an exceptional item in 2013. The remaining £1.5 million will be capitalised and amortised over the life of the new debt facility to June 2015.

Shares in issue at the half year were 170.1 million, of which 169.5 million had voting rights attached, and the weighted average shares in issue for the purposes of EPS calculation at the year end are expected to be approximately 153.0 million (basic) and 156.1 million (diluted); ignoring the impact of any LTIP purchases that may be made in the second half.

LTIP purchases in the period between now and March 2014 are expected to be £2.0 to £3.0 million.

Financial reporting

This financial information has been prepared under IFRS and in accordance with the Group's accounting policies. There have been no changes to the Group's accounting policies since the year ended 31 December 2012.

Going concern

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

30 August 2013

Definitions

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

"Underlying Administrative Expenses" is defined as Administrative expenses before Property provision release, Exceptional items, Amortisation of intangible assets, and Accelerated amortisation of intangible assets and impairment of intangible assets and goodwill.

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

"Underlying Operating Profit" is defined as Operating profit before Property provision release, Exceptional items, Amortisation of intangible assets, Accelerated amortisation of intangible assets and impairment of intangible assets and goodwill.

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

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

"Continuing Operations" is defined as the operations of the Tyman Group excluding Gall Thomson Environmental Limited and its subsidiaries, and the Composite Doors business.

Exchange Rates

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

Roundings

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

Six months ended 30 June 2013

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

The notes on pages 18 to 25 are an integral part of these condensed consolidated interim financial statements.

Tyman plc

Condensed consolidated interim income statement

Six months ended 30 June 2013

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

The notes on pages 18 to 25 are an integral part of these condensed consolidated interim financial statements.

Six months ended 30 June 2013

The notes on pages 18 to 25 are an integral part of these condensed consolidated interim financial statements.

Tyman plc

Six months ended 30 June 2013

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

The notes on pages 18 to 25 are an integral part of these condensed consolidated interim financial statements.

As at 30 June 2013

The notes on pages 18 to 25 are an integral part of these condensed consolidated interim financial statements.

Six months ended 30 June 2013

The notes on pages 18 to 25 are an integral part of these condensed consolidated interim financial statements.

Six months ended 30 June 2013

1. General information

The principal activities of Tyman plc ("the Company") and its subsidiaries (together "the Group") are the manufacture, supply and distribution of building products.

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

These condensed consolidated interim financial statements do not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006. Statutory accounts for the year ended 31 December 2012 were approved by the Board of Directors on 12 March 2013 and delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under section 498 of the Companies Act 2006.

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

2. Basis of preparation

These condensed consolidated interim financial statements for the six months ended 30 June 2013 have been prepared in accordance with the Disclosure and Transparency Rules of the Financial Conduct Authority (previously the Financial Services Authority) and with IAS34, 'Interim financial reporting', as adopted by the European Union. The condensed consolidated interim financial statements should be read in conjunction with the annual financial statements for the year ended 31 December 2012, which have been prepared in accordance with IFRSs as adopted by the European Union.

Going concern

The Directors are satisfied that the Group has sufficient resources to continue in operation for the foreseeable future, a period of not less than 12 months from the date of this report. Accordingly, they continue to adopt the going concern basis in preparing the condensed consolidated interim financial statements.

3. Accounting policies

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

· IAS1 'Presentation of financial statements' are applicable for the financial year commencing 1 January 2013. The Group has included the relevant disclosure requirements within the interim condensed consolidated financial statements.

· IAS19 (revised) 'Employee benefits'. IAS19 (revised) amends the accounting for employment benefits. The impact on the Group has been in the following areas:

· The standard replaces the interest cost on the defined benefit obligation and the expected return on plan assets with a net interest cost based on the net defined benefit asset or liability and the discount rate, measured at the beginning of the year. There is no change to determining the discount rate; this continues to reflect the yield on high quality corporate bonds. The impact on the income statement charge is immaterial and no adjustment has been made. This has no effect on total comprehensive income.

· There is a new term "remeasurements". This is made up of actuarial gains and losses, the difference between actual investment returns and the return implied by the net interest cost.

· The effect of the change in accounting policy on the statement of cash flows and on earnings per share was immaterial.

· IFRS13 'Fair value measurement'. IFRS13 measurement and disclosure requirements are applicable for the December 2013 year end. The Group has included the disclosures required by IAS34 para16A(j). See note 13.

There are no new standards that have been issued but not yet effective for the financial year commencing 1 January 2013 that are expected to have a material impact on the Group.

4. Operating segment information

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

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

Included within the Schlegel International segment is revenue attributable to the UK of £3,366,000.

Included within the Schlegel International segment is revenue attributable to the UK of £2,747,000.

Discontinued operations comprise the Group's Oil Services and Composite Doors businesses, which were disposed of during 2012.

Included within the Schlegel International segment is revenue attributable to the UK of £5,483,000.

Discontinued operations comprise the Group's Oil Services and Composite Doors businesses, which were disposed of during 2012.

5. Exceptional items

Exceptional items from continuing operations:

6. Finance income and costs

Finance income and costs from continuing operations:

7. Income tax (expense)/credit

Income tax (expense)/credit from continuing operations:

8. Earnings per share

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

Diluted earnings per share amounts are calculated by dividing the net profit attributable to ordinary equity holders by the weighted average number of ordinary shares outstanding during the period plus the weighted average number of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares. There is no difference between the basic and diluted loss per share from continuing operations for the period ended 30 June 2013 and the year ended 31 December 2012 as the effect of all potential dilutive ordinary shares outstanding was anti-dilutive.

The weighted average number of shares was:

Non-GAAP measure

Underlying earnings per share from continuing operations before exceptional items

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

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