Annual Report (ESEF) • Jun 10, 2022
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Download Source FileTyman is a leading international supplier of engineered fenestration components and access solutions to the construction industry.
| 2021 | 2020 | 2019 | |
|---|---|---|---|
| Revenue | £635.7m | £572.8m | £613.7m |
| Leverage* | 0.9× | 1.1× | 1.7× |
| Dividend per share* | 12.9p | 4.0p | 3.9p |
| Adjusted net debt* | £91.7m | £100.6m | £164.5m |
| Adjusted operating profit* | £90.0m | £80.3m | £85.4m |
| Adjusted EPS* | 32.1p | 27.2p | 27.5p |
| Profit before taxation | £64.0m | £47.6m | £24.8m |
| Basic EPS | 25.4p | 19.1p | 9.1p |
* Alternative Performance Measures provide additional information to shareholders on the underlying performance of the business. A detailed description of APMs, which have been consistently applied throughout the report, is included on pages 203 to 208.
See more information on our corporate website: www.tymanplc.com
Favourable megatrends, differentiated value-creation and high cash generation support long-term growth.
Read more about our marketplace on pages 16 to 19.
Read more about our products and brands on pages 10 to 12.
Read more about our divisions and geographical reach on pages 8 and 9.
The origins of Tyman’s businesses date back to 1838. Over many years, employees have worked to build the platform that we have today of market-leading brands, differentiated products supported by value-added services, deep customer relationships, all underpinned by our domain expertise and global scale. Our purpose, values and Code of Business Ethics are the building blocks of our culture, creating a shared sense of identity across our employees that is essential for our success. Our strategy is guided by our purpose and will deliver a set of outcomes aligned to our stakeholder interests, against which we measure success and link our performance with purpose. This will create long-term value for all our stakeholders.
4 5
Our stakeholders each play an important role in the delivery of our strategy. Actively engaging with our stakeholders is vital to the Group’s success and the interests of all stakeholders are considered in key decisions. Read about our stakeholders on pages 81 to 83.
The success of our strategy is measured through a set of financial and non-financial KPIs, linking our performance with purpose. Read about our KPIs on pages 26 to 28.
Our purpose is at the core of everything we do, unifying us in a common cause and growth strategy. It is the essence of us at our best and inspires Tyman people to make a positive contribution every day. Millions are kept safe and comfortable at home and at work around the world because of our expertise. We know that to be experts, we must have deep understanding of our customers and their needs, an uncompromising commitment to both safety and quality, and a restless ambition to innovate. We never forget that experts are people: growing and energising our talent is at the heart of what makes us different. With our expertise, we have the power to transform what we touch. We commit to transform living and working spaces, to transform people and careers, to transform the value of our businesses, and to transform our impact on communities and society.
Our purpose is to transform the security, comfort and sustainability of living and working spaces through our expert touch.
Tyman. The expert touch that transforms.
Read more about our products on pages 10 and 11 and our business model on pages 14 and 15.
Our values frame how we work with each other and with our partners, and will shape the culture of Tyman. They are the foundation of our success and essential to achieving our purpose. Our Code of Business Ethics, ‘Integrity in action’ embodies these values, laying out the expected standards of behaviour that all our employees must adhere to. Read more about our Code of Business Ethics on page 59.# Our purpose and values
Integrity is the cornerstone of our business
There is no limit to what we can achieve
We are action people
The Tyman Touch
Never Stop Growing Make It Happen Do The Right Thing
Tyman plc06 Annual Report and Accounts 2021 Group at a glance continued
Scan the QR code to read more Case studies on our website.
Momentum behind the sustainability agenda continues to grow, with demand for products that are sustainable without compromising on function and aesthetics increasing. The market trend towards a minimalist aesthetic also continues to grow. The Reguitti product team therefore sought to create a range of minimalist handles with strong sustainability credentials to address these market trends and contribute to the Group’s goal of reducing Scope 3 carbon emissions.
The Reguitti team explored a range of designs and materials and assessed the lifecycle carbon footprint of each design, resulting in the Obliq range of door handles. The Obliq handle is made with 94% recycled aluminium, a material which can be reused infinitely. The rosette is fully integrated within the handle, reducing components and material weight, while creating an elegant aesthetic in line with the minimalist hardware trend. The spring-load assembly system and finishes are tested and certified to high European standards of quality, including salt spray corrosion resistance.
The Obliq has a carbon footprint which is 63% lower than a standard zinc alloy door handle rosette design with c.20% recycled content and 55% less than an equivalent brass handle design. The product received a ‘Special Mention for Sustainability’ at the Archiproducts Design Awards 2021. The handle assists door manufacturers and consumers in meeting their sustainability goals, while maintaining high performance, aesthetics and ergonomics.
Obliq handle – stylish and sustainable
Case Study Annual Report and Accounts 2021 Tyman plc 07
Our divisions
Tyman is a leading international supplier of engineered fenestration components 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’s portfolio of leading brands serves their markets through three regional divisions. Headquartered in London, the Group employs approximately 4,200 people, with facilities in 16 countries worldwide. Our customer base ranges from large OEMs, where we are often integrated into their product design and development processes and supply chains, through to distributors/retailers, where our strong trade brands are of key importance given their reputation for quality and innovation with installers, architects and end consumers. Our access solutions portfolio also serves specifiers of construction projects and contractors.
Read more about our brands on page 12.
| North America | UK & Ireland | International | |
|---|---|---|---|
| Manufacturers of doors and windows | 79% | 58% | 68% |
| Distributors and wholesalers | 18% | 36% | 30% |
| Other | 3% | 6% | 2% |
| North America | UK & Ireland | International | |
|---|---|---|---|
| Residential | 87% | 72% | 77% |
| Commercial | 13% | 28% | 23% |
| North America | UK & Ireland | International | |
|---|---|---|---|
| Manufacturing sites | 10 | 1 | 3 |
| Distribution sites | 1 | 6 | 9 |
| North America | UK & Ireland | International | |
|---|---|---|---|
| Brands | 2 | 1 | 3 |
| Employees | 2,900 | 420 | 820 |
| Revenue | £397.7m | £105.8m | £132.2m |
| (2020: £372.1m) | (2020: £92.2m) | (2020: £108.4m) | |
| Adjusted operating profit | £65.1m | £14.8m | £19.5m |
| (2020: £64.5m) | (2020: £8.8m) | (2020: £12.3m) |
Tyman plc08 Annual Report and Accounts 2021 Group at a glance continued
Key
Where our products are sold
Where our products are manufactured
Annual Report and Accounts 2021 Tyman plc 09
| % | |
|---|---|
| Manufacturers of doors and windows | 74% |
| Distributors and wholesalers | 23% |
| Other | 3% |
| % | |
|---|---|
| Window and door hardware | 74% |
| Seals and extrusions | 17% |
| Commercial access solutions | 10% |
Read more about our value creation in the business model on pages 14 and 15
The Group offers a broad range of differentiated, highly-engineered products supported by value-added services and holds over 555 active patents with a further 111 pending. The portfolio covers all aspects of the hardware and sealing solutions required for doors and windows, and a full suite of solutions for roof, wall and floor access in residential and commercial buildings.
Tyman plc10 Annual Report and Accounts 2021 Group at a glance continued
Products
Window and internal/external door seals and other extrusions.
Value to the customer
Comfort through weather resistance and sound insulation; sustainability through durability of materials; energy saving; aesthetics through concealed seal designs.
Products
Solutions for roof, floor/pavement, and wall access (riser doors), including associated safety products (e.g. ladders, railings) and emergency barricade solutions.
Value to the customer
Comfort through ventilation, weather resistance and sound insulation; safety and security through suite of lock and barrier products; sustainability through durability of product solutions.
Products
Integrated opening, closing and locking systems for all types of window (casement and sliding/sash) and door (including patio and bi-fold). Associated decorative hardware and smart entry and monitoring solutions (electronic access products, sensors, alarms, indoor/outdoor cameras and associated services).
Value to the customer
Comfort through ventilation and ease of use; sustainability through energy efficiency and durable designs; security through various locking (including remote and timebound access), alarm and monitoring solutions, and safety hardware; aesthetics through look, feel and suiting of product ranges and in concealed hardware designs where appropriate.
Annual Report and Accounts 2021 Tyman plc 11
Our brands are all highly-regarded leaders in their respective market segments. Together they represent almost 1,000 years of innovation, quality and service for our customers.
| Brand | Established | Key user | Division | Product category |
|---|---|---|---|---|
| Bilco | 1926 | Residential, Commercial | North America | Smoke vents, roof access hatches and pavement doors |
| Howe Green | 1983 | Commercial | UK & Ireland | Commercial access solutions |
| Profab | 2001 | Commercial | UK & Ireland | Commercial access solutions |
| Truth | 1914 | Residential | North America | Window and door hardware |
| Amesbury | 1978 | Residential | North America | Window and door hardware |
| 1932 | Residential | International | Window and door hardware | |
| 1926 | Commercial | International | Commercial access solutions | |
| 1838 | Commercial | International | Commercial access solutions | |
| 1989 | Residential | International | Decorative door hardware | |
| 1965 | Commercial | International | Hardware for aluminium windows and doors | |
| 1890 | Residential | International | Decorative door hardware | |
| (Formerly JADO) | ||||
| 1975 | Residential | UK & Ireland | Window and door hardware | |
| 1885 | Commercial | UK & Ireland | Seals and extrusions | |
| 2011 | Commercial | UK & Ireland | Window and door seals and extrusions | |
| Architectural ironmongers | UK & Ireland | Door hardware for architectural ironmongers |
Tyman plc12 Annual Report and Accounts 2021 Group at a glance continued
ERA manufactures hardware for sash windows from its Wolverhampton site in the UK. Our AmesburyTruth brand in the US is also a leader in balance design and manufacture, producing 70% of the Group’s balances volume.
Sash (or vertical sliding) windows have increased in popularity in the UK over the past few years due to their aesthetic appeal, particularly as consumers seek to preserve the traditional features of their properties. The key component to smooth operation of sash windows is the vertical sliding balance. Windows without high-performing balances can be sticky, noisy and feel heavy to open and close, which can be a particular challenge for older people.
The ERA product team drew on the expertise of the AmesburyTruth team to design a new vertical sliding window balance for the UK market.Working together, the team went back to basics with a new design approach, alternative balance materials and production methods to create a better quality and more reliable product that requires a lower operating force and ensures a quieter, smoother operation. To validate the improved performance, partner customers were involved in an extensive testing programme. The new balance comes in a broad range of parameters to support a wide range of window dimensions. To aid selection of the most appropriate balance for a particular window, ERA created a software solution that determines the optimal operating forces for the window.
Value created
The TrueGlide TM balance provides window manufacturers with a higher quality and more reliable product, with the software enabling an accurate match to each window size and also improving the efficiency of the quoting and ordering process. For end-users, the new design makes the window easier and quieter to open and close, helping to support independent living.
Case Study
The new TrueGlide balances have greatly improved the performance, quality and overall feel of our vertical sliding windows, making them smoother and quieter to operate for our customers.”
Steve Cardwell
Production Manager, Warwick Development Specialist Division
Scan the QR code to read more Case studies on our website.
We use our valuable resources to create long-term, sustainable value for all our stakeholders. Our resources are carefully selected and developed to create competitive advantage… … that allows us to undertake differentiated activities that address customer needs… … that together create value for our stakeholders.
We work with our customers to understand their unique requirements in terms of the offer they require and how they wish to be served, making us the partner of choice across many channels to market. These long- term relationships bring high levels of repeat business and a customer intimacy that allows us to continuously improve the value we bring.
Our portfolio of complementary brands have market-leading positions predicated on the innovation, quality and service they deliver for our customers, as evidenced through their long heritage. In some cases, the reputation of our brands is so strong with the end-users that the brand name has become synonymous with the category name.
We have a highly-skilled, dedicated workforce of c.4,200 personnel around the world, together creating unparalleled knowledge of engineered fenestration components and access solutions technologies and applications. Our people are at the heart of our ability to deliver innovation, quality and service to our customers.
We carefully supplement our internal capabilities with select specialisms through external collaborations, allowing us to deliver the best in innovation, quality and service to our customers in the most efficient way.
Our global scale allows us to sustain and further develop a rich portfolio of products and technologies that support our customers’ needs, while having the presence and agility to respond quickly to the specifics of local markets.
Our portfolio attracts high margins due to its competitive advantages and a strong focus on margin expansion initiatives. Asset optimisation and disciplined management of capital investment drive significant cash generation. The resulting balance sheet strength and debt capacity creates a virtuous circle that will allow Tyman to make investments that drive further organic and acquisitive growth for years to come.
We deliver highly-engineered components that allow window and door manufacturers to differentiate in their marketplace with value-enhanced windows, doors and other forms of access solution. In addition, Tyman delivers industry-leading services to these customers ranging from design support to integrated supply of components into window fabrication processes. Our products are also designed to ensure ease of installation for contractors, and our short lead times and technical support allow our distributors to serve their customers in the best way.
Relative to their cost point, our products and solutions have a disproportionate impact on the comfort, sustainability, security, safety and aesthetics of residential homes and commercial buildings. Read more about our products on pages 10 and 11.
Tyman invests in its people through employee training, career path development and continual improvement of working practices and conditions.
Our strategic suppliers benefit from long- term, fair partnerships with development of their business practices and capabilities.
We strive to continually deliver increased shareholder value through a mix of both capital appreciation and dividend distributions, made possible through our growth in earnings and financial strength as we deliver on our strategy.
Our products support making buildings more sustainable by enabling weather- resistance, sound insulation, heat loss reduction and overall durability. Many products have a positive societal impact, through reducing community crime rates, enhancing safety and fire protection and meeting the needs of vulnerable groups. As a Group, we are also committed to minimising our impact on our environment through more deeply embedding sustainable practices in all our operations. Read more about sustainability on pages 46 to 77.
At the core of our capabilities is our ability to understand our customers’ and end-users’ needs and translate these into innovative solutions that add genuine and relevant value to living and working spaces. This innovation is reflected in our extensive portfolio of standard products addressing all aspects of engineered fenestration components and access solutions for the construction industry. In addition, we collaborate with customers on the development of new window and door designs, leveraging our deep product and application expertise to create bespoke hardware and sealing solutions that create true value for end-users.
For window and door system designers, we offer our hardware system design capabilities and deliver drawings and bills of materials for both their standard solutions and bespoke projects. For commercial building and infrastructure projects, we work with architects and specifiers to help them select and design in the right access solutions, bringing custom sizing or other capabilities as required. In all cases, our leading-edge testing facilities and accreditations are a key component of ensuring that our products deliver the quality and durability that our customers expect of them, allowing our customers to assure their users of the same for their installed windows, doors and access solutions.
Our goal is always to provide our customers with the right product, delivered at the right time, at the right price. Our size affords us economies of scale in the procurement of base commodity materials such as stainless steel, zinc, aluminium, polypropylene and also outsourced manufactured components. We manufacture in our world class facilities where this aligns with our core capabilities. Our global footprint and network of extensive supplier partnerships also allow us unparalleled flexibility to deliver locally when close-coupling with our customers’ supply chains is required, or from a distance where more standardised production is possible and economics are more important.
We are continually looking to develop and optimise our routes to market to effectively meet the evolving demands of our industry around the world. For our direct relationships with large window and door manufacturers, we embed with their operations, supplying just-in-time, sequenced components to their production lines. We also serve specialist distributors and merchants who supply smaller manufacturers, system design companies, architects and construction contractors. We excel at delivering to these customers on the short lead-times they routinely require. We also provide training and technical support to give them the product and application knowledge to best serve their customers.
For large commercial building and infrastructure projects, we ship direct to site and then support with on-site technical support as required. Our growing smartware offer requires new routes to market and we have developed and trained a network of accredited installers to support homeowners with a leading- edge security proposition.
Tyman plc 14 Annual Report and Accounts 2021
Our resources are carefully selected and developed to create competitive advantage… … that allows us to undertake differentiated activities that address customer needs… … that together create value for our stakeholders.
We work with our customers to understand their unique requirements in terms of the offer they require and how they wish to be served, making us the partner of choice across many channels to market. These long- term relationships bring high levels of repeat business and a customer intimacy that allows us to continuously improve the value we bring.
Our portfolio of complementary brands have market-leading positions predicated on the innovation, quality and service they deliver for our customers, as evidenced through their long heritage. In some cases, the reputation of our brands is so strong with the end-users that the brand name has become synonymous with the category name.# Strategic Report
The Group continuously assesses changes to market drivers and responds through product innovation and evolution of the business model. Long-term macroeconomic and megatrends continue to support our market drivers. There are a number of trends that have emerged or been accelerated as a result of the pandemic which present significant further opportunities for Tyman. The Group is well-positioned to capitalise on these and deliver further growth.
| Megatrend | Market driver # Tyman plc
| Megatrend | Market driver | Residential/ commercial | Impact | How we are responding | Value proposition |
|---|---|---|---|---|---|
| 1 Urbanisation | Rapid urbanisation continues, creating larger megacities and swelling the size of mid-sized regional cities. | Residential/ Commercial | • Growth in the construction of multi-family homes and conversion of industrial spaces to residential near the centre of major cities. • Increasing range of products with light-commercial application. |
In contrast to rapid urbanisation, COVID-19 has resulted in more time being spent at home, with the home-working trend being amplified. This has led to people seeking more space and necessitating more flexible living spaces. | • Growth in new build and repair and remodelling activity, particularly favouring single-family construction, to which the Group is most exposed. • Capitalising on our strength in this market through continued development of differentiated products. |
| 2 Demographics and social change | Global population growth continues and there is insufficient affordable housing stock. This is particularly acute in the US, where residential housing starts remain significantly below previous cycle peaks and the long-run averages required to sustain the population. | Residential/ Commercial | • Creating demand for quality building products at lower prices. | • Development of differentiated, value-engineered products and removal of waste from supply chains, including focus on efficiency in fabrication and installation processes. | Mature economies are typically experiencing demographic shifts to ageing populations in contrast to growing youth populations in emerging markets. Ageing populations are placing increased emphasis on the need for inclusive ‘lifetime homes’. |
| • Increased demand for disability and connected care products and products that are easy to use. | • Emphasis on ‘ease of use’ in the development of products. • Expansion of range of automated and assisted opening products. |
Growing middle-class populations, supported by good employment levels, low mortgage interest rates, and wage increases. | |||
| • Promoting increased demand for more premium fenestration products. | • Customised hardware and sealing sets for premium fenestration types, prioritising high security and minimal design so as not to disrupt the overall aesthetic. | Design trends and increased focus on wellbeing are driving desire for increased natural light. | |||
| • Trends are driving demand for larger expanses of glass and minimal frames, which require specialist seal and hardware products. | • Development of seals and hardware that support heavier and higher performing glass packages. | Labour shortages across construction markets leading to increased construction wages. Rising material costs and supply chain disruptions in the wake of COVID-19 are also significantly increasing construction costs and putting pressure on lead times. | |||
| • Rising costs are driving a need to find savings elsewhere within a project, increasing demand for quality products at lower prices and those that are efficient to install. • Supply chain disruptions are emphasising the need for flexible, robust supply solutions. |
• Development of differentiated, value-engineered products and removal of waste from supply chains, including focus on efficiency in installation processes. • Enhancing manufacturing and sourcing redundancy and further developing flexible supply initiatives for customers. |
Our markets continued
| Megatrend | Market driver | Residential/ commercial | Impact | How we are responding | Value proposition |
|---|---|---|---|---|---|
| 3 Regulation / certification | Building codes and product certifications are getting stricter, including enhanced fire safety standards within building codes. | Residential/ Commercial | • Increased demand for products with certifications and accreditations, spanning windows, doors and access solutions. • Growing ‘whole solution’ certification increasing emphasis of OEM channel. |
• Growing range of passive fire protection products across hardware and seals to support door manufacturers in fire regulation compliance. • Increased focus on system house partnerships and bespoke solutions. • Growing range of emergency smoke venting products for commercial use as well as a range of fire-certified products. • Further development of safety product range, including child locks, hurricane solutions, and barricades. |
|
| 4 Sustainability | Increasing momentum behind the sustainability agenda driving focus on resource efficiency including the need for energy-efficient buildings and circular economy. This momentum is driven by increasing consumer awareness, increasing regulation, and certain government incentives. | Residential/ Commercial | • Growth in repair and remodelling activity to improve energy efficiency of homes. Increased demand for products that have a positive environmental and/or social impact, that are sustainably manufactured and packaged. | • Continuous focus on development of solutions that deliver positive environmental and/or social impact. • Promoting the enhanced energy efficiency attributes of products e.g. Tyman foam sealing range in contrast to lower-cost alternatives. • Enhancing sustainable manufacturing processes and sourcing. • Expanding range of products with sustainability certifications e.g. C2C and development of sustainable packaging. • Development of thermally-broken commercial access products. |
COVID-19 has increased awareness of surface hygiene. |
| • Increased demand for products that improve surface hygiene. | • Development of products with anti-germ coatings and touch-free opening. | ||||
| 5 Technology and digitalisation | Technology is creating new ways of living and working; even traditional sectors are experiencing changes in customer expectations driven by the way consumers are accustomed to being serviced elsewhere. This is driving growth in smart buildings and connected homes. | Residential/ Commercial | • Increasing demand for smart home security and electro-mechanical fenestration products. | • Expansion of residential smart security range that meets the internationally recognised BSI Kitemark for IoT Devices. • Development of electro-mechanical products. • Enhancing range of actuated commercial access products. |
New technologies making refined industrial design a consumer expectation in many product categories. |
| • Increased demand for products that are not only functional, but also enhance the aesthetics of living spaces. | • Enhanced industrial design and emphasis on creating matching ‘suites’ of products. • Further extensions to minimalist hardware ranges. |
The adoption of e-commerce and digitalisation has been accelerated due to the impact of COVID-19. | |||
| • Increased demand for digitalisation throughout the supply chain and opportunity through emerging direct-to-consumer channel. | • Development of e-commerce capabilities, allowing direct-to-consumer sales where appropriate. • Enhancement of IT systems to improve digitalisation of the supply chain. |
| Megatrend | Market driver | Residential/ commercial | Impact | How we are responding | Value proposition |
|---|---|---|---|---|---|
| 3 Regulation / certification | Building codes and product certifications are getting stricter, including enhanced fire safety standards within building codes. | Residential/ Commercial | • Increased demand for products with certifications and accreditations, spanning windows, doors and access solutions. • Growing ‘whole solution’ certification increasing emphasis of OEM channel. |
• Growing range of passive fire protection products across hardware and seals to support door manufacturers in fire regulation compliance. • Increased focus on system house partnerships and bespoke solutions. • Growing range of emergency smoke venting products for commercial use as well as a range of fire-certified products. • Further development of safety product range, including child locks, hurricane solutions, and barricades. |
|
| 4 Sustainability | Increasing momentum behind the sustainability agenda driving focus on resource efficiency including the need for energy-efficient buildings and circular economy. This momentum is driven by increasing consumer awareness, increasing regulation, and certain government incentives. | Residential/ Commercial | • Growth in repair and remodelling activity to improve energy efficiency of homes. Increased demand for products that have a positive environmental and/or social impact, that are sustainably manufactured and packaged. | • Continuous focus on development of solutions that deliver positive environmental and/or social impact. • Promoting the enhanced energy efficiency attributes of products e.g. Tyman foam sealing range in contrast to lower-cost alternatives. • Enhancing sustainable manufacturing processes and sourcing. • Expanding range of products with sustainability certifications e.g. C2C and development of sustainable packaging. • Development of thermally-broken commercial access products. |
COVID-19 has increased awareness of surface hygiene. |
| • Increased demand for products that improve surface hygiene. | • Development of products with anti-germ coatings and touch-free opening. | ||||
| 5 Technology and digitalisation | Technology is creating new ways of living and working; even traditional sectors are experiencing changes in customer expectations driven by the way consumers are accustomed to being serviced elsewhere. This is driving growth in smart buildings and connected homes. | Residential/ Commercial | • Increasing demand for smart home security and electro-mechanical fenestration products. | • Expansion of residential smart security range that meets the internationally recognised BSI Kitemark for IoT Devices. • Development of electro-mechanical products. |
• Development of electro-mechanical products.
• Enhancing range of actuated commercial access products.
New technologies making refined industrial design a consumer expectation in many product categories.
• Increased demand for products that are not only functional, but also enhance the aesthetics of living spaces.
• Enhanced industrial design and emphasis on creating matching ‘suites’ of products.
• Further extensions to minimalist hardware ranges.
The adoption of e-commerce and digitalisation has been accelerated due to the impact of COVID-19.
• Increased demand for digitalisation throughout the supply chain and opportunity through emerging direct-to- consumer channel.
• Development of e-commerce capabilities, allowing direct-to-consumer sales where appropriate.
• Enhancement of IT systems to improve digitalisation of the supply chain.
Comfort
Sustainability
Security
Safety
Key Aesthetics
Our strategy of Focus, Define, Grow is underpinned by our sustainability roadmap. The Group’s Focus, Define, Grow strategy was put in place in late 2019 following a period of heavy acquisition activity and a change in executive leadership. The sustainability roadmap was established in 2020 and embedded at the core of the Group’s strategy, with the three pillars of Sustainable Operations, Sustainable Culture and Sustainable Solutions aligned with and reinforcing the Focus, Define, Grow strategy. The strategy is guided by our purpose and reflects that there is still much value to be realised in the near- term from activities that will optimise our business, build a more cohesive culture, and create a stronger base. Combined with the growth initiatives that leverage the Group’s inherent strengths, our strategy aims to deliver margin expansion and consistent profitable growth, establish a high-performance culture, and make a positive impact on the environment and in our communities. This will create meaningful long-term value for our stakeholders. More detail on divisional strategic initiatives can be found in the operating reviews on pages 34 to 39 and in the sustainability review on pages 46 to 77.
The Group believes this strategy continues to be the right one in the context of COVID-19, although the global supply chain challenges and high levels of demand have driven a re-prioritisation of initiatives towards those that improve resilience and expand capacity in the short-term. In spite of the operational intensity, the Group has made good progress with initiatives and there are opportunities to accelerate aspects of the strategy as COVID-19 continues to abate.
D e f i n e
G r o w
F o c u s
S u s t a i n a b l e c u l t u r e
S u s t a i n a b l e s o l u t i o n s
S u s t a i n a b l e o p e r a t i o n s
The Focus strategic pillar reflects actions to streamline and strengthen what we have. The Group’s M&A heritage means there is a continued need to integrate and harmonise the structures, products, processes and systems from prior acquisitions to create a strong platform for the future. This will drive margin expansion, enhance the sustainability of our operations, and lay the foundations for sustainable, profitable growth.
• Streamline footprint: Deliver maximum operational efficiency and economies of scale as well as having the right routes to market in each location to best serve the customer.
• Harmonise product portfolio: Reduce portfolio complexity and duplication while also improving range positioning to give a stronger product offer that is both more efficient to produce and better meets customers’ needs.
• Tune systems and processes: Efficiently support business operations management and enable high quality, agile decision support to capitalise on opportunities and better support customers.
• Continuous Improvement (CI): Make CI a way of life, by embedding lean practices, six sigma process controls and value analysis / value engineering (VAVE) activities.
• Safety: Transform health and safety performance through ‘safety is our first language’ programme.
• Environment : Reduce environmental impact by decreasing energy and water usage and reducing waste to landfill.
The Define strategic pillar centres on building cultural cohesion across the Group to facilitate ongoing synergy extraction, through establishing ‘One Tyman’, developing the ‘Tyman Excellence System’, and building a sustainable culture.
• Build a cohesive, high-performing culture through a common purpose, values and Code of Business Ethics to facilitate synergy extraction.
• Establish a clearly-defined business system and enhance groupwide capabilities through a set of processes, playbooks and other toolkits for development and propagation of best practice.
• Ensure our culture enables our diverse talent to contribute to their best and our business to create long-term value for the business, local communities and wider society.
The Grow strategic pillar aims to deliver sustainable organic share gain, through executing well in serving our customers, developing and launching new products, expanding our existing channels to market, and developing sustainable solutions. We also seek to supplement our organic activities with M&A to further strengthen the portfolio.
• Deliver a superior customer experience, fostering long-term partnerships through excellent delivery performance, ease of doing business, technical support and other value-adding services such as co- development and accredited test services.
• Develop a culture and discipline of innovation that proactively addresses changing market dynamics, customer requirements, aesthetic trends, and latest technologies, to create true differentiated value.
• Deliver share gain through optimising routes to market, selling existing products through new channels, and expanding into adjacent markets.
• Offer innovative products and services that promote circularity, help our customers reach net zero, and create safer, more inclusive communities.
• Tyman continues to be the natural consolidator in a fragmented market and seeks to supplement organic growth with targeted M&A to strengthen the portfolio.
| Strategic outcomes | Sub-pillar | Progress in 2021 | Priorities for 2022 |
|---|---|---|---|
| Focus | Rationalise | • Further optimised North America footprint through inter-site line transfers • Commenced distribution footprint optimisation • Completed next phase of North America product portfolio harmonisation |
• Complete North America footprint optimisation activities • Complete North America portfolio harmonisation |
| Optimise | • Implemented automation in Budrio facility • Expanded seals capacity in the UK • Commenced Lean Excellence capability development • Commenced groupwide ERP upgrade |
• Enhance supply chain and operational resilience through expanding alternative sourcing and increasing redundancy • Further increase seals capacity using latest technology in North America and the UK • Continue to extend automation to develop ‘factory of the future’ model • Complete first phase of ERP upgrade |
|
| Sustainable operations | • Completed deployment of safety leadership programme • Deployed four new Group safety standards • Defined environmental targets • Commenced work on developing a Science Based Target • Enhanced TCFD disclosures • Installed water recirculation system at most water-intensive facility |
• Implement safety improvement plans at four key plants • Continue roll-out of Group safety standards • Set Scope 3 SBT Science Based Target and validate with SBTi • Further develop TCFD disclosures including supply chain physical risk assessment and quantitative scenario analysis • Drive reductions in energy, water and waste • Commence deployment of solar energy technologies |
|
| Define | Establish One Tyman | • Deployed new purpose, values and Code of Business Ethics in most locations • Defined Group brand strategy |
• Complete One Tyman deployment and continue to embed • Roll-out ‘Leading with Integrity’ workshop • Develop & deploy targeted ethics and compliance training |
| Develop the ‘Tyman Excellence System’ | • Extended the Tyman Excellence System to Sustainability, Lean and IT • Prioritised initiatives to improve productivity and supply chain resilience • Developed best practice playbook to reduce energy, water and waste • Defined groupwide ERP strategy |
• Complete development of safety standards • Deploy Lean Excellence Leadership programme • Complete Extremely Visual Factory system • Establish Kaizen best practice playbook and global calendar of Kaizen events • Expand Tyman Excellence System to talent • Develop Procurement Excellence roadmap |
We have made good progress in 2021 and have clear plans for 2022.# Tyman plc 2021 Annual Report and Accounts
| Sub-pillar | Progress in 2021 | Priorities for 2022 |
|---|---|---|
| Define Sustainable culture | • Commenced work to develop metrics for employee engagement and retention • Launched global Employee Assistance Programme (EAP) • Became a UK Real Living Wage employer | • Undertake in-depth, all employee engagement survey • Develop diversity and inclusion programme including people metrics dashboard • Develop community investment and engagement plans |
| Grow Executing well in serving our customers | • Gained market share in core International markets due to strength of service levels • Achieved further net business wins in North America through strength of value proposition • Strengthened sales capabilities in UK & Ireland | • Improve customer experience via digital tools, including ERP and website enhancements • Further strengthen sales capabilities and sales and operational planning processes |
| Innovation for differentiated value | • Launched a number of new products, including the Pinnacle TM balance, further extensions to the CHIC minimalist hardware range, and the Precision adjustable riser door frame • Developed new products, including fire retardant and intumescent seals and entry- level patio door roller and handle set | • Launch pipeline of new products, including fire retardant and intumescent seals • Further market-driven NPD to create differentiated value • Continue co-development programmes with major customers |
| Market expansion | • Secured partnerships with significant European and GCC system houses, through launch of Pull & Slide system • Commenced western US distribution footprint optimisation • Developed localised product solutions for fast-growing China market | • Further expand system house partnerships • Improve coverage in western US through new distribution point • Increase share in Canadian market and accelerate growth in China market with launch of localised product solutions and enhanced routes to market |
| Sustainable solutions | • Achieved strong growth products that positively impact SDGs in-use (tilt-and-turn hardware, seals and high- security locks) • Introduced new materials and technology to reduce consumption of single-use plastic and packaging • Achieved Cradle-to-Cradle product certification for the Giesse aluminium hinges and Brio handle | • Establish a common ‘design for sustainability’ approach to integrate into new product development processes • Continue to develop solutions for sustainable packaging and removal of hazardous substances from products • Develop roadmap to achieve environmental product declarations in key markets |
| Targeted M&A | • Established M&A focus areas, candidate characteristics and target funnels | • Continue to review opportunities and develop the pipeline |
Margin expansion
Sustainable growth
Positive impact
Key Engaged people
The cube is a 17-storey, multi-use, smart building in Paddington Square, London. Designed by Renzo Piano, it has the effect of a light, glass cube floating over the piazza.
The challenge
The ambitious “all-glass” façade needed to be achieved with minimal aluminium elements, a significant challenge when dealing with large expanses of glass. The glazed double skin surface features units that open for maintenance, requiring every component to be carefully engineered to fit the structure. Focchi SpA, the main contractor for the building’s façade, was looking for a hardware manufacturer that could meet the demanding architectural specification.
The solution
Giesse used its expertise of designing, testing and manufacturing customised solutions to develop a high load-bearing side-hung opening window system that would accommodate the large expanses of glass while maintaining minimal profiles. Customised hardware was designed to fit the slim profiles, including miniaturised hinges, limitation arms to restrict opening for safety, and adjustable anti- burglar locking points for enhanced security.
Value created
Giesse was chosen for its high-quality product, bespoke design capability, testing services and after-sales support. The customised solution enabled the large double skin façade units to be opened for required maintenance without any compromise to appearance, performance or security. This enabled realisation of the architect’s design vision and sustainability goals, creating an attractive, naturally-lit and energy-efficient office space.
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The Group continually monitors progress in delivery of our strategic goals using five financial and two non-financial key performance indicators (‘KPIs’). The KPIs prior to 2019 exclude the impact of IFRS 16 ‘leases’ which was adopted in 2019. Certain KPIs use Alternative Performance Measures (APMs). For definitions and reconciliations, see pages 203 to 208. For further information, see the Sustainability review on pages 46 to 77 and Financial review on pages 40 to 45.
| 21 | 20 | 19 | 18 | 17 |
|---|---|---|---|---|
| 17.4% | 14.2% | 13.9% | 14.1% | 14.7% |
Purpose
This KPI is used to evaluate the ability of the Group to grow its business organically and excludes the impact of currency translation and acquisitions and divestments.
Target
To grow revenue organically year on year.
2021 performance
LFL revenue increased by 17.4%, driven by strong underlying demand across our core markets, favourable structural trends post-COVID and the implementation of price increases and surcharges to recover input cost inflation. Revenue grew by 10.6% on a LFL basis versus 2019.
Link to strategy
Margin expansion
Sustainable growth
Engaged people
Positive impact
| 21 | 20 | 19 | 18 | 17 |
|---|---|---|---|---|
| 17.4% | -6.0% | -1.8% | 2.7% | 1.7% |
Purpose
This KPI is used to evaluate the profitability and financial health of the Group.
Target
To maintain and improve operating margins through management of the Group’s processes as well as overheads and administrative costs.
2021 performance
Adjusted operating margin increased by 20bps to 14.2%, driven by strong revenue growth, partially offset by input cost inflation and operational inefficiencies in North America due to labour and material shortages. Although pricing actions offset the majority of cost inflation, due to the significant and frequent increases coupled with some of the customer pricing mechanisms, there is an inevitable lag in recovery. Furthermore, the pass-through of inflation is dilutive to margins, given the increase in associated revenue.
Link to strategy
Margin expansion
Sustainable growth
Engaged people
Positive impact
| 21 | 20 | 19 | 18 | 17 |
|---|---|---|---|---|
| 14.5% | 12.3% | 12.0% | 13.4% | 13.6% |
| 14% target |
Purpose
This KPI is used to evaluate how efficiently the Group’s capital is being employed to improve profitability.
Target
To maintain and steadily improve ROCE, with a medium-term target of 14.0%.
2021 performance
ROCE increased by 220bps to 14.5% (2020: 12.3%), exceeding the Group’s medium-term target of 14.0%. This is due to the increase in the Group’s adjusted operating profit, alongside a reduction in average property, plant and equipment due to timing of expenditure after deferral of projects in 2020, and a reduction in the carrying value of intangible assets through amortisation and foreign exchange movements.
Link to strategy
Margin expansion
Sustainable growth
Engaged people
Positive impact
| 21 | 20 | 19 | 18 | 17 |
|---|---|---|---|---|
| 32.1p | 27.2p | 27.5p | 27.6p | 27.0p |
Purpose
This KPI is a key measure for our shareholders. It is used to assess the profitability of the business and the profit generated for equity holders.
Target
To improve adjusted EPS performance year on year.
2021 performance
Adjusted basic earnings per share increased by 17.9% to 32.1p as a result of the increase in adjusted operating profit, as well as a reduction in the Group’s interest charge due to continued deleveraging and a reduction in weighted average interest rate.
Link to strategy
Margin expansion
Sustainable growth
Engaged people
Positive impact
| 21 | 20 | 19 | 18 | 17 | 5 year average |
|---|---|---|---|---|---|
| 64.3% | 130.9% | 132.2% | 92.4% | 85.6% | 101.1% |
Purpose
This KPI is 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.
Target
To maximise conversion of the Group’s adjusted operating profit into cash over any twelve-month period while continuing to make the necessary capex and working capital investments to support the growth of the business.
2021 performance
Operating cash conversion reduced to 64.3%, principally due to a significant working capital outflow and increased capital expenditure. The working capital outflow was a result of the need to rebuild stock levels which were very low at the end of 2020 to meet higher demand levels and to de-risk the business from the global supply chain disruption and the extended New Year period in China. The inventory build has also been significantly inflated by the impact of material cost increases and debtors have been impacted by the increases in prices. Capital expenditure has increased in 2021 after two years of deferral of expenditure due to deleveraging and COVID-19.
Link to strategy
Margin expansion
Sustainable growth
Engaged people
Positive impact
For further information, see the Sustainability report on pages 46 to 77.
| 21 | 20 | 19 | 18 | 17 |
|---|---|---|---|---|
| 4.4 | 3.1 | 4.0 | 4.8 | 6.2 |
| •• | —— |
Lost time incident frequency rate
| 21 | 20 | 19 | 18 | 17 |
|---|---|---|---|---|
| 4.4 | 3.1 | 4.0 | 4.8 | 6.2 |
Purpose
The number of lost time incidents and the lost time incident frequency rate are used to evaluate progress of our safety excellence programme and progression toward our LTIFR targets.
| 21 | 20 | 19 | 18 | 17 |
|---|---|---|---|---|
| 62.3 TCO 2 e per £m revenue | 67.1 | 69.5 | 80.0 | 73.5 |
Purpose
The number of lost time incidents and the lost time incident frequency rate are used to evaluate progress of our safety excellence programme and progression toward our LTIFR targets.# Target To reduce the LTIFR rate each year to <1.0 by 2022.
The trends arising from COVID-19 have continued across most territories, with consumers having spent more time at home and therefore seeking more space or adapting existing space for flexible use. Household savings have increased, and consumers have prioritised expenditure on the home over leisure activities. Increased mortgage lending and low interest rates have also supported housing market activity, particularly in the US and UK, as has fiscal stimulus, such as the stamp duty holiday in the UK and the ‘super bonus’ incentive for home improvements in Italy. In the US, the lack of inventory for both new and existing homes, affordability, and the increasing rate of millennial household formation have also continued to contribute to strong growth in both single-family starts and RMI activity. The high levels of demand have continued to put pressure on service levels industry-wide in most of the Group’s territories, exacerbated by raw material availability issues and global logistics disruption. The US has also suffered from a very tight labour market, resulting in operational challenges which have impacted production and shipping levels. Steps have been taken to increase capacity and throughput, including expanding operating hours, increasing wage rates and other incentives, and implementing various productivity improvement initiatives. This also includes a number of capital investment projects to structurally expand capacity and improve throughput. The business is working closely with customers to manage demand and with suppliers to secure inventory. The spike in demand for goods globally has also driven significant increases in commodity costs and freight costs, with the US also seeing significant labour cost inflation. The Group has implemented price increases and temporary surcharges to recover cost inflation, although due to the size and frequency of these increases as well as some customer pricing mechanisms, there is an inevitable lag in recovery. The pass-through of this inflation also has a dilutive effect on operating margins due to the higher revenue base. Despite the operational challenges and cost inflation, the strong revenue growth and impact of pricing combined with the benefit of self-help initiatives, resulted in LFL adjusted operating profit growth of 16% compared to 2020 and 11% compared to 2019. Reported adjusted operating profit increased 12% compared to 2020, with the unfavourable impact of exchange rates offset by a benefit from the disposal of the loss-making Ventrolla business. Adjusted operating margin expanded from 14.0% to 14.2% despite the dilutive effect of pass-through pricing to recover inflation.
The health and safety of our people is the Group’s top priority, with this culture being embedded through the ‘safety is our first language’ engagement programme. The Group’s safety performance deteriorated in 2021 as a result of the high levels of operational intensity and the ongoing challenges of COVID-19. The lost time incident frequency rate including COVID-19 cases resulting from workplace transmission increased to 4.4 incidents per million hours worked (2020: 3.1). Excluding these COVID-19 cases, the lost time incident frequency rate was 1.9 (2020: 1.5). Safety improvement plans have been implemented at the plants with the highest incident rates. It is notable that half of the incidents in 2021 were with personnel with less than one year of service, reflective of the high levels of workforce turnover, especially in the US, and the high proportion of temporary staff in our facilities in 2021. While the 2021 result is disappointing, excluding COVID cases, it still represents strong progress from the 2019 baseline of 4.0 incidents per million hours worked, and the Group remains committed to its target of achieving an LTIFR rate of less than 1.0 in 2022. I am very proud of our people as they have continued to navigate tirelessly through an unparalleled period of operational intensity.” Jo Hallas Chief Executive Officer Tyman plc32 Annual Report and Accounts 2021
The Group has continued to progress its Focus, Define, Grow strategy, which is underpinned by the three sustainability pillars of Sustainable Operations, Sustainable Culture, and Sustainable Solutions. The global supply chain challenges and high levels of demand have driven some re-prioritisation of initiatives towards those that improve resilience and expand capacity in the short-term, but momentum has also continued with driving our mid-term strategic initiatives. The Focus activities have continued to progress and the benefits from the various initiatives to streamline operations completed in 2020 are being realised. Further inter-site line transfers in North America were completed and work commenced with optimising the distribution footprint in the western US. Continuous improvement activities were directed towards increasing capacity and throughput, and a multi-year upgrade of IT systems to enhance the customer service experience, generate further synergies and improve decision-making has commenced. Progress has also been made with the Sustainable Operations activities. A new water recirculation system at the most water intensive plant was commissioned leading to a 45% reduction in the Group’s water consumption, and initiatives to re-process scrap were successfully implemented. Tyman’s two- year programme to define science-based targets is well underway, with a detailed analysis of carbon footprint across the value chain undertaken. As part of the TCFD compliance journey, an in-depth review of the risks and opportunities of climate change on the Group’s operations and supply chain has also progressed well during the year.
The Define strategic pillar, which centres on building cultural cohesion across the Group has continued to gain momentum, with deployment of the Group’s purpose, values, and Code of Business Ethics now substantially complete. Furthermore, collaboration between the divisions continues to gain traction with more frequent and substantive touchpoints and a series of cross-divisional initiatives undertaken. This ‘One Tyman’ culture provides the basis for the Group’s Sustainable Culture initiatives. Development of the ‘Tyman Excellence System’ has also continued, with a focus on Lean Excellence and prioritisation of activities to enhance supply chain and manufacturing resilience. Under IT Excellence, a groupwide ERP landscape and vendor strategy was defined.
The activities to Grow market share have yielded positive results, with service levels relative to competitors delivering strong market share gains in core international markets and further net customer wins in North America. Channel expansion activities also continued to progress, with increased systems house partnership activity. A series of new products were successfully launched in the period, and a strong pipeline of launches is scheduled for 2022. New product development activities also included developing Sustainable Solutions to grow the proportion of revenues from positive impact products. Various initiatives are also underway across the Group to improve the sustainability of packaging and reduce the use of hazardous substances in production. The Group has begun to sow the seeds for a disciplined return to M&A by defining areas of focus for acquisitions, candidate characteristics, and developing the pipeline of potential opportunities that meet our commercial and strategic objectives. The strengthened platform and Tyman Excellence System should facilitate greater synergy extraction from acquired businesses in the future.
We expect underlying demand in 2022 to remain strong, benefitting from favourable housing market fundamentals, albeit set against rising macroeconomic and geopolitical pressures, supply chain and labour constraints, and continued COVID-19 disruption. High input costs are expected to persist for most of the year and further pricing actions will be implemented where necessary to recover cost inflation. Consequently, the Group expects top-line growth to be driven by the mix of underlying strength in demand and pricing to recover inflation. This revenue growth, combined with benefits from execution of strategic initiatives, is anticipated to benefit profitability for the full year. Operating margins will be broadly flat due to the dilutive effect of passing through cost inflation. Activities to enhance supply chain and manufacturing resilience, improve productivity and increase capacity to meet both current and expected longer-term demand will continue. The Group will also focus on driving organic share gain through its strategic initiatives of executing well in serving our customers, innovation for differentiated value and channel expansion. In addition, the medium- term intention is to resume M&A activity when the right opportunity presents. The Group is well positioned for growth in 2022 and beyond, benefitting from long-term structural industry growth drivers, our strategic initiatives and building on our portfolio of differentiated products, market-leading brands and deep customer relationships.
Jo Hallas Chief Executive Officer
Annual Report and Accounts 2021 Tyman plc 33
| £m except where stated | 2021 | 2020 | 2019 | LFL vs 2020 | LFL vs 2019 | |
|---|---|---|---|---|---|---|
| Revenue | 397.7 | 372.1 | 386.0 | +14% | +11% | |
| Adjusted operating profit | 65.1 | 64.5 | 64.5 | +8% | +9% | |
| Adjusted operating profit margin | 16.4% | 17.3% | 16.7% | -100bps | -30bps |
The US residential market remained at post-recession record levels during the year, driven by the limited supply of homes, demographic shifts and a continuation of pandemic-driven trends of nesting and urban flight. US housing starts were up 16% compared to 2020 (+24% vs 2019), with single family starts, to which the division has proportionally higher exposure, increasing 13% (+26% vs 2019).## Business performance and developments
The positive momentum in the US and Canadian markets, along with net business wins and significant pricing actions to offset cost inflation, resulted in LFL revenue growth of 14% compared to 2020 and 11% compared to 2019. This was in spite of industry-wide raw material, logistics and labour availability issues, which significantly impacted production and shipping rates in the second half of the year. Workforce availability continued to be challenging throughout the US manufacturing sector as demand rose sharply. The division implemented a series of actions to alleviate the situation, including wage increases, recruitment programmes, retention and hiring incentive schemes, and trialling flexible working practices. These measures have delivered gradual improvement; however, the inevitable time for training new employees along with elevated absenteeism rates due to COVID-related factors have impacted productivity.
To mitigate the significant input cost inflation, the division implemented a series of price increases and surcharges. However, due to the speed of cost increases and the nature of some customer pricing mechanisms being based on retrospective material cost indexes, there is a lag in recovery. In addition, the pass-through of cost inflation has had a dilutive effect on operating profit margins, given the higher revenue base. The combined impact of this cost inflation, as well as inefficiencies arising from labour and component shortages, partially offset the strong revenue growth and benefits from continuous improvement activities, resulted in LFL adjusted operating profit growth of 8% compared to 2020 and 9% compared to 2019. LFL adjusted operating margin deteriorated 100bps to 16.4% compared to 2020 and by 30bps compared to 2019.
The division has worked closely with customers and suppliers to manage demand levels and has been successful in winning new business through the strength of its value proposition. The portfolio harmonisation activities are progressing to plan, with sliding patio door rationalisation now complete and work underway on the hinged patio door and casement product groups. The division continued to drive operational improvements, with focus shifting near-term to increasing capacity and throughput to meet heightened demand. This included further inter-site line transfers, temporary outsourcing of processes to increase capacity, and capital investment directed towards addressing bottlenecks. Activities to optimise the distribution footprint in the western US commenced, with consolidation of two warehousing sites completed and conversion of space in the Sioux Falls facility to distribution in progress. Work is well underway on implementing a new integrated ERP platform which will enable a more streamlined ordering process for customers, enable efficiency gains in shared services and improve our decision support capabilities.
New product development continues to be a key enabler of growth for the division. Products launched in 2021 include a number of customer specific solutions and the division’s new Pinnacle TM balance. After initial launch with a development partner, the Pinnacle TM is gaining traction with other customers due to the innovative design allowing customers to use one balance configuration across multiple window lines, enabling a significant reduction in the number of SKUs and a reduction in window frame material content. There is a growing pipeline of products due for launch in 2022, including the entry price point sliding patio door roller and handle solution, redesigned to compete more effectively in the price sensitive sector of the growing vinyl market.
High levels of demand are expected to be sustained, although supply chain constraints, labour availability, cost inflation and interest rate increases may constrain market activity. Cost inflation is expected to remain high through 2022, although realisation of the benefits of price increases implemented in 2021 is expected to benefit profitability. The division will continue to monitor inflation and adjust pricing mechanisms accordingly. In 2022, the division will continue to focus on increasing capacity to meet heightened demand and improving operational efficiency. There are a number of activities underway to enhance supply chain resilience for the division and its customers, including increasing both supply and manufacturing redundancy. Work will also continue with the ERP implementation, optimising the distribution footprint and completing the product portfolio harmonisation initiative.
Tyman plc34 Annual Report and Accounts 2021
Tyman North America produced enough weatherstripping to circle the globe over eight times in 2021, with most of this being packaged in corrugated cardboard. To support its sustainability ambitions and those of its customers, the business sought to reduce waste in the supply chain through strategic customer development partnerships. Projects with strategic customers were commenced, to eliminate the need for corrugated packaging by leveraging returnable solutions and re-useable crates. The division partnered with a large customer to move away from individual reels and is in the process of investing in returnable reels for implementation in 2022. Initial efforts have saved over 22,000 cardboard boxes and 1,200 timber pallets in 2021. Tyman partnered with Endura Products to change packing methods on corrugated containers of urethane door seal products, reducing the packaging needed by 50%. In addition, the desire to contain material costs, support circularity, and address scarcity of supply, led the business to refine manufacturing and tooling processes to allow for the use of scrap in lieu of virgin polypropylene. 10% of the kerf material used in door seals was converted from re- processed polypropylene, saving $120,000 and 24 tonnes of material for the business annually. The target percent for non-virgin materials will increase beyond the current level as the business continues to refine processes through 2022. Additional initiatives planned for 2022 include investing in equipment to support a new circular packaging programme with one of our strategic partners. The multi- year programme will support new business, using 100% reusable reels and packaging on over six million metres of product. This programme is projected to save over 5,250 reels, 2,600 boxes and 600 timber pallets.
In 2021, we partnered with AmesburyTruth to reduce packaging waste. We identified that moving to standard packaging for our door seal product, would reduce the number of boxes and pallets needed, free up valuable real estate within our warehouse, and reduce the number of trucks required to transfer inventory. At Endura, we are proud to be partnered with AmesburyTruth and appreciate their willingness to engage with us to make a positive impact on the environment.” Kevin MacDonald Vice President of Operations at Endura Products Scan the QR code to read more Case studies on our website.
Annual Report and Accounts 2021 Tyman plc 35
| £m except where stated | 2021 | 2020 | 2019 | LFL vs 2020 | LFL vs 2019 | |
|---|---|---|---|---|---|---|
| Revenue | 105.8 | 92.2 | 107.2 | +18% | +5% | |
| Adjusted operating profit | 14.8 | 8.8 | 13.8 | +35% | +1% | |
| Adjusted operating profit margin | 14.0% | 9.6% | 12.9% | +170bps | -50bps |
The strong momentum in the UK residential RMI market has continued throughout 2021, driven by the stamp duty holiday, higher consumer savings levels, and home working resulting in people seeking more space and increasing spending on home improvement activity. The rate of growth began to moderate in the second half of the year due to the end of the stamp duty holiday, supply constraints and cost inflation. The IHS Markit / CIPS UK Construction PMI was at 54.3 in December 2021 (December 2019: 44), signalling a strong rate of construction output growth. The number of housing transactions was 41% higher than in 2020 (+26% vs 2019), and the CPA estimates that private housing RMI was 17% higher than in 2020 (+2% vs 2019). The commercial market has recovered at a slower rate than the residential market, with project delays due to the impact of social distancing measures on construction sites and the availability of labour and materials.
The UK & Ireland division achieved LFL revenue growth of 18% compared to 2020, and 5% compared to 2019. This reflects the buoyant residential RMI market and the effect of pricing actions, weighed down by the impact of the weaker performance of the commercial access business. On a reported basis, revenue was 15% ahead of 2020 and 1% lower than 2019, reflecting the disposal of Ventrolla in November 2020.This performance was achieved despite constraints arising from industry-wide supply chain pressures driven by material shortages and global shipping disruption, which significantly impacted service levels earlier in the year. Actions were taken to resolve stock shortages, including the use of expedited and alternative freight services, as well as increasing order levels to provide additional cover, which improved service levels in the second half. Material and transport cost inflation was mitigated through price increases and the favourable impact of foreign exchange on material purchases, with LFL adjusted operating profit 35% higher than 2020, and 1% above 2019. LFL adjusted operating margin expanded by 170bps against 2020 and declined by 50bps against 2019, impacted by the effect of cost inflation, as well as weaker sales and margins in the commercial access business. On a reported basis, adjusted operating profit was 68% higher than 2020 and 7% higher than 2019, reflecting the disposal of Ventrolla, which was loss-making. Hardware sales continued to be robust, driven by the buoyant housing market and the benefit of price increases, although were constrained by stock availability, resulting in reported revenue 22% ahead of 2020 and 8% ahead of 2019. Sales of the ERA Protect TM smartware range remained below planned levels, as the home security market was subdued by consumers spending more time at home. The ERA Protect TM Core Kit received a Which? Best Buy endorsement, and a new consumer-focused microsite was launched to drive direct-to-consumer sales. The business has also continued to progress development of sustainable packaging solutions and elimination of chromium 6 from products. Access 360, the division’s commercial access portfolio, had a challenging year. The business is largely project-based and suffered from a dearth of larger infrastructure projects in the year, resulting in sales 5% below 2020 and 15% below 2019. Sales were also affected by the business’s decision to temporarily suspend sales of two core product lines due to delays in obtaining re-certification, which led to these being substituted with higher-cost products, further impacting profitability. Sales improved towards the end of the year with the sustained focus on online training further improving engagement with architects and specifiers. Work continues to optimise the business, with activity to harmonise systems across the three heritage Access 360 businesses now well progressed.
Several new products were launched in the period, in line with the strategy to extend ranges and broaden the certified products portfolio. This included ERA’s first range of internal door handles, with concealed fixings and a clean aesthetic that can be coordinated throughout the property. The handles include secure bolt-through fixings to eliminate the requirement for cutting to simplify the fitting process, and the design and spring mechanism provide enhanced ergonomics and durability. Also launched during the year was the Access 360 adjustable riser door frame product, which addresses an industry-wide challenge with installing riser doors. The product removes the need for installers to use separate packers which can impact fire integrity, and also integrates an intumescent strip to avoid the need to apply intumescent mastic. This solution reduces door installation time by up to 50%, delivering significant savings to customers.
The RMI market is expected to be broadly flat in 2022, with strong activity in the first half of the year, set against a weaker second half as the impact of increases in the cost of living affect consumer confidence and spending, particularly in light of continued construction cost inflation. The commercial market is expected to continue to recover slowly, with CPA forecasts now indicating output will not return to 2019 levels until beyond 2023. The infrastructure sector is expected to benefit from some significant government investment projects, which could benefit the commercial access business. High levels of cost inflation, ongoing logistics disruption, as well as the impact of further possible lockdowns in China will continue to create headwinds in 2022. Further pricing actions will be taken as required to manage cost inflation. The division’s focus in 2022 will be on enhancing supply chain resilience, continued new product development, including expansion of the certified solutions and cylinder ranges, and further optimisation of the Access 360 business.
Tyman plc
36 Annual Report and Accounts 2021
Operational review continued
The challenge
Demand has emerged for a traditional-looking entrance door that is compatible with period properties, but also gives the highest modern standards of performance and durability. Manufacturing methods for this style of hardware are traditionally very manual and do not provide the same level of safety and efficiency as modern processes.
The solution
Working closely with one of the UK’s largest composite door manufacturers, a new range of period-inspired door hardware was designed under the Fab&Fix brand. Three traditionally-styled door handles and knockers were designed and two additional finishes added to the range, pewter and forged black. Using the latest manufacturing methods, the look and feel of iron-forged hardware could be created in a safe and efficient way, while ensuring a modern and durable low maintenance finish. Pewter and forged black are offered across 48 different products (including handles, letterplates, door knobs, escutcheons, vertical window hardware), enabling door manufacturers to offer customers the widest choice of suited hardware for their traditional door ranges. The hardware is finished with Fab&Fix’s proprietary plating technology, Hardex. The Hardex range undergoes a form of accelerated corrosion testing which goes beyond the relevant industry standards for weather resistance and longevity, to produce a higher performance specification than competing brands.
Value created
The range has been taken up by many customers, including Endurance Doors. The Fab&Fix pewter range perfectly complements their Country door range, providing their customers with a complete suite of durable period style door furniture.
"Traditional hardware is seeing a real resurgence throughout the industry, as our customers look to replicate the aesthetic of period style properties. The Fab&Fix pewter range perfectly aligns with this growing trend, providing our customers with a complete suite of authentic door furniture for our Country doors. The hardware has been expertly designed to deliver visual appeal and is durable enough to withstand today’s modern environment.”
Stephen Nadin
Managing Director, Endurance Doors
Traditional aesthetics with modern performance
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Annual Report and Accounts 2021
Tyman plc
37
| Tyman International | |||||
|---|---|---|---|---|---|
| £m except where stated | 2021 | 2020 | 2019 | LFL vs 2020 | LFL vs 2019 |
| Revenue | 132.2 | 108.4 | 120.5 | +27% | +15% |
| Adjusted operating profit | 19.5 | 12.3 | 14.8 | +66% | +37% |
| Adjusted operating profit margin | 14.7% | 11.3% | 12.3% | +350bps | +237bps |
Market demand was strong throughout the year in all of the division’s key markets, despite the continuation of COVID-19 restrictions. The IHS Markit Eurozone Construction PMI rose to 52.9 in December, indicating robust expansion of construction activity. The PMI for Italy, the division’s largest market was 64.4 in December 2021, after reaching an all-time high of 65.5 in November 2021. Momentum in Continental Europe has continued to build through the year across both the residential and commercial sectors. This has been driven by resumption of projects on hold due to COVID-19 and consumers continuing to invest in their homes, boosted by government stimulus measures, such as the Italian super-bonus and eco-bonus schemes. Similar buoyancy has been seen in other regions, notably Australia and LATAM. The GCC cluster has also seen continued growth, largely coming from project activity in the commercial sector. We are mindful of the evolving crisis in Ukraine; we have no local operations or colleagues based there or in Russia, and all our revenues are derived via local distribution partners (totalling c.1% of Group revenues in 2021). We are monitoring developments and will adapt as appropriate; our thoughts are with all those impacted.
The division had a very strong year, with LFL revenue growth of 27% against 2020 and 15% against 2019, due to buoyant market conditions, share growth in all key markets and pricing to compensate for cost inflation. The share growth was achieved through momentum with channel partnerships and the new product development pipeline coming to fruition, aided by robust supply chain and capacity management. Revenue in all top twelve markets, representing c. 80% of the business, grew compared to 2019; notably Italy grew 18%, reflecting both strong underlying market growth, some impact from customer re-stocking, as well as share gain. Strong headwinds created by Brexit, haulier shortages, materials scarcity, and significant commodity and freight cost inflation have been effectively managed during the year through robust supply chain management and agile pricing to protect margins. Combined with the strong revenue growth and beneficial effect on fixed cost absorption, this resulted in LFL adjusted operating profit growth of 66% compared to 2020 and 37% compared to 2019. LFL aAdjusted operating margin expanded 350bps to 14.7% (+237bps vs 2019). The business managed the high activity levels and global supply chain disruption effectively, demonstrating the resilience of its supply chain.# Tyman plc 38 Annual Report and Accounts 2021
Giesse has been working with us for the past three years and it did a fantastic job in creating a cost-effective and high-performance system for the Sobha Waves project. It is a pleasure working with the Giesse team and we look forward to working with them again on our future projects.”
Mr. Rajaikepin Rajamoni
Business Head, Sobha Facades
Located in the sought-after waterfront district of Dubai, Hartland Waves is a modern, luxury 35-storey development with uninterrupted 360-degree views from every apartment.
The challenge
Dubai’s weather conditions can bring high winds and sandstorms, which creates challenges for window performance, especially in high-rise buildings. This project therefore required a high performing window system that is airtight and strong enough to withstand high winds, while maintaining minimal profiles to preserve views. Thus, Sobha, one of the largest real estate companies in the world, approached Giesse for its expertise in designing bespoke solutions.
The solution
Giesse worked side-by-side with Sobha to develop a Lift & Slide balcony door solution that was customised for Sobha’s frame profiles. This enabled Sobha to provide a minimal frame profile to provide uninterrupted views, while also achieving a high level of water-tightness and air-resistance that meets the strictest European standards.
Value created
Giesse’s efficient, modular technology helped Sobha streamline the fabrication process for their sliding windows, greatly improving the window fabrication costs and speed. The resulting windows system provides uninterrupted views while achieving high levels of air, water, and wind resistance; low thermal transmission to effectively maintain internal temperature; and high acoustic insulation to minimise noise. The solution is sustainable while enhancing comfort for residents.
A high-performance solution for uninterrupted views
Scan the QR code to read more Case studies on our website.
Annual Report and Accounts 2021 Tyman plc 39
Revenue and profit
Reported revenue for the year increased by 11.0% to £635.7 million (2020: £572.8 million), reflecting a significant increase in volume of £68.8 million driven by strong underlying demand and favourable structural trends post-COVID-19, as well as price increases of £11.9 million and tariffs and surcharges of £13.5 million to recover input cost inflation. This was offset by adverse foreign exchange movements of £28.5 million and the disposal of the Ventrolla business in November 2020 of £2.8 million. On a LFL basis, revenue increased 17.4% compared to 2020. Compared to 2019, which provides a more normalised comparator, LFL revenue increased 10.6%, reflecting the favourable market conditions and pricing actions.
Adjusted selling, general and administrative expenses increased to £121.7 million (2020: £111.8 million), as a result of the reversal of temporary cost-management actions taken in 2020 to mitigate the impact of COVID-19, including the curtailment of discretionary expenditure and cancellation of the senior management bonus scheme, as well as the receipt of £1.7 million from government job retention schemes outside of the UK. There was also a favourable impact of foreign exchange of £4.5 million. Against 2019, adjusted administrative expenses were flat (2019: £120.2 million).
Adjusted operating profit increased by 12.1% to £90.0 million (2020: £80.3 million). This was positively impacted by the revenue growth, productivity gains from continuous improvement initiatives of c. £4.9 million, and the disposal of the loss-making Ventrolla business of £2.2 million. These benefits were partially offset by the impact of raw material and freight inflation over and above pricing actions, labour rate increases, the reversal of the temporary COVID- related cost-savings, and £4.6 million of adverse foreign exchange movements. On a LFL basis, adjusted operating profit increased 15.6%. The Group’s adjusted operating profit margin increased 20bps to 14.2% (2020: 14.0%). Compared to 2019, LFL adjusted operating profit increased by 11.1%, reflecting the strong revenue growth and benefits from self-help initiatives.
Adjusted profit before taxation increased by 19.2% to £81.5 million (2020: £68.4 million) and on a LFL basis increased 21.9%, benefitting from lower finance costs due to the reduction in net debt.
Reported profit before taxation increased by 34.5% to £64.0 million (2020: £47.6 million), reflecting an exceptional credit of £0.6 million as opposed to a cost of £1.8 million in the prior year, as well as a reduction in the amortisation charge on acquired intangible assets.
| £m except where stated | FY 2021 | Materials (1) | Average (2) | Spot (3) |
|---|---|---|---|---|
| Aluminium (Euro) | 17.0 | +43% | +74% | |
| Polypropylene (Euro) | 37.8 | +86% | +113% | |
| Stainless steel (US) | 76.5 | +16% | +46% | |
| Zinc (US) | 31.4 | +21% | +25% | |
| Far East components (UK) | 4 | 44.6 | +7% | +6% |
1 FY 2021 materials cost of sales for raw materials, components and hardware for overall category
2 Average 2021 tracker price compared with average 2020 tracker price
3 Spot tracker price as at 31 December 2021 compared with spot tracker price at 31 December 2020
4 Pricing on a representative basket of components sourced from the Far East by Tyman UK & Ireland
Both spot and average prices across all categories rose significantly in 2021. Price increases and surcharges have been implemented to recover cost increases, albeit due to the magnitude and frequency of these increase as well as customer pricing mechanisms, there is an inevitable timing lag in recovery. Strong LFL adjusted operating profit growth of 11% against 2019, despite unprecedented input cost inflation.”
Jason Ashton
Chief Financial Officer
Tyman plc 40 Annual Report and Accounts 2021
Certain items that are material and non-trading in nature have been drawn out as exceptional such that the effect of these items on the Group’s results can be better understood and to enable a clearer analysis of trends in the Group’s underlying performance.
| £m | 2021 | 2020 |
|---|---|---|
| Footprint restructuring – credits | 0.3 | 0.2 |
| M&A and integration - costs | – | (0.8) |
| M&A and integration - credits | 0.6 | 0.6 |
| M&A and integration - net | 0.6 | (0.2) |
| Loss on disposal of business | – | (1.8) |
| Impairment charges | (1.9) | – |
| Impairment credits | 1.6 | – |
| Impairment - net | (0.3) | – |
| 0.6 | (1.8) |
The footprint restructuring credit in the current and prior year corresponds to the release of excess provisions made relating to the streamlining of the International footprint. The classification as exceptional is consistent with the original charge.M&A and integration
The M&A credit of £0.6 million in the current year relates to the release of provisions made as part of the business combination accounting for previous acquisitions, which are no longer required. M&A and integration costs in the previous year relate to costs associated with the integration of businesses acquired in 2018, predominantly Ashland.
Loss on disposal of business
The £1.8 million charge in the prior year relates to a loss on the disposal of the Ventrolla business, which was divested on 5 November 2020 for nominal consideration.
Impairment
The impairment charge of £1.9 million in the current year relates to impairment of certain of the Group’s intangible assets following the decision to commence a multi-year ERP upgrade. The impairment credit of £1.6 million relates to the release of a portion of provisions made in 2019 against inventory and other assets associated with the new door seals product in North America which is no longer required. The classification as exceptional is consistent with the original charge.
Finance costs
Net finance costs decreased to £9.1 million (2020: £12.1 million). Interest payable on bank loans, private placement notes and overdrafts decreased to £5.9 million (2020: £8.9 million), predominantly reflecting the reduction in net debt and a reduction in the average interest rate. Interest on lease liabilities of £2.5 million reduced slightly (2020: £2.8 million), reflecting the lower average lease liability balance and lower interest rates. The Group’s average cost of funds and margin payable decreased by 30bps to 3.1% (2020: 3.4%) reflecting lower base interest rates and a lower applicable margin due to the reduction in leverage. At 31 December 2021, 22.2% (2020: 43.0%) of the Group’s adjusted debt excluding lease liabilities is held at fixed rates of interest. This reflects the US$45 million of outstanding debt under the US private placement programme. The reduction from 2020 reflects the repayment of the first tranche of this debt of US$55 million in November 2021. Non-cash movements charged to net finance costs in the period include amortisation of capitalised borrowing costs of £0.5 million (2020: £0.5 million), pension interest cost of £0.1 million (2020: £0.2 million) and a loss on revaluation of fair value hedge of £0.1 million (2020: £Nil).
Forward exchange contracts
At 31 December 2021, the Group’s portfolio of forward exchange contracts at fair value amounted to a net liability of £0.3 million (2020: net liability of £0.2 million). The notional value of the portfolio was £24.3 million (2020: £23.7 million), comprising US dollar and Chinese renminbi forward exchange contracts with notional values of US$28 million and RMB30 million respectively (2020: US$23 million and RMB60 million). These contracts have a range of maturities up to 17 June 2022. During the year, a fair value loss of £0.1 million (2020: fair value gain of £0.3 million) was recognised directly in the income statement.
Taxation
The Group reported an income tax charge of £14.4 million (2020: £10.4 million), comprising a current tax charge of £17.3 million (2020: £14.1 million) and a deferred tax credit of £2.9 million (2020: credit of £3.7 million), reflecting an effective tax rate of 22.5% (2020: 21.8%). The increase in the income tax charge reflects the increase in profit before tax as well as the one-off release of an excess provision in 2020. The adjusted tax charge was £18.8 million (2020: £15.3 million) representing an adjusted effective tax rate of 23.1% (2020: 22.4%). During the period, the Group paid corporation tax of £17.7 million (2020: £13.8 million). This reflects a cash tax rate on adjusted profit before tax of 21.7% (2020: 20.2%). The increase reflects the higher charge and timing of payments on account.
Earnings per share
Basic earnings per share increased by 33.1% to 25.4 pence (2020: 19.1 pence). Adjusted earnings per share increased to 32.1 pence (2020: 27.2 pence), reflecting the increase in profit after tax. There is no material difference between these calculations and the fully diluted earnings per share calculations.
Annual Report and Accounts 2021
Tyman plc
41
STRATEGIC REPORT
| £m | 2021 | 2020 |
|---|---|---|
| Net cash generated from operations | 57.0 | 95.9 |
| Add: Pension contributions | 2.8 | 1.7 |
| Add: Income tax paid | 17.7 | 13.8 |
| Less: Purchases of property, plant and equipment | (16.1) | (9.9) |
| Less: Purchases of intangible assets | (4.5) | (0.6) |
| Add: Proceeds on disposal of PPE | 0.8 | – |
| Operational cash flow after exceptional cash costs | 57.7 | 100.9 |
| Exceptional cash costs | 0.2 | 4.2 |
| Operational cash flow | 57.9 | 105.1 |
| Less: Pension contributions | (2.8) | (1.7) |
| Less: Income tax paid | (17.7) | (13.8) |
| Less: Net interest paid | (8.8) | (12.5) |
| Less: Exceptional cash costs | (0.2) | (4.2) |
| Free cash flow | 28.4 | 72.9 |
Operational cash flow in the year decreased by 44.9% to £57.9 million (2020: £105.1 million), predominantly due to a significant working capital outflow of £33.9 million compared to an inflow of £8.3 million in 2020. Capital expenditure also increased to £20.6 million (2020: £10.5 million) after deferral of expenditure in 2020 due to COVID-19. Operating cash conversion in 2021 declined to 64.3% (2020: 130.9%). Free cash flow in the period was significantly lower than 2020 at £28.4 million (2020: £72.9 million), as a result of the lower operational cash flow and higher income tax payments on account, offset by lower interest payments and lower exceptional cash costs.
Bank and US private placement facilities available to the Group, as at 31 December 2021, were as follows:
| Facility | Maturity | Currency | Committed | Uncommitted |
|---|---|---|---|---|
| 2018 Facility | Feb 2024 | Multi-currency | £240.0m | £70.0m |
| 5.37 % USPP | Nov 2024 | US$ | US$45.0m | – |
| Other facilities | Various | € | €0.1m | – |
The first tranche of the USPP facility of US$55 million was repaid in November 2021.
At 31 December 2021 the Group had gross outstanding borrowings of £204.6 million (2020: £224.1 million), cash balances of £58.1 million (2020: £69.7 million), committed but undrawn facilities of £123.6 million (2020: £143.1 million), as well as potential access to the uncommitted £70.0 million accordion facility. This provides immediately available liquidity of £180.8 million (2020: £210.4 million). Net debt at 31 December 2021 was £145.8 million (2020: £153.2 million). Adjusted net debt, which excludes lease liabilities and unamortised finance arrangement fees was £91.7 million (2020: £100.6 million), with the reduction reflecting operational cash generation and movements in foreign exchange.
| Test Performance (1) | Headroom (2) | Headroom (2) | |
|---|---|---|---|
| Leverage < 3.0× | 0.9x | £79.8m | 77.8% |
| Interest cover > 4.0× | 17.6x | £79.2m | 77.2% |
At 31 December 2021, the Group retained significant headroom on its banking covenants. Leverage at the year end was 0.9x (2020: 1.1x), reflecting the higher adjusted EBITDA and lower level of net debt. Interest cover at 31 December 2021 was 17.6x (2020: 10.5x), largely reflecting the lower interest expense and an increase in EBITDA.
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42
Annual Report and Accounts 2021
Financial review continued
| £m | FY 2020 | Mvt FX | 2021 |
|---|---|---|---|
| Inventories | 84.0 | 53.9 | (0.1) |
| Trade receivables | 63.1 | 7.6 | (0.8) |
| Trade payables | (55.1) | (23.8) | 0.5 |
| Trade working capital | 92.0 | 37.7 | (0.4) |
Trade working capital at the year end, net of provisions, was £129.3 million (2020: £92.0 million). Inventories increased by £53.8 million to £137.8 million (2020: £84.0 million), in order to meet higher levels of demand, as well as to provide a buffer in light of the extended Chinese New Year period, energy restrictions in China, ongoing global freight disruption and the need to de-risk key material availability. The inventory build was also magnified by the impact of material cost inflation. The provision for slow moving and obsolete inventory is slightly higher at £19.5 million (2020: £18.9 million). Trade receivables increased by £6.8 million to £69.9 million (2020: £63.1 million) and trade payables increased by £23.3 million to £78.4 million (2020: £55.1 million), each as a result of the increased trading activity in the current year and impact of price increases, with trade payables also reflecting the increase in inventory. The increase in trade working capital was reduced slightly by £0.4 million relating to foreign exchange.
Gross capital expenditure increased to £20.6 million (2020: £10.5 million) or 1.61x depreciation (excluding RoU asset depreciation) (2020: 0.74x), as the Group resumed investment following the deferral of most non- essential expenditure in 2020 in light of COVID-19. Capital expenditure relating to intangible assets has increased significantly to £4.5 million (2020: £0.6 million) due to the commencement of a multi-year ERP upgrade. Net capital expenditure was £19.8 million (2020: £10.5 million), which included £0.8 million of proceeds from disposals.
At 31 December 2021, the carrying value of goodwill and intangible assets was £430.1 million (2020: £446.0 million). The reduction in goodwill and intangible assets mainly reflects amortisation of intangible assets through the income statement of £18.8 million (2020: £20.3 million).
Provisions at 31 December 2021 reduced to £6.2 million (2020: £8.9 million), primarily reflecting the release of provisions made on acquisitions that are no longer necessary given the passage of time.# Balance Sheet – Equity
At 31 December 2021, the total number of shares in issue was 196.8 million (2020: 196.8 million) of which 0.5 million shares were held in treasury (2020: 0.5 million).
At 31 December 2021, the EBT held 0.8 million shares (2020: 1.1 million). During the period, the EBT purchased 0.1 million shares in Tyman plc at a total cost of £0.3 million.
A final dividend of 8.9 pence per share (2020: 4.0 pence), equivalent to £17.4 million based on the shares in issue as at 31 December 2021, will be proposed at the Annual General Meeting (2020: £7.8 million). The total dividend declared for the 2021 financial year is therefore 12.9 pence per share (2020: 4.0 pence), reflecting a return to the Group’s progressive dividend policy after a pause in 2020 due to COVID-19 uncertainty. This equates to a Dividend Cover of 2.50x, in line with the Group’s target range of 2.00x to 2.50x adjusted EPS. The ex-dividend date will be 28 April 2022 and the final dividend will be paid on 27 May 2022 to shareholders on the register at 29 April 2022. Only dividends paid in the year have been charged against equity in the 2021 financial statements. Dividend payments of £15.6 million were paid to shareholders during 2021 (2020: £Nil).
ROCE increased by 220bps to 14.5% (2020: 12.3%) as a result of the strong adjusted operating profit, a reduction in the average carrying value of intangible assets through amortisation and the impact of foreign exchange movements on capital employed, partially offset by higher average working capital.
The principal foreign currencies that impact the Group’s results are the US dollar and the euro. In 2021, sterling was stronger against both the US dollar and Euro when compared with the average exchange rates in 2020.
| Translational Exposure | Currency | US$ | Euro | Other | Total |
|---|---|---|---|---|---|
| % mvt in average rate | 7.2% | 3.4% | |||
| £m Revenue impact | (27.9) | (2.9) | (3.1) | (33.9) | |
| £m Profit impact¹ | (1) | (4.4) | (0.4) | (0.6) | |
| 1c decrease impact² | (2) | 447k | 101k |
¹ Adjusted operating profit impact.
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 adjusted operating profit.
The net effect of currency translation caused revenue and adjusted operating profit from ongoing operations to decrease by £33.9 million and £5.4 million respectively compared with 2020.
Divisions that purchase or sell products in currencies other than their functional currency will potentially incur transactional exposures. For purchases by the UK and Ireland division from the Far East, these exposures are principally sterling/US dollar or Chinese renminbi. For purchases by the International division’s Australian business from the US and the Far East, these exposures are principally Australian dollar/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. Foreign exchange hedges of sterling against the US dollar and renminbi resulted in a loss of £0.1 million in 2021 compared to a gain of £0.3 million in 2020. The Group’s other transactional exposures generally benefit from the existence of natural hedges and are immaterial.
The Group aims to mitigate the translational impact of exchange rate movements by denominating a proportion of total borrowings in those currencies where there is a material contribution to Adjusted Operating Profit. Tyman’s banking facility allows for funds to be drawn in those currencies. The Group’s gross borrowings (excluding leases) are denominated in the following currencies:
| 2021 | 2020 | |||
|---|---|---|---|---|
| £m | Gross | % | Gross | % |
| US dollars | (105.2) | 70.2 | (108.2) | 63.5 |
| Euros | (44.6) | 29.8 | (62.1) | 36.5 |
| Gross borrowings | (149.8) | (170.3) |
Working capital will remain high due to the impact of inflation and to support supply chain resilience, with a minimal net cash flow impact year on year. Capital expenditure in the 2022 financial year is expected to be £25–£30 million, reflecting remaining catch up of expenditure deferred from 2020 and investment in new product development, operational excellence, and systems upgrades. Operating cash conversion is expected to increase to between 80%–90%, reflecting the elevated levels of working capital and the increased capital expenditure. The Group’s long-term target remains at 90% per annum. Leverage is expected to remain below the target range of 1.0× to 1.5× adjusted EBITDA absent any M&A activity. Interest charge is expected to be £7–£8 million, reflecting lower debt levels and a lower average interest rate. The adjusted effective tax rate is expected to be c. 23.0%–25.0%.
Jason Ashton
Chief Financial Officer
| Roadmap Pillar | Ambition | Plans | Targets |
|---|---|---|---|
| Define Grow Sustainable Culture | Transform our health, safety and environmental performance | • Safety is our first language • Reduce our carbon footprint • Water stewardship • Waste management |
• LTIFR < 1.0 by 2022 • TRIR < 3.0 by 2026 • Carbon neutral operations by 2030 (Scope 1 and 2 emissions) • 40% water reduction /£m revenue by 2022 • Zero waste to landfill by 2026 |
| Define Grow Sustainable Culture | Be recognised as an employer that people want to work for | • Employee engagement • Diversity, equity & inclusion • Growing our talent • Community partnerships |
• Gender diversity >30% at all levels |
| Define Grow Sustainable Culture | Help our customers protect the planet and create safer, more inclusive communities | • Positive-impact solutions • Circular economy • Sustainable materials • Responsible sourcing |
• YoY increase in % revenue from positive impact solutions • 100% sustainable packaging by 2026 |
During 2021, the Group began work to embed the Tyman sustainability roadmap into its strategy and positively impact the UN SDGs through sustainable operations, sustainable culture and sustainable solutions. Sustainability resources were strengthened at divisional level with the appointment of two new sustainability managers to help drive the deployment of divisional sustainability plans. Early priorities have included completing the roll-out of the Group safety leadership programme, establishing global safety standards to address areas of highest risk, eliminating single-use plastic packaging, reducing water, waste and operational carbon emissions and developing more sustainable products. External advisers were appointed to support the delivery of two new climate related workstreams to strengthen the long-term resilience of the Group. The first, on setting a Science Based Target (SBT) has quantified the Group’s value chain carbon footprint and the second, deepened the Group’s understanding and disclosures of climate related risks and opportunities in response to the TCFD framework. Read more about the TCFD framework on pages 68 to 77. Sustainability excellence is embedded in our ‘Focus, Define, Grow’ business strategy. For Tyman, this means addressing our own operational climate impacts as well as designing products that promote climate resilience through energy efficiency, hazard protection and product decarbonisation. TCFD provides us with a framework to systematically assess climate impacts so we can build business resilience and ultimately drive positive environmental and societal impact through more sustainable solutions. We are pleased to be an official TCFD supporter in October 2021.”
Jo Hallas
Chief Executive Officer
The sustainable operations strategy pillar aims to transform our health, safety and environmental performance through operational excellence.
| Goal | SDG | Target | Our Planned Contribution | Find Out More |
|---|---|---|---|---|
| Target 8.8 Promote safe and secure working environments for all workers. | Achieving world-class levels of safety performance and wellbeing programmes across the Group’s global operations. | Safety excellence (page 48) | ||
| Target 6.4 By 2030, substantially increase water-use efficiency and address water scarcity. | Achieving water efficiency targets and undertaking water stress mapping to identify priority areas for improvement in our operations. | Water stewardship (page 58) | ||
| Target 7.2 By 2030, increase substantially the share of renewable energy in the global energy mix. | Energy efficient operations, use of renewable electricity supplies and on-site renewables to reduce our emissions of greenhouse gases. | Energy and GHG emissions (page 54) | ||
| Target 12.5 By 2030, substantially reduce waste generation through prevention, reduction, recycling and reuse. | Waste minimisation and zero waste to landfill in our operations. | Waste management (page 58) |
Safety is our first language. It is a focus at every level of the Group from the Board and ExCo to divisional leadership teams, site management and functional teams.# Sustainability review continued
Local management is responsible for health and safety performance with oversight provided by dedicated Health, Safety and Sustainability (HSS) leads in place in each division. All our businesses have health and safety management systems in place to identify, control and take action on risks in the workplace, alongside training, audits and local management reviews. Where considered appropriate for their particular markets, our businesses also seek external certification to international health and safety standards. Following the divestment of Ventrolla, two UK plants (Henlow and Newton Aycliffe) are certified to ISO 45001.
Safety leadership training, together with the deployment and audit of Group safety standards formed the safety excellence priorities for 2021. Since its launch in early 2020, nearly 500 people managers have successfully completed the Group’s flagship two day safety leadership programme, equipping them with the skills to engage and coach their teams on safety. Now that the initial phase of deployment is complete, it has been extended to new hires. Four Group safety standards were deployed during the year covering key areas of risk for machinery safety, working at height, manual handling and forklift truck operations. This brings the total implemented to date to six, with Lock Out Tag Out (LOTO) and electrical safety deployed in the previous year. Two new standards on confined space entry and contractor management are planned for 2022.
For all standards, each Tyman facility completes a gap analysis against the requirements and develops a corrective action plan to address areas for improvement. These plans and compliance with the requirements of the standard are then checked with divisional audits. Over 1,100 corrective actions were closed out in 2021 and more than 30 audits completed using internal or external resources. A ban on using hands-free mobile phones while driving on company business has also been introduced following a review of the compelling research on this topic.
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48 Annual Report and Accounts 2021
| Board of Directors | Health and safety management systems provide feedback to local management on effectiveness of health and safety arrangements |
|---|---|
| Chief Executive Officer | Overall accountability for health and safety performance across the Group |
| Executive Committee | • CEO accountability discharged to local management through the Executive Committee • Divisional presidents regularly review performance and effectiveness of arrangements |
| Local Management | • Responsible for health and safety performance • Adherence to Group and divisional health and safety policies, standards, reporting requirements • Compliance with health and safety regulations |
| Health and Safety Management Systems | • Health and safety committees • Identify, assess and take action to control risks, including safe working practices • Employee training & engagement • Audit and management review |
Local management report on health and safety performance at least weekly to divisional presidents. Divisional presidents report performance monthly to Tyman CEO at BPR meetings.
The deployment of Group safety standards goes beyond local regulatory requirements by introducing globally applicable best practice safety measures and encourages innovative approaches to reduce risk. Following the introduction of the machinery safety standard, our plant in Brampton, Canada used 3-D printing to make new bespoke guards for stacker machines (left) and riveter machines (right). £390k was invested in new and replacement guards across the plant.
3-D printed machinery guarding, Brampton, Canada
Annual Report and Accounts 2021 Tyman plc
49
| Targets | 2021 | 2020 | 2019 | 2018 | 2017 | |
|---|---|---|---|---|---|---|
| Lost Time Incident Frequency Rate (LTIFR) 2 | <1.0 by 2022 | 4.4 | 3.1 | 4.0 | 4.8 | 6.2 |
| Total Recordable Incident Rate (TRIR) 3 | <3.0 by 2026 | 9.9 | 7.5 | 7.6 | n/a | n/a |
| Number of fatalities | 0 | 0 | 0 | 0 | 0 | |
| Number of serious incidents 4 | zero | 0 | 1 | 4 | n/a | n/a |
| Number of lost time incidents | 37 | 23 | 34 | 44 | 49 | |
| Number of Hi-Potential Near Miss Incidents 5 | 18 | 24 | 21 | n/a | n/a | |
| Number of safety improvement opportunities (unsafe act/condition) | 7,439 | 7,348 | 10,065 | 9,756 | 7,994 | |
| Number of safety leadership tours | 2,603 | 1,635 | 1,363 | n/a | n/a | |
| Hours worked | 8,371,887 | 7,377,696 | 8,598,679 | 9,141,132 | 7,962,376 |
1 Covers all permanent and agency staff working under the Group’s direct supervision worldwide. Injuries to visitors or contractors reported separately.
2 Lost Time Incident Frequency Rate per 1 million hours worked (incidents resulting in one or more days away from work, excluding the day of the incident) including 21 COVID-19 cases resulting from workplace transmission at two locations in North America and two in the UK in 2021 (2020: 12 cases). All affected employees testing positive for COVID-19 following workplace transmission have returned to work following completion of self-isolation. The LTIFR excluding COVID-19 cases for a like-for-like comparison to previous years is 1.9 for 2021 (2020: 1.5).
3 Total Recordable Incident Rate for all work-related injuries or illnesses to employees/agency staff that causes fatality, unconsciousness, lost workdays, restricted work activity, job transfer or medical care beyond first aid, per 1 million hours worked. Includes 21 x COVID-19 workplace transmission cases in 2021 (2020: 12). The TRIR excluding COVID-19 cases for a like-for-like comparison to 2019 is 7.4 in 2021 (2020: 5.8).
4 Serious incidents are those deemed life threatening or life changing due to their severity.
5 HiPo incidents did not cause serious injury but could have done under different circumstances.
6 Revised definition introduced from 2020 excluding all types of absence such as holiday, furlough and other non-working time.
Scan this QR code to access the Tyman sustainability data table with all the Group’s safety metrics recorded.
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50 Annual Report and Accounts 2021
1 Workplace transmission cases due to likely exposure to COVID-19 following ‘close contact’ identified in the work environment (<2m for 15 minutes or more).
High levels of operational intensity and the COVID pandemic negatively impacted the Group’s core safety metrics covering the LTIFR and TRIR during the year. The LTIFR, including COVID workplace transmission cases, increased by 42% to 4.4 (2020: 3.1) and the TRIR by 33% to 9.9 (2020: 7.5). For the first time in three years, no serious life-changing injuries were sustained. A detailed analysis of the physical, non-COVID related, lost time and other recordable injuries was undertaken during the year and nearly half (48%) were sustained by employees with less than a year’s service. Furthermore, the plants in Atherstone, Budrio, Owatonna and Statesville accounted for over two-thirds (69%) of all injuries. Safety improvement plans have been deployed for these plants including improved new hire training, supervisor leadership development and coaching, reinvigorated safety leadership tours and employee engagement measures, together with the targeted application of structured problem solving techniques through safety kaizen events. Progress against these plans will be tracked going forward.
One lost time injury was reported during the year involving a contractor operating a forklift truck in our Budrio warehouse, where he bruised his back. Forklift truck operations are outsourced at this facility, using their own vehicles and this incident was subject to an investigation by the local authority. This is a rare event for the Group and the first one recorded in the three years that this metric has been in place. Despite the disappointing number of injuries this year, many of the Group’s plants continue to achieve safety excellence. 13 of our 19 manufacturing plants recorded zero lost time incidents in 2021, 10 have achieved two years since an LTI and both the Brampton and Zanesville plants have gone more than five years since an LTI. The Group’s performance remains well below comparable industry benchmarks that give an LTIFR between 5.5 – 8 and a TRIR of 17.5 - 26. The Group is committed to building a culture of safety excellence for the long-term and uses a number of leading indicators to track progress towards this goal. The number of safety leadership tours and safety improvement opportunities are both trending upwards versus the prior year. Lessons learned from Hi-Potential near miss and other incidents are shared across the Group and where appropriate Group safety alerts are issued and corrective actions tracked to closure. Health surveillance programmes are also in place across the Group for routine exposures such as noise and airborne dust/fume from painting and welding. No occupational health exposures resulted in lost time during the year (2020: zero).
1 Source: US Bureau of Labor Statistics 2020 for other plastics manufacturing (NAICS 32619), window and door manufacturing (332321), hardware manufacturing (3325) and turned product and screw, nut and bolt manufacturing (33272) https://www.bls.gov/web/osh/summ1_00.htm
During the year the pandemic remained an ongoing operational challenge, with exposure outside of the workplace driving cases internally.# Tyman plc 51
The COVID-19 pandemic has heightened societal awareness of mental health and wellbeing. High levels of product demand during the year placed additional pressures on the Group’s employees worldwide, including those in customer facing and procurement roles. A number of interactive and highly impactful personal resilience and conflict resolution courses were run across the Group to help employees find the right coping strategies that worked for them. Trained Mental Health First Aiders are in place in the UK. An Employee Assistance Programme has been deployed across the Group and practical research continues on wellbeing initiatives.
Following a research project initiated in 2020 with the University of Padua, 40 managers at our two Italian plants completed three days of wellbeing training in 2021 covering health leadership, positive management, team working and conflict resolution. A ½ day wellbeing awareness course will be rolled out to all employees in Italy through a train-the-trainer approach in collaboration with the university.
Employee Assistance Programme (EAP) services available to employees in the US and the UK, have now been extended to all employees globally. A range of free to use, confidential services for emotional support and counselling are now available 24/7 covering work-life issues such as relationship management, coping with grief or stress, alcohol or drug misuse and finding solutions to work-related issues or conflict. Employees can access the service via an App, website, telephone or through to face-to-face support. During 2022, four facilities will be collaborating with the University of Padua and King’s College London through two research projects to understand how best to leverage these EAP services to improve employee wellbeing.
Tyman plc 52
Annual Report and Accounts 2021 Tyman plc 53
Our businesses maintain policies and programmes for managing the environment, including compliance with local regulations. These policies and management systems cover areas such as the use of materials, are aligned to the principles of reduce, re-use and recycle and ongoing energy and water efficiency programmes. These measures help improve production efficiencies, deliver compliance with legal obligations, reduce costs and minimise the Group’s environmental impacts. Where considered appropriate for their particular markets, our businesses also seek external certification to international environmental standards. Eight locations in the UK and Italy have environmental management systems in place that are externally certified to the ISO 14001 international standard, representing 28% of the Group’s revenue (2020 22%). We believe our approach to a more sustainable future is best served through the targets and ambitions set out in our sustainability roadmap (see page 46) rather than extending the procedural elements of ISO 14001 to other locations.
The Group measures and reports its global Greenhouse Gas (“GHG”) emissions according to the UK Companies Act 2006 (Strategic Report and Directors’ Reports) Regulations 2013. Scope 1 and 2 emissions are reported and in line with best practice under the Science Based Target initiative (SBTi) including relevant categories of Scope 3 emissions. The Group applies the GHG Protocol as the basis for reporting GHG emissions from its manufacturing, warehousing and office facilities over which it has operational control. The Group’s Scope 1 and 2 emissions in TCO 2 e per £m revenue decreased by 7% in 2021 to 62.3 (2020: 67.1, restated). This reduction is a combination of improved operating efficiencies driven by revenue growth, a smaller footprint following the divestments/disposals announced in 2020, greening of the electricity grid and energy saving initiatives. These initiatives include switching from propane gas powered to electrically charged forklift trucks in Cannon Falls and Sydney, installing a new compressed air system for the Budrio paint plant and LED lighting upgrades at the Monterrey, Valinhos and Trumann manufacturing plants, and the Zoo warehouse in Carlisle. The installation of a new 1.2MW roof-top solar array and electric vehicle charging points at our Wolverhampton, UK facility has also commenced and will be complete in early 2022. This is expected to generate up to 50% of the site’s electrical power needs. Identifying and implementing more energy efficiency projects will be a major focus in 2022, supported by the deployment of a sustainable operations playbook to share best practice measures to save energy, water and waste.
| Scope 1 and 2 emissions | TCO 2 e / £m revenue | 2017 | 2018 | 2019 | 2020 | 2021 |
|---|---|---|---|---|---|---|
| 73.5 | 80.0 | 69.5 | 67.1 | 62.3 |
| 0.00 | 10.00 | 20.00 | 30.00 | 40.00 | 50.00 | 60.00 | 70.00 | 80.00 | 90.00 | 100.00 | |
|---|---|---|---|---|---|---|---|---|---|---|---|
| 2017 | 73.5 | ||||||||||
| 2018 | 80.0 | ||||||||||
| 2019 | 69.5 | ||||||||||
| 2020 | 67.1 | ||||||||||
| 2021 | 62.3 |
| Water consumption | m3/£m revenue | 2017 | 2018 | 2019 | 2020 | 2021 |
|---|---|---|---|---|---|---|
| 889 | 836 | 818 | 452 |
| 0 | 200 | 400 | 600 | 800 | 1000 | |
|---|---|---|---|---|---|---|
| 2017 | 889 | |||||
| 2018 | 836 | |||||
| 2019 | ||||||
| 2020 | 818 | |||||
| 2021 | 452 |
Tyman plc 54
| 2026 Target | 2021 | 2020 | 2019 (baseline) | 2018 | 2017 | |
|---|---|---|---|---|---|---|
| UK Scope 1 emissions (TCO 2 e) | 549 | 711 | ||||
| Offshore (outside UK) Scope 1 emissions (TCO 2 e) | 12,010 | 10,959 | ||||
| Total global Scope 1¹ direct emissions TCO 2 e | 12,559 | 11,670 | 12,627 | 13,988 | 12,046 | |
| UK Scope 2 emissions (TCO 2 e) | 1,077 | 1,057 | ||||
| Offshore (outside UK) Scope 2 emissions (TCO 2 e) | 25,962 | 25,681 | ||||
| Total global Scope 2² indirect emissions TCO 2 e – location based | 27,039 | 26,738 | 30,002 | 33,327 | 26,376 | |
| Total global Scope 2³ indirect emissions TCO 2 e – market based | 27,039 | 26,738 | 30,002 | 33,327 | 26,376 | |
| Total direct and indirect emissions (Scope 1 & 2) TCO 2 e | 39,598 | 38,408 | 42,629 | 47,315 | 38,423 | |
| Intensity ratio (Scope 1 & 2) TCO 2 e per £m revenue | 34.7 | 62.3 | 67.1 | 69.5 | 80.0 | |
| Global energy consumption used to allocate above emissions | 136,235,840 | 127,049,716 |
| Scope 3 5 indirect emissions | 2021 | 2020 | 2019 | |
|---|---|---|---|---|
| Purchased goods and services (metals & polymers) – category 1a | – | 274,508 | 337,543 | |
| Upstream transportation & distribution (category 4) | – | 12,441 | 19,521 | |
| Use of sold products (category 11) | – | 39,821 | 28,715 | |
| Total Scope 3 5 other indirect emissions TCO 2 e (category 1a, 4, 11) | – | 326,771 | 385,780 |
1 Direct emissions through combustion of fuels and process emissions using DEFRA GHG and IEA conversion factors. Refrigerant emissions, e.g. from process and building cooling systems were collected for the first time in 2021 – accounting for 125 TCO2e. Restated emissions in 2020 and 2019 following updated natural gas consumption data. Broken down by UK and offshore emissions required by SECR (see below).
2 Indirect emissions through consumption of electricity (location-based method) using the latest DEFRA GHG and IEA conversion factors. 2020 emissions restated to reflect latest IEA data. Broken down by UK and offshore emissions required by SECR (see below).
3 Indirect emissions through consumption of electricity (market based method).
4 Required by the UK Government’s Streamlined Energy and Carbon Reporting (SECR) using DEFRA conversion factors for natural gas and combustion of fuels for heating and process use, electricity consumption and transport fuel (from quantities consumed) across the Group’s global operations.
5 Updated emissions inventory following full value chain mapping exercise conducted as part of the Science Based Target setting exercise to establish the Group’s baseline, replacing earlier estimates for 2019-2020. Selected emissions sources only, full reporting of 10 applicable Scope 3 emissions categories is available online in the Tyman sustainability data table.
6 Calculated in 2021 using US EPA’s EEIO supply chain emissions factors based on a mix of material weight and spend data as part the Group’s SBT work.# STRATEGIC REPORT
| Category | Percentage | Details |
|---|---|---|
| Raw materials | 72.2% | • Aluminium 29.2% • Steel 8% • Zinc 8.7% • Plastics / polymers 17.2% • Packaging 1.3% • Brass / other metals 1.2% • Specialised components / motors / batteries 6.5% |
| Purchased goods & services (indirect) | 1.0% | |
| Upstream transportation & distribution | 4.2% | |
| Natural gas & vehicle fuel | 2.7% | |
| Electricity | 6.4% | |
| Fuel & energy related activities | 1.5% | |
| Business travel | 0.4% | |
| Capital goods | 1.0% | |
| Waste generated in operations | 0.3% | |
| Employee commuting | 1.7% | |
| Downstream transportation & distribution | 1.3% | |
| Products in use (electro-mechanical & smartware) | 6.1% | |
| End-of-life disposal/ treatment of sold products | 1.4% | |
| Scope 1: | 12,627 | 3% |
| Scope 2: | 30,002 | 6% |
| Scope 3: | 424,969 | 91% |
Value Chain Carbon Footprint (2019)
13.9%73.2% 4.2%
The Group formally committed to setting a Science Based Target (SBT) in February 2021 and completed the first step in developing this target by quantifying its Scope 3 footprint, building on its existing measurement of Scope 1 and 2 emissions. In its baseline year of 2019, 91% of the Group’s total carbon footprint of 467,598 tonnes, was attributable to Scope 3 emissions. Raw materials are the biggest contributor, at 72% of the total, driven by the Group’s purchasing of aluminium, steel, zinc and polymers. A further 4% of the footprint is covered by upstream logistics and 6% is estimated to come from products in use over their design lifetime, driven by the Group’s smartware home security products and electro-mechanical components for windows and roof-hatches. The Group examined both its 2019 and 2020 footprint and elected for the former in determining is baseline, to remove the impact of COVID lockdowns the following year. Scope 3 emissions in 2020 declined in all categories reflecting reduced product sales, with the exception of product in-use emissions which recorded a rise following the launch of the new ERA home protect and security floodlight range of products. Now that the Group has established its 2019 Scope 3 emissions baseline, work will continue in 2022 to develop the target to reduce these emissions in line with the climate science before submitting it to the SBTi for validation, and develop the measurement systems to track progress against the most important categories such as materials.
With raw materials dominating the footprint, the Group identified three opportunities to decarbonise its products. These include selecting lower carbon materials where possible (steel has a lower embodied footprint than aluminium for example), optimising product designs to minimise the amount of material used in the product (dematerialisation or lightweighting) and specifying increased levels of recycled content as part of a circular economy approach (see page 66). Addressing the Group’s Scope 1 and 2 footprint (principally natural gas and electricity use) will involve a phased approach comprising the wider adoption of best practice energy efficiency measures, procuring 100% renewable electricity where available, deploying renewable energy technologies such as solar, switching to hybrid and battery electric company vehicles and as a last resort, using carbon removal technologies such as nature-based carbon offsets to tackle the remaining hard-to-reduce emissions.
Tyman plc56 Annual Report and Accounts 2021
| Category | Percentage | Details |
|---|---|---|
| Raw materials | 72.2% | • Aluminium 29.2% • Steel 8% • Zinc 8.7% • Plastics / polymers 17.2% • Packaging 1.3% • Brass / other metals 1.2% • Specialised components / motors / batteries 6.5% |
| Purchased goods & services (indirect) | 1.0% | |
| Upstream transportation & distribution | 4.2% | |
| Natural gas & vehicle fuel | 2.7% | |
| Electricity | 6.4% | |
| Fuel & energy related activities | 1.5% | |
| Business travel | 0.4% | |
| Capital goods | 1.0% | |
| Waste generated in operations | 0.3% | |
| Employee commuting | 1.7% | |
| Downstream transportation & distribution | 1.3% | |
| Products in use (electro-mechanical & smartware) | 6.1% | |
| End-of-life disposal/ treatment of sold products | 1.4% | |
| Scope 1: | 12,627 | 3% |
| Scope 2: | 30,002 | 6% |
| Scope 3: | 424,969 | 91% |
1.3% 6.1% 1.4%
2030
Mitigating Scope 1 and 2 emissions | Mitigating Scope 3 emissions (materials)
------------------------------------ | ---------------------------------------
Energy efficiency (no/low cost and capital expenditure projects) | Key
Procuring 100% renewable electricity and green gas | Weight optimisation
On-site/off-site renewables (solar panels and power purchase agreements) | Material selection
Hybrid/electric vehicles | Recycled content
Greenhouse gas removals for hard-to-reduce emissions (including nature- based solutions) |
Scope 1 emissions |
Scope 2 emissions |
Scope 3 emissions |
Annual Report and Accounts 2021 Tyman plc 57
The Group has achieved its 2022 water efficiency target a year early, decreasing its use by 45% in 2021 to 452 m3 per £m revenue (2020: 818 m3/£m). This was driven by the successful commissioning of a new closed-loop water recovery system for cooling die-cast zinc components and the elimination of a process wash stage for the treatment of stainless steel components in Owatonna. These actions saved 189,000m3 of water versus the prior year, the equivalent of 75 Olympic sized swimming pools.
| Water sources | 2022 Target | 2021 | 2020 | 2019 | 2018 | 2017 |
|---|---|---|---|---|---|---|
| Municipal authorities (m3) | 263,683 | 450,956 | 493,369 | 510,973 | 464,570 | |
| Ground water (m3) | 1 | 23,904 | 17,426 | 19,965 | 14,985 | |
| Total Water usage (m3) | 287,587 | 468,382 | 513,334 | 525,958 | 464,570 | |
| Water use m3 per £m revenue | 502 | Achieved | 452 | 818 | 836 | 889 |
1 Two plants (Mexico and Brazil)
On completion of the water stress mapping exercise being undertaken as part of TCFD response (page 68), plans for updated site-specific targets in known areas of high water stress will be developed in 2022.
The Group generated 7,410 tonnes of waste in 2021, of which 34% was sent to landfill (2020: 35%) and 66% was recycled/recovered (2020: 65%). Effort was focused on improving both the quality of the Group’s data and implementing opportunities to move towards our zero waste to landfill target for both hazardous and non-hazardous wastes. 45 tonnes of process plastic scrap was diverted from landfill in Juarez and Statesville through re-grinding and re-using to make new product. Hazardous waste represents a relatively small proportion of the total (8%) comprising materials such as oil contaminated rags, cutting fluids, chemicals and fluorescent light tubes.
| Waste arisings | 2022 Target | 2021 | 20201 | 2019 |
|---|---|---|---|---|
| Tonnes non-hazardous waste to landfill | 2,118 | 2,083 | 2,301 | |
| Tonnes hazardous waste to landfill | 367 | 418 | 432 | |
| Tonnes non-hazardous diverted from landfill (recycling, incineration, composting etc.) | 4,677 | 4,363 | 4,744 | |
| Tonnes hazardous diverted from landfill (recycling, incineration) | 248 | 155 | 148 | |
| Tonnes total waste arising | 7,410 | 7019 | 7,625 | |
| % total waste to landfill | Zero | 34 | 35 | 36 |
| Intensity ratio: total waste (non-hazardous & hazardous) | 11.7 | 12.3 | 12.4 |
1 Restated to reflect correct classification.
Biodiversity is on the Group’s radar. By executing its strategy to decarbonise its value chain emissions by conserving resources through a circular economy approach, switching to more renewable forms of energy and using nature-based carbon removals for hard-to-reduce emissions, the Group will reduce adverse impacts on biodiversity too. Ongoing projects to eliminate the use of single-use plastics and switching to more responsibly sourced packaging will also minimise plastic pollution and help conserve natural habitats. The Group will continue to track developments and best practices in this area.
Tyman plc58 Annual Report and Accounts 2021
The sustainable culture pillars aims to build an ethically-led business which is recognised as employer that people want to work for.
| Goal | SDG target | Our planned contribution | Find out more |
|---|---|---|---|
| Target 16.5 Substantially reduce corruption and bribery in all its forms. | Building a culture of strong ethical practices at all levels in the Group. | Ethics and compliance (page 59) | |
| Target 4.7 By 2030, ensure all learners acquire the knowledge and skills needed to promote sustainable development. | Growing our talent through life-long learning; harnessing the creativity of our people in delivering more sustainable outcomes. | Training and development (page 61) | |
| Target 10.2 By 2030, empower and promote the social, economic and political inclusion of all. | Engaging all our people, promoting diversity and developing partnerships and plans to help address social inequalities in our local communities. | Diversity, equity and inclusion (page 62) Our communities (page 63) |
The Group believes that high standards of business ethics are integral to the development of its culture and future growth. Therefore, as enshrined in the Group’s “Code of Business Ethics: “Integrity in Action”, which was published in early 2021, we seek to maintain a reputation for integrity in all our business dealings, and our relationships with authorities, regulators and our workforce. In 2021, as part of the “One Tyman” implementation, the Group took steps to further strengthen its cultural cohesion by implementing a comprehensive and robust business ethics and compliance programme that also aligned with the Group’s purpose and values. This programme covers activities that will educate, empower, examine and enforce ethical behaviours throughout the Group. Its design and implementation was overseen by the Group’s Ethics Steering Committee – a geographically and culturally diverse cross-functional team drawn from across the divisions.# At the heart of the business ethics and compliance programme is the Group’s Code of Business Ethics. To ensure that the new Code builds on the existing cultural strengths of the divisions, it was drafted with the support of the Ethics Steering Committee and was shaped by input from groupwide employee focus groups. The Code was deployed to all employees through workshops across all but two sites of the Group in 2021; the last two sites will conduct these workshops in Q1, 2022. A standardised approach to the conduct of each workshop was developed to ensure that the Code’s material and messages would be consistently communicated to all employees. At each such workshop, with the support of a video message from the Group’s Executive Committee, the participants discussed the Group’s purpose and values before discussing how the Code would help the Group and each of its individual stakeholders achieve their ethics goals. The workshop facilitator then demonstrated how each participant could use the Code’s “Integrity Check Tool” (see Figure 1) to help them consider and deal with ethical dilemmas before the participants were given opportunities to work through scenarios that they might encounter in their roles.
If the answer to any of these is “no” or “not sure”, stop and re-consider your options or ask for help. Think about how your final decision can be best communicated to all those impacted.
Can you speak to your line manager about your question or concern?
Can you speak to another leader in your area?
Can you speak to a specialist (e.g. HR, Legal) or your Integrity Champion?
If none of these work then contact the Tyman SpeakUp line.
Contact your line manager
Contact another leader
Contact the relevant specialist
Use the SpeakUp line
YES YES YES YES
NO NO NO
The workshop participants then walked through the process for escalating their concerns (see Figure 2) and were introduced to the Tyman SpeakUp line. The facilitators highlighted that the Group does not tolerate any form of retaliation for genuine concerns and the fact that the Group respects the anonymity of reporters in accordance with local law. In addition to the deployment of the new Code, a risk-based approach was taken when training the different sites on various business ethics and compliance topics. The Group’s General Counsel & Company Secretary worked closely with each of the divisions to identify areas of such risk before engaging appropriate external facilitators to run workshops that resulted in recommendations for documentary and local policy or procedure amendments. In 2022, a network of “Integrity Champions”, who are drawn from each site, will help to embed ethical decision making and knowledge of business ethics and compliance topics deep in the Group.
Review and adapt (if necessary) the business ethics and compliance programme material to help with local understanding and adoption and to meet the needs of the local operating environment.
Act as a point of contact and source of advice for employees when they have a question about the Code, concerns about conduct or face an ethical dilemma.
Generate a meaningful awareness of the importance of ethics and the Group’s values among their colleagues and expand the ethics vocabulary and imagination of their colleagues.
Arrange, deliver or support the design of training and campaigns about ethics, values or compliance standards. They will include with the development of relevant case studies and other training materials based on their experience and knowledge of local issues and conditions.
Help track the implementation of the business ethics and compliance programme, and identify relevant issues and areas of risk.
The General Counsel & Company Secretary advises the Board when exercising its oversight over the development, implementation and effectiveness of the Code. The Group appreciates that the freedom to raise concerns is a core component of a high-performing, sustainable and ethical business culture where employees are confident that they will be supported to ‘do the right thing’. In June 2021, the Group consolidated its two external whistleblowing platforms onto a single one run by NAVEX Global and relaunched this “speak up” facility to promote the focus on the “employee voice” and to signal the conscious cultivation of an open culture. Ten ‘Speak up’ reports were received in 2021 (2020: 13). Each allegation was investigated under the oversight of the General Counsel & Company Secretary, and the findings of each investigation and any corrective action taken were reported to the Board. In 2021, two reports were determined to be warranted breaches of our Code on Working Together: one resulted in the reallocation of duties and the other resulted in the dismissal of an employee. The Group does not know of it being subject to any regulatory investigation during 2021 and confirms that it did not have to pay any fines for material regulatory breaches in this period. In 2022, the Group aims to further promote general awareness of and confidence in the Group’s Speak Up Programme by working with the Ethics Steering Committee and Integrity Champions network.
Training and development programmes across the Group during the year, prioritised the deployment of the Group’s purpose, values and Code, together with safety leadership and lean excellence as well as ongoing technical/functional/ development training. Total training hours during 2021 increased to 89,376 of which 42,278 were safety related (2020: 47,625 of which 23,656 hours were safety-related). Participants in the purpose, values and code of ethics training were equipped with the skills to enhance their personal impact to help facilitate local discussions on how best to convert the content in meaningful action and positive behaviour change. Following on from the successful deployment of the safety leadership course (page 48), the Group launched its “Lean Excellence” training programme under the auspices of the Shingo Institute. Thirty-three executive-level and practitioner level leaders attended three virtual workshops and 14 course modules respectively. This programme aims to build long-term continuous improvement capabilities and culture across the organisation to deliver sustained results. It is already delivering benefits in other areas of the Tyman Excellence System such as safety and process scrap reduction. The Group employs 46 apprentices in Brazil, Canada, Germany, Italy, the UK and US covering specialist toolroom trades and die making, production, maintenance, sales, warehousing, IT and purchasing roles. In partnership with Sheridan collage, the Group’s Brampton facility is hiring the next generation of skilled screw machine operators, with six recruited in the past year.
When adjusting the LTIP and STIP pay structure, webinars were organised with HR leadership and scheme participants to discuss the operation of these schemes, including the behaviours that they aim to encourage. The Board Director with responsibility for workforce engagement also provided a good conduit for direct engagement with the workforce about a range of issues including remuneration. The Group strongly believes in fairly rewarding its employees. In the UK, the Group has committed to ensuring that all its employees are paid the Real Living Wage as from 1 January 2022.
The Group kicked off 2021 with two “mini virtual conference” sessions for over 100 of its leadership population to update them on Tyman’s strategic initiatives and to deploy the Group’s purpose, values and Code of Business Ethics. All locations carry out communications programmes to engage their employees around important topics including expected behaviours and business updates. Communication methods include town hall meetings, team briefings, noticeboards (including TV boards), training sessions, newsletters, Works Council meetings, employee engagement focus groups, leadership tours/Gemba walks, skip-level meetings, supervisor networks and employee recognition events, together with an increasing emphasis on video conferencing, webinars and video messages. Pamela Bingham, in her role as Non-executive Director and Board member responsible for employee engagement, continued meeting employees at all levels in the business to understand local challenges, identify best practices and promote a direct link to the Board. Eight virtual and in-person meetings were held during the year with cross functional representatives from sites in Italy, the UK and the US (2020: nine). 30% of our employees belong to a recognised trade union (2020: 28%). In addition to trade union representation, a number of Works Councils exist, where required by legislation, together with other employee consultation groups including safety committees. The Group continues to have positive and constructive relationships with our trade unions that collectively represent its employees.
To support its growth, the Group draws on the skills, experiences and insights of a diverse workforce.# Tyman plc 62 Annual Report and Accounts 2021
2021: £80,641
* Company cash donation to charity £50,822
* Employee cash donation to charity £26,760
* Value of staff time volunteered in company hours £2,066
* In-kind contributions to local communities £993
The management of community programmes has traditionally been undertaken locally, with each business focusing on those causes and relationships important to them. During 2021 these included donations to food banks and educational supplies to schools, fundraising for emergency relief/re-building programmes, medical research, pandemic safety equipment, tree planting, scholarships and contributions to other charitable organisations. The Group’s total community investment in 2021 increased to £80,641 (2020: £68,384) with 60 fund-raising activities benefitting children, the elderly, homeless and other disadvantaged groups.
During 2021, three core themes were identified for a more co-ordinated approach across the Group. These are housing projects for disadvantaged people, STEM education programmes and environmental protection/ restoration initiatives. In the coming year, each division will further develop their plans and build partnerships where appropriate with non-profit organisations and customers under these themes to leverage a collective contribution to minimising equalities in our society. These engagements will provide an opportunity for the Group’s employees to bring its purpose and values to life, benefitting both the business (through retention, attraction and development) and the communities in which we are part.
Reguitti supports reforestation in the Fiemme Valley in the Dolomites
The sustainable solutions pillar aims to help our customers protect the planet and create safer, more inclusive communities. According to the UK Committee on Climate Change, decarbonising and adapting the UK’s housing stock of 29 million homes is critical to meeting the country’s net zero ambitions by 2050. New and replacement windows and doors are part of the solution to decarbonising the world’s housing stock and the Group is well placed to benefit from this transition through its current and future product offer. Developing new products that deliver positive environmental or social outcomes in use and in how they are formulated will contribute to both the UN SDGs and to business growth.
| SDG Target | Our planned contribution | Find out more |
|---|---|---|
| Target 7.3 By 2030, double the global rate of improvement in energy efficiency. | Products that save energy by reducing thermal losses in buildings such as Q-Lon window seals and thermally insulated roof hatches (climate change mitigation). | Sustainable products (page 65) |
| Target 13.1 Strengthen resilience to adaptive capacity to climate-related natural disasters. | Severe weather protection solutions such as high strength multi-point hinged patio door locks and roof hatches for hurricane vulnerable zones (climate change adaptation). | Sustainable products (page 65) |
| Target 11.1 By 2030, ensure access for all to adequate, safe and affordable housing. | Products that reduce community crime rates (alarms and high-security certified locks or proven in crime reduction studies), prevent injury and/or ill-health (fire protection products and fall prevention e.g. Pegasus and SafeGard™ child safety devices for windows, safety handrail systems for roof hatches, lockdown security products and anti-bacterial coatings for door handles), or promote inclusive living for disadvantaged / vulnerable groups such as extended lever hardware and hybrid balances used in nursing homes allowing easy opening by elderly or disabled users. | Sustainable products (page 65) |
| Target 8.4 Improve global resource efficiency in consumption and production to decouple economic growth from environmental degradation. | Incorporating recycled content and responsibly sourced materials in our products throughout our supply chain and new product development processes. Driven by growth in sustainable building certification such as BREEAM, LEED and net zero strategies. | Sustainable products (page 65) Value chain carbon footprint (page 56) |
| Target 12.2 By 2030, achieve the sustainable management and efficient use of natural resources. | Meeting customer requirements for sustainable packaging and eliminating hazardous chemicals / substances in our supply chains and addressing the lifecycle environmental impacts of our products, through for example, Environmental Product Declarations (EPDs) and C2C product certifications. | Packaging (page 66) Conflict minerals and hazardous materials (page 67) Sustainable products (page 65) |
| Target 12.4 Achieve the sound management of chemicals and all wastes throughout their lifecycle. | Meeting customer requirements for sustainable packaging and eliminating hazardous chemicals / substances in our supply chains and addressing the lifecycle environmental impacts of our products, through for example, Environmental Product Declarations (EPDs) and C2C product certifications. | Packaging (page 66) Conflict minerals and hazardous materials (page 67) Sustainable products (page 65) |
During 2021, improvements were made to the measurement of product revenues that positively contribute to the UN SDGs in use, and new sustainable products from the Group’s product pipeline were added to these revenues. Sustainable product revenues increased to 21% of total revenues driven by increased sales of seals, high security locks and tilt and turn micro-ventilation products (2020: 19% restated to correct for additional tilt and turn micro- ventilation components). Going forward, the Group has set itself the ambition of increasing year-on-year revenues from products that have demonstrable sustainability benefits vs one or more of the UN SDGs. This target contributes to the Group’s LTIP (pages 129 and 135).
£36.5 million of the Group’s 2021 revenues including ERA multi-point locks, Giesse hardware, Q-Lon and brush pile seals were covered by Environmental Product Declarations (EPDs) or Cradle to Cradle (C2C) certification. The work on SBT this year (page 56) has confirmed how important purchased raw materials are in the Group’s value chain footprint. Eco-design principles when applied early in the product development process can reduce these impacts by selecting lower carbon materials, using less material and incorporating higher levels of recycled content (circular economy thinking). In 2022, the Group will develop a common eco-design tool and supporting guidance to help our product development teams consider sustainability impacts in their decision making. This will build on early experience gained using the SolidWorks eco-design module, linked to our CAD software.
Here are some further examples of how the Group’s products positively impact the SDGs in use, either reducing environmental impacts or by providing socially beneficial outcomes.
2021 Sustainable Product Revenues (£138m)
The Group has installed 10,000 ERA Protect TM integrated smart alarm systems for vulnerable elderly residents aged 65 and over in the London Borough of Hillingdon. Alarm technology such as this has been proven to reduce neighbourhood crime rates, transform lives and build safer communities. Our alarms installed in over 5,000 properties in five of the most deprived neighbourhoods in Mansfield in the UK, reduced domestic burglary rates by 40-80% (source: Safe and Secure Homes independent report, 2004). The impact of feeling safe can be profound, as one elderly resident in Mansfield described the impact of the project:
"I’ve been burgled three times in recent years. I have felt like a prisoner in my own home. Having my home made safe and secure has given me my life back.”
With 72% of the Group’s value chain carbon footprint attributable to raw materials purchasing, with aluminium accounting for 29% and polymers 17%, work continues to address these impacts. Reusing post-consumer waste and specifying high levels of recycled content offer good opportunities to reduce these impacts. For example, our Cannon Falls extrusion facility uses over 900 tonnes of post-consumer recycled PVC in its products and our hardware business in Italy will be trialling the use of extruded aluminium with up to 70-80% recycled content vs the current 23%. Recycled aluminium has the benefit of using 95% less energy than virgin aluminium.# Sustainability review continued
Work will continue to explore other circular economy opportunities as the Group develops its SBT plans (page 56).
The Group has commenced work to develop more sustainable packaging solutions by optimising the amount of packaging used, moving to more sustainable/renewable/fully recyclable materials and avoiding single-use plastic packaging where possible. Where single-use plastic is unavoidable the Group will look to source plastics with the highest levels of recycled content and which can be recycled or composted via arrangements that are widely available. The Group prioritised the elimination of single-use plastics in 2021. For example, foam layer pads in packaging for Bilco roof hatch safety railing products have been replaced with a new cardboard packaging design, and a returnable plastic reel programme for window seals was established in collaboration with a major US customer (see page 35). Switching to a new thinner grade of shrink wrap and new dispenser technology in warehousing operations in the UK and Italy has reduced plastic consumption by an estimated six tonnes per annum, the equivalent of 700,000 plastic bottles. Automatic packaging machines for hardware components in our Budrio plant now use bioplastic (made from sugar cane) as the first step in moving away from virgin fossil fuel derived plastics. Instruction manuals for Giesse hardware have now been replaced with a QR code, saving money as well as 1.5 million sheets of paper per annum. Trials are now underway to replace plastic with paper alternatives on a range of products.
Standard roof hatches typically have 2.5 cm thick layer of fibreglass insulation, with a U-value of 0.31. The U value (Wm/K) is a number that illustrates the rate at which heat is transferred through a structure, with the lower the U value meaning lower heat loss and better energy efficiency. Independent tests show that our thermally broken roof hatches featuring a 7.5 cm thick layer of R-20+insulation and a frame and cover design that minimises heat transfer between interior and metal surfaces, achieve a U-value of 0.278. This product also meets LEED standards for recycled content and has a high solar reflectance index (SRI), to reduce cooling needs in summer months.
The Group’s hybrid balances provided to the US market are American Association of Medical Assistants (AAMA) Class 5 rated, meaning they are easier to open, with less operating force compared to other products available. These balances are often specified in nursing homes or other commercial applications where elderly or disabled consumers are prevalent.
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Annual Report and Accounts 2021
Sustainability review continued
As Tyman is not a US-listed company, §1502 of the US Dodd Frank Act on conflict minerals does not apply to it directly. However, the Group abhors the human rights abuses that are enabled by the sale of raw materials from dubious sources and has taken steps to help it generate the information that its customers need to disclose under §1502 of the US Dodd Frank Act. During 2021, a review was completed to assess opportunities to eliminate hazardous substances found in the Group’s products or manufacturing processes in its supply chains. The Group is now working with trade associations such as the UK’s Surface Engineering Association (SEA) and the European Federation of Associations of Locks & Builders Hardware Manufacturers (ARGE) to find alternatives to Chromium VI in electroplated products sourced from Asia and lead used in brass alloys for locks and other hardware components.
Each division is responsible for conducting appropriate due diligence into and negotiating the terms and conditions of trade with its suppliers. We require all our suppliers to adhere to our Code of Business Ethics or a comparable set of principles of business conduct, including in respect of their regard for human rights and working conditions, and we reserve the right to terminate a business relationship and take appropriate action against any supplier that breaches any part of our Code. For more information, please refer to our Modern Slavery Statement, which is available on our website. The Group values its relationships with its customers and suppliers and seeks honesty and fairness in all its dealings with them. The Group aims to supply and procure goods and services efficiently, in accordance with specifications and compliance with applicable regulations, without compromising quality and performance. To achieve such aims, the Group welcomes transparent dialogue with its customers and suppliers in respect of any quality or performance issues. The Group’s businesses are encouraged to gain and maintain certification to specific standards required by the markets they serve including quality, weather resistance, security and fire protection. 41% of the Group’s revenues are derived from facilities with ISO 9000 certification for quality (2020: 94%). During 2021, the decision was taken not to renew ISO 9000 certification at four major US plants and reinvest internal resources for peer-to-peer reviews between sites to share best practices and build our internal audit capability. The Group believes this will drive cross pollination of ideas and higher levels of quality, than with external auditors, while still maintaining the structure of disciplines of a quality management systems approach. Extensive product safety testing is undertaken by the Group’s in-house test facilities in the UK, US, Italy and Australia, and externally through accredited partners. Tyman UK and Ireland for example, has its own UKAS accredited test facility in Wolverhampton to put its products and complete window/door installations through a variety of tests including product strength, weather tightness and other performance characteristics for both the Group’s products and those of its customers. Many of the Group’s products have been tested to other relevant BS/EN standards in fire protection and acoustics and also meet UL fire standards in the relevant markets. Steel riser doors manufactured under the Access 360 brand, are independently CERTIFIRE rated, making it the only access panel manufacturer in the UK to offer independent bi- directional fire testing accreditation from Warrington Fire.
Going into 2022, the Group will continue to work with its customers to find more sustainable alternatives to current packaging options. This will include eliminating the use of plastic clam shell boxes from our UK retail packaging, switching to cardboard cartons instead. A prototype is shown below. Changes like this are part of the Group’s strategy to transition to 100% sustainable packaging by 2026.
Annual Report and Accounts 2021
Tyman plc
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In accordance with the FCA Policy Statement 20/17 and listing rule LR 9.8.6R(8), Tyman has made disclosures consistent with the 11 TCFD recommendations on pages 69 to 77. The table below shows where core disclosures can be found within the report for each recommendation, and where additional detail is reported. The core disclosure describes activity to date and identifies where additional detail can be found. It also includes next steps for recommendations where the Group partially complies, or where opportunities to strengthen its response have been identified. The areas that are not disclosed in this report are detailed below, together with plans to improve reporting going forward.
| Recommended disclosure | Status | Reference |
|---|---|---|
| Governance a) Board oversight b) Management’s role | Disclosed Disclosed | Core disclosure: Page 69 Core disclosure: Page 69 |
| Strategy a) Climate-related risks and opportunities b) The impact of climate-related risks and opportunities | Disclosed Partially disclosed | Core disclosure: Page 70 Additional information: Pages 71 to 74 Core disclosure: Page 70 Additional information: Page 74 |
| Transition plan: The Group reports progress against targets in the sustainability roadmap annually, alongside measures implemented to decarbonise its operations and increase sustainable product innovation. Following the assessment of all Scope 3 categories, the Group will submit a science-based target in 2022 and work towards a robust action plan to transition its operations. | ||
| c) The resilience of the organisation’s strategy | Partially disclosed | Core disclosure: Page 70 Additional information: Page 74 |
| Financial planning: The Group’s focus has been on identifying and assessing climate-related risks and opportunities over geographies, scenarios and time horizons. In 2022, the potential financial impact for the most material risks and opportunities will be quantified. In 2023, climate financial modelling will be integrated into Tyman’s existing systems and processes. Strategy resilience: Climate Scenario Analysis is underway for different potential futures including a below 2°C scenario. During the next stage of this analysis, the Group will assess how its strategy is affected under these scenarios to determine business resilience and develop appropriate response options. | ||
| Risk Management a) Identifying and assessing climate- related risks b) Managing climate- related risks c) Integration into overall risk management | Disclosed Disclosed Disclosed | Core disclosure: Page 75 Additional information: Pages 72 to 74 Core disclosure: Page 75 Additional information: Page 91 Core disclosure: Page 75 Additional information: Page 91 |
| Metrics & Targets a) Climate metrics | Partially disclosed | Core disclosure: Page 76 Additional information: Pages 54 to 57, and 64 to 65 |
| TCFD climate metrics & targets: The Group reports metrics and targets that align with several of the newly launched TCFD ‘cross-industry, climate-related metric categories’. | # Sustainability Review |
As its knowledge of climate risks and opportunities improves in 2022, the Group expects to be in a better position to consider additional metrics and targets such as risk exposure and capital deployment.
b) GHG emissions
Core disclosure: Page 76
Additional information: Pages 54 to 57
c) Climate targets
Core disclosure: Page 76
Additional information: Pages 46, 55 to 56 and 65
Tyman plc | 68 | Annual Report and Accounts 2021
The Board is supported by the Audit and Risk Committee for the assessment and management of emerging and principal risks. This includes climate-related risks and opportunities which are reviewed as part of the Group’s overall risk management process as well as through climate-specific risk assessments undertaken by the TCFD Working Group. The Remuneration Committee also assists the Board to align the remuneration policy with the Group’s strategy. Since 2021, the Tyman Long-Term Incentive Plan has given a 15% weighting to four sustainability topics, one of which relates to reducing Scope 1 and 2 emissions (see pages 129 and 135).
Daily operational control of climate-related risk is delegated to the Executive Committee with guidance provided by the Group Health, Safety and Sustainability Director, who reports to the Chief Executive Officer directly. The divisional presidents, supported by the divisional sustainability leads, are responsible for developing, monitoring and implementing action plans linked to the roadmap. This year, the Tyman Sustainability Forum was established to share knowledge and develop common solutions for climate related mitigations and other sustainability topics.
a. Board oversight
* The Chief Executive Officer has overall accountability for the management of climate-related risks and opportunities.
* The Board is supported by the Audit and Risk Committee for the oversight of climate change risk management and implementation of climate-related financial disclosures.
b. Management’s role
* The Executive Committee is accountable for the daily management of climate change, guided by the Group Health, Safety and Sustainability Director.
For more information see Sustainability roadmap on page 46.
| Board Oversight | Tyman Sustainability Forum | Group Strategy Review | SBT & TCFD Working Groups | ExCo ownership | Audit & Risk Committee | Remuneration Committee |
|---|---|---|---|---|---|---|
| • CEO accountable for sustainability | • Chaired by Group HSS Director • Divisional sustainability leads meet monthly | • Chaired by Group CEO, meets quarterly | • X-functional representation facilitated by external advisers, continual engagement throughout the year | |||
| • Scrutiny and oversight of sustainability ambitions, plans, targets and disclosures | • Roadmap implementation plans • Development & sharing of best practices across the divisions | • Sustainability integrated into Group strategy | • Understand impacts, risks & opportunities | |||
| • Review and approve sustainability roadmap and plans | • X-functional review of Tyman Excellence System (safety, sustainability, lean, procurement, talent) | • Develop business response to climate change | ||||
| • Scrutinise response to climate risks and opportunities | ||||||
| • Meets monthly as a minimum |
The Chief Executive Officer has ultimate accountability for climate change and sustainability topics, with oversight provided by the Board. The Executive Committee is responsible for the executing of the Group’s sustainability roadmap, including tracking progress towards its climate-related targets. The Board and Executive Committee are briefed on climate-related risks and opportunities through regular education sessions, SBT and TCFD project reviews and other updates on progress against the Group’s sustainability roadmap.
Tyman plc | 69 | Annual Report and Accounts 2021
| NGFS Category | Orderly transition | Disorderly transition | Hot House World |
|---|---|---|---|
| Approximate temperature increase | This includes a Net Zero 2050 scenario and a Below 2°C scenario, reflecting a policy ambition to limit temperature increase to between 1.5°C and 1.7°C respectively. | This includes a Divergent Net Zero 2050 scenario and a Delayed Transition scenario, reflecting a policy ambition to limit temperature increase to between 1.5°C and 1.8°C respectively. | This includes a Nationally Determined Contributions scenario and Current Policies scenario, reflecting a policy ambition to limit temperature increase to between ~2.5°C and 3°C+ respectively. |
| Summary | Decisive global policy action is taken to limit global warming from early 2020s. | Policy measures are delayed until late 2020s/early 2030s meaning increased costs, e.g. higher carbon prices. | No new policies are introduced leading to increasing physical impacts. |
a. Risks and opportunities identified
* The Group assessed the materiality and prioritised climate-related risks and opportunities in terms of the potential level of financial impact. The scoring framework used considered time horizons, geography, and forward-looking climate scenarios.
b. Impact to business
* Climate scenarios developed by the Network for Greening the Financial System (NGFS) have been selected to assess the potential future impact of transition for both climate risks and climate-related opportunities.
c. Resilience
* To assess physical climate risks, the Group uses climate projections from RCP8.5 (a high warming scenario) from the Intergovernmental Panel on Climate Change (IPCC). Moody’s 427 physical climate risk assessment tool was used to screen physical risks for critical parts of our value chain including manufacturing operations and important supply chain locations.
For more information see Climate related risk and opportunities on page 72 and Sustainable solutions on page 64.
Tyman first responded to the TCFD recommendations in 2020 by undertaking a Group level assessment of climate-related risks and opportunities. In 2021, the Group built on this assessment by undertaking a climate scenario analysis across its value chain, considering different forward-looking climate scenarios, time horizons, asset locations and supply chain characteristics.
Tyman is undertaking the climate scenario analysis in two phases:
1. A scoring of climate risks and opportunities to prioritise those that represent the most material potential financial impact. This qualitative assessment was completed in 2021.
2. The quantification of financial impacts from a selection of material risks and opportunities which will be undertaken in 2022. The outputs will be incorporated into Tyman’s financial planning to help inform business strategy.
The Group’s priority risks (both transition and physical) and opportunities were identified over the short, medium and long term, distilled from a long-list of over 100 topics and assessed against a set of hypothetical scenarios developed by the Network for Greening the Financial System (NGFS). These include three categories within which there are six possible temperature scenarios.
Tyman plc | 70 | Annual Report and Accounts 2021
| Key Manufacturing site | Manufacturing HQ | North America | UK and Ireland |
|---|---|---|---|
| Physical climate changes assessed at each site | Heat stress • Temperatures increase • Periods of prolonged extreme heat • Climate control not in place | Water stress • Water demand increases whilst supply decreases • Increase interannual variability | Flood • Increased frequency of intense rainfall events • Infrastructure not in place to manage |
| Wildfire • Higher temperatures • Drier conditions | Hurricanes & typhoons • Increased frequency of severe storm events • Infrastructure not in place to manage | Sea level rise • Increased frequency of swells and extreme waves |
CO 2 emission pathways for selected scenarios
| Hot House World ~3°C | Disorderly Transition ~1.5-2°C | Orderly Transition ~1.5-2°C | |
|---|---|---|---|
| CO2 emissions *indicative, not to scale | 2020 | 2030 | 2040 |
These climate scenarios were incorporated into a ranking of climate risks and opportunities, to help identify priorities. Each risk and opportunity was assessed against criteria including vulnerability, likelihood, and magnitude (see page 75 for methodology). The results reported on pages 72 to 74 include the priority risks/opportunities identified across timeframes, as well as further detail on drivers and business consequences. The Group defines short-term as 0-3 years to align with financial planning cycles, medium-term as 4-9 years to align with its sustainability roadmap ambitions to 2030, and long-term as 10+ years out to 2050 to account for the longer-term nature of climate risks.
| Selected Tyman Assets | Coverage |
|---|---|
| % total revenue | 89% |
| % total employment | 91% |
Physical risks have been assessed using climate projections from SSP5-8.5 developed by the IPCC.# Tyman plc 71 STRATEGIC REPORT
The priority risks and opportunities identified are summarised in the following tables.
| Scenario | Market 0-3 yrs | Market 4-9 yrs | Market 10+ yrs | Orderly Transition 0-3 yrs | Orderly Transition 4-9 yrs | Orderly Transition 10+ yrs | Disorderly Transition 0-3 yrs | Disorderly Transition 4-9 yrs | Disorderly Transition 10+ yrs | Hot House World 0-3 yrs | Hot House World 4-9 yrs | Hot House World 10+ yrs |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Risk | • Availability of feedstock | • Manufacturing costs | • Supply chain disruption | |||||||||
| Risk Drivers | • Scarcity of by/co-products from petrochemicals | • Increased cost of manufacturing process | • Raw material price increases | • Energy regulation leading to higher energy costs | ||||||||
| Consequence | • Delayed production | • Reduced revenue as operating costs increase that cannot be passed on to customers |
| Scenario | Technology 0-3 yrs | Technology 4-9 yrs | Technology 10+ yrs | Technology 0-3 yrs | Technology 4-9 yrs | Technology 10+ yrs | Technology 0-3 yrs | Technology 4-9 yrs | Technology 10+ yrs | Technology 0-3 yrs | Technology 4-9 yrs | Technology 10+ yrs |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Risk | • Technology and equipment | |||||||||||
| Risk Drivers | • Obsolescence or impairment of equipment due to the introduction of new climate change orientated technologies | • High cost of transition to lower emissions technology | ||||||||||
| Consequence | • Increased pressure to invest in new technologies requires large amount of capital |
| Scenario | Policy & legal 0-3 yrs | Policy & legal 4-9 yrs | Policy & legal 10+ yrs | Policy & legal 0-3 yrs | Policy & legal 4-9 yrs | Policy & legal 10+ yrs | Policy & legal 0-3 yrs | Policy & legal 4-9 yrs | Policy & legal 10+ yrs | Policy & legal 0-3 yrs | Policy & legal 4-9 yrs | Policy & legal 10+ yrs |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Risk | • Increasing regulation on operations, suppliers and products | |||||||||||
| Risk Drivers | • Carbon regulation (e.g. carbon pricing mechanisms) | • Energy regulation leading to higher costs and / or disruption to energy availability | • Introduction of energy efficiency standards and use of recycled materials made mandatory | |||||||||
| Consequence | • Higher operating costs associated with the higher cost of carbon through pour operations and value chain | • Fines for not complying with regulations | • Increased costs to monitor and respond to regulations |
| Scenario | Reputation 0-3 yrs | Reputation 4-9 yrs | Reputation 10+ yrs | Reputation 0-3 yrs | Reputation 4-9 yrs | Reputation 10+ yrs | Reputation 0-3 yrs | Reputation 4-9 yrs | Reputation 10+ yrs | Reputation 0-3 yrs | Reputation 4-9 yrs | Reputation 10+ yrs |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Risk | • Investor expectations | • Changing customer behaviour | ||||||||||
| Risk Drivers | • Investor concern over climate credentials | • Customers seeking lower carbon, more sustainable products | ||||||||||
| Consequence | • Investors switch to better climate performing stocks | • Customers opt for other suppliers with greater climate ambition |
Low risk
Low-Medium risk
Medium risk
Medium-High risk
Key
High risk
| Risk | Risk drivers | Consequence |
|---|---|---|
| Heat stress | • Temperatures increase | • Temporary shutdowns |
| • Periods of prolonged extreme heat | • Decreased productivity | |
| • Climate control not in place | • Employee health and safety concerns | |
| • Power outages | ||
| • Increased costs for climate control | ||
| Water stress | • Water demand increases whilst supply decreases | • Drought, limiting electricity due to hydro reliance |
| • Increased interannual variability | • Chronic water shortages | |
| Flood | • Increased frequency of intense rainfall events | • Damage to assets |
| • Infrastructure not in place to manage | • Damage to local infrastructure causing disruption to transport network | |
| • Insurance premiums increase | ||
| Wildfire | • Higher temperatures | • Damage to assets |
| • Drier conditions | • Temporary shutdowns | |
| • Employee safety concerns | ||
| Hurricanes and typhoons | • Increased frequency of severe storm events | • Shipping delays as containers diverted |
| • Infrastructure not in place to manage | • Damage to assets | |
| • Insurance premiums increase | ||
| Sea level rise | • Increased frequency of swells and extreme waves | • Disruptions at ports |
| • Increased costs to manage supply |
Over the next year, the Group will quantify the potential financial impact from key material risks and opportunities. Climate scenarios will be used to describe ranges of transition and physical-related impacts over time. The financial impact assessment will produce climate-adjusted cashflows that can be incorporated into Tyman’s financial planning and business strategy. In 2022, the Group will also explore market demand for the growing range of climate resilient products across different forward-looking climate scenarios and timeframes. There is a clear role for Tyman to support its customers to reduce their environmental impacts through energy saving products, provide adaptation solutions to climate hazards, and also to decarbonise the Group’s own Scope 3 product impacts through design changes and material selection. Tyman’s Sustainability Roadmap (page 46) is the basis of our ambition to transition our operations and enhance our climate resilience over the next decade.
| Opportunity drivers | Consequence |
|---|---|
| Resource efficiency • Use of recycling • Use of more efficient production and distribution processes • Increased water efficiency • Participation in renewable energy programmes and adoption of energy-efficiency measures • Use of new lower carbon technologies, switch from natural gas to electric process heating • Shift towards low emissions sources and/or decentralised on-site energy generation | • Increased sales as customers value environmentally friendly process • Reduced costs from resource saving projects |
| Products and market • Develop smart windows for indoor climate control, ventilation, security and energy saving • Develop products to meet higher pressure ratings requirements on windows and doors to account for hurricanes • Developments in global markets promoting energy efficiency (e.g. UK Government’s Future Homes Standard) • Regulation on energy performance and thermal efficiency • Develop flood defence products for windows and doors | • Increased sales as customers opt for lower carbon and more sustainable products • Increased sales in expanding customers as the need for climate defence infrastructure increases |
| Resilience • Account for value, emissions and spec trade-offs to deliver sustainable operations and solutions • Assessing product lifecycle to reuse waste • Better management of climate-related risks, leads to increase in capital available to invest in climate and sustainability ambitions and implement robust adaption and mitigation plans |
Low Opportunity
Low-Medium Opportunity
Medium Opportunity
Medium-High Opportunity
Key
High Opportunity
| Short-term 0-3 years | Medium-term 4-9 years | Long-term 10+ years | |
|---|---|---|---|
| RISK & OPPORTUNITY SCORE | |||
| VULNERABILITY | |||
| MAGNITUDE Size of impact | |||
| LIKELIHOOD Chance of outcome occurring | |||
| EXPOSURE Presence of systems that could be affected | |||
| ADAPTIVE CAPACITY Ability to adjust or respond | |||
| SENSITIVITY Degree to which systems could be affected |
a. Identifying and assessing risks and opportunities
• Climate change risk is assessed as part of the Group’s risk management process and this year, climate change along with the broader sustainability agenda, was raised as a Principal Risk.
• Risks and opportunities are identified through internal engagement, thorough research and analysis of transition and physical changes in various forward-looking climate scenarios. Each division maintains risk registers which include climate change issues such as mitigation around business and supply chain disruption.
b. Managing risks and opportunities
• Appropriate control measures are identified and selected based on the perceived materiality of climate risk and the Group’s ability to influence. Some of these measures are outlined in Tyman’s sustainability roadmap, including to decarbonise operations and grow sustainable solutions. As we continue to understand the potential impacts of climate issues, we will seek to implement appropriate control measures.
• Risk process: further develop the Group’s approach to climate change risk management building on the Group’s growing understanding of materiality, time horizons, and Tyman’s risk appetite.
• Risk controls: mitigation plans to be developed in late 2022 for the most material risks, including those related to physical risks impacting the Group’s own operations and in its supply chains.
For more information see Managing risk on pages 84 to 91. During 2021, the potential impact of climate change and the growing importance of the broader sustainability agenda was raised to a Principal Risk (page 91). As such, climate-related issues are assessed alongside Tyman’s 10 other Principal Risks, including business interruption and market conditions. This ensures appropriate management controls are in place and allows the Group to consider the significance of climate change and sustainability against other business risks. An in-depth climate risk and opportunity assessment was undertaken to account for the unique characteristics of climate-related risks and opportunities such as the uncertainty and unpredictability of climate changes and global responses. The risks and opportunities identified built on last year’s assessment and leveraged insights from internal engagement as well as findings from desk-based research on climate projections, emerging and existing climate policy, sectoral developments and a peer review. A cross-functional workshop was held with participants from each division and group, covering finance, sustainability, risk, legal, procurement and product development to validate the analysis to date including risk and opportunity identification and the scoring assessment.# STRATEGIC REPORT
The Group reports its progress against targets for carbon emissions, water and waste.
Scope 1 and 2 emissions have been reported for a number of years and have been extended to cover Scope 3 emissions in this year’s reporting.
For more information: Energy and GHG emissions page 54, SBT and value chain emissions pages 56 to 57, sustainable solutions page 64 and revenues impacting the UN SDGs page 65.
Absolute and intensity metrics and targets across a range of environmental performance indicators keeps the Group accountable to the ambitions and plans laid out in Tyman’s sustainability roadmap (page 46). This year, for the first time, the Group has reported its full Scope 3 emissions inventory, which highlighted the significance of raw materials purchases in its value chain footprint (see table below for risks associated to our emissions profile). This insight has supported the business case to invest further effort in research and development to reduce material- related emissions as well as applying sustainability thinking to day-to-day design processes.
New guidance from TCFD encourages organisations to report against the six ‘cross-industry, climate-related metric’ categories. We are already reporting against several categories and plan to develop new measures with associated targets as our understanding of climate-related matters evolves.
| Category | Alignment |
|---|---|
| GHG emissions | Reported: The Group reports Scope 1,2 and 3 emissions as well as its emissions intensity per £m revenue (page 55). |
| Transition risks | In development: The Group is undertaking a comprehensive Climate Scenario Analysis to quantify the potential financial impact from transition and physical risks. |
| Physical risks | |
| Climate- related opportunities | Reported: The Group reports the revenue of climate resilient products (see page 77). Tyman intends to explore additional measures to ensure we are best placed to seize opportunities. |
| Capital deployment | Under consideration: In 2022 the Group will explore investment in mitigation measures to reduce its climate impact and to transition its operations, including investments in adaptation responses as appropriate for physical risks. |
| Internal carbon prices | Under consideration: The Group is building its understanding of climate- related risks and opportunities and will explore the opportunity to develop an internal carbon price. |
| Remuneration | Reported: The Tyman Long-Term Incentive Plan gives 15% weighting for four sustainability topics including growing sustainable product revenues, and reducing Scope 1 and 2 emissions (page 129 and 135). |
The Group aims to grow its range of climate resilient products directly in the way they are used and also in how they are formulated through more sustainable content. In 2021, 15% of the Group’s total revenues help promote climate resilience through improved energy efficiency, reduced materials impacts and protection against physical climate hazards such as hurricane and fire.
| 2021 Climate Resilient Product Revenues | £93 million |
|---|---|
| Energy saving | £74.1m |
| Hurricane protection | £2.4m |
| Fire protection | £12.9m |
| Circular economy | £3.9m |
Solar panel installation underway at the i54 facility in Wolverhampton UK, see page 54
In assessing the long-term prospects of the Group, the Board considers the Group’s current position, including the following factors:
In addition, the Board considers the Group’s strategy and business model, including the following factors:
The Group’s strategy and business model are central to understanding the future prospects and viability of Tyman. Both are well established and subject to regular monitoring and development by the Board. See further details of the Group’s strategy on pages 20 to 25 and of the Group’s business model on pages 14 and 15. The principal risks related to the business are also taken into account by the Board when assessing the long-term prospects of the Group, particularly business interruption, market conditions, loss of competitive advantage, and raw material costs and supply chain disruption. See further details of the Group’s principal risks on pages 84 to 91.
Tyman’s longer-term prospects are assessed primarily through the Group’s budgeting and strategic planning process. The annual Group budget is compiled in the autumn of each year and generates a detailed forecast for the year ahead. This is reviewed and approved by the Board. A strategic planning process is also conducted, covering the next three years on a rolling basis. This process includes a review of divisional strategic plans by the Tyman Executive Committee as well as cross-divisional initiatives. The Board participates in the process through attendance at a strategy day, at which Group and divisional management present strategic plans. The Board also receives monthly strategy updates from the Chief Executive Officer.
The output of the strategic plan includes a consolidated set of financial projections for the Group covering a period of the next three years, including a review of forecast debt covenant compliance and debt headroom.The strategic plan reviewed as part of the assessment of prospects in this report therefore covers the three-year period ending 31 December 2024.
Key assumptions
The key assumptions underpinning the 2022 to 2024 strategic plan include:
• average market growth forecasts in line with local consensus;
• no future loss of significant customers;
• conservative forecasts of market share growth, selling price increases and the impact of new product development;
• conservative forecasts of the benefits from self-help and continuous improvement activities;
• the RCF which is due for repayment in 2024 is successfully refinanced at the existing facility limit of £240 million; and
• no future acquisitions or disposals.
Assessment of viability
In accordance with provision 31 of the Code, the Directors have assessed the future viability of the Group. This assessment takes account of the Group’s current trading position and the potential impact of the principal risks and the mitigating actions documented on pages 84 to 91 of the Annual Report. Consistent with previous years, the Directors have determined that three years is an appropriate timeframe over which to provide a viability statement, as this is the timeframe currently adopted by the Board as its strategic planning period. A three-year period aligns with the Group’s typical investment time horizon. In addition, the Directors consider that demand in the Group’s business is ultimately driven by consumer confidence and discretionary spending patterns which are difficult to project accurately beyond a three-year time horizon. The strategic plan therefore reflects the Directors’ best estimate of the future prospects of the business over the three-year period.
Annual Report and Accounts 2021 Tyman plc 79
STRATEGIC REPORT
In order to assess the Group’s viability over this period, the strategic plan has been flexed by overlaying the cumulative financial impact of a number of downside scenarios to represent ‘severe but plausible’ circumstances that the Group might experience. These scenarios are based on the potential financial outcomes of certain of the Group’s principal risks crystallising such as business interruption through supply chain disruption and loss of productivity due to significant absenteeism due to COVID-19, a deterioration in market conditions and loss of business to competitors. The downside scenarios applied to the strategic plan are summarised below.
Severe but plausible downside scenario
The ‘severe but plausible’ scenario models the impact of a significant short-term contraction in revenue on the Group. The severe but plausible scenario modelled in the current year is less severe than what was modelled in 2020, as the impact of COVID-19 is more certain, and the Group’s performance and trading environment are much more robust than at the end of 2020. The scenario modelled in 2020 is therefore no longer considered plausible.
| Strategic plan flexed for combinations of the following scenarios | Link to principal risks and uncertainties | Level of severity tested | Conclusion |
|---|---|---|---|
| Supply chain disruption and loss of productivity due to absenteeism as a result of ongoing effect of COVID-19 | Business interruption | 10% fall in revenue in year one against the base case, followed by only inflationary growth in the following two years. | Tyman, after undertaking reasonable mitigating actions, should be able comfortably to withstand the impact of this severe but plausible scenario. |
| Severe downturn in market conditions | Market conditions | ||
| Aggressive competitor actions resulting in a loss of market share | Loss of competitive advantage | ||
| Raw material costs and supply chain failures | Raw material costs and supply chain failures |
Reverse stress test scenario
The ‘reverse stress test’ scenario models the impact of a larger short-term contraction in revenue which is sustained for a period of time.
| Strategic plan flexed for combinations of the following scenarios | Link to principal risks and uncertainties | Level of severity tested | Conclusion |
|---|---|---|---|
| Significant supply chain disruption and loss of productivity due to absenteeism as a result of ongoing effect of COVID-19 | Business interruption | 42% fall in revenue in year one against the base case, followed by no year on year growth in the following two years. | This sustained level of performance deterioration is considered highly implausible and would make the future viability of the Group less certain. |
| Extreme downturn in market conditions | Market conditions | ||
| Aggressive competitor actions resulting in a significant loss of market share | Loss of competitive advantage | ||
| Raw material costs and supply chain failures | Raw material costs and supply chain failures |
The flexed models take account of the natural reduction in variable costs and availability and likely effectiveness of mitigating actions available to the Group, including the flexing of working capital, capital expenditure and discretionary spend. The models do not include significant structural actions, such as closing or mothballing facilities or divesting assets. The models also do not consider changes to the Group’s capital structure that it may be able to make through refinancing existing debt facilities and/or raising equity finance.
Viability statement
Based on their assessment of the prospects for the Group and principal risks and the viability assessment above, the Directors confirm that they have a reasonable expectation that the Group will be able to continue in operation and meet its liabilities as they fall due over the period to 31 December 2024.
Going concern
As a consequence of the work undertaken to support the viability statement above, the Directors have continued to adopt the going concern basis in preparing the financial statements (see note 2.2 Going concern in the notes to the financial statements).
Tyman plc 80 Annual Report and Accounts 2021
Going concern and viability continued
In accordance with the duties of Directors under section 172 of the Companies Act 2006, the Board considers a number of factors in its decision-making, including:
• the likely consequences of any decision in the long-term;
• the risks to the Group and its stakeholders;
• the interests and wellbeing of our people;
• the Group’s relationships with its customers and suppliers;
• the importance of our reputation for high standards of business conduct; and
• the impact of our businesses on the environment and the communities where we are present.
Tyman engages extensively with its stakeholders at all levels of our business because we believe that the understanding of such stakeholders through engagement is vital to building a sustainable and successful business. Some examples of direct engagement by the Board include the Workforce Engagement NED’s skip-level meetings with employees and their representatives; and meetings or calls with customers, suppliers or shareholders. Engagement may also be indirect, such as through Board reports, employee surveys and feedback from investors through analysts. All such engagement has provided invaluable input to the Board’s discussions leading to decision making. In 2021, the Board carefully considered the continuing impact of the COVID-19 pandemic on the health and safety of our employees, their families and our communities. It also considered the impact of disruptions in our supply chain on our customers.
This statement should be read in conjunction with: the Chair’s statement on pages 30 and 31; the CEO review on pages 32 and 33; the Financial review on pages 40 to 45; the sustainability section on pages 46 to 77; the risk section on pages 84 to 91; and the Governance and Directors’ reports on pages 94 to 101.
Employees
Why it is important to engage with this stakeholder group
We recognise that an engaged workforce is also a productive one and better able to attract and retain the best talent. We are proud of our workforce and aim to give them reasons to be proud of their employer. For these reasons, the Board is committed to understanding the various culture, issues and challenges facing the Group’s workforce across its global network. By fully appreciating the broad spectrum of the talents, ambitions, needs and concerns of our workforce, we aim to foster diverse and inclusive workplaces in which every employee can bring their genuine selves to work, attain their full potential and achieve job satisfaction.
How did Tyman engage in 2021?
• Training and development (e.g. Safety Leadership Programme, One Tyman Deployment, including Code of Business Ethics, see pages 59 to 61)
• Virtual conferences with the Group’s leaders (see page 62)
• Skip-level meetings with the designated Workforce Engagement Non-executive Director, Pamela Bingham (see page 62)
• Skip-level meetings with the Group Chief Executive and divisional senior management
• Site visits by members of the Board (conducted physically and online)
• Communications to encourage all employees to get vaccinated and to continue precautions at work and outside of work (see page 51)
• All-employee communications from the Group Chief Executive
• SpeakUp hotlines (see pages 60 and 61)
• Webinars with HR leadership and participants of the LTIP and STIP schemes to discuss their operation, including the behaviours that they aim to encourage (see page 126)
Our Stakeholders
Annual Report and Accounts 2021 Tyman plc 81
STRATEGIC REPORT
Customers and End-users
Why it is important to engage with this stakeholder group
We want to continually deliver the best relevant products to our customers on time every time. Engaging with our customers enables us to better evaluate our past performances and to understand their current and future needs. Engagement also highlights opportunities for innovation and improvement to our products and processes. By doing so, we aim to build enduring relationships with our customers and continually attract new ones.# How did Tyman engage in 2021?
We engage with our suppliers to ensure that we continually exercise our values and also to safeguard the security of supply, value for money and speed to market that are important to many of our other stakeholders. For these reasons, we seek to establish long-term relationships with carefully selected high-quality suppliers who can ensure that our businesses continue to deliver sustainable market-leading products that meet or exceed our customers’ expectations and requirements and are delivered on time in full every time.
Tyman plc 82 Annual Report and Accounts 2021
Our Stakeholders continued
As a constituent of the FTSE 250, an issuer of private debt placement notes in the USA and a borrower of bank debt, we aim to help our shareholders and lenders develop a strong understanding of how the Group’s businesses generate sustainable returns and long-term success. The support of our investors, and our ability to attract new ones, enables us to finance our growth activities and build a stronger Group.
We want to be a good employer and responsible neighbour in the communities in which we operate. We aim to continually create positive outcomes in the societies that we touch and to position our businesses to deliver long-term success. Moreover, we aim to be a responsible corporate citizen in each country that we operate by seeking its success. We constructively engage with industry bodies to share our expertise and help shape new regulations and standards in security and insulation.
Annual Report and Accounts 2021 Tyman plc 83
Effective risk management is integral to how we manage the Group.
The Board is committed to protecting and enhancing the Group’s reputation and the interests of shareholders and our wider group of stakeholders. In doing so, the Board promotes a strong ethical, risk aware culture within the business which emphasises the importance of effective risk management and risk reporting throughout the year and forms a key element of our internal governance and performance review processes. Our risk management process, based on the Four Lines of Defence model, provides clarity on roles and responsibilities for managing risk. The Board has ultimate responsibility for the Group’s system of risk management and internal control with responsibility for oversight delegated to the Audit and Risk Committee which is responsible for maintaining and reviewing the effectiveness of our risk management and internal controls processes including strategic, financial, operational and regulatory/compliance matters. The Board has reviewed the systems of Internal and Risk Management within the year up to the date of approval of the Annual report and Accounts.
The Board also ensures that the Group’s risk exposure remains appropriate and links directly to the effective delivery of our strategic objectives. During the year we have reviewed and updated a number of key aspects of our risk management framework including enhancing our Group risk appetite and our risk management processes with further developments planned in 2022 both at divisional and Group levels to enhance skills and capabilities on risk management. As an international Group, the business faces a range of risks and uncertainties where internal and external factors influence the Group’s risk response to managing these risks. The Group’s key principal risks are those risks that are considered material and could have a significant impact on the Group’s business activities and operations. The Group considers emerging risks regularly throughout the year, both through the risk management process and in ongoing and established meetings embedded in our performance management system. We consider emerging risks as those that may materialise or have an impact on a longer timeframe of three years or more. Areas of emerging risk where the value of or nature of these risks are not fully known are considered as a part of the risk management process and other existing management processes in place. As we evolve our risk management process in 2022, we will continue to enhance our approach to emerging risks. The Group’s risks and uncertainties have been considered in the context of the broader geo-political and economic environment, including the impact of the ongoing COVID-19 pandemic, the dynamic nature of the changing trading relationships between the US and China and the impact of Brexit that took effect from 1st January 2021. In addition, we have closely monitored and responded to industry-wide inflationary pressures and supply chain challenges including the availability of raw materials and labour. These have all remained prominent themes of risk throughout the year and we have focused on ensuring the Group is mitigating these risks to the extent possible. The Directors confirm they have carried out a robust assessment of the principal and emerging risks facing the Company, including those that would threaten its business model, future performance, solvency or liquidity. The table on pages 87 to 91 sets out the principal risks and uncertainties facing the Group at the date of this report and how they are being managed or mitigated. In accordance with the provisions of the Code, the Board has taken into consideration the principal risks in the context of determining whether to adopt the going concern basis of accounting and when assessing the prospects of the Company for the purpose of preparing the viability statement. The going concern and viability statement can be found on pages 78 to 80.
The Group’s risk framework defines clear roles, responsibilities and accountabilities for risk management across the Group and continues to develop in line with our strategy. Building on the progress since 2019 in safety excellence with the appointment of the Director of Health, Safety and Sustainability, and in 2020 the Group added specialist resources into the Group that strengthen our risk and assurance capabilities. These included a Group Head of IT, a Group Head of Internal Audit and Risk Management and a General Counsel. Good progress continues to be made in these areas and allows the Group to continue the evolution of our approach to managing cyber and information security risks, evolving our risk management and assurance processes, and strengthening our business ethics and compliance culture. In 2021, the Group has also appointed a Group Head of Tax and Treasury and Group Head of Corporate Development to further strengthen our Group level capabilities and specialisms in these two important areas. The Group manages risk by operating the Four Lines of Defence model. The first line of defence consists of operational management implementing and maintaining effective risk identification, risk mitigation, reporting and the development and maintenance of internal control systems. This ensures that risk management and internal control remain an integral part of day-to-day operations yet facilitates the escalation of significant risks as and when they should arise. Each division has an established organisational structure, senior management team and policies and procedures at a divisional and location level, including those risks relating to compliance with laws and regulations in the geographies in which they operate. The second line of defence consists of the corporate functions who support operational management and who are responsible for establishing Group level policies and procedures including the Delegation of Authority, Code of Business Ethics and Accounting Policies. Corporate functions include Group Finance, Tax and Treasury, IT, Legal and Secretariat, Health, Safety and Sustainability, Risk Management and Corporate Development.
Tyman plc 84 Annual Report and Accounts 2021
The Board: Formulates the Group’s strategy and has overall responsibility for risk management including definition of the Group’s risk appetite and culture. The Board delegates oversight of risk management to the Audit and Risk Committee.
Audit and Risk Committee: Regularly monitors the nature, extent and management of the Group’s principal and emerging risks. Monitors and reviews the effectiveness of the Group’s systems of risk management and internal control.# Group Internal Audit (3rd Line of Defence)
Comprises Executive Directors and Divisional Presidents overseeing management of group-wide risks.
Implementation of the necessary systems of risk assessment and internal control. Regular review of risk registers and implementation of mitigation plans. Day-to-day operational management of risk.
Corporate functions include: Group Finance, Tax and Treasury, Legal and Secretariat, IT and Health, Safety and Sustainability and Corporate Development. Responsible for Group-level design and maintenance of the risk framework and internal controls and providing specialist support across the Group.
Risk management is embedded in many aspects of the Group’s leadership and performance model where key areas of risk are inherently considered. Key governance mechanisms for the management of risk include the Executive Committee, the Finance Leadership Team, the strategic planning process, budgeting and forecasting and the Business Performance Review (BPR) process undertaken every month for each division. The BPR process covers key aspects of our strategic, financial, operational and compliance risks including proactive monitoring of key actions from month to month, safety performance, business ethics, legal matters, financial performance (including budget and forecasts), progress on strategic priorities, organisational developments and risk watchlist items. In addition, the BPR meeting process is supplemented by deep dive reviews from time to time throughout the year including divisional risk management reviews.
In addition, this line of assurance also covers the operation of the Group’s ethics ‘SpeakUp’ reporting system which enables employees to raise concerns confidentially over ethics and compliance matters. All ‘SpeakUp’ reports are investigated by the General Counsel & Company Secretary, or his nominated investigator, who tracks the actions and reports their outcome to the Board at every Board meeting. The Group’s ‘SpeakUp’ process has been reviewed by the Board this year.
The third line of defence is Group Internal Audit providing independent and objective assurance. In 2020, the Board made the decision to appoint a Group Head of Internal Audit and Risk Management to further evolve the Internal Audit function bringing leadership of this important function ‘in-house’ whilst utilising resources from a professional services firm to support the Internal Audit process. This continues to allow the Group to facilitate the ongoing development of the Group’s risk management processes. The Group Head of Internal Audit reports directly to the Chair of the Audit and Risk Committee, reinforcing the importance of this function maintaining its independence and objectivity.
The fourth line of defence is the Group’s external auditor, PwC. Through the work of the Group Internal Audit function and external auditors, the Audit and Risk Committee is satisfied that any audit issues raised by either of the auditors are managed and resolved effectively by management. We will continue to evolve and develop our Risk Framework as appropriate throughout 2022 recognising the dynamic nature of risk management.
The Group has policies and procedures in place to ensure that risks are properly identified, evaluated and managed at the appropriate level within the business. The identification of risks and opportunities, the development of action plans to manage the risks and maximise the opportunities, and the continual monitoring of progress against agreed plans are integral parts of the core activities and performance review processes throughout the Group.
Each division maintains a comprehensive risk register which assesses all pertinent risks relevant to that division, including strategic, financial, operational, and compliance risks. The risk assessment process is dynamic and includes emerging and retiring risks as each division’s risk landscape shifts. These risk registers are reviewed on a regular basis by the senior leadership team of each division. Each risk is monitored in line with the process above to assess the likelihood and impact of the relevant risks crystallising. Against this an assessment is made of existing controls that are in place to mitigate the relevant risk and identify further actions to further manage each risk to an acceptable level. Each division’s risk register is formally reviewed four times a year within the division, the conclusions of which are discussed at the Executive Committee and submitted to the Audit and Risk Committee at least twice per year. A shorter register of Group principal risks is specifically reserved for review by the Audit and Risk Committee. This is mainly, but not exclusively, comprised of risks above a certain threshold after mitigation. These principal risks and uncertainties are reported in the Annual Report.
As a result of this process, several changes have been made to the Group’s principal risks during the year including:
The risk priorities for the year ahead are as follows:
| Risk | Risk description | Mitigation # STRATEGIC REPORT
| Risk | Medium | Trend after mitigation | Up | Same | Down | NEW | New risk |
|---|---|---|---|---|---|---|---|
| Strategy Key | |||||||
| Margin expansion | |||||||
| Sustainable growth | |||||||
| Engaged people | |||||||
| Positive impact | |||||||
| Annual Report and Accounts 2021 Tyman plc 87 |
Risk description
Loss of competitive advantage may adversely affect the Group financial performance or reputation in the short to medium term. The Group’s ability to maintain its competitive advantage is based on a wide range of factors including the strength of the Group’s brands, the breadth and depth of our portfolio, the level of quality and innovation reflected in our products, our supply chain flexibility, excellent customer service and technical support, and the depth of customer relationships we nurture, all supported by fair and competitive pricing. Failure to perform on any one of these aspects may lead to erosion of competitive advantage over time, and in turn to loss of customers to competition. Some of the Group’s markets are relatively concentrated with two or three key players, while others are highly fragmented and offer significant opportunities for consolidation and penetration. Tyman continues to differentiate itself through its wide range of products, its focus on customer service including technical support, its geographical coverage, innovation capabilities and the reputation of its brands. The Group monitors the status of our competitive advantage through feedback from customers and close review of the market positioning of our products. The Group aims to minimise the impact of competitve pricing pressures by competitors through margin expansion activities including continual sourcing review, innovation and value engineering, as well as building long- term relationships with its customers based on value creation, quality, service and technical support. The overall risk from loss of competitive advantage across Tyman’s global portfolio remains stable. The disruption caused by COVID-19 has continued to put pressure on service levels across the industry. The flexibility of the Group’s manufacturing footprint allows it to respond quickly to closure of certain facilities, delivering better service levels than some competitors and enabling the Group to take market share.
Mitigation
Trend after mitigation
Changes since last Annual Report
3 Loss of competitive advantage
Trend after mitigation
Link to strategy
Risk assessment
Medium
Risk description
The Group operates internationally and is therefore exposed to transactional and translational foreign exchange movements in currencies other than sterling. In particular the Group’s translated adjusted operating profit is impacted by the sterling exchange rate of the US dollar and the euro. The Group denominates a proportion of its debt in foreign currency to align its exposure to the translational balance sheet risks associated with overseas subsidiaries. Ancillary bank facilities are utilised to manage the foreign exchange transactional risks and interest rate exposure through the use of derivative financial instruments. Where possible the Group will recover the impact of adverse exchange movements on the cost of imported products and materials from customers. Sterling exchange rates remain volatile and the Group continues to use hedging to mitigate some of this risk. This risk is regarded as stable.
Mitigation
Trend after mitigation
Changes since last Annual Report
4 Foreign exchange risk
Trend after mitigation
Link to strategy
Risk assessment
Medium
| Trend after mitigation | Up | Same | Down | NEW | New risk |
|---|---|---|---|---|---|
| Strategy Key | |||||
| Margin expansion | |||||
| Sustainable growth | |||||
| Engaged people | |||||
| Positive impact | |||||
| Tyman plc 88 |
Annual Report and Accounts 2021
Risk description
The Group must maintain sufficient capital and financial resources to finance its current financial obligations and fund the future needs of its growth strategy. The Group maintains adequate cash balances and credit facilities with sufficient headroom and tenor to mitigate credit availability risk. The Group monitors forecast and actual cash flows to match the maturity profiles of financial assets and liabilities. In the medium term the Group aims to operate within its target leverage range of 1.0x to 1.5x adjusted EBITDA. During the year, the Group achieved further de- leveraging to 0.9x adjusted EBITDA, just below the target range of 1.0–1.5x adjusted EBITDA.
Mitigation
Trend after mitigation
Changes since last Annual Report
5 Liquidity and credit risks
Trend after mitigation
Link to strategy
Risk assessment
Low
Risk description
Information and data systems are fundamental to the successful operation of Tyman’s businesses. The Group’s digital assets are under increasing risk from hacking, viruses and ‘phishing’ threats. Sensitive employee, customer, banking and other data may be stolen and distributed or used illegally. GDPR increases the cost of any failure to protect the Group’s digital assets. The Group continues to develop and test disaster recovery plans for all sites. The Group undertakes regular penetration testing of data systems and maintains up-to-date versions of software and firewalls. The Group periodically reviews and improves IT system controls. In August 2020, a Group Head of IT was appointed with responsibility for the Group’s information security policies and controls. Training and IT controls improvements have continued to be implemented during the year as a key element of our IT Strategy.
Mitigation
Trend after mitigation
Changes since last Annual Report
6 Information security
Trend after mitigation
Link to strategy
Risk assessment
High
Risk description
Raw materials used in the Group’s businesses include commodities that experience price volatility (such as oil derivatives, steel, aluminium and zinc). The Group’s ability to meet customer demands depends on obtaining timely supplies of high quality components and raw materials on competitive terms. Products or raw materials may become unavailable from a supplier due to events beyond the Group’s control. The Group continues to invest in and improve its sourcing and procurement capability with dedicated supply chain resources. The Group manages supply chain risk through developing strong long-term relationships with its key suppliers, regular risk assessment and audit of suppliers including logistics providers, review of make or buy strategies, dual-sourcing where appropriate and maintaining adequate safety stocks throughout the supply chain. Where commodity and other material cost increases materialise, the Group seeks to recover the incremental cost through active price management. The Group has recovered the majority of input cost inflation in the year however there remains an element of lag due to timing of implementing price increases and pricing mechanisms with some of our larger customers. The Group continues to proactively manage supply chain risks, with current focus in particular on global shipping bottlenecks and UK/EU supply chain disruption.
Mitigation
Trend after mitigation
Changes since last Annual Report
7 Raw material costs and supply chain failures
Trend after mitigation
Link to strategy
Risk assessment
Medium
Annual Report and Accounts 2021 Tyman plc 89
Risk description
The Group’s future success is substantially dependent on the continued services and performance of its senior management and its ability to continue to attract and retain highly skilled and qualified personnel at Group, divisional and site level. The Group mitigates the risk of losing key personnel through robust succession planning, strong recruitment processes, employee engagement and retention initiatives, and long-term management incentives. Significant attention continues to be paid to employee wellbeing and engagement as pandemic-related disruption continues, recognising the additional strains this has put on our workforce and in particular on management teams in meeting the needs of our customers.
Mitigation
Trend after mitigation
Changes since last Annual Report
8 Key executives and personnel
Trend after mitigation
Link to strategy
Risk assessment
Low
Risk description
A lack of understanding or non-compliance with laws and regulations in any jurisdiction in which the Group operates could lead to significant financial penalty and/or severe damage to the Group’s reputation. Legal and regulatory requirements can be complex and are constantly evolving, requiring ongoing monitoring and training. Mitigations include:
* A comprehensive and engaging Code of Business Ethics and associated training
* Supporting policies and standards that set out the compliance requirements in detail
* A group-wide ‘SpeakUp’ whistleblowing mechanism
* Risk framework to identify, assess and monitor business and compliance risks
* Specific legal and compliance matters reviewed by the Group General Counsel as required
Whilst added as a Group principal risk, there is no year-on-year change in the level of unmitigated risk. A Group General Counsel was appointed for the first time in 2020. The General Counsel led a process to deploy the Group’s new Code of Business Ethics which has been deployed throughout 2021 / Q1 2022.
Mitigation
Trend after mitigation
Changes since last Annual Report
9 Compliance with laws and regulations
Trend after mitigation
Link to strategy
Risk assessment
Medium# Risk assessment Low 10 Execution of major programmes
Trend after mitigation
Link to strategy
The Group has a range of change management programmes and strategic initiatives underway to support our ‘Focus, Define, Grow’ Strategy. Failure to effectively execute these programmes could adversely affect the Group’s ability to deliver on key elements of our strategy. Oversight mechanisms to track the progress of all strategic programmes take place on a monthly basis at Group and divisional levels. In addition, each programme has established project governance disciplines in place including project managers for each programme. Whilst added as a Group principal risk there remains no year-on-year change in the level of unmitigated risk with the development and execution of key programmes progressing well.
Risk assessment Medium
Trend after mitigation
Up
Same
Down
NEW New risk
Strategy
Key
Margin expansion
Sustainable growth
Engaged people
Positive impact
Tyman plc 90 Annual Report and Accounts 2021
11 Climate change and sustainability
Trend after mitigation
NEW
Link to strategy
Adverse impacts of climate change may, over time, affect the operations of the Group, its supply chains and the markets in which it operates. This could include physical (weather related) risks, as well as failing to adapt to legal, technological and market demands for more sustainable operations and product solutions. More broadly, customer, investor and societal expectations have never been higher for companies to respond with action on ESG topics. Should the Group not reduce its GHG emissions and deliver its other sustainability commitments in line with Tyman’s targets and ambition, it may be subject to increased costs, adverse financial impacts, reputational damage and failure to attract/retain future talent.
This is a new risk in 2021.
Risk assessment Medium
The Strategic Report has been approved by the Board and signed on its behalf by
Peter Ho
General Counsel & Company Secretary
3 March 2022
Annual Report and Accounts 2021 Tyman plc 91
| | Nicky Hartery # Board of Directors
Tyman plc92 Annual Report and Accounts 2021
Jo Hallas
Jason Ashton
Pamela Bingham
Helen Clatworthy
David Randich
Paul Withers
N R A N R A N R A N R A N R
Nicky Hartery was appointed to the Board as a Non-executive Director on 1 October 2020 and as Chair of the Board and Chair of the Nominations Committee on 1 December 2020.
Nicky is a Chartered Engineer with an electrical engineering degree from University College Cork and an MBA from University of Galway. He has extensive operational and general management experience gained in international manufacturing companies, which he later leveraged to set up a Lean Six Sigma business transformation consultancy, Prodigium. He has strong experience of North American markets, both as an Executive and Non-executive director.
From 2012 to 2019, Nicky was the Chair of CRH plc, the global building materials FTSE 100 company, and has also been a Non-executive director of Eircom Ltd. Nicky spent his executive career at General Electric, Verbatim / Eastman Kodak and Dell Inc, including being based in the US for ten years.
Nicky is currently Chair of the Musgrave Group, a Non- executive director of Finning International Inc and Chair of Horse Racing Ireland.
Jo joined Tyman on 1 March 2019 and was appointed Chief Executive Officer with effect from 1 April 2019.
Jo is a Chartered Engineer with an engineering degree from the University of Cambridge and an MBA from INSEAD. She has extensive international management experience focused on business transformation through organic and acquisitive growth in the global industrial and consumer sectors, achieved through establishing and leading strategic clarity and execution.
Jo was previously Business Group Director for Spectris plc, where she had responsibility for a portfolio of global industrial technology businesses. Prior to this, Jo led the Invensys heating controls business. Jo has also held senior commercial roles with the Bosch Group in the UK and Germany, and ten years with Procter and Gamble in Germany, the USA and Asia. Jo is a former Non- executive Director of Norcros plc.
Jo is a Non-executive Director of Smith & Nephew plc.
Jason joined Tyman on 29 April 2019 and was appointed Chief Financial Officer on 9 May 2019.
Jason is a Chartered Accountant and has a degree in Economics from the University of Manchester. His career in international manufacturing-based businesses includes significant experience of commercial finance, M&A, investor relations and tax and treasury functions.
Jason was formerly Interim Group Chief Financial Officer of Nomad Foods Limited, the UK-headquartered, NYSE-listed frozen foods group. Prior to this, he was Group Finance Director for the Iglo Group, leading the business through its €2.6 billion acquisition by Nomad Foods and subsequent €0.7 billion acquisition of the Findus Group. Jason has also held senior finance and commercial positions with Mondalez (Kraft), Plum Baby and Cadbury plc, based variously in the UK, Belgium, Poland, Russia and Turkey. His early career included roles with Diageo plc, Tetley Group and KPMG.
None.
Pamela Bingham was appointed to the Board in January 2018 as a Non- executive Director. She is the Non-executive Director responsible for employee engagement across the Group.
Pamela has a law degree from the University of Edinburgh and holds an MBA from Warwick Business School. She practised as a solicitor before moving into general management. Pamela has a proven track record as a commercial leader, focusing on strategic direction and leading cross-cultural teams to deliver growth and business expansion. She has worked in the building products, engineering, mining, renewable energy and oil and gas sectors.
Pamela was most recently Managing Director, Infrastructure Products Group, Europe & Australia, at CRH and before this she was Managing Director of Weir Minerals Europe. She previously held senior management roles with Rotork plc, David Brown Group Ltd and CSE-Servelec Ltd. Her early career was spent as an in-house counsel for English Welsh and Scottish Railway Ltd and for the Yorkshire Building Society.
Pamela is currently Chief Executive of Glen Dimplex’s Heating and Ventilation Division.
Helen Clatworthy was appointed to the Board in January 2017 as a Non- executive Director. She was appointed Chair of the Audit and Risk Committee in May 2017.
Helen is a Fellow of the Chartered Institute of Management Accountants and has significant operational and corporate experience particularly in cost management, acquisition integration, information technology and change management.
Helen is a former member of the executive committee of Imperial Brands plc, where, as Business Transformation Director, she led integration activities for Imperial’s enlarged US business and a group-wide strategic cost optimisation programme. Helen held a number of other senior roles at Imperial including Finance Director for Western Europe and Group Supply Chain Director.
Helen is Chair of the Imperial Tobacco Pension Fund.
David Randich was appointed to the Board as a Non-executive Director on 15 December 2021 and is a member of the Nominations, Audit and Risk and the Remuneration Committees.
Dave brings extensive experience of the North American building products market to the Tyman Board. He holds a BS in Industrial Management from Purdue University and an MBA from Mercer University.
At Fortune Brands, Dave was President of the Masterbrand Cabinets business for seven years and President of the Therma-Tru Doors business for five years. Prior to Fortune Brands, Dave held an international career with Armstrong World Industries, with roles in China, the UK, Germany and the US. Dave has also been a Non-executive Director of Springs Window Fashions.
Dave lectures at Purdue University’s Krannert School of Management.
Paul Withers was appointed to the Board as a Non- executive Director in February 2020 and as Chair of the Remuneration Committee and Senior Independent Director from April 2020.
Paul qualified as a Mechanical Engineer, is a Sloan Fellow of the London Business School and holds an MA in Mathematics from Cambridge University and a DPhil in Mathematics from Oxford University. He has extensive experience in international manufacturing businesses and, in particular, strong knowledge of US markets, both as an Executive and Non- executive Director.
Paul’s executive career was spent at BPB plc, the international building materials business, where he was Group Managing Director. Paul is a former Non- executive Director of Premier Farnell plc, Hyder Consulting plc, Devro plc and Keller Group plc. He held the roles of Senior Independent Director and Chair of the Remuneration Committee in each of these.
None.
Annual Report and Accounts 2021 Tyman plc 93
The Board maintained its focus on safeguarding our colleagues and communities whilst also servicing our customers.”
Nicky Hartery
Non-executive Chair
Dear Shareholder
On behalf of the Board, I am pleased to present the Group’s Corporate governance report for the financial year ended 31 December 2021. The aim of this report is to explain Tyman’s governance framework and how this is aligned with the 2018 UK Corporate Governance Code (the “Code ” ). to support our long-term sustainable success. More details on the membership of the Board’s Committees and the work they carried out during the year may be found in the Audit and Risk Committee report, Nominations Committee report and Remuneration Committee report.
In 2021, we experienced strong demand for our products while having to manage industry-wide supply chain disruption and US labour challenges, which contributed to high levels of fatigue amongst our colleagues. The Board maintained its focus on safeguarding our colleagues and communities whilst also servicing our customers. In addition to encouraging the take-up of vaccinations and safe practices, the Group has extended an Employee Assistance Programme (“EAP ” ) to all its employees globally to promote mental wellbeing. We were also pleased to complete the deployment of the Group’s flagship Safety Leadership Programme, with all line managers in the Group attending workshops in either in-person or virtual formats.The Board has also overseen the continued strengthening of the Group and the progression of its strategic growth initiatives including sustainability roadmap. During the period, this was primarily focused on fostering a cohesive ‘One Tyman’ culture underpinned by the formalisation of the Tyman Excellence System and the deployment of the Group’s purpose, values and Code of Business Ethics (“CoBE”). Our sustainability roadmap has been another area of key focus for the Board, with both education and review deep-dives to ensure appropriate oversight of our work in developing our Science Based Targets and expanding our TCFD reporting. We take very seriously our role in ensuring clear and appropriate disclosure of our progress against our sustainability priorities and accordingly were delighted to have been runner-up in the industrials category of ESG Investing’s “Best Sustainability Reporting Awards”.
Engagement with stakeholders
The Group’s strong corporate culture enabled senior management to navigate the many twists and turns of doing business in 2021. The Board was kept abreast of developments through regular reports by the CEO as well as through discussions with other members of the Executive Committee and their reports. Despite the challenges of continued travel restrictions in 2021, I am pleased that the Board were able to visit our Aycliffe site together, meet in person with our leadership teams for both the UK & Ireland and International divisions, and meet the Executive team for a strategy day. Our Workforce Engagement Non-executive Director was also able to hold both in-person and virtual skip level meetings during the year.
In 2021, we organised a ‘hybrid’ AGM under our new articles of association to enable us to better engage with our shareholders. Under this format, all shareholders were able to vote and submit questions electronically in advance and join the AGM online via an audio webcast to hear from the directors, ask questions of the Board and vote on our resolutions; we intend to do the same this year. Information on how to participate digitally, both in advance and on the day, can be found in the Notice of the Company’s AGM. We look forward to your participation at the AGM. Thank you for your support.
Nicky Hartery
Non-executive Chair
3 March 2022
Tyman plc94 Annual Report and Accounts 2021
As a company that is premium-listed on the London Stock Exchange, Tyman is required to explain how it has applied the main principles of the Code, which is available at www.frc.org.uk, and the Code’s provisions throughout the financial year. The Strategic report and this Governance report, including the Directors’ Remuneration report, describe how the Company has applied the principles contained in the Code, and the statements required by sections 7.1 and 7.2 of the Disclosure Guidance and Transparency Rules.
For the year ended 31 December 2021, and up to the date of this report, the Board is pleased to report that the Company has complied with all aspects of the Code throughout the period under review, except in respect of the misalignment of the Chief Executive’s pension payments with the wider workforce. This was addressed in 2021 and the CEO’s pension payment was aligned with the wider workforce’s from 1 January 2022.
The Board is responsible for the overall leadership, strategy, culture, development and control of the Group in order to achieve its strategic objectives. The Board also ensures that there is an effective system of controls to safeguard the Group’s assets and to enable risks to be properly assessed and managed. The Board is the body responsible for making decisions on all significant matters, as detailed in the schedule of matters reserved for the Board, and is accountable to shareholders for creating the sustainable long-term success of the business.
The areas specifically considered by the Board include: assessing and monitoring the Group’s culture; approval of the Group’s strategic plan; ensuring maintenance of a sound system of internal control and risk management, including approval of the Group’s risk appetite statements; responsibility for the review of the Group’s corporate governance arrangements; and ensuring the Group has the necessary financial and human resources, processes and controls to deliver the long-term strategy of the Group.
Matters not specifically reserved for the Board, including the day-to-day management of the Group, are delegated to the Executive Directors.
The Board is responsible for engaging with and understanding the views of the Group’s key stakeholders. This includes the need to foster the Group’s business relationships with its employees, customers, investors and communities in the countries that the Group operates. The Board keeps engagement mechanisms under review so that they remain effective. The Directors take their duties under section 172 of the Companies Act 2006 very seriously and consider that they have acted in the way they consider, in good faith, would promote the success of the Company for the benefit of its members as a whole, having regard to the stakeholders and matters set out in section 172 (1) (a-f) in the decisions taken during the year ended 31 December 2021. The full statement, together with how Tyman engages with key stakeholders can be found on pages 81 to 83.
A schedule of Board meeting dates is set a year in advance, to ensure the Board meets at regular intervals throughout the year, at times that align with the operations of the different business divisions and the financial and reporting requirements of the Group as a whole. To ensure relevant topics are given appropriate consideration, the Board has delegated certain roles to three principal Committees: Audit and Risk, Remuneration and Nominations. Membership of these Committees is made up of the Non-executive Directors. The Board Chair is also a member of the Nominations and Remuneration Committees. The work of these Committees in 2021 is explained in more detail on pages 102 to 115, and page 126. Each of the Committees’ terms of reference may be found on the Group’s website. All Directors have access to the services of the General Counsel & Company Secretary who is responsible for ensuring the Group’s governance framework is observed and the Board and Committees receive the necessary support in fulfilling their responsibilities. If thought appropriate, Directors may obtain independent professional advice in respect of their responsibilities, at the Company’s expense. No such advice was sought in the year.
The Board’s role is to promote the Group’s long-term sustainable success for the benefit of all the Company’s stakeholders, generating value for the Company’s shareholders and contributing to wider society. The Board sets the Group’s long-term business strategy and establishes its purpose and values, which underpin its culture.
Monitors the integrity of the Group’s external reporting and provides oversight and governance of its internal controls, risk management and relationships with the external auditors and co-sourced internal auditors.
Responsible for appointments to the Board, succession planning and also the review of the Board’s structure, size and composition to ensure that it has a balance of skills, knowledge, experience and diversity.
Responsible for setting the remuneration policy and individual compensation for the Board Chair, Executive Directors and senior management to ensure that the Group’s long-term interests are achieved.
Annual Report and Accounts 2021 Tyman plc 95
The names and biographical details of all the current Directors, as at the date of this report, are set out on pages 80 to 81 and at the Group’s website. The following Directors served during the year ended 31 December 2021:
| Board member | Appointed to the Board |
|---|---|
| Nicky Hartery | October 2020 |
| Jo Hallas | April 2019 |
| Jason Ashton | May 2019 |
| Paul Withers | February 2020 |
| Pamela Bingham | January 2018 |
| Helen Clatworthy | January 2017 |
| Dave Randich | December 2021 |
Through the work of the Nominations Committee, the Board ensures that its members have an appropriate mix of skills, diversity of backgrounds, and relevant industry experiences such that they can challenge and support the work of the Executive Directors. Each Non-executive Director has sufficient knowledge of the Company, which has enabled them to discharge their duties and responsibilities during the year.
Responsible for the leadership and effective running of the Board and its decision-making processes. Sponsors and promotes the highest standards of corporate governance. Sets the Board agenda in consultation with the Chief Executive Officer and the General Counsel and Company Secretary, ensuring that they are aligned to the Group’s strategic objectives. Sets the style and tone of Board discussions, facilitating contribution from all Directors. Leads the Board in determining the strategy and the overall objectives of the Group, including its approach to environmental, social and governance matters, while ensuring that the Board determines the nature and extent of the principal risks associated with implementing its strategy. Leads the effectiveness evaluation of the Board and ensures its effectiveness in all aspects of its role. Ensures effective communication with the Company’s shareholders and other stakeholders.
Responsible for the day-to-day management of the Group. Promotes the Group’s culture and values. Leads the Executive team and develops and implements the Group’s strategic objectives, with assistance from the Executive Committee. Responsible for sustainability.Brings matters of particular significance or risk to the Chair for discussion and consideration by the Board where appropriate.
Chief Financial Officer
Responsible for the financial reporting and management of the Group, in addition to the finance, audit, tax and treasury functions. Responsible for the day-to-day management of all investor relations matters and for contact with shareholders, as well as with financial analysts. Responsible for providing the Board with details of feedback received from institutional shareholders and any key issues raised.
Senior Independent Director
Is available for shareholders to voice any concerns which may not be appropriate for discussion through the normal channels of Chair, CEO or CFO. Provides a sounding board for the Chair and supports him in his leadership of the Board. Leads the Chair’s performance appraisal by the other Non-executive Directors and serves as an intermediary for the other Directors with the Chair as necessary.
Non-executive Directors
Bring complementary skills and experience to the Board. Constructively challenge the Executive Directors on matters affecting the Group. As part of the externally facilitated Board and committees’ effectiveness evaluation in 2021, the Board reviewed the independence of the Directors. Having reviewed the other positions held by the Non-executive Directors and the possibility of any potential conflicts of interest, the Board continues to consider that each of the Non- executive Directors is independent, as defined against the independence criteria as set out in the Code, believing each to be independent of character and judgement.
Director induction
Upon appointment, all new Directors receive a comprehensive and tailored induction programme, providing them with the opportunity to learn about the operations, making specific site visits and meeting divisional and local management. Recent Director inductions were successfully facilitated under pandemic-related movement restrictions using a combination of in-person and remote meetings, briefing notes and both in-person as well as video tours of facilities.
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Annual Report and Accounts 2021
Statement of Governance continued
Board and Committee attendance
The following table shows the attendance record of the Directors at the scheduled Board and relevant Committee meetings held during the year.
| Board member | Board | Audit | Remuneration | Nominations | AGM |
|---|---|---|---|---|---|
| Nicky Hartery | 8/8 | n/a | 4/4 | 3/3 | 1/1 |
| Jo Hallas | 8/8 | n/a | n/a | n/a | 1/1 |
| Jason Ashton | 8/8 | n/a | n/a | n/a | 1/1 |
| Paul Withers | 8/8 | 4/4 | 4/4 | 3/3 | 1/1 |
| Pamela Bingham | 7/8 | 4/4 | 3/4 | 2/3 | 1/1 |
| Helen Clatworthy | 8/8 | 4/4 | 4/4 | 3/3 | 1/1 |
| Dave Randich 1 | 1/1 | n/a | 1/1 | 1/1 | n/a |
| 1 Dave Randich was appointed as a Non-executive Director of the Board and a member of the Audit and Risk, Remuneration and Nominations Committees on 15 December 2021. |
Attendance at Board meetings
Eight scheduled Board meetings were held during the year. The Board also met on an ad hoc basis on two further occasions to consider the Group’s responses to certain corporate matters. Where expedient, the Board also delegated a number of administrative and completion matters to a duly-appointed sub-committee of the Board.
Work of the Board during 2021
The Board’s principal matters during 2021 are summarised below:
| Principal matter Davi Randich was appointed as a Non-executive Director of the Board and a member of the Audit and Risk, Remuneration and Nominations Committees on 15 December 2021.
Work of the Board during 2021
The Board’s principal matters during 2021 are summarised below:
| Principal matter | # Statement of Governance
The Board subsequently considered a discussion document that analysed the Board’s strengths against specific recommendations designed to support the Board in preparing for the Group’s future challenges. Findings in respect of individual performance were discussed with the Board Chair and individual Directors. Subsequently, the Board Chair led the Board discussion on the findings and, following a constructive debate, the Board agreed the priorities and actions to be implemented.
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98 Annual Report and Accounts 2021
Statement of Governance continued
The evaluation concluded that the Board has many strengths, which include:
* a strong collegiate style and team spirit, which was evident in the good open dialogue at the meetings of the Board and its committees, and a strengthened and complementary blend of different voices and contributions that have been refreshed over the last three years;
* the leadership of the Chair and the CEO and the good use of time, including an adept adaptation to the recent necessity of virtual working; and
* the Board’s significant attention to risk and control, including safety, ethics and customer service.
Additionally, the evaluation also made the following principal recommendations:
| Recommendation | Recommendation |
|---|---|
| 1 | The Board should continually monitor Board composition and succession planning alongside the development of its skills matrix and a formal appraisal process. |
| 2 | The Board should develop a forward agenda that combines both formal and informal time, including increased use of private meetings between the CEO and the Non-executive Directors during the year. |
| 3 | The Board ought to continually review and ensure alignment of its appetite for risk against the changing business landscape and its strategic imperatives as the Group evolves. |
Thus, the Board will continue to review its procedures, effectiveness and development and composition during 2022. The Board Chair will use the Board evaluation’s output and the performance reviews of individual Directors to further develop the Board’s performance in the year ahead.
The Board review also concluded that the Non-executive Directors have sufficient time to meet their Board responsibilities. Separately, the Senior Independent Director led the Non-executive Directors to carry out a review of the Chair’s performance. It was found that the Chair continues to effectively discharge his duties and demonstrates full commitment to the role as evidenced by the progress made in all areas of the Board’s work.
The reviews in 2022 and 2023 will be facilitated internally and led by the Board Chair and the General Counsel & Company Secretary. The 2024 review will be facilitated externally.
The Board is fully committed to maintaining good communications with the Company’s shareholders through its investor relations programme. Tyman operates a planned schedule of communications and investor relations activities throughout the year. The CEO and CFO have day-to-day responsibility for all investor relations matters and for contact with shareholders, as well as with financial analysts. The Group CEO provides the Board with details of feedback received from institutional shareholders and any key issues raised.
Regular dialogue with institutional shareholders and financial analysts is principally maintained through:
* meetings and calls involving the Chief Executive Officer and the Chief Financial Officer;
* four scheduled releases to the market of updates on the financial performance of the Group;
* the Chair regularly engaging with larger institutional shareholders to discuss matters including the Board, strategy, corporate governance and succession planning; and
* a total of 109 separate meetings were held by members of the Board in 2021 with shareholders and prospective shareholders, analysts and equity salesforces.
In addition, the Company actively engages with individual shareholders who periodically contact the Company. Copies of all announcements and presentations made at investor events are published on the Group’s website in order to ensure that all shareholders, whether private or institutional, have equal access to information. It is currently envisaged that a similar shareholder engagement programme will be run during the 2022 financial year. A table setting out the Company’s major shareholders can be found on page 139.
The Company’s AGM is a key date for the Board, as it provides the Directors with the opportunity to meet with shareholders and both private and institutional investors. In 2021, in line with the Financial Reporting Council’s guidance, which was published in “Corporate Governance AGMs: An Opportunity for Change”, the Company organised a hybrid AGM that allowed for shareholders to attend in person or electronically via a live audio webcast. This AGM format allowed for shareholders to be counted in the quorum, ask questions of the Directors and cast live votes via the Lumi platform whilst complying with the UK Government’s measures to restrict travel and public gatherings that were then in force and also safeguard the health and safety of our shareholders, colleagues and communities.
Annual Report and Accounts 2021
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GOVERNANCE
The Chair and Non-executive Directors make themselves available to attend meetings with major shareholders at their request. The Chair attended a number of such meetings during the year to cover areas such as the Board, strategy, corporate governance and succession planning. As face-to-face meetings were neither practical nor possible at various parts of the year, most of the meetings were conducted online or over telephone calls.
The Directors acknowledge that they are responsible for the Group’s internal control and risk management systems and for reviewing their effectiveness. Details of this review process are set out in the Audit and Risk Committee report on pages 104 to 113.
The Company maintains, at its expense, a Directors’ and Officers’ liability insurance policy to afford an indemnity in certain circumstances for the benefit of Group personnel including, as recommended by the Code, the Directors. This insurance policy does not provide cover where the Director or Officer has acted fraudulently or dishonestly.
The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulation. English company law requires the Directors to prepare financial statements for each financial year. Accordingly, the Directors have prepared the Group’s financial statements in accordance with UK-adopted international accounting standards and the Company financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards, comprising FRS 101 “Reduced Disclosure Framework” and applicable law).
Under English company law, the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and the Company and of the profit or loss of the Group and the Company for that period.
In preparing the financial statements, the Directors are required to:
* select suitable accounting policies and then apply them consistently;
* state whether applicable UK-adopted international accounting standards have been followed for the Group financial statements and United Kingdom Accounting Standards, comprising FRS 101, have been followed for the Company financial statements, subject to any material departures disclosed and explained in the financial statements;
* make judgements and accounting estimates that are reasonable and prudent; and
* prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and the Company will continue in business.
The Directors are also responsible for safeguarding the assets of the Group and the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group and Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Group and the Company and enable them to ensure that the financial statements and the Directors’ Remuneration report comply with the Companies Act 2006 and, as regards the Group financial statements, Article 4 of the IAS Regulation. The Directors are responsible for the maintenance and integrity of the Group’s website.
Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. The Directors consider that the Annual Report and Accounts, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Group’s and the Company’s position and performance, business model and strategy.# Statement of Governance
Each of the Directors, whose names and functions are listed in the Annual Report and Accounts, confirms that, to the best of their knowledge:
* the Company financial statements, which have been prepared in accordance with United Kingdom Accounting Standards, comprising FRS 101, give a true and fair view of the assets, liabilities, financial position and profit of the Company;
* the Group financial statements, which have been prepared in accordance with UK-adopted international accounting standards and applicable law, give a true and fair view of the assets, liabilities, financial position and profit of the Group; and
* the Directors’ report includes a fair review of the development and performance of the business and the position of the Group and the Company, together with a description of the principal risks and uncertainties that the Group faces.
In the case of each Director in office at the date the Directors’ report is approved:
* So far as the Director is aware, there is no relevant audit information of which the Group’s and Company’s auditors are unaware; and
* they have taken all the steps that they ought to have taken as Director in order to make themselves aware of any relevant audit information and to establish that the Group’s and Company’s auditors are aware of that information.
By order of the Board
Nicky Hartery
Non-executive Chair
3 March 2022
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Annual Report and Accounts 2021
GOVERNANCE
101
Tyman plc
Annual Report and Accounts 2021
Dear Shareholder
I am pleased to present the Nominations Committee’s report for the year ended 31 December 2021.
The Committee’s role is to support the Board within the Group’s governance framework by providing oversight of the business’s leadership needs, both Executive and Non-executive, with a view to ensuring that the Group is able to implement its strategy, achieve its objectives and compete effectively. It does this by reviewing and making recommendations to the Board on the size, structure and composition of the Board and Committees. In compliance with the Code, it also ensures that plans are in place for the orderly succession to both Board and senior management positions, including overseeing the development of a diverse pipeline for succession. The Committee ensures all Board appointments are made in line with the Group’s Diversity and Inclusion Policy. This states that all decisions involving people, including recruitment, are based on objective assessment that reflects talent, engagement and achievement and are not subject to any form of bias.
The Committee met three times in 2021. In addition to the members of the Nominations Committee, who are all independent Non-executive Directors, and the General Counsel & Company Secretary, the Chief Executive was invited to attend whenever the Committee felt that it was necessary to enable a full discussion of its agenda items.
We welcomed Dave Randich onto the Board and the Committee on 15 December 2021 following a rigorous process to recruit a North American Non-executive Director to bring North American building products market experience to the Board and strengthen the Board’s geographic diversity.
Prior to initiating the recruitment of the new Non-executive Director, the Chair of the Board and the Nominations Committee in discussion with members of the Committee and the Chief Executive agreed the required skills, knowledge, experience and personal attributes relevant to the Group’s strategy. Among the criteria were a deep understanding of the North American building products market and strong international experience. The Committee engaged Russell Reynolds, a signatory to the Voluntary Code of Conduct for Executive Search firms, with whom the Group has previously worked but otherwise has no connection, to undertake the search. The Committee emphasised that diversity of the Board should be a key consideration in the search and that diversity should be considered in its widest sense. The Chair and the Chief Executive created a shortlist of candidates after reviewing a longlist. They subsequently met with the shortlist of candidates. Owing to travel restrictions in force, most of these meetings were conducted online. Two preferred candidates were identified following these meetings. The preferred candidates met with the other members of the Committee, the Group Chief Financial Officer and the President of Tyman North America. Following careful consideration of feedback from interviews and references that had been taken, the Committee recommended Dave’s appointment to the Board.
The Committee was evaluated as part of the external effectiveness review of the Board and its committees (details of which can be found on pages 98 and 99). Committee members were interviewed by the external reviewer, Dr Tracy Long, who also observed the Committee meeting in December 2021. The evaluation concluded that the Committee should continue to strengthen its focus on Executive and Non-executive succession planning, having regard to diversity and inclusion and key competencies that are important to the Group’s present and future.
The Committee assists the Board in the operation of its three-year cycle of evaluations. The first year of the cycle comprises of an externally facilitated evaluation that is carried out by an independent consultant. In the following two years, the Board builds on the outcomes of the first year using internally devised questionnaires and the process is led by the Chair of the Board and the Nominations Committee, but facilitated by the General Counsel & Company Secretary. In every year, the evaluation separately assesses the effectiveness of:
(a) the Board;
(b) each committee; and
(c) the Board Chair.
The results of the Board Chair are reviewed by the Senior Independent Director. The 2020 review identified a number of priorities. A progress report on those priorities can be found on page 98. The Committee supports the Board within the Group’s governance framework by providing oversight of the business’s leadership needs.”
Nicky Hartery
Chair, Nominations Committee
Nominations Committee report
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Annual Report and Accounts 2021
A tender process was carried out to appoint an appropriate consultant to conduct the externally facilitated review in 2021. After a rigorous review of potential consultants, the Chair and the General Counsel & Company Secretary interviewed a shortlist of two preferred candidates and ultimately appointed Boardroom Review to carry out the evaluation. Boardroom Review and its reviewer, Dr Tracy Long, have no other connection with Tyman. Details of the evaluation process and its findings and recommendations can be found on pages 98 and 99.
The members of the Nominations Committee during the year ended 31 December 2021 were as follows:
| Nominations Committee member | Appointed to the Committee |
|---|---|
| Nicky Hartery (Chair) | October 2020 |
| Paul Withers | February 2020 |
| Pamela Bingham | January 2018 |
| Helen Clatworthy | January 2017 |
| Dave Randich | December 2021 |
The Nominations Committee membership includes all of the Non-executive Directors. All its members are independent Non-executive Directors. The Chair was considered independent on appointment. Meetings of the Committee are attended by the Chief Executive Officer by invitation, when appropriate.
The Committee held three formal meetings during the year to consider the following:
* The search and selection process for a North American Non-executive Director.
* A review of the work being undertaken to ensure that the Group has the appropriate organisation capability in place to deliver on its strategic objectives.
* A review of the Committee’s terms of reference.
* The review of the Nominations Committee report for inclusion in the 2020 Annual Report and Accounts.
* Whether share ownership guidelines would be appropriate for the Non-executive Directors.
* The consideration of the Committee’s priorities for 2022.
The Group performed a structured OCR for the third year in 2021. The OCR’s objectives are to:
* identify where there are capability gaps that need to be addressed to be able to successfully execute the Group’s strategic plans;
* identify what organisation structure changes may be required to support this;
* assess the Group’s leadership talent and how this supports succession plans across the Group; and
* understand areas of key talent risk and any mitigation actions that may be required; and
* identify the health and shape of the Group’s diversity and actions required to strengthen this.
The OCR is undertaken annually as a key element of the Group’s talent management programme and will be used to strengthen the development of a diverse executive pipeline. A key element of the OCR process is the conversation that is stimulated to cross-confirm views on individual talent and develop precision on what competencies are required to deliver the Group’s strategy. The review meetings are first conducted amongst the divisional leadership teams to consider the organisation below them. This output is then used by the Division President and Division HR Director to develop the overall division OCR, which is then reviewed with the Chief Executive and Group CFO. The Committee reviewed the findings and the recommendations of the OCR undertaken in 2021. The Committee also engaged directly with Senior Management at the Board strategy meeting on 13 October 2021. At that meeting, the Committee received strategy updates and updates on progress against divisional strategic initiatives from the divisional Presidents. The Committee also met with members of the UK & Ireland division in December 2021.# GOVERNANCE
Such direct engagement is extremely valuable to the Committee in identifying and developing the talent pipeline for senior leadership positions.
The aim of the Committee is to ensure that the Board is well-balanced and appropriate for the needs of the business and the achievement of its strategy, comprising of Directors who possess appropriate experiences and are independent in character and judgement. Therefore, before recommending new candidates to the Board, the Nominations Committee takes account of the balance of skills, knowledge, experience, diversity of background and cultural fit. As a member of the FTSE 350, the Committee is mindful of the Hampton-Alexander Review targets in respect of gender diversity. It keeps such targets under review when considering appointments to the Board and is pleased to confirm continued adherence to these recommendations. At 31 December 2021, the Board had 42.9% female representation. The Committee is also aware of the Parker Review’s recommendation that each board should have at least one Director from an ethnic minority background by 2024. In accordance with our policy on diversity and inclusion, the Committee will continue to ensure ethnic and all other aspects of diversity are considered for each appointment.
The priorities of the Committee for 2022 are set out below:
On behalf of the Nominations Committee
Nicky Hartery
Chair, Nominations Committee
3 March 2022
Annual Report and Accounts 2021
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The Committee has focussed on providing effective governance over the Group’s financial reporting, risk management, internal controls and oversight of the external audit tender.”
Helen Clatworthy
Chair, Audit and Risk Committee
Dear Shareholder
On behalf of the Board, I am pleased to present an update on the work of the Audit and Risk Committee during the year. The Committee has continued to support the Board in development of the Group’s risk management and internal control framework, as well as ensuring the integrity and quality of external financial reporting. This report sets out the activities of the Committee during 2021 and the Committee’s priorities for the year ahead.
In 2021, the Committee continued to focus on the core aspects of governance within the Group. This included the enhancement of the Group’s risk management and internal controls frameworks, progress with establishing the new approach to internal audit, and completing the tender of the external audit. The Committee was pleased with progress made in enhancing the risk management and internal controls frameworks, which included deployment of the new Code of Business Ethics and a Group Minimum Standards of Financial Control framework and the implementation of a programme of risk management activities developed by the Group Head of Internal Audit and Risk Management to further enhance the Group’s approach to enterprise risk management.
The updated structure and approach to internal audit has developed well in the year and forms a basis for an increasingly risk-based approach to internal audit. The 2021 internal audit plan is complete, and I am pleased to report that all but one audit was completed on-site as COVID-19 restrictions eased. The Committee considered the co- sourcing relationship with BDO and concluded there was no need to perform a tender for this arrangement at this time. BDO will continue to report to the Group Head of Internal Audit and Risk Management on a co-source basis.
The Committee oversaw a formal and robust external audit tender process in 2021. Following the recommendation of the Audit and Risk Committee, the Board has appointed Deloitte to succeed PwC for the financial year ending 31 December 2022 onwards.
The Committee has also spent time understanding the requirements of the Taskforce on Climate-Related Financial Disclosures (“TCFD”) and environmental, social and governance (“ESG”) reporting, including the impacts on the risk framework. The Committee is satisfied with progress made to date.
David Randich was appointed as a Non-executive Director and a member of the Audit and Risk Committee on 15 December 2021. I would like to welcome David to the Committee and look forward to his contributions going forward.
The Board has delegated responsibility to the Committee for the oversight of the Company’s financial reporting, monitoring the integrity of the financial statements and other financial communications of the Company. It is responsible for ensuring that effective governance and appropriate frameworks are in place for the oversight of the Company, major subsidiary undertakings and the Group as a whole, and for considering whether accounting policies are appropriate. The Committee operates under terms of reference approved by the Board. These terms of reference have been reviewed and updated by the Committee and may be found on the Group website.
In 2021, the Committee met four times, with meetings timed to coincide with key dates in the financial reporting and audit cycles of the Group. To provide the appropriate focus on key priorities, an annual schedule of Committee activity is set out a year in advance. In addition to the Committee members, the Board Chair, Chief Executive Officer and Chief Financial Officer regularly attend Committee meetings at the invitation of the Committee Chair. Other attendees include the Group Financial Controller and members of the finance team, senior representatives from the external auditors, PwC, as well as BDO and the Group Head of Internal Audit and Risk Management.
In advance of meetings, the Committee is provided with reports from the Chief Financial Officer, the Group finance function, PwC and internal audit. These reports provide the Committee with detailed information on accounting and audit matters, and the progress the Group is making in respect of risk management activities and internal control related matters.
The Committee meets separately with the external auditors and the Group Head of Internal Audit and Risk Management during the course of the year, without Executive management being present. The Chair of the Committee has also met with PwC outside of Committee meetings to keep appraised of the year end audit process and audit matters in general.
Audit and Risk Committee report
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Annual Report and Accounts 2021
The Committee is authorised to seek independent advice should it wish to do so; however, this was not required during the year.
The members of the Committee during the year ended 31 December 2021 were as follows:
| Committee member | Appointed to the Committee |
|---|---|
| Helen Clatworthy (Chair) | January 2017 |
| Paul Withers | February 2020 |
| Pamela Bingham | January 2018 |
| David Randich | 15 December 2021¹ |
¹ David Randich joined the Board and Committee on 15 December 2021.
All members are independent Non-executive Directors. Under provisions of the UK’s Corporate Governance Code, the Committee should have at least one member with recent and relevant financial experience and competence in accounting and/or auditing, and the Committee as a whole should have competence relevant to the sector in which the Company operates. The Board considers that Helen Clatworthy has such recent and relevant financial experience. Each member of the Committee has the requisite competence including significant international, commercial and operational skills and experience which are relevant to an international manufacturer and distributor of engineered components to the building industry.
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The Committee is responsible for monitoring the integrity of the financial statements including significant judgements and estimates. In undertaking this review, the below significant issues and judgements were discussed with management and the external auditors. As part of these discussions, the Committee provided challenge to management on the appropriateness of assumptions and the areas of particular consideration outlined below and sought clarification as necessary:
| Area of focus | Audit and Risk Committee review | Conclusions |
|---|---|---|
| Carrying value of goodwill and intangibles (See note 10 to the Group financial statements) | The Group has goodwill and intangible assets of £430.1 million. The assessment of the carrying value of intangible assets involves significant estimates related to drivers of future cash flows, long-term growth rates and discount rates. The Committee received a detailed report from management outlining the valuation methodology, key assumptions used, the level of headroom, comparison to external market information and sensitivity analysis. The Committee discussed the report with management and PwC and considered whether the key assumptions were appropriate and the extent to which the valuation was sensitive to changes in these assumptions. Particular consideration was given to the level of uncertainty arising from the ongoing effect of COVID-19, supply chain disruption and the potential impact of climate change on longer-term cash flows and the terminal growth rate. | The Committee was satisfied that the methodology and assumptions used in the impairment testing were appropriate and that no impairment charge was required. |
See note 2.2 to the Group financial statements and pages 78 to 80
The Board is required to satisfy itself that the Company will continue as a going concern for a period of at least twelve months from the date of the financial statements. It is also required to consider the longer-term viability of the Group. The Committee received a detailed report from management outlining key assumptions used in the going concern and viability assessments, along with analysis of liquidity headroom and covenant compliance under a base case scenario, severe but plausible downside scenario, and a reverse stress test scenario. The Committee considered whether the key assumptions used were appropriate, including the assumed mitigating actions in the downside scenario. Consideration was given to the current level of macro-economic uncertainty as well as the impact of climate change. Particular consideration was given to the impact of the Group’s RCF facility and $45 million of USPP debt becoming due in the final year of the viability period and the strong prospects of successful refinancing. The Committee was satisfied that assumptions used were reasonable and it was appropriate to prepare the financial statements on a going concern basis. It was also satisfied that the viability statement was appropriate (see pages 78 to 80).
See note 20 to the Group financial statements
The Group holds provisions related to restructuring, properties, warranty claims and tax exposures of £6.2 million. There is inherent judgement involved in assessing the level of provision required. The Committee discussed the key assumptions used in determining these provisions with management and with PwC to assure themselves as to the adequacy and appropriateness of the provisions. The Committee was satisfied that the judgements exercised were appropriate and that the provisions were fairly stated in the annual accounts.
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| Area of focus | Audit and Risk Committee review # Audit and Risk Committee report continued
Internal audit and internal audit effectiveness
Having appointed the Group Head of Internal Audit and Risk Management in 2020, I am pleased to report that good progress has been made in enhancing the Group internal audit and risk management function. The internal audit function, led by the Group Head of Internal Audit and Risk Management is now well established and has a clear plan in place to further develop an increasingly risk-based internal audit programme.
Risk and control
Key activities of the Committee in the last twelve months
The Group’s assessment of its principal risks and uncertainties is set out on pages 84 to 91. The key elements of risk management and internal controls are detailed on page 86 of the risk management section of this Annual Report.
In accordance with the Corporate Governance Code, the Committee reviewed the Annual Report and was able to confirm to the Board that the Committee considered the Annual Report and Accounts, taken as a whole, was fair, balanced and understandable and provided the information necessary for shareholders to assess the Group’s performance, business model and strategy.
During the year, the Committee promoted continuous improvement in the Group’s risk management system, which included reviewing the risk management structure and approach, the Group’s risk appetite and principal risks and uncertainties facing the Group. In line with the priorities set out in the 2020 Annual Report, the Committee has considered the Group’s cyber and emerging risks. The Committee confirmed to the Board it had carried out a robust assessment of the principal risks, including emerging risks and developments throughout the year.
Tyman plc 108 Annual Report and Accounts 2021
Audit and Risk Committee report continued
Throughout the year, the Committee has reviewed progress in relation to the further development of the Group’s risk framework including its risk philosophy and appetite, an assessment of risk management maturity and proposals for further enhancing and embedding enterprise risk management. The Committee has also reviewed and approved the ongoing enhancements to the internal audit function and its key activities including the Internal Audit Charter and the status of actions relating to the IIA Code of Practice.
In the context of appointing the Group Head of Internal Audit and Risk Management, the Committee has reviewed the resourcing of the internal audit function more broadly. The Committee has considered the current co-sourcing relationship with BDO, led by the Group Head of Internal Audit and Risk Management. The relationship with BDO has operated well throughout 2021 and a decision not to tender this co-sourcing arrangement was made.
The Group Head of Internal Audit and Risk Management has attended every meeting of the Audit and Risk Committee. He has had ongoing contact with the Audit and Risk Committee throughout the year, including meetings without management being present. The Group Head of Internal Audit and Risk has monthly meetings with the Chair of the Committee and has had access to the Chair of the Board as required.
The 2021 internal audit plan was completed, and the number of audits has increased considerably from 2020 as the impact of COVID-19 and government restrictions eased across the Group. In 2021, there were a number of reviews in the UK, US, Mexico and China and all but one internal audit was completed on-site. The Committee reviewed the activity of internal audit throughout the year, including progress in delivering the 2021 audit plan, audit reports, completion of audit recommendations and approved the 2022 internal audit plan. The focus of internal audit in the year has been on a range of risk areas and included reviews of key Group policies, financial and IT controls, payroll, and business continuity plans. Regular review and tracking of internal audit recommendations takes place throughout the year, complemented by follow-up audits as appropriate based on risk. The Audit and Risk Committee reviewed the effectiveness of internal audit for the financial year with input from management and concluded the function had performed well and had been effective in discharging its duties and resources appropriately. Moving into 2022, the Committee looks forward to supporting the Group Head of Internal Audit and Risk Management in further establishing the Group internal audit function and moving the risk and assurance agenda to the next stage in its development.
Key activities of the Committee in the last twelve months
The Committee is responsible for managing the relationship with and the performance of the external auditors, which includes making recommendations in respect of the appointment, reappointment and, if necessary, removal of the external auditors.
PwC were appointed the Group’s auditors in December 2011 and have therefore served as the Group’s auditors since the conclusion of the 2012 AGM. Richard Porter has been the Group audit partner since 2017. In line with the provisions of the CMA Order, during 2021, the Audit and Risk Committee oversaw a formal tender process for external audit services for the financial year ending 31 December 2022 onwards. Following a robust process, the Board appointed Deloitte to succeed PwC and a resolution will be put forward to appoint Deloitte as external auditor at the forthcoming 2022 AGM. The process undertaken to reach this decision has been outlined below. The Committee would like to thank each of the participating firms.
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A selection panel was appointed to evaluate the performance of firms and prepare a report and recommendation to the Audit and Risk Committee. The panel was led by the Audit and Risk Committee Chair and members included the Chief Financial Officer and Group Financial Controller. Based on the assessment of the performance of the firms through the process against the evaluation criteria, the selection panel recommended two firms to the Audit and Risk Committee, with a preference for Deloitte. The Committee unanimously agreed and put this forward to the Board, who endorsed this recommendation.
Introductory discussions were held by management with a selection of top 10 audit firms, including the incumbent auditor, to understand their appetite for involvement in the tender process. Management considered various factors including independence, audit quality, geographic coverage, industry experience, FTSE 250 experience and capacity to deliver when determining which firms to invite to tender. Consideration was given to ensuring firms outside the big four had equal opportunity to participate. At least two references were requested for the Group Partner of each participating firm, and one reference for other senior team members.
The two shortlisted firms were invited to give an oral presentation and participate in a Q&A session. Each presentation was attended by the selection panel as well as a further member of the Audit and Risk Committee to provide an unbiased view because they had no previous involvement in the process. The presentations for each of the firms were assessed against the evaluation criteria and a feedback session was held to discuss the performance of each firm.
An external audit proposal document was received from each of the three participating firms. This was reviewed by the selection panel against the evaluation criteria and requirements set out in the Request For Proposal. A selection panel meeting was held to discuss feedback on the proposal documents and management meetings, with two firms being selected to progress to the oral presentation stage.# External audit tender process
The main objectives of the tender process, as well as transparent evaluation criteria with importance weighting against which each firm was to be assessed, were agreed by the selection panel at the planning stage. A scorecard with more detailed questions aligned to the evaluation criteria was also prepared. The criteria used to evaluate firms throughout the process was as follows:
A formal Request for Proposal was issued to each of the three firms that were formally invited to tender, being two big-four firms and one mid-tier firm. The Request for Proposal included an overview of Tyman plc, details of the planned tender process, the evaluation criteria, a detailed timetable and guidelines for expected content and length of the proposal documents and oral presentations.
Results of the audit tender process were announced following the Board’s decision. Detailed feedback was captured and provided to each of the participating firms to explain the decision reached.
Deloitte has shadowed PwC during the 2021 year end audit. They attended key meetings through the audit process and reviewed management papers on key judgements. Deloitte, during their transition period, will also have full access to both Group and divisional management to assist with any queries they have to facilitate a smooth transition. A review of Deloitte’s independence has been completed in advance of the transition and the Committee is satisfied with Deloitte’s independence. The Committee will monitor the transition to ensure it is effective.
All participating firms were given access to the data room, which included a substantial amount of information to assist firms with the production of their tender proposal. Participating firms were able to request further information, and any additional information requested was provided to all firms to ensure equality in the process. Firms were given the opportunity to meet with key members of the head office and divisional management and Committee members to allow them to ask questions to ensure they had a deep understanding of the business, risks, controls and processes and priorities, to assist them in preparing their proposal documents. Each member of management was provided with a copy of the scorecard and was asked to provide feedback on the firms following each of the meetings.
Key activities of the Committee in the last twelve months
The Committee assessed the Group’s compliance with the revised UK Corporate Governance Code, which included receiving a report from management outlining how each of the requirements of the Code had been addressed. The Committee also reviewed the Group’s non-financial reporting practices and disclosures and assessed compliance with the s172 requirements. This included review of the sustainability report, stakeholder engagement disclosures and s172(1) statement. The Committee is satisfied that the Group has complied with the UK Corporate Governance Code 2018 and non- financial reporting regulations.
The Committee effectiveness was included as part of the overall externally-facilitated effectiveness evaluation of the Board and its committees and the Committee was found to be effective. The report on the Board and Committees evaluation can be found on pages 98 and 99.
A key responsibility of the Committee is ensuring the continued effectiveness of the external audit. The Committee discussed feedback on the audit process with Group management and with PwC during private sessions as well as feedback from the audit tender process and was satisfied there were sound working relationships between the Group’s finance teams and the audit team. Having considered feedback, the robustness and quality of the work performed and the contents of the reports on audit findings the Committee was satisfied that PwC has continued to provide an effective audit.
The Committee recognises the importance of auditors’ independence and receives reports from PwC during the year in respect of their compliance with the fundamental principles of objectivity, integrity and professional behaviour, including independence. PwC has provided their annual independence letter to the Audit ad Risk Committee in March 2022. The Committee reviews the policy on auditors’ independence and non-audit services annually and takes into consideration the nature, scope and appropriateness of non-audit services supplied by the external auditors, while taking into account that the provision of certain non-audit services can be most effectively provided by the Group’s external auditors. The policy on auditors’ independence and non-audit services was reviewed and approved during the year, with no significant changes made. A copy of this policy may be found at the Group’s website. The Committee was satisfied with the external auditors’ independence and objectivity.
The Committee regularly reviews the audit fees to ensure these are appropriate to enable an effective and high- quality audit to be conducted. The fee for the 2021 Group audit is £1.0 million (2020: £0.9 million). The increase in the fee is primarily driven by an increase in audit market rates and the impact of additional work required to satisfy new auditing standards. Further information in respect of the audit fee can be found in note 4 to the Group financial statements.
During 2021, non-audit fees paid to PwC were 5.1% (2020: 6.3%) of the annual Group audit fee. This work related entirely to the provision of compliance or regulatory services customarily performed by external auditors, including the interim review which is classed as a non- audit service. Approval of the Audit and Risk Committee is required for all non-audit services. The Committee is satisfied that the provision of such services does not in any way prejudice the objectivity and independence of the external auditors.
The priorities for the Committee for 2022 are set out below:
The results of the work on these priorities will be reported in the 2022 Annual Report.
On behalf of the Audit and Risk Committee
Helen Clatworthy
Chair, Audit and Risk Committee
3 March 2022
The Committee is mindful of the Group’s commitment to creating value for our wider stakeholder groups.”
Paul Withers
Chair, Remuneration Committee
Dear Shareholder
On behalf of the Board, I am delighted to present the report of the Company’s Remuneration Committee for the year ended 31 December 2021. As in previous years, this report is set out in three sections:
This section of the report will be put to shareholders, for an advisory vote, at the 2022 AGM (pages 125 to 137).
David Randich, who is based in the US, joined the Board as a Non-executive Director and became a member of the Remuneration, Nomination and Audit and Risk Committees with effect from 15 December 2021. David’s fee is in line with the Policy for Non-executive Directors and includes the payment of an annual travel supplement to reflect the additional time commitment of the intercontinental travel required to fulfil this role.# Remuneration report
As outlined in the Chair’s Statement and Chief Executive Officer’s Review on pages 30 to 33, the Group’s performance in 2021 was strong against both 2020 and 2019, with good market momentum and share gains delivering growth in spite of well-publicised supply chain challenges, labour constraints and input cost inflation. Highlights included:
The Committee is mindful of the Group’s commitment to creating value for our wider stakeholder groups. This commitment has been very evident throughout the COVID-19 pandemic, with efforts to ensure the health and safety of our employees, their families and communities, cancellation of the 2020 management bonus scheme, and voluntary Executive Director salary reductions during 2020. In 2021, good progress has been made with embedding the Group’s culture through the deployment of the purpose, values and Code of Business Ethics. The Group became a UK Real Living Wage employer from 1 January 2022 and continues to enhance its stakeholder engagement activities.
The Group’s Chief Financial Officer received a 1.5% salary increase for 2021 which was in line with the average increase for the Group’s UK, USA and Europe-based employees. The Chief Executive was awarded a 4.5% increase in line with other high performers across the Group, and which represented the first of a planned two- stage increase to reflect her strong performance in role and to start to align her total remuneration more closely with comparable levels for other CEOs of companies of similar scale and complexity to Tyman.
Having cancelled the management bonus scheme in 2020, the Committee reinstated this in 2021. The strong performance in the year delivered adjusted profit before tax in excess of the target performance level. Due to higher than planned working capital as a result of significant cost inflation and the need to protect supply chain resilience in light of current industry-wide challenges, both cash conversion and cash generation were below target, with cash generation slightly above threshold. This resulted in a bonus outturn of 73.3% of maximum and the Executive Directors will consequently receive bonuses of 110.0% of salary for the CEO and 91.7% of salary for the CFO. Further details, including bonus targets and outcomes, are included on page 128.
The vesting period for the LTIP awarded in 2019 ended in 2021. This award was subject to a single performance condition of cumulative three-year adjusted EPS of between 95.0p (25% vesting) and 112.0p (100% vesting) and, for the Executive Directors, included additional discretionary underpins based on three-year relative TSR and 2021 ROCE. While three-year TSR was 53.6%, outperforming the FTSE All-Share and FTSE SmallCap indices over that period, and the Group’s target ROCE was achieved for the first time in 2021, actual cumulative underlying EPS for the three years, 2019 to 2021, was 86.76 pence. This was below threshold and consequently the 2019 LTIP will lapse in full. Further details are included on page 128.
Overall, the Committee is satisfied that pay outcomes in respect of the year ended 31 December 2021 are appropriate and accordingly we have not applied any discretion to this year’s incentive outcomes.
Following a consultation with our largest shareholders, we submitted our Remuneration Policy for approval at the 2021 AGM, receiving 90.31% of votes in favour. The Committee was pleased to gain strong support for the changes proposed, which included the commitment to align the CEO’s pension contribution to the level available to the wider UK workforce from 1 January 2022, an increase to both the maximum annual bonus and LTIP opportunity for the CEO from 125% to 150% of salary, and the removal of the 200% of salary exceptional award limit under the LTIP.
The Committee also set out its intention to align the total remuneration of the CEO more closely with comparable levels for CEOs of companies of similar scale and complexity to Tyman through a phased increase to her salary over the course of two years: a 4.5% increase to £477,500 which took effect from 1 January 2021, and a further increase to £550,000 from 1 January 2022, subject to continued good performance. The Committee reviewed the appropriateness of the second salary increase in the context of the Group’s performance in 2021 and outcomes for our wider stakeholders. Having reflected on the Group’s robust performance in the year and the strong leadership Jo has continued to exhibit in delivering the strategy and fostering positive outcomes for the Group’s stakeholders, the Committee has unanimously approved implementation of the second planned salary increase with effect from 1 January 2022. The CFO’s salary was increased by 4.1%, in line with the UK workforce average.
The CEO will receive cash in lieu of pension of 7% of salary from 1 January 2022, reduced from 15% in line with our Policy. The CFO will continue to receive cash in lieu amounting to 7% of salary. This contribution level is aligned with that available to the wider UK workforce. The maximum bonus opportunity and LTIP award levels will remain at 150% of salary for the CEO and 125% for the CFO. Further details on each element of remuneration, including details of performance measures and targets, are included on page 135.
The Committee remains committed to keeping under review the appropriateness of the remuneration arrangements for Tyman in the context of its strategy and culture, as well as wider market developments. The Committee looks forward to your continued support at the 2022 AGM, where I will be happy to answer questions or receive feedback on any aspect of the Group’s remuneration.
Paul Withers
Chair, Remuneration Committee
3 March 2022
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This section sets out the Remuneration policy for Executive and Non-executive Directors that was approved by shareholders at the 2021 AGM, and which shall be effective for a period of up to three years from that date (i.e. until the Group’s 2024 AGM). Minor amendments have been made to the drafting of the Remuneration policy report from the version approved by shareholders in 2021 (which can be found in the 2020 Annual Report) including: (i) the data used in the pay-for-performance scenarios; (ii) page references; and (iii) the section on Non-executive Director letters of appointment, to reflect changes in Board composition during 2021.
The 2018 UK Corporate Governance Code sets out principles against which the Committee should determine the Policy for executives. A summary of these principles, and how the proposed Policy reflects these, is set out below:
| Principle | Our approach |
|---|---|
| Clarity | We remain committed to transparent Director pay decisions, with the rationale for decisions, awards and in particular, incentive targets and outcomes, published in detail. |
| Simplicity | Our Policy consists of fixed remuneration, annual and long-term incentive components only. The share incentive and bonus schemes were designed with simplicity and shareholder preference in mind. |
| Risk | The combination of reward for short-term business performance (50% deferred into shares for three years) and long-term, sustainable earnings performance and returns ensures the incentives drive the right behaviours for the Group, its shareholders, employees and customers. Formulaic outcomes produced by the performance conditions can be overridden where, in the Committee’s opinion, they do not reflect the true performance of the business or individual Directors’ contributions. Furthermore, all variable pay awards are subject to malus and clawback provisions. |
| Predictability | There are defined threshold and maximum pay scenarios, which we have disclosed on page 124. |
| Proportionality | There is a clear and direct link between Group performance and individual rewards under the annual bonus and LTIP. No variable remuneration is payable for performance below a defined threshold level. |
| Alignment to culture | The Remuneration Committee has worked hard to formulate a Policy and incentive plans that support a performance culture, driving sustainable growth while also rewarding appropriate short-term business performance, without encouraging excessive risk taking or unsustainable Company performance. Financial and non-financial incentive measures reflect and support business strategy. Our assessment of annual performance considers both what is delivered and how the Executive Directors have delivered it. |
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| Link to strategy | Operation |
|---|---|
| Maximum opportunity | |
| Base salary | To pay Executive Directors at a level commensurate with their contribution to the Company and appropriately based on skill, experience and performance achieved. The level of salary paid is considered appropriate for motivation and retention of the calibre of executive required to ensure the successful formation and delivery of the Group’s strategy and the management of its business in the international environment in which it operates. Base salary is paid monthly in cash. The Executive Directors’ salaries are set having regard to typical pay levels at companies of a similar size, internationality and complexity. |
Salaries are normally reviewed annually and are typically effective from 1 January each year. When reviewing salaries, the Committee considers all relevant factors including: • prevailing market and economic conditions; • scope and responsibilities of the role; • the level of increase for other roles within the business; and • Company and individual performance. There is no prescribed maximum salary. Salary increases will normally be broadly in line with the general annual salary increase received by Group employees in the relevant Director’s country of residence. The Committee retains the discretion to award larger increases, for example, to reflect a change in role, development and performance of a Director or reflect an increase in complexity of the Group. While there are no performance targets attached to the payment of salary, Company and individual performance are factors considered in the salary review process.
Benefits To provide a range of market competitive benefits to facilitate the recruitment of high calibre individuals and encourage their retention. Executive Directors are eligible for a range of benefits that may include: • life assurance cover; • critical illness cover; • private medical and dental cover; • car allowance; and • professional tax and financial advice. Additional benefits may also be provided in certain circumstances which may include relocation and associated expenses. Other benefits may be offered if considered appropriate, reasonable and necessary by the Committee and any reasonable business related expenses can be reimbursed (including tax thereon if determined to be a taxable benefit). Executive Directors are eligible for other benefits introduced for the wider workforce on broadly similar terms. No overall maximum level has been set since some costs may change in accordance with market conditions. Benefits are reviewed by the Committee on an annual basis and set at an appropriate market rate. No performance metrics apply.
Pension To provide a market- competitive benefit for retirement, to facilitate the recruitment of high calibre individuals and encourage their retention. Executive Directors are eligible to participate in the relevant pension arrangements offered by the Group or to receive a cash salary supplement in lieu of pension entitlement. The Committee may amend the form of any Executive Director’s pension arrangements in response to changes in legislation or similar developments, provided that the amendment does not materially increase the cost to the Company of the pension provision. The maximum pension allowance for the current Chief Executive is 15% of base salary. This will be aligned with the majority of the wider workforce with effect from 1 January 2022. For all other and any new Executive Directors, the maximum pension contribution/allowance will be in line with the majority of the wider workforce. Currently, this is 7% of base salary. No performance metrics apply.
Annual bonus To incentivise and reward achievement of annual goals consistent with the strategic direction of the business. To create further alignment with shareholders’ interests via the delivery and retention of deferred equity. Rewards annual performance against targets set and assessed by the Committee. Any bonus payable under the annual bonus scheme is paid 50% in cash and 50% in shares deferred for three years under the DSBP and is not pensionable. Dividend equivalents may accrue on deferred bonus during the deferral period, at the Committee’s discretion on vested deferred bonus shares at the time of vesting. Three-year recovery and withholding provisions apply. The Committee has discretion to override formulaic outcomes (under both financial and non- financial metrics) if deemed appropriate. The maximum annual bonus opportunity for the Executive Directors is 150% of salary. Performance metrics are selected annually based on the objectives of the business at the time, with the majority of the bonus linked to financial metrics. Annual financial performance targets have historically been focused on profit and cash generation metrics. Performance below threshold results in zero payment. Payments normally rise from 0% to 100% of the maximum opportunity for performance between the threshold and maximum targets.
Long Term Incentive Plan To align the interests of senior executives to those of shareholders in developing the long-term growth of the business and execution and delivery of the Group’s strategy. To facilitate share ownership. Consists of awards of shares that vest subject to the achievement of performance conditions. Participation and individual award levels will be determined at the discretion of the Committee and within the approved limits of the policy. The Committee reviews the LTIP performance measures in advance of each grant to ensure their ongoing appropriateness and, where material changes to performance measures are proposed, it consults with shareholders. Awards made under the LTIP are non-pensionable and will normally require Executive Directors to retain any awards that vest, net of tax, (whether held as shares or options) for a minimum of two further years from the date of vesting. Three-year recovery and withholding provisions apply. Dividend equivalents may accrue during the performance period to the extent that awards vest. The Committee has discretion to override formulaic outcomes (under both financial and non- financial metrics) if deemed appropriate. 150% of salary. Awards are subject to the achievement of defined targets measured over three financial years, starting at the beginning of the financial year in which the award is made. In respect of each performance measure, performance below threshold results in zero vesting. The starting point for the vesting of each performance element will be no higher than 25% of the maximum opportunity and will rise in a straight- line basis to 100% of maximum opportunity for attainment of levels of performance between threshold and maximum. Awards will be granted subject to performance conditions that measure the long-term success of the Company. The Committee may introduce or reweight performance measures so that they are directly aligned with the Company’s strategic objectives for each performance period.
Shareholding requirements To motivate and reward the creation of long-term shareholder value. To ensure alignment with shareholders’ interests. Executive Directors are required to retain a minimum shareholding equivalent to 200% of basic salary, normally to be achieved within five years of appointment. Executive Directors are required to retain at least 50% of shares vesting (after any disposals necessary to pay associated tax charges) or such higher percentage (as the Committee may determine in light of the extent to which the holding requirement has been met) under both the Deferred Share Bonus Plan and the LTIP until the minimum shareholding is reached. No performance metrics apply.
Post-employment shareholding requirement To further strengthen alignment with shareholders’ interests in the long term. Executive Directors are required to retain a minimum number of shares for two years post- employment equivalent to the lower of 100% of basic salary or the actual shareholding at the time of departure. This is enforced by having such shares deposited in accounts that require the Company’s approval for their release. Shares purchased by Executive Directors and shares under any buy-out awards are not included for the purpose of post- employment shareholding. No performance metrics apply.
Chair and Non-executive Director fees To attract and retain high calibre Non-executive Directors. Non-executive Director fees are set by the Board. Fees are normally reviewed annually, but not necessarily increased. Reviews take into account the time commitment, responsibilities and fees paid by companies of a similar size and complexity. Fee increases, if applicable, for Non-executive Directors, take effect from 1 January. Additional fees may be paid to Chairs of Board Committees, to the Senior Independent Director and to the Non-executive Director designated as being responsible for employee engagement. If there is a temporary yet material increase in the time commitments for Non-executive Directors, the Board may pay extra fees on a pro rata basis to recognise the additional workload. No eligibility to receive bonuses or retirement benefits or to participate in the Group’s long-term incentive plans or employee share plans. Any reasonable business related expenses can be reimbursed (including tax thereon if determined to be a taxable benefit). This may include a travel allowance to reflect the additional time commitment of intercontinental travel required of the Non- executive Directors, based on their home location and the location of the Board meeting. Aggregate annual fees to Directors are limited to £500,000 under the Company’s Articles of Association. No performance metrics apply.
For the avoidance of doubt, by approval of the policy, authority has been given to the Company to honour any commitments entered into with current or former Directors that have been disclosed to shareholders in previous Directors’ remuneration reports. Details of any payments to former Directors, where required by relevant regulations, will be set out in the Annual report on remuneration as they arise.
The Remuneration Committee retains discretion over the operation of certain elements of pay, particularly variable pay. This includes the overriding discretion to adjust either the annual bonus or LTIP if the formulaic outcome is not considered to be reflective of Company performance. In addition, the Committee may adjust elements of the plan including, but not limited to:
Annual bonus performance metrics are determined at the start of each year based on the key business priorities for the year. The majority will be based on clear financial targets that may include, but are not limited to, profit and cash generation as, when combined, these are often strong indicators of sustainable growth.
LTIP performance metrics are determined at the time of grant. Performance measures may include measures of profitability (such as EPS), measures of capital allocation discipline (such as ROCE), measures linked to other strategic priorities (such as ESG) and other measures of long-term success (such as relative TSR). These measures align with the Company’s goal of value creation for shareholders through financial growth and above market returns. Performance against targets may also be subject to appropriate discretionary underpins.
The service agreements of the Executive Directors provide for a notice period of no more than twelve months from either party. On termination of their contract by Tyman, and during the period of notice, Executive Directors would be eligible to be paid their salary, pension contributions and other employment benefits (but not annual bonus or grants under long-term incentive plans) until the earlier of the end of the notice period or the Director obtaining full-time employment, with an obligation on the part of the Director to mitigate. Payments will normally be made monthly, although the Committee retains discretion to agree settlement terms. These may include a pro rata bonus in respect of the period worked by the Executive Director up until the date of termination. Bonuses in the final year of employment may also be settled in cash. The Committee may pay reasonable outplacement and legal fees where considered appropriate. The Committee may pay any statutory entitlements or settle or compromise claims in connection with a termination of employment, where considered in the best interests of the Company.
Executive Directors who are categorised as ‘good leavers’ by the Committee will generally be eligible to receive outstanding awards under the Executive Share Plans as they vest in future years. Awards that vest under the LTIP post- employment will normally be prorated to reflect the fact that the Executive Director was not employed for the entire period under measurement. For LTIP awards made after the 2014 AGM, the Committee retains discretion to waive the post-vesting holding period requirement for good leavers depending on circumstances. Similar provisions apply in the event of a change of control. In the event that an Executive Director is dismissed for reasons constituting gross misconduct, all unvested awards under Executive Share Plans lapse and the Committee retains no discretion in this regard.
The Chair and Non-executive Directors do not have service agreements but the terms of their appointment, including the time commitment expected, are recorded in letters of appointment. Non-executive Directors are employed for terms of three years’ duration, terminable on a month’s notice by the Company or the Director. All Non-executive Directors are required to undertake that they will submit themselves for re-election at each Annual General Meeting occurring during their term of office and no Non-executive Director will serve more than three terms of three years without prior shareholder approval. Non-executive Directors do not have a minimum shareholding requirement; however, they are expected to acquire and retain a shareholding in the Group for the duration of their appointment.
Tyman plc122 Annual Report and Accounts 2021
The Committee’s general policy on recruitment is that the structure of remuneration for new Executive Directors should be in line with the Policy in force at that time, with base salary set taking into account a range of factors, including the salary for the incumbent and the candidate’s relative experience in role. The Committee may agree that the Company will meet certain relocation and associated expenses of a new Executive Director, subject to circumstances. For a new Executive Director their annual bonus framework and LTIP awards will be in line with the limits set out in the Remuneration policy table. Depending on the timing of the appointment, the Committee may deem it appropriate to set different annual bonus performance conditions to the current Executive Directors for the first year of appointment. An LTIP award can be made shortly following an appointment (assuming the Company is not in a Closed Period). Where individuals are promoted to the Board from within the Group, their existing share grants or awards will be allowed to pay out on their original terms. In certain circumstances, and in order to secure the services of an outstanding candidate, it may be necessary to make an award to a new Executive Director to buy out unvested performance plan share or cash awards forfeited on leaving their previous employment. Any such awards would be subject to independent confirmation of the existence, forfeiture on departure and probability of these historical awards vesting had the new Executive Director remained in post. In doing so, the Committee will seek to do no more than match the fair value of the awards forfeited, taking account of performance conditions attached to these awards, the likelihood of those conditions being met and the proportion of the vesting period remaining. Such awards may be made using existing arrangements or using the flexibility provided by the Listing Rules to make awards without prior shareholder approval. Any such awards would be made in cash or in shares in Tyman plc, and may be subject to performance conditions attached to Tyman.
New Non-executive Directors appointed to the Board will be paid in line with the fee rates applicable at that time. The Committee will review the fee for a new Chairman on appointment, taking into account a range of factors, including the fee for the incumbent and the candidate’s relative experience in role. All Non-executive Director appointments will be subject to the same provisions concerning annual re-election and shareholdings as the then current Non-executive Directors.
Executive Directors are allowed to accept external appointments as Non-executive Directors. In respect of quoted companies, this is limited to one other quoted company, subject to Board approval, provided that these are not with competing companies and are not likely to lead to conflicts of interest. Executive Directors would normally be allowed to retain the fees paid from these appointments. Executive Directors may not serve as the Non-executive Chair of another quoted company.
The Executive Directors may participate in any all-employee share plans on the same basis as other employees in their country of residence. The maximum level of participation is subject to the limits imposed by HMRC (or a lower cap set by the Company).
The Remuneration policy for Executive Directors is consistent with that for other employees save lower levels of incentive opportunity based on seniority and market norms. All senior management employees of the Group participate in bonus arrangements, with all permanent UK, US and other international employees eligible to participate in one or more share schemes. Employees in certain other jurisdictions are also eligible to participate in all-employee share plans. Although the Committee does not consult directly with employees on the Directors’ remuneration policy, the Committee considers any feedback gathered by management or the designated NED as well as the general basic salary increase, remuneration arrangements and employment conditions for the broader employee population when determining remuneration policy for the Executive Directors.# GOVERNANCE
Consultation with shareholders and shareholder bodies The Committee is committed to regular engagement with shareholders and governance bodies. In advance of implementing any material future changes to the Executive Directors’ remuneration, the Committee would normally engage in consultation with shareholders. All Committee members attend the Annual General Meeting and may also be contacted through the Group’s registered office or via email to the Group’s Secretariat ([email protected]) to answer any questions shareholders or shareholder bodies may have in relation to the Group’s remuneration policy.
Annual Report and Accounts 2021 Tyman plc 123
The table below sets out performance scenarios for each Executive Director, for the financial year 2022, showing an indication of the level of remuneration that would be received at minimum, on-target and maximum performance.
| Minimum | Target | Maximum | Maximum + 50% share price growth | |
|---|---|---|---|---|
| £’000 | 0 | 500 | 1,000 | 1,500 |
| 2,000 | 2,500 | 3,000 | ||
| Fixed Annual bonus | £609 | £1,434 | £2,259 | £2,671 |
| LTIP | 22.8% | 30.9% | 46.3% | |
| 26.9% | 36.5% | 36.5% | 28.8% | |
| 28.8% | 42.4% | 100% |
| Minimum | Target | Maximum | Maximum + 50% share price growth | |
|---|---|---|---|---|
| £’000 | 0 | 300 | 600 | 900 |
| 1,200 | 1,500 | |||
| Fixed Annual bonus | £388 | £818 | £1,249 | £1,464 |
| LTIP | 26.5% | 29.4% | 44.1% | |
| 31.0% | 34.5% | 34.5% | 26.3% | |
| 26.3% | 47.4% | 100% |
The above charts provide an illustration of the proportion of total remuneration made up of each component of the remuneration and the value of each component. These assumptions are shown for illustration purposes only.
Four scenarios have been illustrated for each Executive Director:
The fixed pay element is based on the following elements:
* Base salary is the base salary effective for Jo Hallas and Jason Ashton for the year ending 31 December 2022, as set out on page 135.
* Benefits are the annualised value of benefits paid in the year ended 31 December 2021, as set out in the table of Directors’ remuneration on page 127.
* Cash contribution in lieu of pension of 7% of base salary.
Tyman plc 124 Annual Report and Accounts 2021
The Annual report on Directors’ remuneration set out below (together with the Remuneration Committee Chair’s annual statement) will be put to a single advisory shareholder vote at the 2022 AGM. This report sets out the pay outcomes in respect of the 2021 financial year and explains how the Committee intends to operate in 2022 the Remuneration policy that was approved by shareholders at the 2021 AGM. The information from the single figures of total remuneration for Directors on page 127 to the end of the section on payments to past Directors on page 131 has been audited. The remainder of the Annual report on Directors’ remuneration is unaudited.
The Remuneration Committee is responsible for setting and implementing the Remuneration policy for the Executive Directors and the Company’s Chair. In addition, the Committee considers the remuneration arrangements for all senior executives in the Group and other relevant senior managers. This ensures a consistent application of Remuneration policy across the Group and aligns all senior managers’ remuneration to the Group’s strategic objectives. Remuneration received reflects the contribution made by senior executives to the business, the performance of the Group, the size and complexity of the Group’s operations and the need to attract, retain and incentivise executives of the highest quality.
The members of the Committee during the year ended 31 December 2021 were as follows:
| Remuneration Committee member | Appointed to the Committee |
|---|---|
| Paul Withers (Chair) | February 2020 (Chair since end of March 2020) |
| Nicky Hartery | October 2020 |
| Pamela Bingham | January 2018 |
| Helen Clatworthy | January 2017 |
| David Randich | 1 December 2021 |
1 David Randich was appointed to the Committee when he joined the Board as a Non-executive Director on 15 December 2021. All members of the Committee are Independent Non-executive Directors. The Chief Executive attends meetings at the invitation of the Committee Chair. Other individuals such as external advisers may be invited to attend all or part of any meeting, as and when appropriate and necessary. None of these individuals were present or participated in any discussion in respect of their own remuneration. The Committee held four meetings during the year to coincide with the Company’s reporting cycle, including the approval of the Annual report, and the management of the Executive Directors’ remuneration and incentive plans. The meetings (members’ attendance at which is summarised on page 97) were conducted using secure online meeting technology when it was not possible to meet in person due to the ongoing pandemic.
The Committee operates under terms of reference approved by the Board. The terms of reference were reviewed by the Committee during the year to ensure they:
* remained relevant for the aims of the Committee;
* continued to meet the requirements of the business, the Group’s shareholders and other stakeholders; and
* reflected changes in corporate governance best practice.
The terms of reference may be found on the Group website.
Annual Report and Accounts 2021 Tyman plc 125
The Committee considered the following matters during the past twelve months:
Ahead of the 2021 AGM (and as reported in last year’s Remuneration report), the Committee consulted with Tyman’s largest shareholders on the proposed revisions to the Policy and the two-stage implementation of this (in 2021 and 2022). The Committee welcomed the broad indications of support for its proposals and the >90% level of support for the resolution at the AGM. The Committee noted the feedback from some shareholders about disclosing fully the Committee’s decision- making process in the event that it considered it appropriate to approve the second stage of the salary increase for the CEO; and we hope that we have addressed this expectation appropriately on page 115.
At the time of implementing the revised LTIP and annual bonus structures for 2021, webinars were organised with our HR leadership teams and scheme participants, to discuss the changes and intended operation of these schemes, including the behaviours that they sought to incentivise. Through this two-way dialogue, we also received positive feedback on the LTIP structure and the excitement and empowerment to drive outcomes that participation in the Plan creates. Further, the Board Director with responsibility for workforce engagement also remained available to the workforce throughout the year, and in the Board’s opinion continues to provide an effective conduit for direct engagement with the workforce about a range of issues, including remuneration.
During 2021, the Committee was advised by Ellason LLP. As described in last year’s report, Ellason was appointed as the independent remuneration adviser to the Committee, effective 1 January 2021. Total fees for Ellason’s advice provided to the Committee during the year were £35,801, excluding VAT (and charged on a time and materials basis). Ellason provided advice to the Committee on all aspects of its agenda during the year, including incentive design, target setting, benchmarking and aspects of remuneration governance. Ellason reports to the Chair of the Committee and provides no other service to the Group during the year. As such, Ellason is considered by the Committee to remain independent. Ellason is a signatory of the Remuneration Consultants Group Code of Conduct and any advice received is governed by that Code which sets out guidelines to ensure that advice provided is independent and free of undue influence.# Tyman plc
The following table sets out the single figure of total remuneration for Directors for the financial years ended 31 December 2020 and 2021:
| Year ended 31 December | Salary/ fees £’000 | Benefits £’000 | Annual bonus: cash £’000 | Annual bonus: deferred £’000 | Vested LTIP awards £’000 | Cash Payments in lieu of pension £’000 | Other £’000 | Total remuneration £’000 | Total fixed £’000 | Total variable £’000 |
|---|---|---|---|---|---|---|---|---|---|---|
| Executive Directors | ||||||||||
| Jo Hallas | ||||||||||
| 2021 | 478 | 20 | 262 | 262 | – | 72 | – | 1,094 | 570 | 524 |
| 2020 | 419 | 20 | – | – | – | 63 | – | 502 | 502 | – |
| Jason Ashton | ||||||||||
| 2021 | 331 | 19 | 152 | 152 | – | 23 | – | 677 | 373 | 304 |
| 2020 | 299 | 19 | – | – | – | 21 | – | 339 | 339 | – |
| Non-executive Directors | ||||||||||
| Nicky Hartery 5 | ||||||||||
| 2021 | 193 | – | – | – | – | – | – | 193 | 193 | – |
| 2020 | 24 | – | – | – | – | – | – | 24 | 24 | – |
| Paul Withers 6 | ||||||||||
| 2021 | 68 | – | – | – | – | – | – | 68 | 68 | – |
| 2020 | 52 | – | – | – | – | – | – | 52 | 52 | – |
| Pamela Bingham | ||||||||||
| 2021 | 56 | – | – | – | – | – | – | 56 | 56 | – |
| 2020 | 49 | – | – | – | – | – | – | 49 | 49 | – |
| Helen Clatworthy 7 | ||||||||||
| 2021 | 57 | – | – | – | – | – | – | 57 | 57 | – |
| 2020 | 56 | – | – | – | – | – | – | 56 | 56 | – |
| David Randich 8 | ||||||||||
| 2021 | 3 | – | – | – | – | – | – | 3 | 3 | – |
| 2020 | – | – | – | – | – | – | – | – | – | – |
1 Executive and Non-executive Directors who were in a role from April 2020 to July 2020 volunteered a salary/fees reduction of 25% for that period as a response to COVID-19. The 2020 figures in the table show the reduced basic annual salaries and fees received in that year.
2 All bonuses for 2020 were cancelled as agreed by the Board as a response to COVID-19. Deferred bonuses are not subject to further performance or service conditions.
3 Jo Hallas and Jason Ashton received cash in lieu of pension amounting to 15% and 7% of earned base salary, respectively. The Executive Directors are not members of any of the Group pension schemes.
4 The benefits provided to the Executive Directors included car allowance, private medical insurance, permanent health insurance and life assurance. There were no changes to the benefit policies or levels during the year.
5 Nicky Hartery was appointed to the Board on 1 October 2020.
6 Paul Withers was appointed to the Board on 1 February 2020.
7 Due to an administrative error, Helen Clatworthy received an overpayment of fees in 2020. Her fee for 2021 reflects the deduction made to correct this in early 2021.
8 David Randich was appointed to the Board on 15 December 2021. His fee in 2021 includes a travel supplement (of £15,000 per annum, pro-rated for 2021).
The maximum bonus opportunities for Executive Directors in respect of the 2021 financial year were 150% of base salary for the Chief Executive Officer, and 125% of base salary for the Chief Financial Officer. Of any amounts payable, 50% is paid in cash and 50% is deferred in shares, which vest after three years. For 2021, the Executive Directors’ bonus was based 100% on financial metrics. The outcome of the 2021 bonus, alongside the performance targets set, is shown below:
| Measure | Threshold 0% | Target 50% | Exceeds 100% | Performance achieved | Payout as % of maximum2 |
|---|---|---|---|---|---|
| Profit1 growth over prior year (25% weighting) | £68.4m | £71.8m | £75.2m | £81.5m | 25.0 |
| Profit performance versus target (45% weighting)3 | £65.4m | £70.2m | £77.2m | £81.5m | 45.0 |
| Cash conversion of operating profit (15% weighting) | 75% | 85% | 95% | 64% | 0.0 |
| Cash generation versus target (15% weighting)4 | £63.4m | £70.5m | £77.5m | £66.6m | 3.3 |
| Total bonus achieved | 73.3 |
1 Profit is defined as Adjusted Profit before Tax
2 Calculation is performed on the basis of targets and performance in £’000 rounded to one decimal percentage place.
3 Profit performance versus target is measured on a constant currency basis.
4 Cash generation targets for the Group exclude the investment impact of major projects. The Group recorded an Operational Cash Flow in the year of £57.9 million and the investment impact of major projects in the year was £8.6 million.
As a result of the cancellation of the management bonus scheme in 2020, no DSBP awards were granted during 2021.
LTIP awards were made to the Chief Executive Officer and Chief Financial Officer on 18 March 2019 and 14 May 2019 respectively, subject to performance measured over three years ended 31 December 2021. Awards were measured against targets outlined below dependent upon the Company’s three-year cumulative adjusted EPS, and subject to a discretionary underpin based on, inter alia, relative TSR over the period 2019–2021, and reported ROCE performance in 2021 of not less than 15% (calculated on a 2018 GAAP basis).
Cumulative EPS target over the three years ending December 2021
1 Straight-line vesting between these points. No award is made if performance is below threshold.
| Performance year | Earnings per share |
|---|---|
| 2019 | 27.46p |
| 2020 | 27.20p |
| 2021 | 32.10p |
| Adjusted cumulative EPS | 86.76p |
As the adjusted cumulative EPS of 86.76p was less than the threshold of 95.0p, the LTIP awards lapsed in full. Details of the Directors’ awards which lapsed are shown below:
| Director | Date of award | Normal vesting date 1 | Number of shares under award | Number of shares vested | Number of shares lapsed | Estimated award value on vesting |
|---|---|---|---|---|---|---|
| Jo Hallas | 18 March 2019 | March 2022 | 225,038 | – | 225,038 | £nil |
| Jason Ashton | 14 May 2019 | May 2022 | 155,912 | – | 155,912 | £nil |
1 The awards are subject to a two-year holding period after vesting.
LTIP awards were granted to both Executive Directors on 21 May 2021, with face values of 150% of salary for the Chief Executive Officer and 125% of salary for the Chief Financial Officer.
| Director | Award scheme | Date of award | Normal vesting date 1 | Number of shares awarded | Face value of award £’000 | Share price 2 | Share award receivable at lower threshold |
|---|---|---|---|---|---|---|---|
| Jo Hallas | LTIP – nil cost options | 21 May 2021 | May 2024 | 205,111 | 716 | £3.4920 | 51,277 |
| Jason Ashton | LTIP – nil cost options | 21 May 2021 | May 2024 | 118,445 | 414 | £3.4920 | 29,611 |
1 The awards are subject to a two-year holding period after vesting.
2 Calculated by reference to the 5-day average closing price prior to the date that shares were awarded to all other eligible employees (five trading days ended 11 March 2021) of £3.4920 (as stated on page 119 of the 2020 Annual Report, to support alignment of interests across the LTIP population).
Vesting of the 2021 awards is based on four measures over a three-year period commencing 1 January 2021. Any awards vesting for performance will be subject to an additional two-year holding period, during which time clawback provisions will apply. Performance will be measured against the targets as set out below:
| Measure | Weighting | Basis of measurement | Threshold (25% vesting) | Stretch (100% vesting) |
|---|---|---|---|---|
| Adjusted EPS | 40% | 3-year CAGR to 2023 | 4.5% p.a. | 12.0% p.a. |
| ROCE | 25% | 2023 outturn | 13.0% | 14.2% |
| Relative TSR | 20% | Ranking vs constituents of the FTSE250 Index (xIT) | Median | Upper quartile |
| ESG | 15% | |||
| − Safety | Four categories weighted equally | |||
| 2023 TRIR 1 | 5.5 | 4.0 | ||
| − Environment | ||||
| 2023 TCO 2 e per £m revenue 2 | 64.0 | 48.0 | ||
| − Impact | ||||
| 2023 sustainable product revenues 3 | 17% | 20% | ||
| − Culture | Employee engagement | |||
| Based on a qualitative assessment of improvement by the Workforce Engagement NED, taking into account factors such as eNPS 4 , ethics training and incidents, diversity and inclusion, and talent development. |
1 Total Recordable Incident Rate. Aligns with Tyman’s stated ambition to achieve a TRIR of <3.0 by 2026.
2 Tonnes of carbon dioxide equivalents per £m revenue is a measure of operation carbon emissions. Aligns with Tyman’s stated ambition to achieve a 50% reduction by 2026 (relative to a 2019 baseline).
3 Reflects the % of total revenues that meet the UN Sustainable Development Goals (SDGs) in use.
4 Employee Net Promoter Score.
For performance between Threshold and Stretch, the % vesting increases on a straight-line sliding scale.
The interests of each person who was a Director of the Company as at 31 December 2021 (together with interests held by his or her connected persons) were:
| Director | Shares | Options | % of salary required (2021)2 | % of salary achieved 3 | 2020 guidelines met? | Owned outright or vested | Unvested and not subject to performance conditions | Unvested and subject to performance conditions | Vested but not exercised | Unvested and not subject to performance conditions |
|---|---|---|---|---|---|---|---|---|---|---|
| 31 December 2021 1 | 31 December 2020 | |||||||||
| Nicky Hartery | 100,000 | 100,000 | – | – | – | – | – | – | – | – |
| Jo Hallas | 249,597 | 161,454 | 29,740 | 634,502 | – | 10,793 | 200% | 209% | Yes | |
| Jason Ashton | 27,351 | 27,351 | 17,155 | 420,389 | – | 10,793 | 200% | 33% | Building | |
| Paul Withers | 50,000 | 50,000 | – | – | – | – | – | – | – | – |
| Pamela Bingham | 3,928 | 3,928 | – | – | – | – | – | – | – | – |
| Helen Clatworthy | 15,000 | 15,000 | ||||||||
| David Randich | – | n/a | – | – | – | – | – | – | – | – |
1 From 31 December 2021 to 3 March 2022 there were no changes to the above stated interests.
2 Annualised base salary as at 31 December 2021.
3 Based on the closing price of Tyman plc ordinary shares of £3.995 on 31 December 2021, and Executive Directors’ beneficial shareholdings at that date (i.e. shares owned outright or vested).# Directors’ interests in shares under all share plans (LTIP, share awards issued under Listing Rule 9.4.4(2), DSBP and SAYE) (audited)
| Shares over which awards held at 1 Jan 2021 | Award scheme | Award date | granted during the year | vested during the year1 | lapsed/ cancelled during the year | held at 31 Dec 2021 | Exercise price | Earliest vesting date2 |
|---|---|---|---|---|---|---|---|---|
| Jo Hallas | LTIP | 18/03/19 | 225,038 | – | – | 225,038 | Mar 2022 | |
| LR 9.4.2(2) awards3 | 01/04/19 | 156,814 | – | 156,814 | – | Apr 2021 | ||
| LTIP 4 | 25/03/20 | 204,353 | – | – | 204,353 | Mar 2023 | ||
| LTIP 4 | 21/05/21 | – | 205,111 | – | 205,111 | May 2024 | ||
| DSBP | 11/03/20 | 29,740 | – | – | 29,740 | Mar 2023 | ||
| UK ESPP | 30/09/19 | 4,066 | – | – | 4,066 | £1.7706 | Nov 2022 | |
| UK ESPP | 30/09/20 | 6,727 | – | – | 6,727 | £1.6054 | Nov 2023 | |
| Jason Ashton | LTIP | 14/05/19 | 155,912 | – | – | 155,912 | May 2022 | |
| LTIP 4 | 25/03/20 | 146,032 | – | – | 146,032 | Mar 2023 | ||
| LTIP 4 | 21/05/21 | – | 118,445 | – | 118,445 | May 2024 | ||
| DSBP | 11/03/20 | 17,155 | – | – | 17,155 | Mar 2023 | ||
| UK ESPP | 30/09/19 | 4,066 | – | – | 4,066 | £1.7706 | Nov 2022 | |
| UK ESPP | 30/09/20 | 6,727 | – | – | 6,727 | £1.6054 | Nov 2023 |
1 LTIPs are subject to a mandatory two-year holding period, upon vesting, after the sale of the necessary number of shares to cover tax and national insurance payments.
2 All awards lapse ten years from the date of grant.
3 These one-off awards of nil cost options were granted under the exemption to the requirement for prior shareholder approval, to which Listing Rule 9.4.2(2) applies and were made to facilitate recruitment and to compensate for loss of certain benefits and share awards from Jo Hallas’ previous employment, which were forfeited.
4 Details of qualifying performance conditions in relation to outstanding LTIP awards are summarised below.
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Annual Report and Accounts 2021
Remuneration report continued
March 2020 LTIP
| Measure | EPS (50% of an award) | ROCE (50% of an award) |
|---|---|---|
| Performance measurement basis | FY22 adjusted EPS | FY22 ROCE |
| 25% (threshold) vesting | 31.33p | 13.0% |
| 100% vesting | 38.57p | 14.2% |
| Between 25% and 100% vesting | Straight line sliding scale | Straight line sliding scale |
| Underpin | Discretionary; relative TSR | Discretionary; relative TSR |
Details of the 2021 LTIP performance conditions are set on page 129.
Payments for loss of office
There were no payments for loss of office made to past Directors during the year.
Payments to past Directors
There were no cash payments to past Directors during the year. In line with the leaver treatment outlined in the 2019 Annual Report, James Brotherton’s retained interest in 23,178 shares (including dividend equivalents) under the 2018 DSBP vested in March 2021. In line with the leaver treatment outlined in the 2019 Annual Report, Louis Eperjesi’s retained interest in 37,554 shares (including dividend equivalents) under the 2018 DSBP vested in March 2021. On 12 March 2021, which was the date of vesting, based on the closing share price that day of £3.58, Louis’s retained interest was valued at £134,443.32 while James’s was £82,977.24.
Service contracts
Service contracts were entered into between the Company and the Executive Directors as follows:
| Director | Commencement date | Notice period in months |
|---|---|---|
| Jo Hallas | 1 April 2019 | Twelve |
| Jason Ashton | 9 May 2019 | Twelve |
Details of the letters of appointment of the Non-executives are shown below:
| Non-executive Director | Commencement date | Notice period in months | Commencement date | Notice period in months |
|---|---|---|---|---|
| Nicky Hartery | 1 October 2020 | 1 October 2023 | One | |
| Paul Withers | 1 February 2020 | 1 February 2023 | One | |
| Pamela Bingham | 18 January 2018 | 18 January 2021 | 18 January 2024 | |
| Helen Clatworthy | 9 January 2017 | 9 January 2020 | 9 January 2023 | |
| David Randich | 15 December 2021 | 15 December 2021 | 15 December 2024 |
Copies of service contracts and letters of appointment are available to view at the Company’s registered office.
External appointments of Executive Directors
The Committee acknowledges that Executive Directors may be invited to become independent non-executive directors of other listed companies that have no business relationship with the Company and that such roles may broaden their experience and knowledge to Tyman’s benefit. The Executive Directors are permitted to accept such external appointment with the prior approval of the Board, which would only be given if it does not present a conflict of interest with the Group’s activities (including consideration of whether such individual has the capacity for the required time commitment) and the wider exposure gained will be beneficial to such Executive Director’s development. Where fees are payable in respect of such appointment, they may be retained by the Executive Director.
Jo Hallas was appointed as an independent non-executive director of Smith & Nephew plc on 1 February 2022.
Annual Report and Accounts 2021
Tyman plc 131
GOVERNANCE
Performance graph and table
This graph shows the value, by 31 December 2021, of £100 invested in Tyman plc on 31 December 2011, compared with the value of £100 invested in the FTSE All-Share and FTSE SmallCap indices on the same date, these being two broad market indices of which Tyman has been a constituent for the majority of the period shown.
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Tyman plc
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Historical Chief Executive remuneration outcomes
The table below sets out the single figure for the total remuneration paid to the Chief Executive Officer, together with the annual bonus payout (expressed as a percentage of the maximum opportunity) and the LTIP payout (expressed as a percentage of the maximum opportunity), for the current year and previous nine years.
| Year | CEO Single figure of total remuneration £’000 | Annual bonus payout % | LTIP payout % |
|---|---|---|---|
| 2021 | Jo Hallas 1,094 | 73.3 | Nil |
| 2020 | Jo Hallas 502 | Nil1 | n/e |
| 2019 | Jo Hallas 1,299 2 | 30 | n/e2 |
| Louis Eperjesi 134 | n/e | Nil | |
| 2018 | Louis Eperjesi 1,153 | 39.5 | 90 |
| 2017 | Louis Eperjesi 876 | 51 | 42 |
| 2016 | Louis Eperjesi 1,052 | 91 | 49 |
| 2015 | Louis Eperjesi 1,026 | 58 | 100 |
| 2014 | Louis Eperjesi 1,137 | 31 | 94 |
| 2013 | Louis Eperjesi 1,821 | 90 | 100 |
| 2012 | Louis Eperjesi 493 | 68 | Nil |
| 2011 | Louis Eperjesi 338 | 22 | Nil |
n/e = not eligible – individual was employed during the year but was not eligible to participate in the bonus or LTIP scheme as appropriate that year.
1 The 2020 Group bonus was cancelled due to the scale of the financial impact of the COVID-19 crisis on the business, the wider stakeholder experience and the societal impact of the pandemic.
2 The single figure shown for Jo Hallas for 2019 of £1,299k includes £775k in relation to the buy-out of the share awards at her previous employer which she forfeited by joining Tyman during the year. Consequently, the amount paid to Jo Hallas solely in respect to her Tyman employment during 2019 was £524k.
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Annual Report and Accounts 2021
Remuneration report continued
Percentage change in remuneration of Directors and employees
In accordance with the Companies (Directors’ remuneration policy and Directors’ remuneration report) Regulations 2019 (applying to financial years commencing on or after 10 June 2019), the table below covers the percentage change in salary/ fees, taxable benefits and annual bonus for each Executive Director and Non-executive Director; and will continue to be built up over time to display a five-year history.
| Director 1,2,3 | Basic salary / total fee4 | Taxable benefits5 | Annual bonus6 |
|---|---|---|---|
| 2021 vs 2020 | 2020 vs 2019 | 2021 vs 2020 | |
| Nicky Hartery | 1.2% | n/a | n/a |
| Jo Hallas | 14.0% | -5.9% | 1.7% |
| Jason Ashton | 10.7% | -6.0% | 1.3% |
| Paul Withers | 11.0% | n/a | n/a |
| Pamela Bingham | 14.4% | 1.0% | n/a |
| Helen Clatworthy | 2.6% | -1.3% | n/a |
| David Randich | n/a | n/a | n/a |
| Average UK employee7 | 6.1% | 1.9% | 17.9% |
1 Relevant changes in Directors and their responsibilities include:
a Nicky Hartery was appointed to the Board on 1 October 2020.
b Jo Hallas was appointed to the Board as the Chief Executive Officer on 1 April 2019.
c Jason Ashton was appointed to the Board as the Chief Financial Officer on 9 May 2019.
d Paul Withers was appointed to the Board on 1 February 2020 and became Chair of the Remuneration Committee and Senior Independent Director with effect from 31 March 2020.
e Pamela Bingham started receiving a fee in respect of her role as Employee Engagement Director with effect from 1 March 2020.
f David Randich was appointed to the Board on 15 December 2021.
2 All figures shown are based on a full-time equivalent basis to allow comparability where a Director was not in role for the entirety of a financial year.
3 Note that those Directors who were not a Director at any point during 2021 have not been included. The percentage changes in their remuneration for prior years (and in which they were a Director) are disclosed in the 2020 Annual Report.
4 All the Directors who were in role from April to July 2020 volunteered cuts of 25% to their base salaries and fees for four months (April to July) due to COVID-19. Whilst the workforce also experienced cuts to their salaries ranging from 10–20%, the workforce’s forgone salaries were repaid to them. However, the cuts to the Directors’ salaries and fees were not repaid to them. The % change from 2020 to 2021 reflects this temporary reduction in basic salary or total fee for part of 2020 only, as well as the annual increases awarded for 2021.
5 For Executive Directors, taxable benefits consist primarily of car allowance, private medical insurance, permanent health insurance and life assurance. Non-executive Directors do not receive taxable benefits.
6 The figures shown are reflective of any bonus earned in respect of the relevant financial year. The n/a for the % change in bonuses from 2020 to 2021 reflects the cancellation in 2020 (the base year) of the management bonus scheme following the onset of the COVID-19 pandemic.# Annual Report and Accounts 2021 Tyman plc 133
Non-executive Directors are not eligible to participate in the annual bonus scheme.
7 The average percentage change of employee FTE salary is calculated with reference to the UK workforce as at 31 December 2021. This definition is broader than all employees of Tyman plc (as required by the reporting regulations), reflecting that the Tyman plc employee population is very small (and limited largely to the Head Office) and therefore is considered by the Committee not to be sufficiently representative of our wider workforce.
8 Taxable benefits for 2020 vs 2019 have been re-stated to exclude pension contributions.
The table below sets out, for the years ended 31 December 2021 and 31 December 2020, the total cost of employee remuneration for the Group together with the total distributions made to shareholders by way of dividends.
| Relative spend on pay (£’000) | 2021 | 2020 | Year on year |
|---|---|---|---|
| Total employee remuneration for the Group (excluding share-based payments) | 151,700 | 140,037 | 8.33% |
| Dividends paid in the financial year | 15,630 | Nil | n/a |
The Regulations require certain companies to disclose the ratio of the Chief Executive’s pay, using the amount set out in the single total figure table, to that of the 25th percentile, median and 75th percentile total remuneration of full-time equivalent UK employees.
| Year | Method | 25th percentile pay ratio | Median pay ratio | 75th percentile pay ratio |
|---|---|---|---|---|
| 2021 | Option A | 1:55 | 1:46 | 1:31 |
| 2020 | Option A | 1:26 | 1:22 | 1:14 |
| 2019 | Option A | 1:32 | 1:27 | 1:19 |
| CEO pay (£) | P25 pay (£) | P50 pay (£) | P75 pay (£) | |
|---|---|---|---|---|
| Salary | ||||
| 2021 | 477,500 | 18,595 | 22,440 | 34,066 |
| 2020 | 418,919 | 18,331 | 21,930 | 33,729 |
| 2019 | 441,750 | 19,550 | 23,335 | 33,598 |
| Total pay | ||||
| 2021 | 1,094,116 | 19,897 | 23,524 | 36,451 |
| 2020 | 501,409 | 19,064 | 23,027 | 36,090 |
| 2019 | 657,510 | 20,333 | 24,268 | 33,598 |
The 25th percentile, median and 75th percentile figures used to determine the above ratios were selected from an analysis of the full-time equivalent annualised remuneration (comprising salary, benefits, pension, annual bonus and long-term incentives) of all the UK employees for the year ended 31 December 2021. This methodology is defined as Option A under the reporting regulations and is considered by the Committee to be the most accurate approach.
The Committee notes that the statutory CEO pay ratios have increased in 2021, with the ratio of CEO total remuneration to the median employee, for example, rising from 22:1 to 46:1. The primary driver of the increase this year is the payment of an annual bonus to the CEO for 2021 performance (compared to no bonus payment in 2020, with the scheme having been cancelled for Executive Directors as a result of the pandemic).
Figures recorded in each of 2019, 2020 and 2021 do not include the value of any LTIP vesting to the CEO which is expected to be a significant driver of the headline pay ratio each year and which may lead to an increase in the ratios in future (but which will reflect the longer-term performance of the Group).
In reviewing the pay ratio analysis, the Committee is satisfied that the individuals identified at each quartile reflect the pay profile across different levels at Tyman, and that the overall picture presented by the ratios is consistent with the Group’s pay, reward and progression policies.
Details of the Directors’ remuneration for the 2022 financial year are set out in the table below:
Salary
Jo Hallas – to be increased to £550,000 with effect from 1 January 2022
Jason Ashton – £344,500 (2021: £330,890 – 4.1% increase, in line with the UK workforce average)
As set out in the Annual statement, the Committee awarded Jo Hallas the second stage of the salary increase set out in last year’s report in recognition of her ongoing strong performance and the performance of the Group as whole.
Pension allowance
Jo Hallas – 7% of base salary (reduced from 15% of salary to align with the majority of the wider workforce)
Jason Ashton – 7% of base salary
Benefits
Life assurance cover, critical illness cover, private medical and dental cover, car allowance (of £17,500 per annum) and professional tax and financial advice.
Annual bonus
Maximum opportunities:
Jo Hallas: 150% of salary
Jason Ashton: 125% of base salary
Bonuses will be based entirely on financial measures, with 70% linked to adjusted profit before tax and 30% linked to cash generation. Consistent with prior years, the precise bonus targets will be disclosed in detail in the 2022 Annual Report and Accounts (these are considered currently to be commercially sensitive). Any bonus earned will be payable 50% in cash and 50% in shares deferred for three years.
LTIP Award opportunities:
Jo Hallas: 150% of salary
Jason Ashton: 125% of base salary
LTIP awards comprise grants of nil-cost options, vesting three years after grant, subject to performance over a 3-year period commencing 1 January 2022 against four measures:
| Measure | Weighting | Basis of measurement | Threshold (25% vesting) | Stretch (100% vesting) |
|---|---|---|---|---|
| Adjusted EPS | 40% | 3-year CAGR to 2024 | 4.5% p.a. | 12.0% p.a. |
| ROCE | 25% | 2024 outturn | 13.6% | 15.04% |
| Relative TSR | 20% | Ranking vs constituents of the FTSE 250 Index (xIT) | Median | Upper quartile |
| Sustainability Scorecard | 15% | |||
| − Safety | 2024 TRIR1 | 5.0 | 4.0 | |
| − Sustainable Operations | 2024 TCO2e per £m revenue2 | 56.0 | 41.0 | |
| − Sustainable Culture | Employee engagement4 | Qualitative | ||
| − Sustainable Solutions | 4 % revenue from sustainable products in-use3 | 21% | 24% |
1 Total Recordable Incident Rate. Aligns with Tyman’s stated ambition to achieve a TRIR of <3.0 by 2026.
2 Tonnes of carbon dioxide equivalents per £m revenue is a measure of operational carbon emissions. Aligns with Tyman’s stated ambition to achieve a 50% reduction by 2026 (relative to a 2019 baseline).
3 Reflects the % of total revenues that meet the UN Sustainable Development Goals (“SDGs”) in use.
4 To be based on a qualitative assessment of improvement by the Workforce Engagement NED, taking into account factors such as eNPS, ethics training and incidents, diversity and inclusion, and talent development.
For performance between Threshold and Stretch, the % vesting increases on a straight line sliding scale. Vested LTIP awards have a two-year post-vesting holding period.
The Chair is paid an annual basic fee (determined by the Remuneration Committee), with no additional fee for chairing the Nominations Committee. For 2022, the Chairman’s annual fee will be increased to £205,000, to reflect his ongoing valued contribution to the Group.
Non-executive Directors are paid an annual basic fee, plus an additional fee for chairing a Board Committee. These fees are determined by the Chairman, CEO and CFO. In line with the increases awarded to the wider UK workforce, the annual base fee payable to NEDs will be increased by 4.0% (to £52,000) for 2022. In addition, to reflect the additional time commitment of the intercontinental travel required of David Randich to attend Board meetings, and within Policy limits, a travel supplement (of £15,000 per annum) will be payable to Mr Randich in addition to his base fee.
Fees payable to NEDs for additional responsibilities remain unchanged from 2021, as set out below.
| Position | Annual fee 2022 £ | Annual fee 2021 £ |
|---|---|---|
| Chair | 205,000 | 192,850 |
| Non-executive Director | 52,000 | 50,000 |
| Annual fee for the Chair of the Audit or Remuneration Committees | 10,000 | 10,000 |
| Annual fee for the Senior Independent Director | 8,000 | 8,000 |
| Annual fee for the Workforce Engagement Director | 6,000 | 6,000 |
| Intercontinental travel supplement | 15,000 | n/a |
During the year awards were made under the following plans:
The total number of shares outstanding under all share plans as at 31 December 2021 is 3,252,535.
As at 31 December 2021, shares equivalent to 1.65% of the Group’s issued share capital (excluding treasury shares) would be required to settle all outstanding awards under Executive and employee share plans, assuming maximum vesting.
However, the Group operates the general principle that the vesting of share awards under Executive and employee share plans should be satisfied either by the issue of shares out of treasury or, subject to Trustee consent, through shares acquired on the market by the Tyman Employee Benefit Trust.
Certain jurisdictions require that new shares are issued to employees to settle vesting under share arrangements. Where new shares are issued in these circumstances, it is the Group’s intention to match the new shares issued with an equal purchase of shares on the market either into treasury or into the Tyman Employee Benefit Trust.
In accordance with the Investment Association’s Principles of Remuneration, the Company can satisfy awards to employees under all its share plans with new issue shares or shares issued from treasury up to a maximum of 10% of its issued share capital (adjusted for share issuance and cancellation) in a rolling ten-year period.Within this 10% limit, the Company can only issue (as newly issued shares or from treasury) 5% of its issued share capital (adjusted for share issuance and cancellation) to satisfy awards under Executive (discretionary) plans. As well as the LTIP and DSBP, the Company operates various all employee share schemes as described on page 123. Subject to Trustee consent, shares acquired on the market have been used to satisfy the exercise of options under the Sharesave Scheme and the International Sharesave Plans.
Statement of voting at Annual General Meetings
The table below sets out the results of the 2021 AGM in respect of the Remuneration policy and Annual Report on Directors’ remuneration, respectively:
| Director | Votes for | Votes at discretion | Votes against | Total number of votes cast | Total number of votes withheld |
|---|---|---|---|---|---|
| Remuneration policy | 152,491,342 (90.31%) | 0 (0%) | 16,362,020 (9.69%) | 168,853,362 (100%) | 6,895 |
| Annual Report on Directors’ remuneration | 153,510,584 (96.45%) | 0 (0%) | 5,647,668 (3.55%) | 159,158,252 (100%) | 9,702,005 |
The Committee is grateful to the Group’s shareholders for their support as shown in the voting levels at the 2021 AGM and looks forward to receiving their continued support in 2022.
This Annual Report on Directors’ remuneration has been approved by the Remuneration Committee and is signed on its behalf by:
Paul Withers
Chair, Remuneration Committee
3 March 2022
Annual Report and Accounts 2021 Tyman plc 137
The Group is a leading international supplier of engineered fenestration components and access solutions to the construction industry. These activities remain unchanged from the previous year. The Company is the ultimate holding company of the Tyman Group of companies. A full list of subsidiaries may be found on pages 194 to 197.
The Company’s shares are listed in the premium segment of the Official List and are traded on the Main Market of the London Stock Exchange. The Company’s share capital consists of ordinary shares of 5.00 pence each, carrying the right to attend, vote and speak at general meetings of the Company. The ordinary shares also have the right to profits of the Company which are available for distribution and the return of capital on a winding up. The issued share capital of the Company as at 31 December 2021 was 196,762,059 ordinary shares of 5.00 pence each, of which 521,423 shares are held in Treasury. Further information on the Company’s share capital may be found in note 22 to the Group financial statements.
The names and biographical details of the Directors are on pages 92 and 93 of this report. Further information regarding the Directors who served during the year to 31 December 2021 may be found on pages 125 to 137 in the Remuneration report.
Each Director of the Board will stand for election or re- election at the AGM. Accordingly, Nicky Hartery, Jo Hallas, Jason Ashton, Paul Withers, Pamela Bingham and Helen Clatworthy will offer themselves for re-election at the 2022 AGM. As this is Dave Randich’s first year of appointment, he will offer himself for election to the Board.
At the Company’s 2021 AGM the Directors were authorised to allot shares equal to approximately one-third of the issued share capital of the Company as at 5 April 2021 or a further one-third of the issued share capital in connection with a pre-emptive offer by way of a rights issue. The Directors were also given the authority to allot shares for cash representing up to 5.0% of the Company’s issued share capital as at 5 April 2021, without first offering these shares to existing shareholders in the proportion to their existing holding. The Directors confirmed there was no intention to issue more than 7.5% of the issued share capital of the Company on a non-pre-emptive basis in any rolling three-year period without prior consultation with the relevant investor groups (except in connection with an acquisition or specified capital investment as contemplated by the Pre-Emption Group’s Statement of Principles). Shareholders also approved an additional authority for the Directors to issue ordinary shares, or sell treasury shares, for cash in connection with an acquisition or capital investment of the kind contemplated by the Pre- Emption Group’s Statement of Principles up to an additional aggregate amount being approximately 5.0% of the issued ordinary share capital as at 5 April 2021. At the 2021 AGM, the Company was also authorised to make market purchases of its own shares of up to approximately 14.99% of the shares in issue as at 5 April 2021. The Board had no immediate intention of exercising this authority but wished to retain the flexibility to do so should it be needed in the future. This authority was not used during the year and therefore remained in full at the year end. The Directors believe that it is in the best interests of the Company that these powers are renewed and, as in previous years, resolutions to renew these authorities will be put to shareholders at the Company’s AGM to be held on 19 May 2022. The Notice of the Company’s AGM and related explanatory notes accompany this Annual Report and Accounts, which may also be found with further information on these resolutions on the Group’s website. Other than elections to the Board and authorities to allot shares, to dis-apply pre-emption rights in certain limited circumstances and to purchase its own shares as explained above, the principal business to be considered at the AGM is the approval of an amendment to the Company’s articles of association.
As at 31 December 2021, the Tyman Employee Benefit Trust held 1,068,969 ordinary shares in Tyman plc. Further information on the Employee Benefit Trust may be found on page 43. Dividend waivers are in place from Tyman plc in respect of the 521,423 shares held in Treasury as at 31 December 2021 and all but £0.01 of the total dividend to the Tyman Employee Benefit Trust.
Pages 2 to 137 (inclusive) of this Annual Report comprise the Strategic report, Governance and Directors’ report and the Remuneration report. These reports have been written and presented in accordance with English law and the liabilities of the Directors in connection with this report shall be subject to the limitations and restrictions provided accordingly. The Directors are required under the Disclosure Guidance and Transparency Rules to include a Management report containing a fair review of the business and a description of the principal risks and uncertainties facing the Group and the Company. The Management report disclosures can be found in the Strategic report on pages 84 to 91. A description of the main features of the Group’s internal control and risk management systems in relation to the process for preparing the consolidated accounts continues further on page 86 of the Strategic report. Pursuant to Section 414c of the Companies Act 2006 the Strategic report on pages 2 to 91 contains disclosures in relation to future developments, dividends, finance and financial risk management, and the disclosures relating to the Group’s greenhouse gas emissions and environmental policy and performance. A full description of the Group’s activities relating to our employees, their involvement with the Company and our employment and health and safety practices and policies may be found on pages 59 to 63 of the Strategic report.
There are no restrictions on the transfer of fully paid-up shares in the Company.
Details of the Group’s Directors and Officers’ insurance arrangements may be found on page 100.
Tyman plc138 Annual Report and Accounts 2021
The Company has been notified of, or has identified, the following direct or indirect interests comprising 3% or more of its voting share capital (the issued share capital less shares held by the Company in Treasury) in accordance with DTR 5. The Company’s substantial shareholders do not have different voting rights from those of other shareholders:
| Ordinary shares held as at 31 December 2021 | % | Ordinary shares notified as at 3 March 2022 | % | |
|---|---|---|---|---|
| Alantra Asset Management | 19,356,843 | 9.86 | 19,356,855 | 9.86 |
| Fidelity International | 17,768,977 | 9.05 | 17,866,110 | 9.10 |
| BlackRock | 14,073,538 | 7.17 | 14,073,538 | 7.17 |
| Wellington Management | 11,540,758 | 5.88 | 11,349,351 | 5.78 |
| BMO Global Asset Management (UK) | 10,341,247 | 5.27 | 10,100,878 | 5.15 |
| abrdn | 9,431,864 | 4.81 | 9,426,308 | 4.80 |
| Artemis Investment Management | 9,146,353 | 4.66 | 9,146,353 | 4.66 |
| Allianz Global Investors | 8,154,164 | 4.15 | 8,155,874 | 4.16 |
| Chelverton Asset Management | 7,050,000 | 3.59 | 7,050,000 | 3.59 |
| M&G Investments | 6,278,068 | 3.20 | 6,048,791 | 3.08 |
| Janus Henderson Investors | 6,223,516 | 3.17 | 6,271,641 | 3.20 |
The Group finances its operations through a mixture of retained profits, equity and borrowings. The Group does not trade in financial instruments. Full details of the Group’s borrowing facilities are set out in note 18 to the financial statements. The main risks arising from the Group’s borrowings are market risk, interest rate risk, liquidity risk, foreign currency risk and credit risk. The Board reviews and agrees policies for managing each of these risks and the policies, which have been applied throughout the year, are set out in note 19 to the financial statements.
The Annual Report and Accounts are intended to provide a balanced and clear assessment of the Group’s past performance, present position and future prospects. A statement by the Directors on their responsibility for preparing the financial statements is given on page 100 and a statement by the auditors on their responsibilities is given on page 147.
This information is included in the Sustainability report on pages 46 to 77.# Other Stakeholder engagement and policies
Information summarising how the directors have had regard to the need to foster the company’s business relationships with suppliers, customers and others, and the effect of that regard, including on the principal decisions taken by the company during the financial year is included in the s172 statement on pages 81 to 83.
As a consequence of the work undertaken to support the viability statement, which may be found on pages 78 and 79, the Directors have continued to adopt the going concern basis in preparing the financial statements (see note 2 to the financial statements).
The Directors who held office at the date of approval of this Directors’ report confirm that, so far as they are aware, there is no relevant audit information of which the Company’s auditors are unaware and each Director has taken all the steps that they ought to have taken as a Director to make themselves aware of any relevant audit information and to establish that the Company’s auditors are aware of that information.
As explained in the Audit and Risk Committee report on page 109, PricewaterhouseCoopers LLP will not seek reappointment when their term of office expires at the end of the forthcoming AGM. Following a competitive tender process, and on the recommendation of the Audit and Risk Committee, the Board intends to appoint Deloitte LLP as the Group’s external auditor. Accordingly, the appointment of Deloitte LLP is recommended to the shareholders for approval at the forthcoming AGM.
The Company did not make any political donations during the year (2020: £Nil).
Reporting requirements under LR 9.8.4R (4), (5) and (6) and LR 9.8.6 (1), if applicable, have been included in the Remuneration report on pages 114 to 137. All other information required to be disclosed, under LR 9.8.4R (1), (2) and (7) to (14), if applicable, is covered in this report. There is no further information to disclose.
None.
By order of the Board
Peter Ho
General Counsel & Company Secretary
3 March 2022
Company registration number: 02806007
Annual Report and Accounts 2021
Tyman plc 139
In our opinion:
* Tyman plc’s Group financial statements and Company financial statements (the “financial statements”) give a true and fair view of the state of the Group’s and of the Company’s affairs as at 31 December 2021 and of the Group’s profit and the Group’s cash flows for the year then ended;
* the Group financial statements have been properly prepared in accordance with UK-adopted international accounting standards;
* the Company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards, comprising FRS 101 “Reduced Disclosure Framework”, and applicable law); and
* the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements, included within the Annual Report and Accounts (the “Annual Report”), which comprise: the consolidated and Company balance sheets as at 31 December 2021; the consolidated income statement and consolidated statement of comprehensive income, the consolidated cash flow statement, and the consolidated and Company statements of changes in equity for the year then ended; and the notes to the financial statements, which include a description of the significant accounting policies. Our opinion is consistent with our reporting to the Audit and Risk Committee.
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities under ISAs (UK) are further described in the Auditors’ responsibilities for the audit of the financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
We remained independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, which includes the FRC’s Ethical Standard, as applicable to listed public interest entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. To the best of our knowledge and belief, we declare that non-audit services prohibited by the FRC’s Ethical Standard were not provided. Other than those disclosed in note 4 to the financial statements, we have provided no non-audit services to the Company or its controlled undertakings in the period under audit.
Tyman plc 140 Annual Report and Accounts 2021
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements. As part of our audit, we made enquiries of management to understand the process they have adopted to assess the extent of the potential impact of climate change risk on the Group’s financial statements. We read management’s paper which sets out their assessment of climate change risk to the Group and the impact on the financial statements and impairment testing. Management consider that the impact of climate change does not give rise to a material financial statement impact as explained in note 10 to the financial statements. We used our knowledge of the Group to evaluate management’s assessment. We particularly considered how climate change risks would impact the assumptions made in the forecasts prepared by management used in their impairment analyses and going concern. Our procedures in relation to the assessment of the carrying value of goodwill and intangible assets are described in the related key audit matter. We also discussed with management the ways in which climate change disclosures should continue to evolve as the Group continues to develop its response to the impact of climate change.
Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by the auditors, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. These matters, and any comments we make on the results of our procedures thereon, were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. This is not a complete list of all risks identified by our audit.
Inventory valuation, valuation of defined benefit pension schemes and recoverable amount of investments in subsidiaries and affiliates are new key audit matters this year.
Going concern and Impact of Covid-19, which were key audit matters last year, are no longer included because of the following:
* Going concern: in the prior year, the entity’s ability to continue as a going concern was assessed as a significant risk due to the Covid-19 pandemic affecting the environment in which the Group operates resulting in the financial covenants for the Group being reset during the period. In the current year the Group has experienced strong growth and covenant compliance. The year end going concern assessment shows significant headroom forecasted throughout the going concern period. Based on these considerations, we have assessed the going concern risk as normal for the current year audit.
* The impact of Covid-19 is no longer included as a key audit matter because the Group has not suffered any significant impact from the pandemic and trading is ahead of that achieved pre pandemic.
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Tyman plc 141
Otherwise, the key audit matters below are consistent with last year.
| Key audit matter | How our audit addressed the key audit matter # Tyman plc 142 Annual Report and Accounts 2021 Financial Statements
We focused on these balances because the judgement of whether or not an impairment charge on any of the three CGUs was necessary involved significant estimates about the future results of the business. Management has considered the potential impact of climate change on the assumptions supporting the impairment test, taking into consideration the risks and opportunities identified in the climate change risk assessment, the qualitative assessment of the potential financial impact and mitigations, and the commitments made in the sustainability roadmap. There are deemed to be three CGUs, namely North America, UK & Ireland and International. For all the CGUs we evaluated management’s future cash flow forecasts and tested the underlying value in use calculations. We agreed management’s forecast to the latest Board approved strategic plan. We also compared historic actual results to those budgeted to assess the quality of management’s forecasting. The key assumptions in the calculations were growth in revenue, gross margin and EBITDA margins. In assessing these assumptions, we considered external construction industry outlook reports and economic growth forecasts from a variety of sources, as these were good indicators of building product sales. We also involved our valuation experts and tested:
• management’s assumption in respect of the long-term growth rates in the forecasts by comparing them to long term average growth rates of the economies in the relevant territories; and
• the discount rate by assessing the cost of capital for the Company and comparable organisations.
We considered the outturn of significant estimates from last year to assess management’s forecasting accuracy. We considered the climate change risk assessment prepared by management and understood the impact on management’s forecast, which is not deemed material based on available information. We reviewed for completeness the climate change risk assessment by performing an analysis of sectors and competitors in relation to physical and transitional risks. We considered the impacts of climate change risk assessment in relation to the assumptions supporting the impairment assessment and agree with management’s conclusion that there is no material impact based on the information available. We have also considered the effects of Covid-19 in relation to cash flow forecasts and determined this to have no significant impact. We are satisfied these assumptions are appropriate. We performed sensitivity analysis in respect of the key assumptions, which were flexed to determine at what level this would eliminate the headroom in the model. There were no changes in the key assumptions that were considered reasonably possible which would eliminate headroom, as outlined in the disclosure included in note 10. We have considered management’s disclosures in respect to the recoverability of goodwill and intangible assets to be appropriate.
Refer to note 13 to the financial statements. The Group applies FIFO costing and achieves this through a standard costing method adjusted for capitalised purchase variances. Capitalised variances are determined as the difference of actual against standard purchase costs considering as a basis the number of inventory turnover days. Slow moving and obsolete provisions are based on historical turnover. The current year has seen an impact on the global business operations in terms of increase of raw material prices, shipping costs, labour costs (in specific countries like the US) and supply chain issues. These factors, along with the decision for the Group to build up the inventory level at year-end to prevent supply shortages during the Chinese New Year, have contributed to a material increase in inventory. Considering these factors, there is a risk that inventory costing and provisioning may be more susceptible to material misstatement. We considered the effects of the supply chain disruption on the calculation of the inventory reserve, as there can be items deemed obsolete or slow moving under the current Group accounting policy but for which the Company might have already received specific orders. We have performed a walkthrough of the costing and provisioning processes for the components in scope; We have obtained an understanding of how management accounts for costs and where capitalised variances were material we tested:
• the standard costing through sample testing;
• the capitalised variances by reperforming the actual invoice cost compared to the standard costing;
• the assumption made over stock turn and reperformed the calculation to capitalise variances to reach a FIFO costing policy.
We have obtained an understanding of the application of the provision policy and tested the ageing reports and mathematical accuracy of the calculation. We verified no manual adjustments have been made in respect of the provision and determined this was in line with the Group accounting policy. We were satisfied with the costing methodology applied and deemed reasonable the assumptions for the basis of the inventory provisions. We have considered management’s disclosures in respect to the valuation of inventory to be appropriate.
Refer to note 21 to the financial statements. The Group’s principal defined benefit pension schemes are operated in the US and Italy. The US defined benefit schemes provide benefits to members in the form of a guaranteed level of pension payable for life, while the Italian schemes relate to TFR termination obligations payable to employees of the Group’s Italian operations. The pension assets and liabilities are material to the Group and consist of gross obligations of £29.9m and gross plan assets of £25.9m as at 31 December 2021). An inherent level of risk exists in the valuation of the obligations as there are assumptions utilised in the estimation process with respect to discount rates, the number of employees, salaries, length of service, mortality and demographic data. Considering the nature of the Italian scheme and the immaterial impact of the liability, we determined the risk to relate to the US pension assets and liabilities. We considered the magnitude of the balances and changes in discount rates and mortality rate assumption may have a material effect on the Group’s financial position and there is estimate and expertise involved in making the assumptions. We challenged the appropriateness of key assumptions supporting the Group’s valuation of retirement benefit obligations, including comparison of these assumptions with our internally developed benchmarks. We have involved our own internal actuarial experts to assess the appropriateness of management’s assumptions in relation to mortality rates and discount rates. We circularised fund managers and custodians to confirm the existence of pension assets and performed independent valuation procedures. We reviewed trust deeds and communications to members to confirm any changes to the pension schemes. We are satisfied these assumptions used are appropriate. We have considered management’s disclosures in respect to the valuation of defined benefit obligations to be appropriate.
Recoverable amount of investments in subsidiaries and affiliates (parent)
Refer to note 4 to the Company financial statements. There are £345.8 million of investments in subsidiaries recognised on the Company balance sheet. In line with IAS 36, the carrying amounts of the Company’s investments are reviewed at each reporting date to determine whether there is an indication of impairment An impairment review using a value in use calculation has been performed by management for each investment. We focused on these balances as the models applied in determining the recoverable amount require the use of assumptions over which there is a degree of judgement, including short-term and long-term growth assumptions, discount rates, and other judgmental cash flows, which all increase the risk of error. We tested the appropriateness and reasonableness of the model, key assumptions and sensitivities. We identified and tested significant assumptions to third party industry information or other external data, as applicable. We used our internal valuation experts to assess the discount and long-term growth rates applied in management’s calculations. We considered the impacts of climate change risk assessment in relation to the assumptions supporting the recoverability assessment. We considered the outturn of significant estimates from last year to assess management’s forecasting accuracy. We are satisfied the assumptions used in the recoverability assessment are appropriate and that no impairment exists. We have considered management’s disclosures in respect to the valuation of the investments in subsidiaries and affiliates to be appropriate.
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial statements as a whole, taking into account the structure of the Group and the Company, the accounting processes and controls, and the industry in which they operate. The Group is structured along three divisions being Tyman North America, Tyman UK & Ireland and Tyman International, along with centralised functions covering Group treasury and central costs. The Group financial statements are a consolidation of 77 reporting units for the Group’s operating businesses, which map into the three divisions and centralised functions.# Independent Auditors' Report
Of the Group’s 77 reporting units, we identified 10 which, in our view, required an audit of their complete financial information, due to their size. The units were based in the United Kingdom (UK), the United States (US), and Italy. Specific audit procedures on certain balances and classes of transactions were performed at a further 9 reporting units, as while overall the units were not financially significant, certain classes of transactions and balances were material or considered to be higher risk, including cost of sales, interest, loans, cash, inventory, accounts payable, pension liabilities and property, plant and equipment. In establishing the overall approach to the Group audit, we determined the type of work that needed to be performed at each of the reporting units either by us, as the Group engagement team, or the component auditors in the US or Italy operating under our instruction. Where work was performed by the US and Italian component auditors, the UK engagement leader and senior manager were in regular contact with the teams via video calls, reviewed audit work papers with specific focus related to significant and elevated risks and key estimates, and participated in the US and Italian component clearance meetings. 81% of the Group’s revenue and 79% of the Group’s adjusted operating profit is accounted for by the 10 reporting units where we performed full scope audit work on the complete financial information.
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The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures on the individual financial statement line items and disclosures and in evaluating the effect of misstatements, both individually and in aggregate on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
| Financial statements | Group | Company |
|---|---|---|
| Overall materiality | £4,000,000 (2020: £4,100,000). | £3,300,000 (2020: £3,700,000). |
How we determined it
Rationale for benchmark applied
Adjusted operating profit is the key measure used internally by management in assessing the performance of the Group, externally by analysts, and is the measure disclosed as a key performance indicator in the Annual Report. This measure provides us with a consistent year on year basis for determining materiality based on trading performance and eliminates the impact of non-recurring items. Adjusted operating profit excludes amortisation of acquired intangible assets, impairment of goodwill and acquired intangible assets, and exceptional items. The Company is predominantly an investment holding Company and therefore total assets is deemed the most appropriate benchmark.
For each component in the scope of our Group audit, we allocated a materiality that is less than our overall Group materiality. The range of materiality allocated across components was from £163,000 to £3,500,000. Certain components were audited to a local statutory audit materiality that was also less than our overall Group materiality.
We use performance materiality to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds overall materiality. Specifically, we use performance materiality in determining the scope of our audit and the nature and extent of our testing of account balances, classes of transactions and disclosures, for example in determining sample sizes.
Our performance materiality was 75% (2020: 75%%) of overall materiality, amounting to £3,000,000 (2020: £3,100,000) for the Group financial statements and £2,475,000 (2020: £2,800,000) for the Company financial statements. In determining the performance materiality, we considered a number of factors - the history of misstatements, risk assessment and aggregation risk and the effectiveness of controls - and concluded that an amount at the upper end of our normal range was appropriate.
We agreed with the Audit and Risk Committee that we would report to them misstatements identified during our audit above £200,000 (Group audit) (2020: £195,000) and £165,000 (Company audit) (2020: £185,000) as well as misstatements below those amounts that, in our view, warranted reporting for qualitative reasons.
Our evaluation of the Directors’ assessment of the Group’s and the Company’s ability to continue to adopt the going concern basis of accounting included:
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Group’s and the Company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue. In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
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However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as to the Group’s and the Company’s ability to continue as a going concern. In relation to the Directors’ reporting on how they have applied the UK Corporate Governance Code, we have nothing material to add or draw attention to in relation to the Directors’ statement in the financial statements about whether the Directors considered it appropriate to adopt the going concern basis of accounting. Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report.
The other information comprises all of the information in the Annual Report other than the financial statements and our auditors’ report thereon. The Directors are responsible for the other information, which includes reporting based on the Task Force on Climate-related Financial Disclosures (TCFD) recommendations. Our opinion on the financial statements does not cover the other information and, accordingly, we do not express an audit opinion or, except to the extent otherwise explicitly stated in this report, any form of assurance thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If we identify an apparent material inconsistency or material misstatement, we are required to perform procedures to conclude whether there is a material misstatement of the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report based on these responsibilities.
With respect to the Strategic report and Governance and Directors’ report, we also considered whether the disclosures required by the UK Companies Act 2006 have been included. Based on our work undertaken in the course of the audit, the Companies Act 2006 requires us also to report certain opinions and matters as described below.
In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic report and Governance and Directors’ report for the year ended 31 December 2021 is consistent with the financial statements and has been prepared in accordance with applicable legal requirements. In light of the knowledge and understanding of the Group and Company and their environment obtained in the course of the audit, we did not identify any material misstatements in the Strategic report and Governance and Directors’ report.
In our opinion, the part of the Remuneration report to be audited has been properly prepared in accordance with the Companies Act 2006.# Corporate governance statement
The Listing Rules require us to review the Directors’ statements in relation to going concern, longer-term viability and that part of the corporate governance statement relating to the Company’s compliance with the provisions of the UK Corporate Governance Code specified for our review. Our additional responsibilities with respect to the corporate governance statement as other information are described in the Reporting on other information section of this report.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the corporate governance statement is materially consistent with the financial statements and our knowledge obtained during the audit, and we have nothing material to add or draw attention to in relation to:
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Financial Statements
STRATEGIC REPORT
FINANCIAL STATEMENTS
Our review of the Directors’ statement regarding the longer-term viability of the Group was substantially less in scope than an audit and only consisted of making inquiries and considering the Directors’ process supporting their statement; checking that the statement is in alignment with the relevant provisions of the UK Corporate Governance Code; and considering whether the statement is consistent with the financial statements and our knowledge and understanding of the Group and Company and their environment obtained in the course of the audit.
In addition, based on the work undertaken as part of our audit, we have concluded that each of the following elements of the corporate governance statement is materially consistent with the financial statements and our knowledge obtained during the audit:
We have nothing to report in respect of our responsibility to report when the Directors’ statement relating to the Company’s compliance with the Code does not properly disclose a departure from a relevant provision of the Code specified under the Listing Rules for review by the auditors.
As explained more fully in the Directors’ responsibilities statement, the Directors are responsible for the preparation of the financial statements in accordance with the applicable framework and for being satisfied that they give a true and fair view. The Directors are also responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Group’s and the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Group or the Company or to cease operations, or have no realistic alternative but to do so.
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
Based on our understanding of the Group and industry, we identified the principal risks of non-compliance with laws and regulations related to breaches in health and safety regulations and employment law, and we considered the extent to which non-compliance might have a material effect on the financial statements. We also considered those laws and regulations that have a direct impact on the financial statements such as the Companies Act 2006.
We evaluated management’s incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls), and determined that the principal risks were related to posting inappropriate journal entries to revenue and management bias in accounting estimates. The Group engagement team shared this risk assessment with the component auditors so that they could include appropriate audit procedures in response to such risks in their work.
Audit procedures performed by the Group engagement team and/or component auditors included:
There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-compliance with laws and regulations that are not closely related to events and transactions reflected in the financial statements. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.
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Independent auditors’ report continued to the members of Tyman plc
Our audit testing might include testing complete populations of certain transactions and balances, possibly using data auditing techniques. However, it typically involves selecting a limited number of items for testing, rather than testing complete populations. We will often seek to target particular items for testing based on their size or risk characteristics. In other cases, we will use audit sampling to enable us to draw a conclusion about the population from which the sample is selected.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors’ report.
This report, including the opinions, has been prepared for and only for the Company’s members as a body in accordance with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.
Under the Companies Act 2006 we are required to report to you if, in our opinion:
We have no exceptions to report arising from this responsibility.# Appointment
Following the recommendation of the Audit and Risk Committee, we were appointed by the members on 1 May 2012 to audit the financial statements for the year ended 31 December 2012 and subsequent financial periods. The period of total uninterrupted engagement is 10 years, covering the years ended 31 December 2012 to 31 December 2021.
As required by the Financial Conduct Authority Disclosure Guidance and Transparency Rule 4.1.14R, these financial statements form part of the ESEF-prepared annual financial report filed on the National Storage Mechanism of the Financial Conduct Authority in accordance with the ESEF Regulatory Technical Standard (‘ESEF RTS’). This auditors’ report provides no assurance over whether the annual financial report has been prepared using the single electronic format specified in the ESEF RTS.
Richard Porter (Senior Statutory Auditor) for and on behalf of PricewaterhouseCoopers LLP Chartered Accountants and Statutory Auditors London 3 March 2022
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For the year ended 31 December 2021
| Note | 2021 £’m | 2020 £’m |
|---|---|---|
| Revenue | 3 | 635.7 |
| Cost of sales | 3 | (424.0) |
| Gross profit | 211.7 | |
| Selling, general and administrative expenses | (138.6) | |
| Operating profit | 4 | 73.1 |
| Analysed as: | ||
| Adjusted1 operating profit | 3 | 90.0 |
| Exceptional items | 6 | 0.6 |
| Amortisation of acquired intangible assets | 10 | (17.5) |
| Operating profit | 73.1 | |
| Finance income | 7 | – |
| Finance costs | 7 | (9.1) |
| Net finance costs | 7 | (9.1) |
| Profit before taxation | 3 | 64.0 |
| Income tax charge | 8 | (14.4) |
| Profit for the year | 49.6 | |
| Basic earnings per share | 9 | 25.4p |
| Diluted earnings per share | 9 | 25.3p |
Non-GAAP alternative performance measures
| 1 | |||
|---|---|---|---|
| Adjusted1 operating profit | 90.0 | 80.3 | |
| Adjusted2 profit before taxation | 9 | 81.5 | 68.4 |
| Basic Adjusted earnings per share2 | 9 | 32.1p | 27.2p |
| Diluted Adjusted earnings per share2 | 9 | 32.0p | 27.1p |
1 Before amortisation of acquired intangible assets, impairment of goodwill and acquired intangible assets, and exceptional items. See Alternative Performance Measures on pages 203 to 208.
2 Before amortisation of acquired intangible assets, impairment of goodwill and acquired intangible assets, exceptional items, unwinding of discount on provisions, gains and losses on the fair value of derivative financial instruments, amortisation of borrowing costs and the associated tax effect. See Alternative Performance Measures on pages 203 to 208.
The notes on pages 154 to 196 are an integral part of these consolidated financial statements.
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For the year ended 31 December 2021
| Note | 2021 £’m | 2020 £’m |
|---|---|---|
| Profit for the year | 49.6 | |
| Other comprehensive income/(expense) | ||
| Items that will not be reclassified to profit or loss | ||
| Remeasurements of post-employment benefit obligations | 21 | 1.6 |
| Total items that will not be reclassified to profit or loss | 1.6 | |
| Items that may be reclassified subsequently to profit or loss | ||
| Exchange differences on translation of foreign operations | 2.4 | |
| Effective portion of changes in value of cash flow hedges | 17 | – |
| Total items that may be reclassified to profit or loss | 2.4 | |
| Other comprehensive income/(expense) for the year, net of tax | 4.0 | |
| Total comprehensive income for the year | 53.6 |
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 8.
The notes on pages 154 to 196 are an integral part of these consolidated financial statements.
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For the year ended 31 December 2021
| Share capital £’m | Treasury reserve £’m | Hedging reserve £’m | Translation reserve £’m | Retained earnings £’m | Total equity £’m | |
|---|---|---|---|---|---|---|
| At 1 January 2020 | 9.8 | (4.3) | (0.3) | 59.5 | 351.6 | 416.3 |
| Total comprehensive income/(expense) | – | – | 0.3 | (12.7) | 38.6 | 26.2 |
| Profit for the year | – | – | – | – | 37.2 | 37.2 |
| Other comprehensive income/(expense) | – | – | 0.3 | (12.7) | 1.4 | (11.0) |
| Transactions with owners | – | 0.9 | – | – | (0.3) | 0.6 |
| Share-based payments 1 | 23 | – | – | – | 0.9 | 0.9 |
| Issue of own shares from Employee Benefit Trust | 1.2 | – | – | (1.2) | – | |
| Purchase of own shares for Employee Benefit Trust | 23 | – | (0.3) | – | – | (0.3) |
| At 31 December 2020 | 9.8 | (3.4) | – | 46.8 | 389.9 | 443.1 |
| Total comprehensive income | – | – | – | 2.4 | 51.2 | 53.6 |
| Profit for the year | – | – | – | – | 49.6 | 49.6 |
| Other comprehensive income | – | – | – | 2.4 | 1.6 | 4.0 |
| Transactions with owners | – | 0.8 | – | – | (15.1) | (14.3) |
| Share-based payments 1 | 23 | – | – | – | 1.6 | 1.6 |
| Dividends paid | 24 | – | – | – | (15.6) | (15.6) |
| Issue of own shares from Employee Benefit Trust | 1.1 | – | – | (1.1) | – | |
| Purchase of own shares for Employee Benefit Trust | 23 | – | (0.3) | – | – | (0.3) |
| At 31 December 2021 | 9.8 | (2.6) | – | 49.2 | 426.0 | 482.4 |
1 Share-based payments include a tax credit of £0.3 million (2020: tax credit of £0.2 million) and a release of the deferred share-based payment bonus accrual of £0.3 million (2020: £0.6 million).
The notes on pages 154 to 196 are an integral part of these consolidated financial statements.
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As at 31 December 2021
| Note | 2021 £’m | 2020 £’m |
|---|---|---|
| TOTAL ASSETS | ||
| Non-current assets | ||
| Goodwill | 10 | 363.3 |
| Intangible assets | 10 | 66.8 |
| Property, plant and equipment | 11 | 63.5 |
| Right-of-use assets | 12 | 52.0 |
| Financial assets at fair value through profit or loss | 14 | 1.1 |
| Deferred tax assets | 8 | 12.6 |
| 559.3 | ||
| Current assets | ||
| Inventories | 13 | 137.8 |
| Trade and other receivables | 14 | 81.0 |
| Cash and cash equivalents | 15 | 58.1 |
| 276.9 | ||
| TOTAL ASSETS | 836.2 | |
| LIABILITIES | ||
| Current liabilities | ||
| Trade and other payables | 16 | (112.8) |
| Derivative financial instruments | 17 | (0.3) |
| Borrowings | 18 | (0.1) |
| Lease liabilities | 12 | (6.0) |
| Current tax liabilities | (6.0) | |
| Provisions | 20 | (1.4) |
| (126.6) | ||
| Non-current liabilities | ||
| Borrowings | 18 | (149.0) |
| Lease liabilities | 12 | (48.8) |
| Deferred tax liabilities | 8 | (20.5) |
| Retirement benefit obligations | 21 | (4.0) |
| Provisions | 20 | (4.8) |
| Other payables | 16 | (0.1) |
| (227.2) | ||
| TOTAL LIABILITIES | (353.8) | |
| NET ASSETS | 482.4 | |
| EQUITY | ||
| Capital and reserves attributable to owners of the Company | ||
| Share capital | 22 | 9.8 |
| Treasury reserve | (2.6) | |
| Translation reserve | 49.2 | |
| Retained earnings | 426.0 | |
| TOTAL EQUITY | 482.4 |
The notes on pages 154 to 196 are an integral part of these consolidated financial statements.
The financial statements on pages 149 to 153 were approved by the Board on 3 March 2022 and signed on its behalf by:
Jo Hallas
Chief Executive Officer
Jason Ashton
Chief Financial Officer
Tyman plc
Company registration number: 02806007
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For the year ended 31 December 2021
| Note | 2021 £’m | 2020 £’m |
|---|---|---|
| Cash flow from operating activities | ||
| Profit before taxation | 3 | 64.0 |
| Adjustments | 25 | 47.4 |
| Changes in working capital1: | ||
| Inventories | (54.0) | |
| Trade and other receivables | (9.1) | |
| Trade and other payables | 29.2 | |
| Provisions utilised | – | |
| Pension contributions | (2.8) | |
| Income tax paid | (17.7) | |
| Net cash generated from operations | 57.0 | |
| Cash flow from investing activities | ||
| Purchases of property, plant and equipment | 11 | (16.1) |
| Purchases of intangible assets | 10 | (4.5) |
| Proceeds on disposal of property, plant and equipment | 0.8 | |
| Acquisitions of subsidiary undertakings, net of cash acquired | – | |
| Net cash used in investing activities | (19.8) | |
| Cash flow from financing activities | ||
| Interest paid | (8.8) | |
| Dividends paid | 24 | (15.6) |
| Purchase of own shares for Employee Benefit Trust | (0.3) | |
| Proceeds from drawdown of borrowings | 40.0 | |
| Repayments of borrowings | (57.8) | |
| Principal element of lease payments | (6.2) | |
| Net cash used in financing activities | (48.7) | |
| Net (decrease)/increase in cash and cash equivalents | (11.5) | |
| Exchange (losses)/gains on cash and cash equivalents | (0.1) | |
| Cash and cash equivalents at the beginning of the year | 69.7 | |
| Cash and cash equivalents at the end of the year | 58.1 |
1 Excluding the effects of exchange differences on consolidation.
The notes on pages 154 to 196 are an integral part of these consolidated financial statements.
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For the year ended 31 December 2021
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 4,200 people with facilities in 16 countries worldwide. Tyman plc is a public limited company listed on the London Stock Exchange, incorporated and domiciled in the United Kingdom. The address of the Company’s registered office is 29 Queen Anne’s Gate, London SW1H 9BU.
The accounting policies in this section relate to the financial statements in their entirety. Accounting policies, including critical accounting judgements and estimates used in the preparation of the financial statements, that relate to a particular note are described in the specific note to which they relate. The accounting policies have been consistently applied to all the years presented, unless otherwise stated.# 2. Accounting policies and basis of preparation
On 31 December 2020, IFRS as adopted by the European Union at that date was brought into UK law and became UK- adopted International Accounting Standards, with future changes being subject to endorsement by the UK Endorsement Board. Tyman plc transitioned to UK-adopted International Accounting Standards in its Group financial statements on 1 January 2021. This change constitutes a change in accounting framework. However, there is no impact on recognition, measurement or disclosure in the period reported as a result of the change in framework. 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 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 32 and 33. Changes to principal risks and uncertainties are described on pages 84 to 91. As at 31 December 2021, the Group had cash and cash equivalents of £58.1 million and an undrawn RCF available of £123.6 million, giving liquidity headroom of £180.8 million. The Group also has potential access to an uncommitted accordion facility of £70 million. 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 2021, with £79.8 million (77.8%) of EBITDA headroom on the leverage covenant and £79.2 million (77.2%) of EBITDA headroom on the interest cover covenant. The Group has performed an assessment of going concern through modelling several scenarios. The base case scenario reflects the budget for 2022 and the strategic plan financials for 2023. A severe but plausible downside scenario has also been modelled, which assumes a deterioration in revenue from the base case of 10%. This reflects the risks arising from ongoing supply chain disruption, ability to continue passing on price increases to customers and market uncertainty. This scenario also includes some level of remedial actions to preserve cash flow in the event of performance downgrades, however, there are further cost mitigating actions that could be taken by management in the event this became necessary. 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 which would result in elimination of covenant headroom within the going concern assessment period. Revenue would need to decrease significantly, to an extent not considered plausible, for the covenants to be breached. This scenario was considered highly unlikely. Having reviewed the various scenario models, available liquidity and taking into account current trading, the Directors are satisfied that the Group has sufficient resources to continue in operation for the foreseeable future, 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. The Group’s viability statement is set out on pages 78 and 79 of the Annual Report and Accounts.
Tyman plc 154 Annual Report and Accounts 2021 Financial Statements
STRATEGIC REPORT FINANCIAL STATEMENTS
The preparation of financial statements requires management to exercise judgement in applying the Group’s accounting policies. It also requires the use of certain critical accounting estimates and assumptions that affect the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any affected future periods.
There are no areas representing the critical judgements made by management in the preparation of the Group’s financial statements
The areas involving key assumptions concerning the future and other key sources of estimation uncertainty that are significant to the financial statements are listed below and in more detail in the related notes:
* going concern assessment (note 2.2);
* the carrying amount of goodwill and intangible assets (note 10);
* provisions (note 20);
* defined benefit pension and post-retirement benefit schemes (note 21)
In addition, although not considered critical judgements or key sources of estimation uncertainty, the following areas involve estimates or judgements in applying the Group’s accounting policies:
Estimates
* Inventory (note 13)
* Trade receivables (note 14)
* Taxation (note 8)
Judgements
* APMs and exceptional items (note 6)
* Lease extension and termination options (note 12)
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.
The March 2021, IFRS IC update included an agenda decision on accounting for Configuration and Customisation (“CC”) costs in a Cloud Computing Arrangement under IAS 38. This decision clarifies the steps that entities should consider in accounting for CC in Software as a Service (“SaaS”) arrangements. This means that implementation costs that would previously have been capitalised as part of an intangible asset and amortised over its useful life may need to be expensed immediately as incurred. As this is an agenda decision item, it is effective immediately and must be retrospectively applied. The Group has evaluated the impact of this on the carrying value of intangible assets related to current and previous software implementations. All material current and previous system implementations are “on-premise” arrangements rather than SaaS arrangements and, therefore, the agenda decision does not apply to these. The total value of implementation costs associated with SaaS arrangements, all of which were incurred during 2021, was £0.3 million. These costs were expensed to the income statement as incurred. Adjusted operating profit in 2021 was, therefore, £0.3 million less than it would have been prior to this decision agenda. This is a timing difference only and will reduce the amortisation charge in future years. There is no impact on cash flows. This may impact the timing of future expenses associated with future SaaS implementations as the Group embarks on a multi-year programme of system upgrades.
LIBOR regulators (including the UK Financial Conduct Authority and the US Commodity Futures Trading Commission) have commenced a transition away from LIBOR towards alternative risk-free rates (“RFR”). Consequently, the IASB has issued amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 that address issues arising during the reform of benchmark interest rates including the replacement of one benchmark rate with an alternative one. In March 2021, the FCA and ICE Benchmark Administration (the administrator of LIBOR) announced that sterling, euro, Swiss franc and Japanese yen LIBOR panels, as well as panels for one-week and two-month US dollar LIBOR, will cease at the end of 2021, with the remaining US dollar LIBOR panels ceasing at the end of June 2023. In September 2021, the FCA announced that to ensure an orderly wind-down, it would require the LIBOR benchmark administrator to continue to publish these settings under a “synthetic” methodology, based on term risk-free rates, for the duration of 2022 for use with legacy contracts.
Annual Report and Accounts 2021 Tyman plc 155
Notes to the financial statements continued For the year ended 31 December 2021
The interest rates under the Group’s RCF facility are floating rates based on LIBOR plus a margin. An amendment to the facility agreement was signed in January 2022 to facilitate the transition to new benchmark RFRs. Any existing sterling drawdowns will continue to use LIBOR rates until their maturity. For new drawdowns in sterling, the rates will transition to the Sterling Overnight Index Average (“SONIA”) rate. The new benchmark rates for US dollar and euro borrowings have not yet been amended and LIBOR rates for these currencies will continue to be applied until such time as new rates are agreed. On transition to the new rates, the Group will apply the Phase 2 amendments practical expedient to account for the change in the basis for determining contractual cash flows as a result of interest rate benchmark reform. This means the Group will account for these changes by updating the effective interest rate using the guidance in paragraph B5.4.5 of IFRS 9 without the recognition of an immediate gain or loss. This practical expedient applies as the change is necessary as a direct consequence of interest rate benchmark reform, and the new basis is economically equivalent to the previous basis. The Group does not have any material lease or other agreements with variable payments linked to IBOR and, therefore, there is no impact on the Group’s other contractual arrangements.# 2. Accounting policies and basis of preparation (continued)
Certain new accounting standards, amendments to accounting standards and interpretations have been published that are not mandatory for 31 December 2021 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.
There are no further changes to accounting policies.
Subsidiaries are entities that are directly or indirectly controlled by the Group. Control exists when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases. Intercompany transactions, balances and unrealised gains and losses on transactions between Group companies are eliminated. Unrealised losses are also eliminated. Where necessary, amounts reported by subsidiaries have been adjusted to conform to the Group’s accounting policies.
Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (the functional currency). The consolidated financial statements are presented in sterling, which is the functional currency of the Company and the presentation currency of the Group.
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement, except when deferred in other comprehensive income as qualifying cash flow hedges and qualifying net investment hedges. Other than the ineffective element, these are recognised directly in equity until the disposal of the net investment, at which time they are recognised in the income statement.
On consolidation, assets and liabilities of Group companies denominated in foreign currencies are translated into sterling at the exchange rate prevailing at the balance sheet date. Income and expense items are translated into sterling at the average rates throughout the year. Exchange differences arising on the translation of opening net assets of Group companies, together with differences arising from the translation of the net results at average or actual rates to the exchange rate prevailing at the balance sheet date, are taken to other comprehensive income. On disposal of a foreign entity, the cumulative translation differences recognised in other comprehensive income relating to that particular foreign operation are recognised in the income statement as part of the gain or loss on disposal.
The Group derives revenue solely from the sale of goods to customers. This revenue recognition policy applies to all product types and sales channels. Revenue from the sale of goods is recognised when control of the goods has been transferred to the buyer. Control transfers when the customer has the ability to direct the use of and obtain substantially all of the benefits of the goods. This is either on dispatch of the goods or on receipt of goods by the customer, depending on the terms of shipment.
Tyman plc156 Annual Report and Accounts 2021 Financial Statements STRATEGIC REPORT FINANCIAL STATEMENTS
2. Accounting policies and basis of preparation continued
Where the Group is responsible for arranging shipping services, an evaluation is made to determine whether the shipping services are a separate performance obligation. Where these are considered to be a separate performance obligation, the revenue recognition criteria are applied to the performance obligations of sale of goods and shipping services separately. Revenue is allocated to each performance obligation based on its standalone selling price.
The Group is considered to be acting as the principal in shipping arrangements when it has discretion over setting prices, has primary responsibility for fulfilling the obligation, and retains inventory risk. In these circumstances, the cost of freight to customers is considered a distribution expense. The cost of freight is recorded within selling, general and administrative expenses.
Revenue is measured at the fair value of the consideration received or receivable. Revenue represents the amounts receivable for goods supplied, stated net of discounts, returns, rebates and value-added taxes. Where customers have a right to return goods, a refund liability is recognised (included in trade and other payables) for the expected value of refunds to be provided to customers. A corresponding contract asset is recognised reflecting the value of goods expected to be returned (included in other receivables). Accumulated experience is used to estimate and provide for rebates, discounts, and expected returns using the expected value method, and revenue is only recognised to the extent that it is highly probable that a significant reversal will not occur.
Incremental costs of obtaining a contract, such as sales commissions, are expensed as incurred, as the period over which the Group obtains benefit from these is less than twelve months.
Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Operating Decision Maker. The Chief Operating Decision Maker, defined as the Board of Directors of the Group, is responsible for allocating resources and assessing performance of the operating segments.
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 and 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 includes the two UK seal manufacturing plants).
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. Each reporting segment broadly represents the Group’s geographical focus, being the North American, UK & Ireland and International operations respectively. 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.
For completeness, the Group discloses certain financial data for business carried on in the UK that is not accounted for in Tyman UK & Ireland in notes 3.2.1 and 3.2.4.
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.
| 2021 | 2020 | |
|---|---|---|
| Segment revenue £’m | Inter- segment revenue £’m | |
| North America | 400.5 | (2.8) |
| UK & Ireland | 106.2 | (0.4) |
| International | 135.2 | (3.0) |
| Total revenue | 641.9 | (6.2) |
Included within the Tyman International segment is revenue attributable to the UK of £22.3 million (2020: £17.2 million). There are no single customers which account for greater than 10% of total revenue.
Annual Report and Accounts 2021 Tyman plc 157
Notes to the financial statements continued
For the year ended 31 December 2021
3. Segment reporting continued
| Note | 2021 £’m | 2020 £’m | |
|---|---|---|---|
| North America | 65.1 | 64.5 | |
| UK & Ireland | 14.8 | 8.8 | |
| International | 19.5 | 12.3 | |
| Operating segment profit | 99.4 | 85.6 | |
| Centrally incurred costs | (9.4) | (5.3) | |
| Adjusted operating profit | 90.0 | 80.3 | |
| Exceptional items | 6 | 0.6 | (1.8) |
| Amortisation of acquired intangible assets | 10 | (17.5) | (18.8) |
| Operating profit | 73.1 | 59.7 | |
| Net finance costs | 7 | (9.1) | (12.1) |
| Profit before taxation | 64.0 | 47.6 |
| Cost of sales | Depreciation | Amortisation | |
|---|---|---|---|
| 2021 £’m | 2020 £’m | 2021 £’m | |
| North America | (280.0) | (258.5) | (11.8) |
| UK & Ireland | (67.5) | (58.6) | (2.0) |
| International | (76.5) | (63.6) | (4.5) |
| Unallocated | – | – | (0.2) |
| Total | (424.0) | (380.7) | (18.5) |
| Segment assets 2021 £’m | Segment assets 2020 £’m | Segment liabilities 2021 £’m | Segment liabilities 2020 £’m | Non-current assets 1 2021 £’m | Non-current assets 2 2020 £’m | |
|---|---|---|---|---|---|---|
| North America | 540.8 | 507.0 | (134.0) | (133.5) | 384.5 | 389.6 |
| UK & Ireland | 141.5 | 134.2 | (39.7) | (33.1) | 81.4 | 85.3 |
| International | 153.4 | 155.9 | (52.3) | (61.1) | 80.3 | 84.0 |
| Unallocated | 2.2 | 5.3 | (129.5) | (131.6) | 0.5 | 0.7 |
| Total | 837.9 | 802.4 | (355.5) | (359.3) | 546.7 | 559.6 |
1 Included within unallocated segment liabilities are centrally held borrowings of £125.8 million (2020: £129.1 million), provisions of £0.4 million (2020: £0.4 million) and other liabilities of £3.0 million (2020: £2.1 million). Where borrowings can be directly attributed to segments, these have been allocated.## 3. Segment reporting continued
| Goodwill | Intangible assets | Retirement benefit obligations | |
|---|---|---|---|
| 2021 £’m 2020 £’m | 2021 £’m 2020 £’m | 2021 £’m 2020 £’m | |
| North America | 268.5 265.6 | 43.6 53.6 | (0.8) (5.2) |
| UK & Ireland | 60.2 60.2 | 4.7 7.9 | – – |
| International | 34.6 36.1 | 18.5 22.6 | (3.2) (3.7) |
| Total | 363.3 361.9 | 66.8 84.1 | (4.0) (8.9) |
Operating profit is stated after charging the following:
| Note | 2021 £’m | 2020 £’m |
|---|---|---|
| Depreciation of property, plant and equipment | (11.5) | (12.7) |
| Depreciation of right-of-use assets | (7.0) | (7.7) |
| Amortisation of acquired intangible assets | (17.5) | (18.8) |
| Amortisation of other intangible assets | (1.3) | (1.5) |
| Impairment of other intangible assets | (1.9) | – |
| Foreign exchange loss | (1.0) | (1.3) |
| Employee costs | (152.7) | (138.3) |
| 2021 £’m | 2020 £’m | |
|---|---|---|
| Audit of Parent Company and consolidated financial statements | (0.3) | (0.3) |
| Audit of subsidiaries | (0.7) | (0.6) |
| Total audit | (1.0) | (0.9) |
| Audit-related assurance services | (0.1) | (0.1) |
| Total fees | (1.1) | (1.0) |
| Total audit fees | (1.0) | (0.9) |
| Total non-audit fees | (0.1) | (0.1) |
| Total fees | (1.1) | (1.0) |
Audit-related assurance services were primarily in respect of the interim review.
Wages and salaries are recognised in the income statement as the employees’ services are rendered.
Termination benefits are payable when employment is terminated by the Group before the normal retirement date, or whenever an employee accepts voluntary redundancy in exchange for these benefits. The Group recognises termination benefits at the earlier of the following dates:
* when the Group can no longer withdraw the offer of those benefits; and
* when the entity recognises costs for a restructuring that is within the scope of IAS 37 and involves the payment of termination benefits.
In the case of an offer made to encourage voluntary redundancy, the termination benefits are measured based on the number of employees expected to accept the offer. Benefits falling due more than twelve months after the end of the reporting period are discounted to their present value.
The Group recognises a liability and an expense for bonuses based on the expected level of payment to employees in respect of the relevant financial year. The Group recognises a provision where contractually obliged or where there is a past practice that has created a constructive obligation.
In the previous year, the Group utilised available government job retention schemes across various territories and the amount of government support received outside of the United Kingdom in the year was £1.7 million. This was accounted for as a government grant under IAS 20. As the grant was intended to cover employee costs, this was recognised in the profit or loss within selling, general and administrative expenses, offsetting the related expense. There was no government support received across the Group in 2021.
The average monthly number of employees during the financial year and total number of employees as at 31 December 2021 was:
| Average | Total | |
|---|---|---|
| 2021 2020 | 2021 2020 | |
| Administration | 405 399 | 418 388 |
| Operations | 3,554 3,273 | 3,404 3,414 |
| Sales | 336 363 | 337 329 |
| Total | 4,295 4,035 | 4,159 4,131 |
The analysis above includes Directors.
Employment costs of employees, including Directors’ remuneration, during the year were as follows:
| Note | 2021 £’m | 2020 £’m |
|---|---|---|
| Wages and salaries | (136.4) | (124.8) |
| Social security costs | (11.2) | (10.8) |
| Share-based payments | (1.0) | (0.1) |
| Pension costs – defined contribution schemes | (3.8) | (3.6) |
| Pension costs – defined benefit schemes | (0.3) | (0.7) |
| Government support income | – | 1.7 |
| Total | (152.7) | (138.3) |
1 The government support income of £1.7 million in 2020 relates to government support received outside of the United Kingdom and was accounted for as a government grant under IAS 20. Details of Directors’ remuneration are set out in the Remuneration report on pages 114 to 137.
Where certain income or expense items recorded in the year are material, by their size or incidence, the Group presents such items as exceptional within a separate line on the income statement, except for those exceptional items that relate to net finance costs and tax. Separate presentation provides an improved understanding of the elements of financial performance during the year to facilitate comparison with prior periods and to assess the underlying trends in financial performance. Exceptional items include one-off redundancy and restructuring costs, transaction costs and integration costs associated with merger and acquisition activity, as well as credits relating to profit on disposal of businesses, and property provision releases. The Group aims to be both consistent and clear in its recognition and disclosure of exceptional gains and losses. Management judgement is required in assessing the nature and amounts of transactions that satisfy the conditions for classification as an exceptional item.
| 2021 £’m | 2020 £’m | |
|---|---|---|
| Footprint restructuring – credit | 0.3 | 0.2 |
| M&A and integration – costs | – | (0.8) |
| M&A and integration – credits | 0.6 | 0.6 |
| M&A and integration – net | 0.6 | (0.2) |
| Loss on disposal of business | – | (1.8) |
| Impairment charge | (1.9) | – |
| Impairment credits | 1.6 | – |
| Impairment – net | (0.3) | – |
| Total | 0.6 | (1.8) |
The footprint restructuring credit in the current and prior year corresponds to the release of excess provisions made relating to the streamlining of the International footprint. The classification as exceptional is consistent with the original charge.
The M&A credit in the current year relates to the release of provisions made as part of the business combination accounting for previous acquisitions, which are no longer required. M&A and integration costs in the previous year relate to costs associated with the integration of businesses acquired in 2018, predominantly Ashland.
The prior year charge relates to a loss on the disposal of the Ventrolla business, which was divested on 5 November 2020.
The impairment charge in the current year relates to impairment of certain of the Group’s intangible assets following the decision to commence a multi-year ERP upgrade. The impairment credit relates to the release of a portion of provisions made in 2019 against inventory and other assets associated with the new door seals product in North America, which is no longer required. The classification as exceptional is consistent with the original charge.
| 2021 £’m | 2020 £’m | |
|---|---|---|
| Finance income | ||
| Gain on revaluation of fair value hedge | – | 0.3 |
| Finance costs | ||
| Interest payable on bank loans, private placement notes and overdrafts | (5.9) | (8.9) |
| Interest payable on leases | (2.5) | (2.8) |
| Amortisation of borrowing costs | (0.5) | (0.5) |
| Pension interest cost | (0.1) | (0.2) |
| Loss on revaluation of fair value hedge | (0.1) | – |
| Total Finance Costs | (9.1) | (12.4) |
| Net finance costs | (9.1) | (12.1) |
The income tax charge comprises current and deferred tax. Tax is recognised in the income statement, except to the extent that it relates to items recognised in other comprehensive income or directly in equity, in which case it is recognised in the relevant statement. The Group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted at the balance sheet date in the countries where the Company and its subsidiaries operate and generate taxable income. Deferred income tax is recognised on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. No deferred tax liabilities are recognised if they arise from the initial recognition of:
* goodwill; or
* an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss.
Deferred income tax is determined using tax rates that have been enacted or substantively enacted at the balance sheet date and are expected to apply when the related deferred income tax asset is realised or when the deferred income tax liability is settled. Deferred income tax liabilities are provided on taxable temporary differences arising on investments in subsidiaries, except for deferred income tax liabilities, where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.# Tyman plc
| Note | 2021 £’m | 2020 £’m |
|---|---|---|
| Current taxation | ||
| Current tax on profit for the year | (18.8) | (15.5) |
| Prior year adjustments | 1.5 | 1.4 |
| Total current taxation | (17.3) | (14.1) |
| Deferred taxation | ||
| Origination and reversal of temporary differences | 2.2 | 3.6 |
| Rate change adjustment | 0.4 | 0.1 |
| Prior year adjustments | 0.3 | – |
| Total deferred taxation | 2.9 | 3.7 |
| Income tax charge in the income statement | (14.4) | (10.4) |
| Total (charge)/credit relating to components of other comprehensive income | ||
| Current tax charge on translation | – | (0.2) |
| Current tax credit on share-based payments | 0.1 | 0.1 |
| Deferred tax (charge)/credit on actuarial gains and losses | 0.5 | 0.1 |
| Deferred tax credit on share-based payments | 0.2 | 0.1 |
| Deferred tax charge on translation | (0.1) | (0.2) |
| Income tax charge in the statement of other comprehensive income | (0.3) | (0.1) |
| Total current taxation | (17.2) | (14.2) |
| Total deferred taxation | 2.5 | 3.7 |
| Total taxation | (14.7) | (10.5) |
The Group’s UK profits for this financial year are taxed at the statutory rate of 19.0% (2020: 19.0%). The deferred tax balances have been measured using the applicable enacted rates. In the UK, legislation to increase the standard rate of corporation tax to 25% from 1 April 2023 was enacted in the Finance Act 2021 on 10 June 2021, and consequently deferred tax has been remeasured to reflect this. Taxation for other jurisdictions is calculated at rates prevailing in those respective jurisdictions.
The tax assessed for the year differs from the standard rate of tax in the UK of 19.0% (2020: 19.0%). The differences are explained below:
| 2021 £’m | 2020 £’m | |
|---|---|---|
| Profit before taxation | 64.0 | 47.6 |
| Profit before taxation multiplied by the standard rate of corporation tax in the UK of 19.0% (2020: 19.0%) | (12.2) | (9.0) |
| Effects of: | ||
| Expenses not deductible for tax purposes | (0.9) | (0.1) |
| Overseas tax rate differences | (3.5) | (2.8) |
| Rate change adjustment | 0.4 | 0.1 |
| Prior year adjustments | 1.8 | 1.4 |
| Income tax charge in the income statement | (14.4) | (10.4) |
The analysis of deferred tax assets and deferred tax liabilities is as follows:
| 2021 £’m | 2020 £’m | |
|---|---|---|
| Deferred tax assets | 12.6 | 16.3 |
| Deferred tax liabilities | (20.5) | (26.8) |
| Net deferred tax liabilities | (7.9) | (10.5) |
The net movement in deferred tax is as follows:
| Note | 2021 £’m | 2020 £’m |
|---|---|---|
| At 1 January | (10.5) | (14.1) |
| Income statement credit | 8.2 | 2.5 |
| Rate change adjustment | 8.2 | 0.4 |
| Tax charge relating to components of other comprehensive income | 8.2 | (0.4) |
| Exchange difference | 0.1 | |
| At 31 December | (7.9) | (10.5) |
The movement in deferred tax assets and liabilities during the year is as follows:
Deferred tax assets
| Accelerated tax depreciation £’m | Post- retirement benefit provisions £’m | Purchased goodwill £’m | Other timing differences £’m | Total £’m | |
|---|---|---|---|---|---|
| At 1 January 2020 | 0.7 | 2.0 | 5.6 | 8.9 | 17.2 |
| Income statement charge | – | (0.2) | (0.4) | (0.3) | (0.9) |
| Rate change adjustment | – | – | – | 0.1 | 0.1 |
| Tax (charge)/credit relating to components of other comprehensive income | – | (0.3) | – | 0.3 | – |
| Exchange difference | – | – | – | (0.1) | (0.1) |
| At 31 December 2020 | 0.7 | 1.5 | 5.2 | 8.9 | 16.3 |
| Income statement charge | (0.8) | (0.7) | (1.5) | (0.6) | (3.6) |
| Rate change adjustment | – | – | 0.3 | 0.1 | 0.4 |
| Tax (charge)/credit relating to components of other comprehensive income | – | (0.5) | – | 0.1 | (0.4) |
| Exchange difference | – | – | – | (0.1) | (0.1) |
| At 31 December 2021 | (0.1) | 0.3 | 4.0 | 8.4 | 12.6 |
Deferred tax liabilities
| Accelerated tax depreciation £’m | Intangible assets on acquisition £’m | Other timing differences £’m | Total £’m | |
|---|---|---|---|---|
| At 1 January 2020 | (6.3) | (21.6) | (3.4) | (31.3) |
| Income statement credit | 0.7 | 3.8 | – | 4.5 |
| Rate change adjustment | – | (0.2) | 0.1 | (0.1) |
| Exchange difference | 0.2 | – | (0.1) | 0.1 |
| At 31 December 2020 | (5.4) | (18.0) | (3.4) | (26.8) |
| Income statement credit | 0.9 | 3.8 | 1.3 | 6.0 |
| Rate change adjustment | – | 0.2 | (0.2) | – |
| Exchange difference | – | 0.2 | 0.1 | 0.3 |
| At 31 December 2021 | (4.5) | (13.8) | (2.2) | (20.5) |
The deferred tax asset arises from temporary differences arising in various tax jurisdictions, predominantly the US and UK. Given both recent and forecast trading, the Directors are of the opinion that the level of profits in the foreseeable future is more likely than not to be sufficient to recover these assets. Deferred tax liabilities of £14.0 million (2020: £19.2 million) are expected to fall due after more than one year and deferred tax assets of £7.5 million (2020: £10.8 million) are expected to be recovered after more than one year.
The estimated tax losses within the Group are as follows:
| Estimated tax losses: | \multicolumn{2}{c|}{Gross losses} | \multicolumn{2}{c|}{Tax effect of losses} |
| :-------------------- | :-------------------------------- | :---------------------------------------- | :---------------------------------------- |
| | 2021 £’m | 2020 £’m | 2021 £’m | 2020 £’m |
| Capital losses | 3.3 | 3.3 | (0.6) | (0.6) |
| Trading losses | 20.2 | 21.4 | (5.4) | (5.7) |
| | 23.5 | 24.7 | (6.0) | (6.3) |
In accordance with the Group’s accounting policy, as the future use of these losses is uncertain none of these losses have been recognised as a deferred tax asset. An assessable temporary difference exists, but no deferred tax liability has been recognised because the Group is able to control the timing of any distributions from these subsidiaries and hence any tax consequences that may arise. On 25 April 2019, the European Commission published its final decision regarding its investigation into the UK CFC rules, concluding that the exemption applied to income derived from UK activities constituted a breach of EU State Aid rules. The Group had previously disclosed a contingent liability, but had not recognised a provision based on analysis performed and the level of uncertainty in respect of the potential liability. On 29 June 2021, HMRC notified the Group that it had concluded its review and determined that no State Aid had been provided. As such, there is no longer a contingent liability at 31 December 2021.
The Directors believe that the adjusted profit and earnings per share measures provide additional useful information to shareholders on the underlying performance of the business. These measures are consistent with how business performance is measured internally. The adjusted profit before tax measure is not recognised under IFRS and may not be comparable with adjusted profit measures used by other companies (see Alternative Performance Measures on pages 203 to 208).
| 2021 £’m | 2020 £’m | |
|---|---|---|
| Profit for the year | 49.6 | 37.2 |
| Basic earnings per share (p) | 25.4p | 19.1p |
| Diluted earnings per share (p) | 25.3p | 19.0p |
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.
| 2021 ’m | 2020 ’m | |
|---|---|---|
| Weighted average number of shares (including treasury shares) | 196.8 | 196.8 |
| Treasury and Employee Benefit Trust shares | (1.4) | (1.7) |
| Weighted average number of shares – basic | 195.4 | 195.1 |
| Effect of dilutive potential ordinary shares – LTIP awards and options | 0.7 | 0.7 |
| Weighted average number of shares – diluted | 196.1 | 195.8 |
The Group presents an adjusted earnings per share measure which excludes the impact of exceptional items, certain non-cash finance costs, amortisation of acquired intangible assets and certain non-recurring items. Adjusted earnings per share has been calculated using the adjusted profit before taxation and using the same weighted average number of shares in issue as the earnings per share calculation. See Alternative Performance Measures on pages 203 to 208.
Adjusted profit after taxation is derived as follows:
| 2021 £’m | 2020 £’m | |
|---|---|---|
| Profit before taxation | 64.0 | 47.6 |
| Exceptional items | (0.6) | 1.8 |
| Loss/(gain) on revaluation of fair value hedge | 0.1 | (0.3) |
| Amortisation of borrowing costs | 0.5 | 0.5 |
| Amortisation of acquired intangible assets | 17.5 | 18.8 |
| Adjusted profit before taxation | 81.5 | 68.4 |
| Income tax charge | (14.4) | (10.4) |
| Add back: Adjusted tax effect 1 | (4.4) | (4.9) |
| Adjusted profit after taxation | 62.7 | 53.1 |
1 Tax effect of exceptional items, amortisation of borrowings costs, amortisation of acquired intangible assets, gain or loss on revaluation of fair value hedge and unwinding of discount on provisions.
Adjusted earnings per share is summarised as follows:
| 2021 | 2020 | |
|---|---|---|
| Basic adjusted earnings per share | 32.1p | 27.2p |
| Diluted adjusted earnings per share | 32.0p | 27.1p |
Goodwill arises on the acquisition of subsidiaries and represents the excess of the consideration transferred over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities of the acquiree. For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the CGUs that are expected to benefit from the synergies of the combination. Each unit or group of units to which the goodwill is allocated represents the lowest level within the entity, at which the goodwill is monitored for internal management purposes. Goodwill is monitored at the operating segment level. Goodwill impairment reviews are undertaken annually, or more frequently if events or circumstances indicate a potential impairment. The carrying amount of goodwill is compared to the recoverable amount, which is the higher of value in use and the fair value less costs of disposal. Any impairment is recognised immediately as an expense and is not subsequently reversed.
Intangible assets are stated at cost less accumulated amortisation and impairment. On acquisition of businesses by the Group, the Group recognises any separately identifiable intangible assets separately from goodwill, initially measuring the intangible assets at fair value. Purchased intangible assets acquired through a business combination, including purchased brands, customer relationships, trademarks and licences, are initially measured at fair value and amortised on a straight-line basis over their estimated useful economic lives as follows:
Tyman plc 166 Annual Report and Accounts 2021 Financial Statements STRATEGIC REPORT FINANCIAL STATEMENTS
Development costs that are directly attributable to the design and testing of identifiable and unique software products controlled by the Group are recognised as intangible assets when the following criteria are met:
Directly attributable costs capitalised as part of the software product include the software development employee costs and an appropriate portion of relevant overheads. Other development expenditures that do not meet these criteria are recognised as an expense as incurred. Development costs previously recognised as an expense are not recognised as an asset in a subsequent period.
Computer software development costs recognised as assets are amortised when the intangible assets are in the location and condition necessary for it to be capable of operating in the manner intended by management. Configuration and customisation costs associated with Software as a Services (“SaaS”) arrangements are capitalised if they create an intangible asset that the Group controls. If these costs do not meet the definition of an intangible asset, but are considered to be an integral part of the service provided by the software provider, they are capitalised as a prepayment and expensed as the service is provided. In other cases, these costs are expensed as incurred.
The estimated useful lives of acquired intangible assets are reviewed whenever events or circumstances indicate that there has been a change in the expected pattern of consumption of the future economic benefits embodied in the asset. Any amendments to the estimated useful lives of intangible assets are recorded as a change in estimate in the period the change occurred.
Intangible assets, including goodwill, that have an indefinite useful life or intangible assets not ready to use are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of the asset’s fair value less costs of disposal and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels, for which, there are largely independent cash inflows. Prior impairments of non-financial assets (other than goodwill) are reviewed for possible reversal at each reporting date. Goodwill previously impaired cannot be reversed at a later date.
As at 31 December 2021, the Group had goodwill of £363.3 million (2020: £361.9 million) with intangible assets amounting in total to £66.8 million (2020: £84.1 million). An impairment review using a value in use calculation has been performed for each CGU. There is significant estimation involved in determining the appropriate assumptions to use in the calculations, including the forecasted cash flows of each CGU and appropriate discount rates relative to the Company’s cost of capital. These assumptions have been subjected to sensitivity analyses. Details of estimates used and sensitivities in the impairment reviews are set out in this note.
The Group’s CGUs have been defined as each of the Group’s three operating divisions. Each division has its own senior management and leadership team, which holds the overall responsibility for the key decision making of each operating unit within that division. In the opinion of the Directors, the divisions represent the smallest groups of assets that independently generate cash flows for the Group. This conclusion is consistent with the approach adopted in previous years.
| £’m | |
|---|---|
| Net carrying value | |
| At 1 January 2020 | 371.3 |
| Exchange difference | (9.4) |
| At 31 December 2020 | 361.9 |
| Exchange difference | 1.4 |
| At 31 December 2021 | 363.3 |
Annual Report and Accounts 2021 Tyman plc 167 Notes to the financial statements continued
For the year ended 31 December 2021
Goodwill is monitored principally on an operating segment basis and the net book value of goodwill is allocated by CGU as follows:
| 2021 £’m | 2020 £’m | |
|---|---|---|
| North America | 268.5 | 265.6 |
| UK & Ireland | 60.2 | 60.2 |
| International | 34.6 | 36.1 |
| 363.3 | 361.9 |
The recoverable amounts of CGUs are determined from VIU calculations. VIU is determined by discounting the future pre-tax cash flows generated from the continuing use of the CGU, using a pre-tax discount rate.
Assumptions
Cash flow projections
Cash flow projections, which have been reviewed and approved by the Board, are derived from the bottom-up budget for 2022 and the strategic plan for 2023–2024, extrapolated for a further two years at the estimated medium-term growth rate for each CGU. The five-year cash flows were extrapolated using a long-term growth rate of 1.5% in order to calculate the terminal recoverable amount.
Climate change
The Group has considered the potential impact of climate change on future cash flows and the terminal growth rate used in the impairment test. This took into consideration the risks and opportunities identified in the TCFD disclosures outlined in the sustainability report on pages 68 to 77, a qualitative assessment of the potential financial impact and mitigations that could impact the impairment model, and the commitments made in the sustainability roadmap. The Group has not identified any risks that have a significant financial impact that cannot reasonably be mitigated by activities already planned or in many cases, already underway as part of the sustainability roadmap. There have been no factors identified that would be expected to limit the useful lives of any major assets or parts of the business, which would suggest the current terminal growth rate is not appropriate.There are also many opportunities presented by climate change, the benefit of which is expected to offset the risks. The Group continues to work on quantifying the impact of risks and opportunities as part of the TCFD work.
Discount rates
Discount rates are estimated using pre-tax rates that reflect current market assessments of the time value of money and the risk profiles of the CGUs. The key assumptions used in the VIU calculations in each of the Group’s CGUs at 31 December are as follows:
| 2021 | 2020 | 2021 | 2020 | |
|---|---|---|---|---|
| Average pre-tax discount rate | Average EBITDA margin: years one to five | |||
| North America | 12.7% | 12.8% | 21.9% | 23.4% |
| UK & Ireland | 11.2% | 12.6% | 15.7% | 16.0% |
| International | 14.4% | 14.1% | 20.2% | 19.2% |
Impairment review results: 2021
A review of the carrying amount of goodwill and intangible assets across the Group has been carried out at year end, taking into account the current trading conditions and future prospects. The assumptions have been subjected to sensitivity analyses, including sensitising revenue, gross margin and the discount rate. The annual impairment review did not result in any impairment losses being recognised in 2021. Results are summarised as follows:
UK & Ireland: Relative to the base case scenario, revenue would need to decline by over 9% on average in each of the five years from 2022 to 2026, to eliminate VIU headroom, or the average EBITDA margin for the next five years would need to decrease from 15.7% to 11.1%, to reduce VIU headroom to zero. This is substantially lower than the 2021 EBITDA margin in a year where input costs have increased significantly. This scenario is considered unlikely to occur given historic rates and strategic initiatives in progress.
Tyman plc 168 Annual Report and Accounts 2021 Financial Statements STRATEGIC REPORT FINANCIAL STATEMENTS
North America: Relative to the base case scenario, revenue would need to decline by over 9% on average in each of the five years from 2022 to 2026, to eliminate VIU headroom, or the average EBITDA margin for the next five years would need to decrease from 21.9% to 15.8%, to reduce VIU headroom to zero. Given the current trading performance and the margin uplift potential of operational improvement activities, realisation of pricing benefits and stabilisation of cost inflation, this scenario is felt unlikely to occur.
International: Relative to the base case scenario, revenue would need to decline by 15% on average in each of the five years from 2022 to 2026, to eliminate VIU headroom, or the average EBITDA margin for the next five years would need to decrease from 20.2% to 13.6% for the VIU headroom of the International division to reduce to zero. Given the strength in underlying demand in the core International markets, the expected benefits from streamlining International operations and growth from new product introductions, this is felt unlikely to occur.
| Note | Computer software £’m | Acquired brands £’m | Customer relationships £’m | Total £’m |
|---|---|---|---|---|
| Cost | ||||
| At 1 January 2020 | 13.2 | 86.5 | 258.1 | 357.8 |
| Additions | 0.6 | – | – | 0.6 |
| Disposals | (0.4) | – | – | (0.4) |
| Exchange difference | (0.2) | (0.7) | (5.4) | (6.3) |
| At 31 December 2020 | 13.2 | 85.8 | 252.7 | 351.7 |
| Additions | 4.4 | 0.1 | – | 4.5 |
| Disposals | (2.0) | (3.0) | – | (5.0) |
| Exchange difference | (0.1) | (0.8) | (0.2) | (1.1) |
| At 31 December 2021 | 15.5 | 82.1 | 252.5 | 350.1 |
| Accumulated amortisation | ||||
| At 1 January 2020 | (5.9) | (52.5) | (195.4) | (253.8) |
| Amortisation charge for the year 4 | (1.5) | (5.7) | (13.1) | (20.3) |
| Disposals | 0.2 | – | – | 0.2 |
| Exchange difference | 0.1 | 0.8 | 5.4 | 6.3 |
| At 31 December 2020 | (7.1) | (57.4) | (203.1) | (267.6) |
| Amortisation charge for the year 4 | (1.3) | (5.4) | (12.1) | (18.8) |
| Disposals | 2.0 | 3.0 | – | 5.0 |
| Impairment | (1.9) | – | – | (1.9) |
| Exchange difference | (0.1) | 0.4 | (0.3) | – |
| At 31 December 2021 | (8.4) | (59.4) | (215.5) | (283.3) |
| Net carrying value | ||||
| At 1 January 2020 | 7.3 | 34.0 | 62.7 | 104.0 |
| At 31 December 2020 | 6.1 | 28.4 | 49.6 | 84.1 |
| At 31 December 2021 | 7.1 | 22.7 | 37.0 | 66.8 |
The amortisation charge for the year has been included in administrative expenses in the income statement and comprises £17.5 million (2020: £18.8 million) relating to amortisation of acquired intangible assets and £1.3 million (2020: £1.5 million) relating to amortisation of other intangible assets.
Annual Report and Accounts 2021 Tyman plc 169
For the year ended 31 December 2021
Property, plant and equipment are stated at cost less accumulated depreciation and impairment. Cost includes expenditure that is directly attributable to the acquisition of the assets. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the specific asset will flow to the Group and the cost of the subsequent item can be measured reliably. The carrying amount of the replaced part is derecognised from the date of replacement. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred. Freehold land is not depreciated. Depreciation is provided on all other property, plant and equipment at rates calculated to write off the cost less estimated residual value of each asset on a straight-line basis over its expected useful life, at the following annual rates:
The carrying amounts of property, plant and equipment are reviewed for impairment periodically if events or changes in circumstances indicate that the carrying amount may not be recoverable. The assets’ residual values, useful lives and methods of depreciation are reviewed, and adjusted if appropriate, at the end of each reporting period. Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in the income statement.
| Note | Freehold land and buildings £’m | Plant and machinery £’m | Total £’m |
|---|---|---|---|
| Cost | |||
| At 1 January 2020 | 26.6 | 104.0 | 130.6 |
| Additions | 0.1 | 9.8 | 9.9 |
| Disposals | – | (13.4) | (13.4) |
| Exchange difference | 1.6 | (2.8) | (1.2) |
| At 31 December 2020 | 28.3 | 97.6 | 125.9 |
| Additions | 0.2 | 15.8 | 16.0 |
| Disposals | (1.7) | (2.8) | (4.5) |
| Exchange difference | (1.8) | (2.1) | (3.9) |
| At 31 December 2021 | 25.0 | 108.5 | 133.5 |
| Accumulated depreciation | |||
| At 1 January 2020 | (7.4) | (57.4) | (64.8) |
| Depreciation charge for the year 4 | (0.8) | (11.9) | (12.7) |
| Disposals | – | 12.1 | 12.1 |
| Impairment | – | (0.5) | (0.5) |
| Exchange difference | (1.2) | 1.9 | 0.7 |
| At 31 December 2020 | (9.4) | (55.8) | (65.2) |
| Depreciation charge for the year 4 | (0.8) | (10.7) | (11.5) |
| Disposals | 0.9 | 2.7 | 3.6 |
| Impairment | – | (0.2) | (0.2) |
| Exchange difference | 1.5 | 1.8 | 3.3 |
| At 31 December 2021 | (7.8) | (62.2) | (70.0) |
| Net carrying value | |||
| At 1 January 2020 | 19.2 | 46.6 | 65.8 |
| At 31 December 2020 | 18.9 | 41.8 | 60.7 |
| At 31 December 2021 | 17.2 | 46.3 | 63.5 |
Tyman plc 170 Annual Report and Accounts 2021 Financial Statements STRATEGIC REPORT FINANCIAL STATEMENTS
Depreciation on property, plant, and equipment is included in the income statement as follows:
| 2021 £’m | 2020 £’m | |
|---|---|---|
| Cost of sales | 9.0 | 9.7 |
| Administrative expenses | 2.5 | 3.0 |
| Total depreciation charge | 11.5 | 12.7 |
The carrying amounts of property, plant and equipment have been reviewed for impairment, with a charge of £0.2 million (2020: charge of £0.5 million) recognised. As part of this review, the Group has considered the impact of physical risk hazards arising from climate change on significant asset locations, the risk of obsolescence or impairment of equipment due to the introduction of climate-related technologies, and additional costs of transitioning to energy efficient technology. There were no assets identified where this would significantly reduce the useful economic life and no impairment charge has been recognised in relation to climate change. Refer to the sustainability report on pages 46 to 77 for further detail on climate risks and opportunities.
Recognition
At inception, the Group assesses whether a contract is or contains a lease. This assessment involves the exercise of judgement about whether it depends on a specified asset, whether the Group obtains substantially all the economic benefits from the use of that asset, and whether the Group has the right to direct the use of the asset. The Group recognises a right-of-use (“ROU”) asset and a lease liability at the commencement of the lease.
Short-term and low-value assets
The Group has elected not to recognise ROU assets and lease liabilities for leases where the total lease term is less than or equal to twelve months, or for leases of assets, with a value of less than £5,000. The payments for such leases are recognised in the income statement on a straight-line basis over the lease term.
Non-lease components
Fees for components such as property taxes, maintenance, repairs and other services, which are either variable or transfer benefits separate to the Group’s right to use the asset are separated from lease components based on their relative stand- alone selling price. These components are expensed in the income statement as incurred.
Measurement
Lease liabilities
Lease liabilities are initially measured at the present value of future lease payments at the commencement date. Lease payments are discounted using the interest rate implicit in the lease, or where this cannot be readily determined, the lessee’s incremental borrowing rate. Lease payments include the following payments due within the non-cancellable term of the lease, as well as the term of any extension options where these are considered reasonably certain to be exercised:
Right-of-use assets
The ROU asset is initially measured at cost, being the value of the lease liability, plus the value of any lease payments made at or before the commencement date, initial direct costs and the cost of any restoration obligations, less any incentives received. The ROU asset is subsequently measured at cost, less accumulated depreciation and impairment losses. The ROU asset is adjusted for any remeasurement of the lease liability. The ROU asset is subject to testing for impairment where there are any impairment indicators.
Annual Report and Accounts 2021 Tyman plc 171
Notes to the financial statements continued
For the year ended 31 December 2021
12.2 The Group’s leasing arrangements
The Group leases manufacturing and warehousing facilities, offices, and various items of plant, machinery, and vehicles used in its operations. Leases of manufacturing and warehousing facilities and offices generally have lease terms between five and 25 years, while plant, machinery, and vehicles generally have lease terms between six months and five years. The Group’s obligations under its leases are secured by the lessor’s title to the leased assets. Generally, the Group is restricted from assigning and subleasing the leased assets. There are several lease contracts that include extension and termination options and variable lease payments, which are further discussed below.
12.3 Carrying value of right-of-use assets
Set out below are the carrying amounts of right-of-use assets recognised and the movements during the year:
| Land and buildings £’m | Plant and machinery £’m | Total £’m |
|---|---|---|
| At 1 January 2020 | 57.0 | 2.4 |
| Additions | 2.9 | 0.4 |
| Disposals | (1.6) | – |
| Depreciation charge | (6.7) | (1.0) |
| Revaluation impairment | (0.3) | – |
| Exchange difference | (1.3) | – |
| At 31 December 2020 | 50.0 | 1.8 |
| Additions | 1.4 | 0.9 |
| Lease extensions | 4.7 | – |
| Change in indexation | 0.1 | – |
| Disposals | (0.1) | – |
| Depreciation charge | (6.1) | (0.9) |
| Exchange difference | 0.2 | – |
| At 31 December 2021 | 50.2 | 1.8 |
12.4 Carrying value of lease liabilities
Set out below are the carrying amounts of lease liabilities (included under interest-bearing loans and borrowings) and the movements during the year:
| 2021 £’m | 2020 £’m | |
|---|---|---|
| At 1 January | (53.8) | (60.0) |
| New leases | (2.3) | (3.3) |
| Lease extensions | (4.7) | – |
| Change in indexation | (0.2) | – |
| Disposals | 0.2 | 1.6 |
| Interest charge | (2.5) | (2.8) |
| Lease payments | 8.6 | 9.2 |
| Exchange difference | (0.1) | 1.5 |
| At 31 December | (54.8) | (53.8) |
| 2021 £’m | 2020 £’m | |
|---|---|---|
| Current liabilities | (6.0) | (5.4) |
| Non-current liabilities | (48.8) | (48.4) |
| (54.8) | (53.8) |
Tyman plc 172 Annual Report and Accounts 2021
Financial Statements
STRATEGIC REPORT
FINANCIAL STATEMENTS
12.5 Amounts recognised in profit or loss
The following are the amounts recognised in profit or loss
| 2021 £’m | 2020 £’m | |
|---|---|---|
| Depreciation of ROU assets | (7.0) | (7.7) |
| Interest expense (included in finance cost) | (2.5) | (2.8) |
| Expense relating to short-term and low-value assets not included in lease liabilities (included in cost of sales and administration expenses) | (1.3) | (1.0) |
| Expense relating to variable lease payments not included in lease liabilities (included in cost of sales and administration expenses) | (0.5) | (0.5) |
| (11.3) | (12.0) |
12.6 Extension and termination options
The Group has several lease contracts that include extension and termination options. These options are negotiated by management to provide flexibility in managing the leased-asset portfolio and align with the Group’s business needs. Management applied judgment in determining whether these options were reasonably certain to be exercised when determining the lease term. In making this judgment, management considered the remaining lease term, future business plans and other relevant economic factors. As at 31 December 2021, potential future cash outflows of £64.0 million (2020: £68.1 million) (undiscounted) have not been included in the lease liability because it is not reasonably certain that the leases will be extended (or not terminated).
13.1 Accounting policy
Inventories are valued at the lower of cost and net realisable value. Cost is determined in accordance with the first-in, first-out method. Cost includes the cost of materials determined on a purchase cost basis, direct labour and an appropriate proportion of manufacturing overheads based on normal levels of activity. It excludes borrowing costs. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to make the sale. The carrying amounts of inventories are stated with due allowance for excess, obsolete or slow-moving items. Management exercises judgement in assessing net realisable value. In estimating provisions for slow-moving and obsolete inventory management assesses of the nature and condition of the inventory, including assumptions around future demand, market conditions and new product development initiatives.
13.2 Carrying amount of inventories
| 2021 £’m | 2020 £’m | |
|---|---|---|
| Raw materials and consumables | 34.4 | 28.4 |
| Work in progress | 19.6 | 14.0 |
| Finished goods | 83.8 | 41.6 |
| 137.8 | 84.0 |
The cost of materials charged to cost of sales in the income statement during the year was £279.0 million (2020: £242.7 million). Inventories are stated net of an allowance for excess, obsolete or slow-moving items of £19.5 million (2020: £18.9 million). A charge in respect of an increase in inventory provision of £0.9 million (2020: credit of £0.9 million) was recognised in respect of inventories during the year. There were no borrowings secured on the inventories of the Group (2020: £Nil).
Annual Report and Accounts 2021 Tyman plc 173
Notes to the financial statements continued
For the year ended 31 December 2021
14.1 Accounting policy
Trade receivables are amounts due from customers for goods sold in the ordinary course of business. If collection is expected in one year or less they are classified as current assets; otherwise they are presented as non-current assets. Trade receivables are recognised initially at the amount of consideration that is unconditional. The Group holds the trade receivables with the objective of collecting the contractual cash flows, and so it measures them subsequently at amortised cost using the effective interest method, less appropriate allowances for estimated credit losses (provision for impairment). The Group assesses on a forward-looking basis the expected credit losses associated with its trade receivables carried at amortised cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk. For trade receivables, the Group applies the simplified approach permitted by IFRS 9, which requires expected lifetime losses to be recognised from initial recognition of the receivables. To measure the expected credit losses, trade receivables are grouped based on shared credit risk characteristics and the length of time overdue. An estimate is made of the expected credit loss based on the Group’s history, existing market conditions, as well as forward-looking estimates at the end of each reporting period. The trade receivables impairment provision requires the use of estimation techniques by Group management. The estimate is made based on the assessments of the creditworthiness of customers, the ageing profile of receivables, historical experience, and expectations about future market conditions.
14.2 Carrying amounts of trade and other receivables
| 2021 £’m | 2020 £’m | |
|---|---|---|
| Trade receivables | 72.9 | 66.8 |
| Less: Provision for impairment of trade receivables | (3.0) | (3.7) |
| Trade receivables – net | 69.9 | 63.1 |
| Other receivables – net | 5.7 | 4.8 |
| Prepayments | 5.4 | 4.9 |
| 81.0 | 72.8 |
All trade and other receivables are current. Other receivables is net of an expected credit loss provision of £1.1 million (2020: £1.8 million). The net carrying amounts of trade and other receivables are considered to be a reasonable approximation of their fair values.
Impairment of trade receivables
An expected credit loss of £3.0 million has been recognised at 31 December 2021 (2020: £3.7 million). The impairment loss allowance was determined as follows:
31 December 2021
| Not yet due | 0–3 months overdue | 3–12 months overdue | > 12 months overdue | Total | |
|---|---|---|---|---|---|
| Expected credit loss rate | 0.7% | 13.0% | 22.2% | 100.0% | 4.1% |
| Gross trade receivables (£’m) | 60.9 | 10.0 | 0.9 | 1.1 | 72.9 |
| Loss allowance (£’m) | 0.4 | 1.3 | 0.2 | 1.1 | 3.0 |
31 December 2020
| Not yet due | 0–3 months overdue | 3–12 months overdue | > 12 months overdue | Total | |
|---|---|---|---|---|---|
| Expected credit loss rate | 2.0% | 13.1% | 50.0% | 100.0% | 5.5% |
| Gross trade receivables (£’m) | 55.2 | 9.9 | 0.8 | 0.9 | 66.8 |
| Loss allowance (£’m) | 1.1 | 1.3 | 0.4 | 0.9 | 3.7 |
Tyman plc 174 Annual Report and Accounts 2021
Financial Statements
STRATEGIC REPORT
FINANCIAL STATEMENTS
Movement in the allowance for impairment of trade receivables is as follows:
| 2021 £’m | 2020 £’m | |
|---|---|---|
| At 1 January | (3.7) | (3.1) |
| Provision for receivables impairment | (0.1) | (1.8) |
| Receivables written off during the year | 0.7 | 0.5 |
| Unused amounts reversed | 0.1 | 0.7 |
| At 31 December | (3.0) | (3.7) |
Movements in the impairment allowance are recognised in administrative expenses in the income statement.# Notes to the financial statements continued
For the year ended 31 December 2021
The Group classifies equity investments as assets held at FVPL. See note 19.1 for financial instruments accounting policy. Financial assets measured at FVPL are as follows:
| 2021 £’m | 2020 £’m | |
|---|---|---|
| Unlisted shares | 1.1 | 1.1 |
There was no gain or loss recognised in profit or loss in the current and prior year. The maximum market risk exposure at the end of the year is the carrying amount of this investment.
In the consolidated statement of cash flows and balance sheet, cash and cash equivalents includes cash in hand, deposits held at call with banks, other short-term, highly liquid investments with original maturities of three months or less and bank overdrafts where the Group has a legal right of set off. Bank overdrafts, where there is no legal right of set off, are classified as borrowings.
| 2021 £’m | 2020 £’m | |
|---|---|---|
| Cash at bank and in hand | 76.6 | 72.8 |
| Short-term deposits | 0.4 | 0.4 |
| Bank overdrafts | (18.9) | (3.5) |
| 58.1 | 69.7 |
The carrying amounts of cash and cash equivalents are denominated in the following currencies:
| 2021 £’m | 2020 £’m | |
|---|---|---|
| Sterling | 8.3 | 19.2 |
| US dollars | 22.5 | 24.6 |
| Euros | 13.1 | 16.6 |
| Other currencies | 14.2 | 9.3 |
| 58.1 | 69.7 |
Annual Report and Accounts 2021 Tyman plc 175
Notes to the financial statements continued
For the year ended 31 December 2021
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.
| 2021 £’m | 2020 £’m | |
|---|---|---|
| Trade payables | (78.4) | (55.1) |
| Other taxes and social security costs | (4.4) | (6.5) |
| Accruals | (29.1) | (22.3) |
| Deferred income | (1.0) | (0.9) |
| (112.9) | (84.8) |
Analysed as:
| 2021 £’m | 2020 £’m | |
|---|---|---|
| Current liabilities | (112.8) | (84.4) |
| Non-current liabilities | (0.1) | (0.4) |
| (112.9) | (84.8) |
The carrying amounts of trade and other payables are considered to be a reasonable approximation of their fair values. The carrying amounts of trade and other payables are denominated in the following currencies:
| 2021 £’m | 2020 £’m | |
|---|---|---|
| US dollars | (59.2) | (44.5) |
| Sterling | (22.4) | (14.8) |
| Euros | (22.8) | (19.8) |
| Other currencies | (8.5) | (5.7) |
| (112.9) | (84.8) |
Derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at fair value. Derivatives are carried as assets when fair value is positive and as liabilities when fair value is negative. The Group designates certain derivatives as either:
For those instruments designated as hedges, the Group documents at the inception of the transaction the relationship between hedging instruments and hedged items, as well as its risk management objectives and strategy for undertaking various hedging transactions. The Group also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items. The full fair value of a hedging derivative is classified as a non-current asset or liability when the remaining hedged item is more than twelve months and as a current asset or liability when the remaining maturity of the hedged item is less than twelve months. For derivatives that do not qualify for hedge accounting, any gains or losses arising from changes in fair value are recognised immediately in the income statement.
Tyman plc 176 Annual Report and Accounts 2021
Financial Statements STRATEGIC REPORT FINANCIAL STATEMENTS
Changes in the fair value of derivatives designated and qualifying as fair value hedges are recorded in the income statement, together with any changes in fair value of the hedged asset or liability that are attributable to the hedged risk.
The effective portion of changes in the fair value of the derivatives that are designated and qualify as cash flow hedges is recognised in other comprehensive income. The gain or loss relating to the ineffective portion is recognised immediately in the income statement. Amounts accumulated in equity are reclassified to the income statement in the period in which the hedged item affects profit or loss. When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognised when the forecast transaction is ultimately recognised in the income statement. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is immediately transferred to the income statement.
Hedges of net investments in foreign operations are accounted for in a similar manner to cash flow hedges. Any gain or loss on the hedging instrument relating to the effective portion of the hedge is recognised in other comprehensive income. The gain or loss relating to the ineffective portion is recognised in the income statement. Gains and losses accumulated in equity are included in the income statement when the foreign operation is partially disposed of or sold.
| 2021 | 2020 | |
|---|---|---|
| Assets £’m | Liabilities £’m | |
| Forward exchange contracts – fair value hedges | – | (0.3) |
| Total | – | (0.3) |
Analysed as:
| 2021 | 2020 | |
|---|---|---|
| Assets £’m | Liabilities £’m | |
| Current | – | (0.3) |
| Total | – | (0.3) |
The carrying amounts of derivative financial instruments are denominated in the following currencies:
| 2021 Liabilities £’m | 2020 Liabilities £’m | |
|---|---|---|
| US dollars | (0.3) | (0.1) |
| Other currencies | – | (0.1) |
| (0.3) | (0.2) |
The notional principal amount of the outstanding forward foreign exchange contracts at 31 December 2021 was £24.3 million (2020: £23.7 million). The hedge ratio of foreign exchange contracts is 1:1, holding all other variables constant. The contracts have a range of maturities up to 17 June 2022. During the year, a loss of £0.1 million (2020: gain of £0.3 million) was recognised in the income statement for the changes in value of the fair value hedges. The hedged highly probable forecast transactions denominated in foreign currency are expected to occur at various dates during the next six months.
The notional principal amounts of the outstanding interest rate swap at 31 December 2021 were £Nil (2020: £Nil). During the year, a gain/loss of £Nil (2020: gain of £0.3 million) was recognised in the statement of comprehensive income and £Nil (2020: £Nil) in the income statement for the ineffective portion of changes in the value of cash flow hedges.
Annual Report and Accounts 2021 Tyman plc 177
Notes to the financial statements continued
For the year ended 31 December 2021
The Group uses foreign currency-denominated debt to hedge the value of its US dollar and euro-denominated net assets, which may change due to respective movements in US dollar and euro exchange rates. At 31 December 2021, the value of the net investment hedges was £126.0 million (2020: £129.5 million). These hedges are considered highly effective and no ineffective portion has been recognised in the income statement. The hedge ratio of each net investment hedge was 1:1, holding all other variables constant. The weighted average hedged rate of the US net investment hedge was 1.376 (2020: 1.284) and of the EUR net investment hedge was 1.163 (2020: 1.125).
The effect of the net investment hedges on the Group’s financial statements is summarised as follows:
| 2021 US net investment hedge | 2021 EUR net investment hedge | 2020 US net investment hedge | 2020 EUR net investment hedge | |
|---|---|---|---|---|
| Loan carrying amount (£’m) | (81.4) | (44.6) | (81.1) | (48.4) |
| Loan carrying amount (US$m/€m) | (110.0) | (53.1) | (110.7) | (53.9) |
| Hedge ratio (holding all other variables constant) | 1:1 | 1:1 | 1:1 | 1:1 |
| Change in carrying amount of loans as a result of foreign currency movements recognised in OCI | (0.8) | 3.1 | 2.7 | (2.5) |
| Change in value of hedged item used to determine hedge effectiveness | 0.8 | (3.1) | (2.7) | 2.5 |
Interest-bearing loans and borrowings are recognised initially at fair value, net of transaction costs incurred. Interest-bearing loans and borrowings are subsequently carried at amortised cost using the effective interest method.# 18. Interest-bearing loans and borrowings
| Note | 2021 £’m | 2020 £’m |
|---|---|---|
| Unsecured borrowings at amortised cost: | ||
| Bank borrowings | (116.5) | (97.0) |
| Senior notes | (33.3) | (73.3) |
| Capitalised borrowing costs | 0.7 | 1.2 |
| Borrowings | (149.1) | (169.1) |
| Lease liabilities | 12 | (54.8) |
| Total interest-bearing liabilities | (203.9) |
Analysed as:
| 2021 £’m | 2020 £’m | |
|---|---|---|
| Current liabilities | (6.1) | (45.7) |
| Non-current liabilities | (197.8) | (177.2) |
| (203.9) | (222.9) |
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 (see note 7).
The carrying amounts of interest-bearing loans and borrowings are denominated in the following currencies:
| 2021 £’m | 2020 £’m | |
|---|---|---|
| Sterling¹ | 0.7 | 1.2 |
| US dollars | (105.2) | (108.2) |
| Euros | (44.6) | (62.1) |
| (149.1) | (169.1) |
¹ Relates to capitalised borrowing costs.
Tyman plc 178 Annual Report and Accounts 2021 Financial Statements STRATEGIC REPORT FINANCIAL STATEMENTS
Multi-currency revolving credit facility
On 19 February 2018, the Group entered into the 2018 Facility. The 2018 Facility gives the Group access to up to £310.0 million of borrowings and comprises a £240.0 million committed revolving credit facility and a £70.0 million uncommitted accordion facility, expiring in February 2024. The banking facility is unsecured and is guaranteed by Tyman plc and its principal subsidiary undertakings. As at 31 December 2021, the Group has undrawn amounts committed under the multi-currency revolving credit facility of £123.6 million (2020: £143.1 million). These amounts are floating rate commitments which expire beyond twelve months.
Other borrowings
The Group acquired bank borrowings as part of the acquisition of Reguitti. At 31 December 2021, the remaining facility has a carrying value of £0.1 million (2020: £0.2 million) and an undrawn value of £Nil (2020: £Nil). The facility has a maturity of 22 May 2022 and is unsecured.
On 19 November 2014, the Group issued unsecured private debt placement notes with US financial institutions totalling US$100.0 million. The debt comprised US$55.0 million debt with a seven-year maturity from inception at a coupon of 4.97% and US$45.0 million with a 10-year maturity from inception at a coupon of 5.37%. The US$55.0 million matured and was repaid in November 2021. The US$45.0 million is due in 2024 and is classified as non-current.
| 2021 £’m | 2020 £’m | |
|---|---|---|
| Borrowings | (149.1) | (169.1) |
| Lease liabilities | (54.8) | (53.8) |
| Cash | 58.1 | 69.7 |
| At 31 December | (145.8) | (153.2) |
| Cash £’m | Borrowings £’m | Lease liabilities £’m | Total £’m | |
|---|---|---|---|---|
| At 1 January 2020 | 49.0 | (211.8) | (60.0) | (222.8) |
| Cash flows | 22.1 | 44.0 | 9.2 | 75.3 |
| Acquisitions | (1.5) | – | – | (1.5) |
| Disposals | – | – | 1.6 | 1.6 |
| New leases | – | – | (3.3) | (3.3) |
| Lease interest accretion | – | – | (2.8) | (2.8) |
| Foreign exchange adjustments | 0.1 | (0.8) | 1.5 | 0.8 |
| Amortisation of borrowing costs | – | (0.5) | – | (0.5) |
| At 31 December 2020 | 69.7 | (169.1) | (53.8) | (153.2) |
| Cash flows | (11.5) | 17.8 | 8.6 | 14.9 |
| Disposals | – | – | 0.2 | 0.2 |
| New leases | – | – | (2.3) | (2.3) |
| Lease modifications | – | – | (0.2) | (0.2) |
| Lease interest accretion | – | – | (2.5) | (2.5) |
| Lease extensions | – | – | (4.7) | (4.7) |
| Foreign exchange adjustments | (0.1) | 2.7 | (0.1) | 2.5 |
| Amortisation of borrowing costs | – | (0.5) | – | (0.5) |
| At 31 December 2021 | 58.1 | (149.1) | (54.8) | (145.8) |
Annual Report and Accounts 2021 Tyman plc 179
Notes to the financial statements continued
For the year ended 31 December 2021
Financial assets and liabilities are recognised in the Group’s balance sheet when the Group becomes a party to the contractual provisions of the instrument and are generally derecognised when the contract that gives rise to it is settled, sold, cancelled or expires.
Classification
The Group classifies its financial assets in the following measurement categories:
• those to be measured subsequently at fair value through profit or loss; and
• those to be measured subsequently at amortised cost.
The classification depends on the Group’s business model for managing the financial assets and the contractual terms of the cash flows. For assets measured at fair value, gains and losses will be recorded in profit or loss.
Initial measurement
At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at FVPL, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at FVPL are expensed in profit or loss.
Subsequent measurement
Debt instruments
Subsequent measurement of debt instruments depends on the Group’s business model for managing the asset and the cash flow characteristics of the asset. There are two measurement categories into which the Group classifies its debt instruments:
• Amortised cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. Interest income from these financial assets is included in finance income using the effective interest rate method. Any gain or loss arising on derecognition is recognised directly in profit or loss and presented in administrative expenses in the income statement, together with foreign exchange gains and losses.
• FVPL: Assets that do not meet the criteria for amortised cost or fair value through other comprehensive income are measured at FVPL. A gain or loss on a debt investment that is subsequently measured at FVPL is recognised in profit or loss in the period in which it arises.
Equity instruments
The Group subsequently measures all equity investments at fair value, with any gains or losses recorded in profit or loss.
Impairment
The Group assesses on a forward-looking basis the expected credit losses associated with its debt instruments carried at amortised cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk. For policy on impairment of trade receivables, see note 14.
Financial liabilities held at amortised cost comprise “trade and other payables” (see note 16) and “interest-bearing loans and borrowings” (see note 18).
| 31 December 2021 | 31 December 2020 | |||||
|---|---|---|---|---|---|---|
| Assets as per balance sheet: | Financial assets at amortised cost £’m | Financial assets at fair value through profit or loss £’m | Total £’m | Financial assets at amortised cost £’m | Financial assets at fair value through profit or loss £’m | Total £’m |
| Trade and other receivables¹ | 69.9 | – | 69.9 | 63.1 | – | 63.1 |
| Financial assets at FVPL | – | 1.1 | 1.1 | – | 1.1 | 1.1 |
| Cash and cash equivalents | 58.1 | – | 58.1 | 69.7 | – | 69.7 |
| Total financial assets | 128.0 | 1.1 | 129.1 | 132.8 | 1.1 | 133.9 |
¹ Excludes non-financial assets.
Tyman plc 180 Annual Report and Accounts 2021 Financial Statements STRATEGIC REPORT FINANCIAL STATEMENTS
| 31 December 2021 | 31 December 2020 | |||||
|---|---|---|---|---|---|---|
| Derivatives used for hedging £’m | Other financial liabilities at cost £’m | Total £’m | Derivatives used for hedging £’m | Other financial liabilities at cost £’m | Total £’m | |
| Borrowings¹ | (0.3) | (149.8) | (149.8) | (0.2) | (170.3) | (170.3) |
| Lease liabilities | – | (54.8) | (54.8) | – | (53.8) | (53.8) |
| Derivative financial instruments | (0.3) | – | (0.3) | (0.2) | – | (0.2) |
| Trade and other payables² | – | (107.5) | (107.5) | – | (77.4) | (77.4) |
| Total financial liabilities | (0.3) | (312.1) | (312.4) | (0.2) | (301.5) | (301.7) |
¹ Excludes capitalised borrowing costs of £0.7 million (2020: £1.2 million).
² Excludes non-financial liabilities.
The Group manages its capital structure to ensure that it will be able to continue as a going concern. The capital structure of the Group consists of cash and cash equivalents (note 15), interest-bearing loans and borrowings (note 18) and equity attributable to the shareholders of the Company, as disclosed in the consolidated statement of changes in equity.
The Group’s principal financial instruments comprise bank loans, private debt, and cash and short-term deposits. The Group has various other financial instruments, such as trade receivables and trade payables that arise directly from its operations. No trading in financial instruments is undertaken. The Board reviews and agrees policies for managing each financial instrument risk and they are summarised below.
The Group maintains sufficient cash and marketable securities and the availability of funding through an adequate amount of credit facilities. Management monitors rolling forecasts of the Group’s liquidity on the basis of expected cash flow. The Group manages liquidity risk by the pooling of cash resources and depositing funds available for investment in approved financial instruments with financial institutions. Counterparty risk with respect to cash and cash equivalents is managed by only investing in banks and financial instruments with independently assessed credit ratings of at least A2, as published by Standard and Poor’s. Individual risk limits are assessed by management based on the external ratings. Management does not expect any losses from the non-performance of these counterparties. Credit risk is also attributable to the Group’s exposure to trade receivables due from customers. Management assesses the credit quality of customers taking into account their financial position, past experience and other factors. In order to mitigate credit risk, the Group utilises credit insurance in those areas of its operations where such insurance is available.# 19. Financial risk management and financial instruments continued
In areas where such insurance is not available, or it is uneconomical to purchase, management monitors the utilisation of credit limits by customers, identified either individually or by group, and incorporates this information in credit risk controls. The diverse nature of the Group’s customer base means that the Group has no significant concentrations of credit risk. Trade receivables are presented in the balance sheet net of allowances for doubtful receivables, estimated by the Group’s management based on prior experience and their assessment of the current economic environment. The Group’s exposure to credit risk is limited to the carrying amount of financial assets recognised at the balance sheet date. Management considers all financial assets that are not impaired for each of the reporting dates under review are of good credit quality, including those that are past due. During the year ended 31 December 2021, the Group operated within its borrowing facilities. Following a temporary relaxation of the leverage covenant granted in 2020 to 3.5x at December 2020 and 4.0x at June 2021 due to uncertainty arising from COVID-19, the leverage covenant returned to 3.0x adjusted EBITDA at December 2021.
The table below analyses the contractual undiscounted cash flows of the Group’s financial liabilities into relevant maturity groupings based on the contractual maturity date.
| Not later than one year £’m | Later than one year but not later than five years £’m | Later than five years £’m | Total £’m | |
|---|---|---|---|---|
| At 31 December 2021 | ||||
| Borrowings 1 | (1.7) | (153.1) | – | (154.8) |
| Lease liabilities | (8.5) | (26.5) | (40.8) | (75.8) |
| Derivative financial instruments | (0.3) | – | – | (0.3) |
| Trade and other payables 2 | (107.5) | – | – | (107.5) |
| Total | (118.0) | (179.6) | (40.8) | (338.4) |
| At 31 December 2020 | ||||
| Borrowings 1 | (43.9) | (135.0) | – | (178.9) |
| Lease liabilities | (8.0) | (24.5) | (44.2) | (76.7) |
| Derivative financial instruments | (0.2) | – | – | (0.2) |
| Trade and other payables 2 | (77.4) | – | – | (77.4) |
| Total | (129.5) | (159.5) | (44.2) | (333.2) |
1 Excludes capitalised borrowing costs of £0.7 million (2020: £1.2 million).
2 Excludes non-financial liabilities.
The interest rate profile of the Group’s borrowings as at 31 December 2021 was as follows:
| Floating rate borrowings 1 £’m | Fixed rate borrowings 2 £’m | Fixed rate lease liabilities £’m | Total £’m | |
|---|---|---|---|---|
| At 31 December 2021 | ||||
| Sterling | – | – | (14.6) | (14.6) |
| US dollars | (71.8) | (33.3) | (35.6) | (140.7) |
| Euros | (44.7) | – | (1.4) | (46.1) |
| Other | – | – | (3.2) | (3.2) |
| Total | (116.5) | (33.3) | (54.8) | (204.6) |
| At 31 December 2020 | ||||
| Sterling | – | – | (14.9) | (14.9) |
| US dollars | (34.9) | (73.4) | (33.4) | (141.7) |
| Euros | (62.1) | – | (1.6) | (63.7) |
| Other | – | – | (3.9) | (3.9) |
| Total | (97.0) | (73.4) | (53.8) | (224.2) |
1 Excludes capitalised borrowing costs of £0.7 million (2020: £1.1 million).
2 Excludes capitalised borrowing costs of £Nil (2020: £0.1 million).
The interest rate on the floating bank loans is linked to LIBOR. The Board periodically reviews any exposure the Group may have to interest rate fluctuations, and, where appropriate, considers use of interest rate swaps to fix the cost of a proportion of these floating rate borrowings.
| Floating rate borrowings 1 £’m | |
|---|---|
| At 31 December 2021 | |
| US dollars | (71.8) |
| Euros | (44.7) |
| Total | (116.5) |
| At 31 December 2020 | |
| US dollars | (34.9) |
| Euros | (62.1) |
| Total | (97.0) |
1 Excludes capitalised borrowing costs of £0.7 million (2020: £1.1 million).
Interest rate sensitivity
The impact of a 50 basis point movement in floating interest rates on borrowings would have a c.£0.5 million (2020: c. £0.8 million) impact on profits. This impact would be reduced by the tax effect on such a change.
Interest rate risk of financial assets
The weighted average interest rate received on deposited funds was Nil% during the year (2020: Nil%).
The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the US dollar and the euro. Foreign exchange risk arises from future commercial and financing transactions, recognised assets and liabilities denominated in a currency that is not the Group’s functional currency and net investments in overseas entities. The Group includes entities which transact in currencies other than sterling and that have functional currencies other than sterling, whose net assets are, therefore, subject to currency translation risk. The Group borrows in local currencies as appropriate to minimise the impact of this risk on the balance sheet. See details of net investment hedges in note 17.
Foreign currency exchange rate sensitivity
Foreign currency financial assets and liabilities, translated into sterling at the closing rate, are as follows:
| Sterling £’m | US dollars £’m | Euros £’m | Other £’m | Total £’m | |
|---|---|---|---|---|---|
| At 31 December 2021 | |||||
| Financial assets | |||||
| Trade and other receivables 1 | 13.9 | 36.5 | 15.7 | 3.8 | 69.9 |
| Financial assets at FVPL | – | 1.1 | – | – | 1.1 |
| Cash and cash equivalents | 8.3 | 22.5 | 13.1 | 14.2 | 58.1 |
| Total financial assets | 22.2 | 60.1 | 28.8 | 18.0 | 129.1 |
| Financial liabilities | |||||
| Borrowings 2 | – | (105.2) | (44.6) | – | (149.8) |
| Lease liabilities | (14.6) | (35.6) | (1.4) | (3.2) | (54.8) |
| Derivative financial instruments | – | (0.3) | – | – | (0.3) |
| Trade and other payables 3 | (20.6) | (58.1) | (21.0) | (7.8) | (107.5) |
| Total financial liabilities | (35.2) | (199.2) | (67.0) | (11.0) | (312.4) |
| Potential impact on profit or loss – (loss)/gain | |||||
| 10% increase in functional currency | (2.3) | (0.4) | (0.5) | (3.2) | |
| 10% decrease in functional currency | 3.2 | 0.7 | 0.5 | 4.4 | |
| Potential impact on other comprehensive income – gain/(loss) | |||||
| 10% increase in functional currency | 12.7 | 3.5 | (0.5) | 15.7 | |
| 10% decrease in functional currency | (15.6) | (4.2) | 0.7 | (19.1) |
1 Excludes non-financial assets.
2 Excludes capitalised borrowing costs of £0.7 million (2020: £1.2 million).
3 Excludes non-financial liabilities.
| Sterling £’m | US dollars £’m | Euros £’m | Other £’m | Total £’m | |
|---|---|---|---|---|---|
| At 31 December 2020 | |||||
| Financial assets | |||||
| Trade and other receivables 1 | 12.3 | 31.4 | 15.8 | 3.6 | 63.1 |
| Financial assets at FVPL | – | 1.1 | – | – | 1.1 |
| Cash and cash equivalents | 19.2 | 24.6 | 16.6 | 9.3 | 69.7 |
| Total financial assets | 31.5 | 57.1 | 32.4 | 12.9 | 133.9 |
| Financial liabilities | |||||
| Borrowings 2 | – | (108.2) | (62.1) | – | (170.3) |
| Lease liabilities | (14.9) | (33.4) | (1.6) | (3.9) | (53.8) |
| Derivative financial instruments | – | (0.1) | – | (0.1) | (0.2) |
| Trade and other payables 3 | (13.3) | (41.1) | (17.9) | (5.1) | (77.4) |
| Total financial liabilities | (28.2) | (182.8) | (81.6) | (9.1) | (301.7) |
| Potential impact on profit or loss – (loss)/gain | |||||
| 10% increase in functional currency | (2.3) | (0.4) | (0.4) | (3.1) | |
| 10% decrease in functional currency | 2.5 | 0.3 | 0.5 | 3.3 | |
| Potential impact on other comprehensive income – gain/(loss) | |||||
| 10% increase in functional currency | 11.6 | 4.5 | (0.3) | 15.8 | |
| 10% decrease in functional currency | (14.1) | (5.5) | 0.4 | (19.2) |
1 Excludes non-financial assets.
2 Excludes capitalised borrowing costs of £0.7 million (2020: £1.2 million).
3 Excludes non-financial liabilities.
The 10% movements in exchange rates are considered to be indicative of a reasonable annual movement, based on historical average movements in exchange rates.
The Group’s capital management objectives are to safeguard the Group’s ability to continue as a going concern so as to provide returns to shareholders and benefits to stakeholders. The Group defines its capital as total equity plus net debt. In maintaining the capital structure, the Group may adjust the amount paid as dividends to shareholders, issue new shares or dispose of assets to reduce debt. The Group monitors its financial capacity by reference to its financial covenant ratios, including leverage and interest cover. If the Group fails to meet its key financial covenant ratios required by its lenders, this could impact the Group’s average interest rate of borrowings and the future availability of credit to the Group. The Group is in compliance with the financial covenants contained within its credit facilities, and has been in compliance throughout the financial year.
| Note | 2021 £’m | 2020 £’m | |
|---|---|---|---|
| Borrowings (including lease liabilities)1 | 18 | 204.6 | 224.1 |
| Less: Cash and cash equivalents | 15 | (58.1) | (69.7) |
| Total equity | 482.4 | 443.1 | |
| Total capital | 628.9 | 597.5 |
1 Excludes capitalised borrowing costs of £0.7 million (2020: £1.2 million).
The Group’s derivative financial instrument used for hedging is measured at fair value. The Group uses the following hierarchy for measuring fair value:
Derivatives shown at fair value in the balance sheet have been valued by reference to Level 2 techniques described above. There were no transfers between levels in the current and prior year.
Level 2 hedging derivatives comprise interest rate swaps fair valued using forward interest rates extracted from observable yield curves and foreign exchange contracts valued with reference to the period end exchange rate. The effects of discounting are generally insignificant for Level 2 derivatives.The fair value of the derivative financial instruments at 31 December 2021 is a net liability of £0.3 million (2020: liability of £0.2 million). There were no changes in valuation techniques during the year.
The Group has a team that performs the valuations of financial assets required for financial reporting purposes. This team reports to the CFO and the Audit and Risk Committee.
The fair values of borrowings are as follows:
| 2021 £’m | 2020 £’m | |
|---|---|---|
| Current liabilities | (6.1) | (45.7) |
| Non-current liabilities | (197.8) | (177.2) |
| Fair value of borrowings | (203.9) | (222.9) |
The fair values of the following financial assets and liabilities approximate their carrying amounts:
* trade and other receivables;
* cash and cash equivalents; and
* trade and other payables.
Provisions are recognised when:
* the Group has a present legal or constructive obligation as a result of a past event;
* it is probable that an outflow of resources will be required to settle the obligation; and
* a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the balance sheet date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to the passage of time is recognised in the income statement within net finance costs. Provisions are not recognised for future operating losses.
Annual Report and Accounts 2021 Tyman plc 185
Notes to the financial statements continued
For the year ended 31 December 2021
Provisions, by their nature, are uncertain and highly judgemental. Provisions are measured at the Directors’ best estimate of the expenditure required to settle the obligation at the balance sheet date based on the nature of the provisions, the potential outcomes, any developments relating to specific claims and previous experience.
| Property related £’m | Restructuring £’m | Warranty £’m | Other £’m | Total £’m | |
|---|---|---|---|---|---|
| At 1 January 2020 | (3.3) | (0.9) | (3.1) | (2.3) | (9.6) |
| (Charged)/credited to the income statement | |||||
| Additional provisions in the year | (0.1) | 0.1 | (0.5) | – | (0.5) |
| Unused amounts reversed | – | – | 0.7 | – | 0.7 |
| Utilised in the year | – | 0.3 | – | 0.1 | 0.4 |
| Exchange difference | – | – | 0.1 | – | 0.1 |
| At 31 December 2020 | (3.4) | (0.5) | (2.8) | (2.2) | (8.9) |
| (Charged)/credited to the income statement | |||||
| Additional provisions in the year | – | – | (0.1) | (0.1) | (0.2) |
| Unused amounts reversed | – | 0.2 | 1.6 | 1.0 | 2.8 |
| Exchange difference | – | – | – | 0.1 | 0.1 |
| At 31 December 2021 | (3.4) | (0.3) | (1.3) | (1.2) | (6.2) |
Analysed as:
| 2021 £’m | 2020 £’m | |
|---|---|---|
| Current liabilities | (1.4) | (1.3) |
| Non-current liabilities | (4.8) | (7.6) |
| (6.2) | (8.9) |
Current liabilities are those aspects of provisions that are expected to be utilised within the next twelve months.
Property provisions include provisions for site restoration costs of £1.3 million (2020: £1.3 million) and leasehold dilapidations of £2.1 million (2020: £2.1 million). These provisions relate to contractual obligations to reinstate leasehold properties and land to their original state of repair and are based on management’s best estimate of future costs to remediate. Property provisions are expected to be utilised by 2042.
Restructuring provisions reversed in the year and remaining at year end predominantly relate to the streamlining of the international satellite operations which commenced in late 2019. The majority of the remaining provisions are expected to be utilised in 2022.
Warranty provisions are calculated based on historical experience of the ultimate cost of settling product warranty claims and potential claims. These warranty provisions are expected to be utilised by 2031. The unused amounts reversed during the year predominantly relates to a reduction in a provision made on a previous acquisition, as well as a reduction in a product warranty provision.
Included in other provisions is £0.4 million (2020: £0.4 million) relating to the tax consequences of international intragroup transactions, for which the fiscal authorities may be expected to adopt opposing treatments in respect of revenue and cost recognition. The remaining £0.8 million (2020: £1.7 million) relates to various provisions for potential obligations mainly arising from the Group’s M&A activity. These other provisions are expected to be utilised by 2025.
Tyman plc 186 Annual Report and Accounts 2021
Financial Statements
STRATEGIC REPORT
FINANCIAL STATEMENTS
The Group operates both defined contribution and defined benefit pension plans.
Defined contribution plans
A defined contribution plan is a pension plan under which the Group pays fixed contributions into publicly or privately administered pension insurance plans on a mandatory, contractual or voluntary basis. The Group recognises contributions as an employee benefit expense when they are due and has no further payment obligations once the contributions have been paid. The Group has no legal or constructive obligation to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current or prior periods. Prepaid contributions are recognised as an asset to the extent that a cash refund in the future is available.
Defined benefit plans
A defined benefit plan is a pension plan that is not a defined contribution plan. Typically, defined benefit plans define an amount of pension benefit an employee will receive on retirement. This amount is usually dependent on one or more factors such as age, years of service and compensation. The liability recognised in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating to the terms of the related pension obligation. In countries where there is no deep market in such bonds, the market rates on government bonds are used. Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to equity in other comprehensive income in the period in which they arise. Past service costs are recognised immediately in the income statement.
Defined benefit obligations are calculated using a number of assumptions, including future salary increases, increases to pension benefits, mortality rates and, in the case of post-employment medical benefits, the expected rate of increase in medical costs. The plan assets consist largely of listed securities and their fair values are subject to fluctuation in response to changes in market conditions. Effects of changes in the actuarial assumptions underlying the benefit obligation, effects of changes in the discount rate applicable to the benefit obligation and effects of differences between the expected and actual return on the plan assets are classified as actuarial gains and losses and are recognised directly in equity. Further actuarial gains and losses will be recognised during the next financial year. An analysis of the assumptions that will be used by management to determine the cost of defined benefit plans that will be recognised in the income statement in the next financial year is presented in this note.
The Group operates a number of defined contribution pension schemes, the assets of which are held externally to the Group in separate trustee-administered funds. The costs of the Group’s defined contribution pension schemes are charged to the income statement in the period in which they fall due. The charge to the income statement was £3.8 million (2020: £3.6 million). At the year end, the Group had unpaid pension contributions of £0.2 million (2020: £0.1 million) included within employee benefit liabilities.
The table below outlines where the Group’s post-employment amounts and activity are included in the financial statements.
| 2021 £’m | 2020 £’m | |
|---|---|---|
| Net liability on the balance sheet | (4.0) | (8.9) |
| Income statement charge ¹ | (0.3) | (0.7) |
| Remeasurements ² | 2.1 | 1.3 |
¹ The income statement charge included within profit before taxation includes current service costs, past service costs, administrative costs and interest costs.
² The remeasurement of post-employment benefit obligations includes a £0.5 million deferred tax charge. The remeasurement included in the consolidated statement of comprehensive income and consolidated statement of changes in equity of £1.6 million is included net of the £0.5 million deferred tax charge.
The Group’s principal defined benefit pension schemes are operated in the US and Italy. The US defined benefit schemes provide benefits to members in the form of a guaranteed level of pension payable for life.The level of benefits provided depends on members’ length of service and their salary in the final years leading up to retirement.
Annual Report and Accounts 2021
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187
Notes to the financial statements continued
For the year ended 31 December 2021
21. Retirement benefit obligations continued
The Italian schemes relate to TFR termination obligations payable to employees of the Group’s Italian operations. Italian employers are required to make provision for a type of severance package to its employees equivalent to 6.9% of each employee’s gross annual salary, revalued on the basis of 75.0% of inflation plus a fixed rate of 1.5% during the period of accrual. Upon termination of employment, the employer is obliged to pay a lump sum to the employee. TFR termination obligations are unfunded by the Group.
For certain US plans, pensions in payment do not receive inflationary increases. The benefit payments are from trustee-administered funds. Plan assets held in trusts are governed by local regulations and practice in the US, as is the nature of the relationship between the Group and the trustees and their composition. Responsibility for governance of the plans, including investment and contribution schedules, lies jointly with the Group and the board of trustees. The board of trustees is composed of representatives of the Company and plan participants in accordance with the relevant plan rules.
Actuarial gains and losses from participant experience, changes in demographic assumptions, changes in financial assumptions and net return on plan assets are recognised, net of the related deferred tax, in the consolidated statement of comprehensive income.
In 2021, the Group commenced a process to terminate in the two remaining US defined benefit schemes. These schemes have been closed to new entrants and closed to further accrual of service for many years. Termination of these schemes will reduce income statement volatility, reduce administration costs and burden and will reduce future cash outflows. Under the terms of the arrangement, participants will be given the option of receiving a lump-sum benefit or an annuity, the liability for which will be transferred to an insurance company. The termination process is expected to take up to twenty-four months, with the final distribution date in the second half of 2023. In September 2021, a Notice of Intent to Terminate was issued to participants and a Plan Termination Amendment was signed in November 2021. During the year, additional contributions were made to the plans to reduce the net deficit and all assets were transferred to fixed income funds to minimise volatility. During 2022, the Group will complete various procedures and filings required for approval of the termination by the Inland Revenue Service (“IRS ” ) and Pension Benefit Guarantee Corporation (“PBGC ” ). In 2023, participant elections will be finalised, the final termination liability will be calculated, annuities transferred to a provider, and any final termination payment made. After such time, the Group will have no further obligations remaining.
The movement in the defined benefit obligation over the year is as follows:
| 2021 £’m | 2020 £’m | 2021 £’m | 2020 £’m | 2021 £’m | 2020 £’m | |
|---|---|---|---|---|---|---|
| Present value of obligations | Fair value of plan assets | Net defined liability | ||||
| Balance at 1 January | (31.8) | (30.5) | 22.9 | 19.3 | (8.9) | (11.2) |
| Included in the income statement: | ||||||
| Current service cost | (0.1) | (0.1) | – | – | (0.1) | (0.1) |
| Administration costs | – | – | (0.1) | (0.3) | (0.1) | (0.3) |
| Interest (expense)/income | (0.6) | (0.9) | 0.5 | 0.6 | (0.1) | (0.3) |
| Subtotal in income statement | (0.7) | (1.0) | 0.4 | 0.3 | (0.3) | (0.7) |
| Included in other comprehensive income | ||||||
| Remeasurement gain/(loss) arising from: | ||||||
| Net gain on plan assets | 2 | – | – | 1.1 | 4.1 | 1.1 |
| Gain/(loss) from change in demographic assumptions | (0.1) | 0.2 | – | – | (0.1) | 0.2 |
| Gain/(loss) from change in financial assumptions | 1.2 | (3.0) | – | – | 1.2 | (3.0) |
| Experience loss | (0.1) | – | – | – | (0.1) | – |
| Subtotal in other comprehensive income | 3 | 1.0 | (2.8) | 1.1 | 4.1 | 2.1 |
| Employer contributions | – | – | 2.5 | 1.5 | 2.5 | 1.5 |
| Benefit payments | 1.7 | 1.6 | (1.3) | (1.4) | 0.4 | 0.2 |
| Exchange difference | (0.1) | 0.9 | 0.3 | (0.9) | 0.2 | – |
| Balance at 31 December | (29.9) | (31.8) | 25.9 | 22.9 | (4.0) | (8.9) |
1 The current service cost, past service costs and expenses relating to the administration of the defined benefit schemes are included in the income statement within administrative expenses. Also see note 5.3.
2 Net expense is included within net finance income and costs (note 7).
3 Excluding amounts included in interest expense.
4 A deferred tax charge of £0.5 million (2020: deferred tax credit of £0.1 million) has been recognised in other comprehensive income in respect of remeasurements of the defined benefit obligation. Also see note 8.
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Annual Report and Accounts 2021
Financial Statements
STRATEGIC REPORT
FINANCIAL STATEMENTS
21. Retirement benefit obligations continued
Defined benefit plan liabilities and assets by country are as follows:
| 2021 £’m | 2020 £’m | 2021 £’m | 2020 £’m | 2021 £’m | 2020 £’m | |
|---|---|---|---|---|---|---|
| Present value of obligations | Fair value of plan assets | Net defined liability | ||||
| United States | (26.8) | (28.1) | 25.9 | 22.9 | (0.9) | (5.2) |
| Italy | (3.1) | (3.7) | – | – | (3.1) | (3.7) |
| Balance at 31 December | (29.9) | (31.8) | 25.9 | 22.9 | (4.0) | (8.9) |
Plan assets comprise the following asset classes:
| 2021 £’m | % | 2020 £’m | % | |
|---|---|---|---|---|
| Equity instruments | – | – | 12.5 | 54.6% |
| Large US equity | – | – | 7.1 | |
| Small/mid US equity | – | – | 1.2 | |
| International equity | – | – | 4.2 | |
| Fixed income | 25.9 | 100.0% | 9.2 | 40.2% |
| Other | – | – | 1.2 | 5.2% |
| Balance at 31 December | 25.9 | 22.9 |
Equity instruments comprise quoted investments.
Through its defined benefit pension plans, the Group is exposed to a number of risks, the most significant of which are detailed below:
The significant actuarial assumptions were as follows:
| 2021 | 2020 | |
|---|---|---|
| United States | Italy | |
| Discount rate | 2.64% | 0.80% |
| Inflation | 2.25% | 1.25% |
| Salary growth rate | n/a | 1.25% |
Assumptions regarding future mortality are set based on actuarial advice in accordance with published statistics and experience in each jurisdiction. These assumptions translate into an average life expectancy in years for a pensioner retiring at age 65 for the US schemes as seen in the following table. This assumption is not relevant to the Italian schemes.
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Notes to the financial statements continued
For the year ended 31 December 2021
21. Retirement benefit obligations continued
| 2021 | 2020 | |
|---|---|---|
| United States | Italy | |
| Retiring at the end of the reporting year | ||
| Male | 20.1 | n/a |
| Female | 22.1 | n/a |
| Retiring 20 years after the end of the reporting year | ||
| Male | 21.6 | n/a |
| Female | 23.6 | n/a |
The sensitivity of the defined benefit obligation to changes in the weighted principal assumption is:
| Change in discount rate assumption | Impact of increase in assumption | Impact of decrease in assumption | |
|---|---|---|---|
| US | 0.25% | (2.9)% | 3.0% |
| Italy | 0.50% | (4.6)% | 5.1% |
The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same methodology has been applied as when calculating the pension liability recognised within the statement of financial position. The methods and types of assumptions used in preparing the sensitivity analyses did not change compared to the previous year.
The US pension schemes are closed to new entrants and closed to further accrual of service; as a result there will be no further service costs incurred by the Group related to these schemes.
The expected level of contributions to the defined benefit pension scheme and post-employment medical benefits in the year to December 2022 is £1.5 million (2021: £1.4 million).
The weighted average duration of the defined benefit obligation is 12.1 years for US plans (2020: 13 years) and 10.2 years for Italian plans (2020: 10 years).
The expected maturity analysis of undiscounted post-employment pension benefits is as follows:
| Defined pension benefits 1 2021 £’m | Defined pension benefits 2020 £’m | |
|---|---|---|
| No later than one year | (1.7) | (1.8) |
| Between one and two years | (1.7) | (1.7) |
| Between two and five years | (5.1) | (5.3) |
| Later than five years | (8.6) | (9.1) |
| Total | (17.1) | (17.9) |
1 This maturity analysis reflects the current terms of the scheme and does not reflect the planned termination of the US schemes.# Tyman plc
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new ordinary shares or options are shown in equity as a deduction, net of tax, from the proceeds received by the Company. Where any Group company purchases the Company’s equity share capital (treasury shares), the consideration paid, including any directly attributable incremental costs (net of income taxes), is deducted from equity attributable to the Company’s owners until the shares are cancelled or reissued. Where such shares are subsequently reissued, any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable to the Company’s owners.
| Number of shares ’m | Ordinary shares £’m | Share premium £’m |
|---|---|---|
| At 31 December 2020 and 31 December 2021 | 196.8 | 9.8 |
Ordinary shares in the Company have a par value of 5.00 pence per share (2020: 5.00 pence per share). All issued shares are fully paid up.
The Group operates the LTIP, which is an equity-settled share-based compensation plan for certain employees, under which the entity receives services from employees as consideration for equity instruments (share options) of the Group. The fair value of the employee services received in exchange for the grant of options is expensed on a straight-line basis over the vesting period, based on the Group’s estimate of shares that will eventually vest. The total amount to be expensed over the vesting period is determined by reference to the fair value of the options granted, excluding the impact of any non-market vesting conditions. Non-market vesting conditions are included in assumptions about the number of options that are expected to vest. At each balance sheet date, the entity revises its estimates of the number of options that are expected to vest, with any changes in estimate recognised in the income statement, with a corresponding adjustment in equity. The fair value of awards granted under LTIP is measured using the Black-Scholes model to predict target EPS levels. The proceeds received, net of any directly attributable transaction costs, are credited to share capital (nominal value) and share premium when the options are exercised. The Group also operates a save as you earn scheme for employees and a deferred share bonus plan for senior management. The Group also operates as deferred share bonus plan that requires that a portion of the Short-term Incentive Plan (“STIP”) award to certain executives, which is determined based on current year performance is deferred in shares to be issued three-years after the award date. The value is fixed and the number of shares varies dependent on the share price at vesting. This is therefore treated as cash settled, with the credit being recorded as a liability. Once the shares are issued, the liability is transferred to retained earnings in equity. The total expense recognised in the year in respect of the deferred share bonus was £0.4 million. The charges relating to the equity-settled share-based payments is outlined below.
| 2021 £’m | 2020 £’m | |
|---|---|---|
| LTIP | 0.9 | 0.1 |
| Save as you earn | 0.1 | – |
| Total equity-settled share-based payments charge | 1.0 | 0.1 |
The charge in respect of the save as you earn scheme (“SAYE”) of £62,000 (2020: £47,000) is immaterial and therefore further disclosures are not provided.
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Notes to the financial statements continued
For the year ended 31 December 2021
The charge to the income statement in 2021 in relation to the LTIP was £1.0 million (2020: £0.1 million). Conditional, annual awards of shares are granted under the LTIP to the Executive Directors and certain senior managers at the discretion of the Remuneration Committee. Provided the participant remains an employee of the Group and where applicable, the performance targets are met, awards will vest between one and three years after the date of the grant at no cost to the employee. Further information on the LTIP and the performance targets for each grant are given in the Remuneration report. The fair value of the awards granted under the LTIP in 2021 and the assumptions used in the calculation of the share-based payment charge are outlined below.
| Grant 1 | Grants 2–4 | Grant 5 | Grant 6 | Grant 7 | |
|---|---|---|---|---|---|
| Exercise price | £Nil | £Nil | £Nil | £Nil | £Nil |
| Share price at grant date | £3.58 | £3.58 | £4.88 | £4.30 | £4.30 |
| Fair value | £3.58 | £3.58 | £4.69 | £4.30 | £4.30 |
| Expected volatility | 31.17% | 31.17% | 31.14% | 31.05% | 31.05% |
| Expected dividend yield | – | – | – | – | – |
| Risk-free rate | 0.4% | 0.1% | 0.4% | 0.4% | 0.4% |
| Grant date | 12 March 21 | 12 March 21 | 21 May 21 | 04 August 21 | 04 August 21 |
| Expected life | 3 years | 1–3 years | 3 years | 3 years | 3 years |
LTIPs awarded to Divisional Presidents and Head Office employees under Grants 1 and 6 contain the following performance targets in respect of between half to two-thirds of the respective award’s value: (a) 2023 Group EPS must be 31.06p or more; (b) 2023 Group ROCE must be 13.0% or more; and (c) at least the lower threshold of the Group ESG scorecard conditions (i.e. Safety, Sustainable Operations, Sustainable Culture and Sustainable Solutions) must be met. Divisional Presidents and senior reports to Divisional Presidents also have a performance target based on their division’s 2023 EBITA. Senior reports to Divisional Presidents do not have the 2023 Group EPS performance targets attached to their LTIP awards. Divisional Presidents have no performance targets in respect of half of their awards. Head Office employees and senior reports to Divisional Presidents have no performance targets in respect of half of their awards. The remaining recipients of awards under Grants 1 and 6 are subject only to a continuous service condition. In addition to the Group EPS, Group ROCE and Group ESG performance targets described above, Executive Directors (who received an award under Grant 5) also have a TSR performance target. To fulfil the TSR performance target, they must achieve at least the “median” in the Net Return Index when ranked against constituents of the FTSE250 index, excluding investments trusts, as at 1 January 2021. Executive Directors are also subject to a two-year compulsory holding period post-vesting. For further details, see Directors’ Remuneration report on pages 116 to 137. Grants 2, 3, 4 and 7 relate to one-off restricted share awards, where LTIPs vest at the end of a period of between one to three years if the employees remain in continuous service. There are no performance targets attached to such awards.
Movements in the number of outstanding conditional awards of shares are as follows:
| 2021 ’m | 2020 ’m | |
|---|---|---|
| At 1 January | 2.4 | 2.1 |
| Exercised | (0.3) | – |
| Granted | 0.9 | 1.1 |
| Lapsed | (0.6) | (0.8) |
| Dividend equivalent | 0.1 | – |
| At 31 December | 2.5 | 2.4 |
At 31 December, there are no options currently exercisable.
Details of shares purchased by the Employee Benefit Trust to satisfy certain share awards vested in the year, as well as future obligations under the Group’s various share plans are as follows:
| 2021 ’m | 2020 ’m | |
|---|---|---|
| Number of ordinary shares | 0.1 | 0.1 |
| Cost to Company (£) | 0.3 | 0.3 |
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Financial Statements
STRATEGIC REPORT
FINANCIAL STATEMENTS
| 2021 £’m | 2020 £’m | |
|---|---|---|
| Amounts recognised as distributions to owners in the year: | ||
| Final dividend for the year ended 31 December 2020 (2019: Nil ¹) | 7.8 | – |
| Interim dividend for the year ended 31 December 2021 (2020: Nil) | 7.8 | – |
| Total amounts recognised as distributions to owners in the year | 15.6 | – |
| Amounts not recognised in the financial statements: | ||
| Final dividend proposed for the year ended 31 December 2021 of 8.9 pence (2020: 4.0 pence) | 17.4 | 7.8 |
¹ As a result of significant uncertainty in 2020, payment of the final dividend proposed in 2019 of 8.4 pence per share was cancelled. The proposed final dividend is subject to approval by the shareholders at the Annual General Meeting and has not been included as a liability in the financial statements for the year ended 31 December 2021.
The following non-cash and financing adjustments have been made to profit before taxation to arrive at operating cash flow:
| Note | 2021 £’m | 2020 £’m |
|---|---|---|
| Net finance costs | 7 | 9.1 |
| Depreciation of PPE | 11 | 11.5 |
| Depreciation of right-of-use assets | 12 | 7.0 |
| Amortisation of intangible assets | 10 | 18.8 |
| Impairment of intangible assets | 10 | 1.9 |
| Impairment of property, plant and equipment | 11 | 0.2 |
| Impairment of right-of-use assets | 12 | – |
| Loss on disposal of property, plant and equipment | 0.2 | |
| Pension service costs and expected administration costs | 0.1 | |
| Non-cash provision movements | (2.4) | |
| Share-based payments | 1.0 | |
| 47.4 | 55.9 |
| 2021 £’m | 2020 £’m | |
|---|---|---|
| Property, plant and equipment | 1.7 | 1.1 |
There are no contingent liabilities in 2021.
There were no events after the balance sheet date.
Annual Report and Accounts 2021
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193
Notes to the financial statements continued
For the year ended 31 December 2021
he following transactions were carried out with related parties of Tyman plc:
Transactions between the Company and its subsidiaries, which are related parties, are eliminated on consolidation. There were no transactions between the Company and its subsidiaries made during the year other than intercompany loans and dividends.## 29.2 Key management compensation
The Group considers its Directors to be the key management personnel on the basis that it is the Directors who have the sole responsibility for planning, directing and controlling the Group. Full details of Directors’ remuneration are given in the Remuneration report on pages 114 to 137.
Key management compensation in accordance with IAS 24 is as follows:
| 2021 £’m | 2020 £’m | |
|---|---|---|
| Short-term employee benefits | 1.7 | 1.0 |
| Share-based payments (including DSBP) | 0.7 | – |
| Total | 2.4 | 1.0 |
Full details of individual Directors’ remuneration are given in the Remuneration report on page 127.
Directors remuneration in accordance with the requirements of The Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 is as follows:
| 2021 £’m | 2020 £’m | |
|---|---|---|
| Aggregate emoluments | 2.4 | 1.0 |
| Aggregate gains made on the exercise of share options | 0.7 | 0.3 |
| Total | 3.1 | 1.3 |
Details of the subsidiaries of the Group as at 31 December 2021 are detailed below. Unless otherwise indicated, all subsidiaries are wholly owned.
| Registered name and office address | Country of incorporation | Nature of business |
|---|---|---|
| 29 Queen Anne’s Gate, London SW1H 9BU Amesbury Holdings Limited ¹ | United Kingdom | Holding company |
| Balance UK Limited ¹ | United Kingdom | Dormant |
| Bilco Access Solutions Limited ¹ | United Kingdom | Building products |
| Crompton Limited ¹ | United Kingdom | Dormant |
| ERA Home Security Limited ¹ | United Kingdom | Building products |
| ERA Products Limited ¹ | United Kingdom | Dormant |
| ERA Security Hardware Limited ¹ | United Kingdom | Dormant |
| Grouphomesafe Limited ¹ | United Kingdom | Dormant |
| Howe Green Limited ¹ | United Kingdom | Building products |
| Jasper Acquisition Holdings Limited | United Kingdom | Holding company |
| Jasper Acquisition Limited ¹ | United Kingdom | Holding company |
| Lupus Capital Limited | United Kingdom | Dormant |
| Octroi Group Limited | United Kingdom | Holding company |
| Octroi Investments Limited ¹ | United Kingdom | Dormant |
| Otterburn Limited ¹ | United Kingdom | Dormant |
| Profab Access Limited ¹ | United Kingdom | Dormant |
| Response Electronics Limited ¹ | United Kingdom | Dormant |
| Response Alarms Limited ¹ | United Kingdom | Dormant |
| Schlegel Acquisition Holdings Limited | United Kingdom | Holding company |
| Schlegel Building Products Limited ¹ | United Kingdom | Dormant |
| Schlegel Limited ¹ | United Kingdom | Building products |
| Tyman Equities Limited | United Kingdom | Dormant |
| Tyman Financial Services Limited ¹ | United Kingdom | Financing company |
| Tyman Investments¹ | United Kingdom | Dormant |
| Tyman Management Limited ¹ | United Kingdom | Holding company |
| Ventrolla Limited ¹ | United Kingdom | Dormant |
| Window Fabrication and Fixing Supplies Limited ¹ | United Kingdom | Dormant |
| Y-cam Solutions Limited ¹ | United Kingdom | Smart home security |
| Zoo Hardware Limited ¹ | United Kingdom | Building products |
¹ Held by subsidiary.
| Registered name and office address | Country of incorporation | Nature of business |
|---|---|---|
| Bay Adelaide Centre, East Tower, 22 Adelaide Street West, Toronto, ON M5H 4E3 Amesbury Canada Inc¹ | Canada | Holding company |
| 8005 Dixie Road, Unit 8043, Brampton, Ontario L6T 3V1 AmesburyTruth, Inc | Canada | Holding company |
| Suite 1700 Park Place, 666 Burrard Street, Vancouver, BC V6C 2X8 Canada Ashland Hardware Canada Inc. | Canada | Building products |
| Roberto Fierro #6351, Industrial Park Aero Juarez, Juarez, Chihuahua 32695 Amesbury Mexico S.De R.L. De C.V. ¹ | Mexico | Building products |
| Deportistas 7820 Parque Industrial Gema Ciudad, Juarez, Chihuahua 32648 Bilcomex Comercializadora S.De R.L. De C.V. ¹ | Mexico | Building products |
| Bilcomex S.De R.L. De C.V.¹ | Mexico | Building products |
| Via Monterrey Matamoros No. 600, Parque Industrial Milenium, Apoodaca, Nuevo Leon, Mexico, 66600 Ashland Hardware and Casting Systems de Mexico, S.DE R.L. De C.V. ¹ | Mexico | Building products |
| Centennial Lakes, Office Park V, Suite 800, 3600 Minnesota Drive, Edina, MN 55435 Amesbury Acquisition Holdings (2) Inc ¹ | United States | Holding company |
| Amesbury Door Hardware Inc ¹ | United States | Building products |
| Amesbury Group Inc ¹ | United States | Holding company |
| Amesbury Group Plastic Profiles Inc ¹ | United States | Building products |
| Amesbury Industries Inc ¹ | United States | Holding company |
| Ashland Hardware Holdings, Inc ¹ | United States | Holding company |
| Ashland Hardware LLC ¹ | United States | Building products |
| Balance Systems Inc ¹ | United States | Building products |
| Fastek Products Inc ¹ | United States | Building products |
| Giesse Group North America Inc ¹ | United States | Building products |
| Overland Products Company, Inc ¹ | United States | Building products |
| Schlegel Systems Inc ¹ | United States | Building products |
| The Bilco Company ¹ | United States | Holding company |
| The Bilco Holding Company ¹ | United States | Holding company |
| Truth Hardware Corporation ¹ | United States | Building products |
| Tyman Ventures Inc ¹ | United States | Holding company |
| Unipoly Schlegel Holdings US Inc ¹ | United States | Holding company |
| 370 James Street, Suite 201, New Haven, CT 06513 Bilco U.K. Limited¹ | United States | Building products |
| Registered name and office address | Country of incorporation | Nature of business |
|---|---|---|
| Nieuwpoortsesteenweg 102, 8400 Oostende Schlegel Belgium BVBA ¹ | Belgium | Dormant |
| Bredowstrasse 33, 22113, Hamburg Schlegel GmbH ¹ | Germany | Building products |
| Carl-Zeiss-Strasse 37, 63322 Rödermark Jatec GmBH ¹ | Germany | In liquidation |
¹ Held by subsidiary.
| Registered name and office address | Country of incorporation | Nature of business |
|---|---|---|
| Kolonou 1-3, 12131 Peristeri Giesse Group Hellas S.A. ¹ | Greece | Building products |
| Via Tubertini n.1, 40054 Budrio BO, Italy Giesse S.p.A. ¹ | Italy | Building products |
| Localita Fondi, 33 25071, Agnosine, Italy Reguitti S.p.A. | Italy | Building products |
| Havenkade 99B, 1973 AK ljmuiden, Holland Tetchy Investments BV ¹ | Netherlands | Dormant |
| Constitucion 84, Poligono Industrial Les Grases, 08980 Sant Feliu De Llobregat, Barcelona Giesse Group Iberia S.A. ¹ | Spain | Building products |
| Registered name and office address | Country of incorporation | Nature of business |
|---|---|---|
| Enrique Becquerel 4873, Area de promocion el Triangulo, CP 1615, Buenos Aires Giesse Group Argentina S.A. ¹ | Argentina | Building products |
| 44 Riverside Road, Chipping Norton, NSW 2170 Schlegel Australia Pty (2006) Ltd ¹ | Australia | Holding company |
| Schlegel Pty Limited¹ | Australia | Building products |
| 617 Alameda Itatinga, Galpao 2, Parte B, Joapirange II, Valinhos-SP Giesse Brasil Indústria e Comércio de Ferragens e Acessórios Ltda. ¹ | Brazil | Building products |
| 618 Alameda Itatinga, Galpao 2, Parte B, Joapirange II, Valinhos-SP Schlegel América Latina – Vedação, Esquadrias e Extrusão Ltda. ¹ | Brazil | Building products |
| No.151 Linjia of Linlianghe Village, Miaocheng Town, Huairou District, Beijing, 101401 Giesse Hardware (Beijing) Co. Ltd. ¹ | China | Building products |
| Second floor of No.3 Building, No.1515 of Juxian Road, Hi-Tech District, Ningbo, Zhejiang Province TSA Hardware (Ningbo) Co. Limited ¹ | China | Building products |
| Amesbury (Ningbo) Hardware Trading Co. Ltd ¹ | China | Building products |
| 1 Commonwealth Lane, 6-18, One Commonwealth, Singapore 149544 Schlegel Asia Pte. Ltd ¹ | Singapore | In liquidation |
| 3rd Interchange, Sheikh Zayed Road, Al Quoz Industrial Area 1, Dubai United Arab Emirates SchlegeGiesse Middle East Building Materials Trading LLC¹ ² | Building products | |
| Units 30-32 Martock Business Park, Great Western Road, Martick, Somerset, TA12 6HB United Kingdom Building products Bilco UK Ltd | United Kingdom | Building products |
| D-362, MIDC, TTC Industrial Area, Kushket Village, Juinagar, Navi Mumbai 400705 India Building products Giesse S.p.A Istanbul Merkez Şubesi, Halk Sokak Ada IS Merkezi No: 46, Kat: 2 Daire: 4, 34734 Sahrayicedid, Kadikoy, Istanbul | India | Building products |
| Turkey Building products Giesse S.p.A 8 Chemin du Jubin, 69570 Dardilly | France | Building products |
| Giesse S.p.A Av. Eng. Duarte Pacheco, 19 - 3° DTO., 1070-100 Lisboa Portugal Building products Giesse Group Iberia S.A. ¹ | Portugal | Building products |
¹ Held by subsidiary.
² Shareholding of 49% held by the Group. The Group has managerial control and is entitled to 100% of the profits and cash generated by the business.
As at 31 December 2021
| Note | 2021 £’m | 2020 £’m | |
|---|---|---|---|
| Non-current assets | |||
| Investments | 4 | 345.8 | 344.5 |
| Debtors | 5 | 64.9 | – |
| Current assets | |||
| Debtors | 5 | 40.7 | 104.7 |
| Cash and cash equivalents | 0.8 | 6.0 | |
| 41.5 | 110.7 | ||
| Creditors – amounts falling due within one year | 6 | (0.3) | (40.7) |
| Net current assets | 41.2 | 70.0 | |
| Total assets less current liabilities | 451.9 | 414.5 | |
| Creditors – amounts falling due after more than one year | 6 | (74.5) | (33.5) |
| Net assets | 377.4 | 381.0 | |
| Equity | |||
| Called up share capital | 10 | 9.8 | 9.8 |
| Treasury reserve | (2.6) | (3.4) | |
| Retained earnings | 370.2 | 374.6 | |
| – brought forward | 374.6 | 374.3 | |
| – profit for the year | 10.8 | 0.6 | |
| – other movements | (15.2) | (0.3) | |
| Total shareholders’ funds | 377.4 | 381.0 |
The notes on pages 199 to 202 are an integral part of these financial statements.
The financial statements on pages 197 and 198 were approved by the Board on 3 March 2022 and signed on its behalf by:
Jo Hallas
Chief Executive Officer
Jason Ashton
Chief Financial Officer
Tyman plc
Company registration number: 02806007
For the year ended 31 December 2021
| Called up share capital £’m | Treasury reserve £’m | Retained earnings £’m | Total £’m | |
|---|---|---|---|---|
| At 1 January 2020 | 9.8 | (4.3) | 374.3 | 379.8 |
| Total comprehensive income | ||||
| Profit for the year | – | – | 0.6 | 0.6 |
| Transactions with owners | ||||
| Share-based payments ¹ | – | 0.9 | (0.3) | 0.6 |
| Issue of own shares to Employee Benefit Trust | – | 1.2 | (1.2) | – |
| Purchase of own shares for Employee Benefit Trust | – | (0.3) | – | (0.3) |
| At 31 December 2020 | 9.8 | (3.4) | 374.6 | 381.0 |
| Total comprehensive income | ||||
| Profit for the year | – | – | 10.8 | 10.8 |
| Transactions with owners | ||||
| Share-based payments ¹ | – | 0.8 | (15.2) | (14.4) |
| Dividends paid | – | – | 1.5 | 1.5 |
| Issue of own shares to Employee Benefit Trust | – | – | (15.6) | (15.6) |
| 1.1 |
¹ This relates to the fair value of shares awarded to employees.# Financial Statements
For the year ended 31 December 2021
For general information on the Company, see note 1 to the consolidated financial statements.
The financial statements of Tyman plc have been prepared in accordance with Financial Reporting Standard 101, Reduced Disclosure Framework (FRS 101). The financial statements have been prepared under the historical cost convention and in accordance with the Companies Act 2006 applicable to companies reporting under FRS 101. The accounting policies have been consistently applied unless otherwise stated. None of the new standards, which became effective in the year, had a material impact on the Company.
The financial statements have been prepared on a going concern basis. The Group has performed an assessment of going concern through modelling several scenarios, including a base case scenario and a severe but plausible scenario. The Directors are satisfied that the Group and Company have sufficient resources to continue in operation for the foreseeable future, a period of not less than twelve months from the date of this report. Further details can be found in note 2.2 of the Group financial statements.
The preparation of financial statements in conformity with FRS 101 requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Company’s accounting policies. The following areas involving key assumptions concerning the future and other key sources of estimation uncertainty that are significant to the financial statements are listed below and in more detail in the related notes to the Group financial statements:
* going concern assessment (note 2.2);
* provisions (note 20).
In addition to this, the carrying value of investments is a key source of estimation uncertainty relevant to the Company. See note 4.
The following exemptions from the requirements of IFRSs have been applied in the preparation of these financial statements in accordance with FRS 101:
* paragraphs 45(b) and 46 to 52 of IFRS 2 Share-based Payments;
* IFRS 7 Financial Instruments: Disclosures;
* paragraphs 91 to 99 of IFRS 13 Fair Value Measurement;
* the following paragraphs of IAS 1 Presentation of Financial Statements:
* comparative information requirements in respect of paragraph 79(a)(iv);
* paragraph 10(d), cash flow statements;
* paragraph 16, statement of compliance with all IFRS;
* paragraph 38A, minimum of two primary statements, including cash flow statements;
* paragraphs 38B to 38D, additional comparative information;
* paragraphs 40A to 40D, requirements for a third statement of financial position;
* paragraph 111, cash flow statement information;
* paragraphs 134 to 136, capital management disclosures;
* paragraphs 30 and 31 of IAS 8 Accounting Policies, Changes in Accounting Estimates And Errors;
* IAS 7 Statement of Cash Flows;
* paragraph 17 of IAS 24 Related Party Disclosures; and
* the requirements of IAS 24 Related Party Disclosures to disclose related party transactions entered into between two or more members of a Group.
The financial statements are presented in sterling, which is also the functional currency.
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss.
Tyman plc
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Annual Report and Accounts 2021
Financial assets and liabilities are recognised when the Company becomes party to the contractual provisions of the instrument and are generally derecognised when the contract that gives rise to it is settled, sold, cancelled or expires.
The Company classifies financial assets at amortised cost only if both of the following criteria are met:
* the asset is held within a business model whose objective is to collect the contractual cash flows; and
* the contractual terms give rise to cash flows that are solely payments of principal and interest.
They are included in current assets, except for maturities greater than twelve months after the end of the reporting period. These are classified as non-current assets. The Company’s financial assets comprise “debtors” (see note 5) and “cash and cash equivalents” in the balance sheet.
Financial liabilities held at amortised cost comprise “creditors” (see note 6).
Investments in subsidiaries are stated at cost less any accumulated impairment losses.
Interest-bearing loans and overdrafts are recognised initially at fair value, net of transaction costs incurred. Interest- bearing loans are subsequently carried at amortised cost using the effective interest rate method. All borrowing costs are expensed as incurred, on an accruals basis, to the income statement using the effective interest rate method.
The Company operates an equity-settled share-based compensation plan (Long-Term Incentive Plan, “LTIP”) for certain employees under which the entity receives services from employees as consideration for equity instruments (share options) of the Company. The fair value of the employee services received in exchange for the grant of options is expensed on a straight-line basis over the vesting period, based on the Company’s estimate of shares that will eventually vest. The total amount to be expensed over the vesting period is determined by reference to the fair value of the options granted, excluding the impact of any non-market vesting conditions. Non-market vesting conditions are included in assumptions about the number of options that are expected to vest. At each balance sheet date, the entity revises its estimates of the number of options that are expected to vest, with any changes in estimate recognised in the income statement, with a corresponding adjustment in equity.
The fair value of awards granted under LTIP is measured using the Black-Scholes model. The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium when the options are exercised. The grant by the Company of options over its equity instruments to the employees of subsidiary undertakings in the Group is treated as a capital contribution. The fair value of employee services received, measured by reference to the grant date fair value, is recognised over the vesting period as an increase to investment in subsidiary undertakings, with a corresponding credit to equity in the parent entity financial statements. The social security contributions payable in connection with the grant of the share options are considered an integral part of the grant itself, and the charge will be treated as a cash-settled transaction. Details of share-based payments are provided in note 23 of the Group financial statements.
The Company is an investment holding company. It receives dividend income from subsidiaries and bank interest. It pays loan interest to a subsidiary. The majority of selling, general and administrative expenses are paid by the Company’s subsidiary, Tyman Management Limited, including the whole amount of relevant auditors’ remuneration and operating lease costs. As permitted by Section 408 of the Companies Act 2006, the Company has elected not to present its own profit and loss account for the year.
The Company reported a profit for the financial year ended 31 December 2021 of £10.8 million (2020: £0.6 million). £10.5 million of the Company profit relates to dividends received from Group Companies (2020: £Nil).
Other than the Directors, there were no employees of the Company during the year (2020: Nil). Directors’ emoluments are set out in the Directors’ remuneration report in the Group’s Annual Report on pages 125 to 137.
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200
Annual Report and Accounts 2021
An impairment review using a value in use calculation has been performed for each investment. The calculation of the value in use involves judgement in determining the appropriate assumptions to use in the calculations, including forecasted cashflows and appropriate discount rates. The same information as used in the Group goodwill impairment assessment is used for assessing the carrying value of investments in subsidiaries. For further information, see pages 167 to 169 of the Group financial statements.4.2 Carrying value of investments £’m
| Cost | At 1 January 2020 | Capital contribution relating to share-based payments | At 31 December 2020 | Capital contribution relating to share-based payments | At 31 December 2021 |
|---|---|---|---|---|---|
| 344.3 | 0.9 | 345.2 | 1.3 | 346.5 | |
| Impairment | At 1 January 2020 | At 31 December 2020 | At 31 December 2021 | ||
| (0.7) | (0.7) | (0.7) | |||
| Carrying amount | At 1 January 2020 | At 31 December 2020 | At 31 December 2021 | ||
| 343.6 | 344.5 | 345.8 |
All of the above investments are in unlisted shares. The Directors believe that the carrying value of the investments is supported by the recoverable amount of their underlying assets.
| Note | 2021 £’m | 2020 £’m | |
|---|---|---|---|
| Amounts receivable within one year | |||
| Amounts owed by Group undertakings | 40.7 | – | |
| 40.7 | – | ||
| Amounts receivable after more than one year | |||
| Amounts owed by Group undertakings | 64.2 | 104.4 | |
| Corporation tax asset | 0.1 | – | |
| Deferred tax asset | 9 | 0.6 | 0.3 |
| 64.9 | 104.7 |
The amounts owed by Group undertakings are unsecured and interest free. Of the total amount owed by Group undertakings, £40.7 million is due to be repaid in May 2022 and £33.3 million is due to be repaid in November 2024. The remainder of the Group receivable balance of £30.9 million is recoverable on demand but unlikely to be received within one year so is classified as non-current.
| Note | 2021 £’m | 2020 £’m | |
|---|---|---|---|
| Amounts falling due within one year | |||
| Private placement notes | 7 | – | (40.4) |
| Other creditors | (0.3) | (0.3) | |
| (0.3) | (40.7) | ||
| Amounts falling due after more than one year | |||
| Private placement notes | 7 | (33.3) | (32.9) |
| Amounts owed to Group undertakings | (0.5) | (0.6) | |
| Bank borrowings | 8 | (40.7) | – |
| (74.5) | (33.5) |
The amounts owed to Group undertakings are interest free, repayable on demand and unsecured.
Annual Report and Accounts 2021 Tyman plc 201
Notes to the Company financial statements continued
For the year ended 31 December 2021
The senior notes relate to the issuance of a private debt placement with US financial institutions totalling US$45,000,000 (2020: US$100,000,000). US$55,000,000 was repaid in November 2021. Refer to note 18.2.2 of the Group financial statements.
Details of the private placement notes, which are unsecured, are as follows:
| 2021 £’m | 2020 £’m | |
|---|---|---|
| Wholly repayable in 2021 | – | (40.4) |
| Wholly repayable in 2024 | (33.3) | (33.0) |
| Capitalised borrowing costs | – | 0.1 |
| (33.3) | (73.3) |
Borrowings relate to a drawdown of the £240 million committed revolving credit facility used to repay the US$55,000,000 private debt placement in November 2021.
| 2021 £’m | 2020 £’m | |
|---|---|---|
| Bank borrowings | (40.7) | – |
| (40.7) | – |
| 2021 £’m | 2020 £’m | |
|---|---|---|
| At 1 January | 0.3 | 0.3 |
| Income statement credit/(charge) | 0.1 | (0.1) |
| Tax credit relating to components of other comprehensive income | 0.2 | 0.1 |
| At 31 December | 0.6 | 0.3 |
The deferred tax asset relates to share-based payments. There are no unused tax losses or unused tax credits.
The share capital of the Company is as set out in note 22 of the Group financial statements.
At 31 December 2021, the Company had future lease commitments on land and buildings under non-cancellable operating leases. These commitments were met on the Company’s behalf by Tyman Management Limited, a subsidiary. The carrying value of the ROU asset held by Tyman Management Limited was £0.5 million (2020: £0.7 million) and of lease liabilities was £0.5 million (2020: £0.7 million). See further details regarding the nature of lease commitments in note 12 of the Group financial statements.
The dividends of the Company are set out in note 24 of the Group financial statements.
The Company has taken advantage of the exemption in accordance with FRS 101, as a wholly owned subsidiary, not to disclose details of related party transactions in accordance with IAS 24 Related Party Disclosures required by this standard.
Tyman plc202 Annual Report and Accounts 2021
Financial Statements
STRATEGIC REPORT
FINANCIAL STATEMENTS
Alternative Performance Measure reconciliations
APMs used in key performance indicators
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 to 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
| 2021 £’m | 2020 £’m | |
|---|---|---|
| Reported revenue | 635.7 | 572.8 |
| Revenue from business disposed of in prior year | – | (2.8) |
| Effect of exchange rates | – | (28.5) |
| Like for like revenue | 635.7 | 541.5 |
| Adjusted operating profit | 90.0 | 80.3 |
| Operating profit from business disposed of in prior year | – | 2.2 |
| Effect of exchange rates | – | (4.6) |
| Like for like adjusted operating profit | 90.0 | 77.9 |
Adjusted operating profit and adjusted operating margin
Definition
Operating profit before amortisation of acquired intangible assets, impairment of goodwill and acquired intangible assets, and exceptional 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. Exceptional items are excluded from this measure to provide an improved understanding of the elements of financial performance during the year to facilitate comparison with prior periods and to assess the underlying trends in financial performance. Exceptional items include one-off redundancy and restructuring costs, transaction costs and integration costs associated with merger and acquisition activity, as well as credits relating to profit on disposal of businesses and property provision releases. 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
A reconciliation of adjusted operating profit is included on the face of the income statement on page 149.
| 2021 £’m | 2020 £’m | |
|---|---|---|
| Adjusted operating profit | 90.0 | 80.3 |
| Revenue | 635.7 | 572.8 |
| Adjusted operating margin (%) | 14.2% | 14.0% |
Leverage
Definition
Adjusted net debt translated at the average exchange rate for the year divided by adjusted EBITDA as defined in the lending agreement.
Purpose
This measure is used to evaluate the ability of the Group to generate sufficient cash flows to cover its contractual debt servicing obligations.
Annual Report and Accounts 2021 Tyman plc 203
Reconciliation/calculation
| 2021 £’m | 2020 £’m | |
|---|---|---|
| Adjusted net debt (at average exchange rate) | 91.0 | 105.3 |
| Adjusted EBITDA | 102.6 | 95.2 |
| Leverage (x) | 0.9x | 1.1x |
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
| 2021 £’m | 2020 £’m | |
|---|---|---|
| Adjusted operating profit | 90.0 | 80.3 |
| Average capital employed | 619.4 | 653.8 |
| ROCE (%) | 14.5% | 12.3% |
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 adjusted EPS for our shareholders.
Reconciliation/calculation
A reconciliation is provided in note 9 on page 166.
Dividend cover
Definition
Adjusted earnings per share divided by the total dividend per share for the financial year.
Purpose
This measure provides an indication of the dividend paid relative to adjusted earnings for comparison with the Group’s dividend policy.
Reconciliation/calculation
| 2021 | 2020 | |
|---|---|---|
| Basic adjusted earnings per share (p) | 32.1 | 27.2 |
| Total dividend per share (p) | 12.9 | 4.0 |
| Dividend cover (x) | 2.5x | 6.8x |
Alternative Performance Measure reconciliations continued
Tyman plc204 Annual Report and Accounts 2021
Financial Statements
STRATEGIC REPORT
FINANCIAL STATEMENTS
Operating cash conversion and operational cash flow
Definition
Operational Cash Flow: Net cash generated from operations before income tax paid, exceptional 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.
Operating Cash Conversion: Operational 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
| 2021 £’m | 2020 £’m | |
|---|---|---|
| Net cash generated from operations | 57.0 | 95.9 |
| Income tax paid | 17.7 | 13.8 |
| Exceptional costs | 0.2 | 4.2 |
| Pension contributions | 2.8 | 1.7 |
| Proceeds on disposal of PPE | 0.8 | – |
| Payments to acquire PPE and intangible assets | (20.6) | (10.5) |
| Operational cash flow | 57.9 | 105.1 |
| Operational cash flow | 57.9 | 105.1 |
| Adjusted operating profit | 90.0 | 80.3 |
| Operating cash conversion (%) | 64.3% | 130.9% |
Other APMs
EBITDA and adjusted EBITDA
Definition
EBITDA: Adjusted operating profit with depreciation, amortisation of computer software, and share-based payments expenses added back.## Alternative Performance Measure reconciliations
Adjusted EBITDA
Definition: 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
| 2021 £’m | 2020 £’m | |
|---|---|---|
| Adjusted operating profit | 90.0 | 80.3 |
| Depreciation of property, plant and equipment | 11.5 | 12.7 |
| Amortisation of computer software | 1.3 | 1.5 |
| IFRS 16 | (1.2) | (1.2) |
| Share-based payments expense | 1.0 | 0.1 |
| EBITDA of businesses disposed of during the year | – | 1.8 |
| Adjusted EBITDA | 102.6 | 95.2 |
Annual Report and Accounts 2021 Tyman plc 205
Alternative Performance Measure reconciliations continued
Adjustment to net cash generated from operations
Definition: The add back of net finance costs, depreciation, amortisation of intangible assets, impairment of PPE, profit on disposal of PPE, write-off of inventory fair value adjustments, pension service costs and expected selling, general and administrative costs, non-cash provision movements, profit on disposal of business and share-based payments.
Purpose: These are non-cash, non-operating items which are added back to profit to derive cash generated from operations in the cash flow statement.
Reconciliation/calculation: See reconciliation in note 25 on page 193.
Constant currency or CC
Definition: Comparison with the comparative period translated at the current year’s average or closing exchange rate as applicable.
Purpose: This measure is used by management to measure performance of the business removing the effect of changes in foreign exchange rates which are outside of the control of management.
Reconciliation/calculation: It is not practicable to present a reconciliation of all CC measures used. A table showing the current and comparative period average and closing exchange rates is presented on page 213. A sensitivity analysis showing the impact of fluctuations in exchange rates is also presented on page 44.
Free cash flow
Definition: Operational cash flow after deducting pension contributions, income tax paid, net interest paid and exceptional cash costs settled in the year.
Purpose: This measure is used to evaluate the cash flow generated by the business operations after expenditure incurred on maintaining capital assets.
Reconciliation/calculation: See page 42 for reconciliation between operational cash flow and free cash flow.
Interest cover
Definition: 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
| 2021 £’m | 2020 £’m | |
|---|---|---|
| EBITDA | 102.6 | 93.4 |
| Net interest | 5.9 | 8.9 |
| Interest cover (x) | 17.6x | 10.5x |
Tyman plc 206 Annual Report and Accounts 2021
STRATEGIC REPORT FINANCIAL STATEMENTS
Adjusted administrative expenses
Definition: Administrative expenses before exceptional items, amortisation of acquired intangible assets, impairment of acquired intangible assets and impairment of acquired goodwill.
Purpose: This measure is used to evaluate the adjusted administrative expenses of the business excluding the effect of exceptional items and amortisation of acquired intangible assets which is a significant charge that is not directly affected by trading.
Reconciliation/calculation
| 2021 £’m | 2020 £’m | |
|---|---|---|
| Administrative expenses | (138.6) | (132.4) |
| Exceptional items | (0.6) | 1.8 |
| Amortisation of acquired intangible assets | 17.5 | 18.8 |
| Adjusted administrative expenses | (121.7) | (111.8) |
Adjusted effective tax rate
Definition: Adjusted tax charge divided by adjusted profit before tax.
Purpose: This measure is used to evaluate the tax charge relative to profit arising on the adjusted trading activity of the Group.
Reconciliation/calculation
| 2021 £’m | 2020 £’m | |
|---|---|---|
| Adjusted tax charge | (18.8) | (15.3) |
| Adjusted profit before tax | 81.5 | 68.4 |
| Adjusted effective tax rate (%) | (23.1%) | (22.4%) |
Adjusted gross debt
Definition: Interest-bearing loans and borrowings, with unamortised borrowing costs and lease liabilities 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
| 2021 £’m | 2020 £’m | |
|---|---|---|
| Borrowings (including lease liabilities) | (203.9) | (222.9) |
| Lease liabilities | 54.8 | 53.8 |
| Unamortised borrowing costs | (0.7) | (1.2) |
| Adjusted gross debt | (149.8) | (170.3) |
Annual Report and Accounts 2021 Tyman plc 207
Alternative Performance Measure reconciliations continued
Adjusted net debt
Definition: Interest-bearing loans and borrowings, net of cash and cash equivalents, plus unamortised borrowing costs and lease liabilities added back.
Purpose: This gives a measure of the gross amount owed to lenders, without the effect of unamortised borrowing costs.
Reconciliation/calculation
| 2021 £’m | 2020 £’m | |
|---|---|---|
| Borrowings (including lease liabilities) | (203.9) | (222.9) |
| Cash | 58.1 | 69.7 |
| Lease liabilities | 54.8 | 53.8 |
| Unamortised borrowing costs | (0.7) | (1.2) |
| Adjusted net debt | (91.7) | (100.6) |
Adjusted profit before tax and adjusted profit after tax
Definition: Profit before amortisation of acquired intangible assets, impairment of goodwill and acquired intangible assets, exceptional items, unwinding of discount on provisions, gains and losses on the fair value of derivative financial instruments, amortisation of borrowing costs, accelerated 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, accelerated amortisation of borrowing costs and the associated tax effect are excluded. These items are excluded as they are of a non-trading nature.
Reconciliation/calculation
| 2021 £’m | 2020 £’m | |
|---|---|---|
| Profit before tax | 64.0 | 47.6 |
| Exceptional items | (0.6) | 1.8 |
| Loss/(gain) on revaluation of fair value hedge | 0.1 | (0.3) |
| Amortisation of borrowing costs | 0.5 | 0.5 |
| Amortisation of acquired intangible assets | 17.5 | 18.8 |
| Adjusted profit before taxation | 81.5 | 68.4 |
| Income tax charge | (14.4) | (10.4) |
| Adjusted tax effect | (4.4) | (4.9) |
| Adjusted profit after taxation | 62.7 | 53.1 |
Adjusted tax charge
Definition: Tax charge adjusted for the tax effect of amortisation of acquired intangible assets, impairment of goodwill and acquired intangible assets, exceptional items, unwinding of discount on provisions, gains and losses on the fair value of derivative financial instruments, amortisation of borrowing costs, accelerated amortisation of borrowing costs.
Purpose: This measure is used to evaluate the tax charge arising on the adjusted trading activity of the Group.
Reconciliation/calculation
| 2021 £’m | 2020 £’m | |
|---|---|---|
| Tax charge | (14.4) | (10.4) |
| Tax effect of adjusted profit adjustments | (4.4) | (4.9) |
| Adjusted tax charge | (18.8) | (15.3) |
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FINANCIAL STATEMENTS STRATEGIC REPORT FINANCIAL STATEMENTS
| Disclosure | GRI code | Page |
|---|---|---|
| 1. The Organisation and Reporting Practices | ||
| Organisational details | 2–1 | 8 |
| Entities included in the organisation’s sustainability reporting | 2–2 | 194 |
| Reporting period, frequency and contact point | 2–3 | – |
| Restatements of information | 2–4 | 55,58,65 |
| External assurance | 2–5 | – |
| 2. Activities and Workers | ||
| Activities, value chain and other business relationships | 2–6 | 8–19 |
| Employees | 2–7 | 62 |
| Workers who are not employees | 2–8 | 62 |
| 3. Governance | ||
| Governance structure and composition | 2–9 | 92–100 |
| Nomination and selection of the highest corporate body | 2–10 | 102–103 |
| Chair of the highest corporate body | 2–11 | 92–100 |
| Role of the highest governance body in overseeing the management of impacts | 2–12 | 69,97–98 |
| Delegation of responsibility for managing impacts | 2–13 | 49,69,97–98 |
| Role of the highest governance body in sustainability reporting | 2–14 | 69 |
| Conflicts of interest | 2–15 | 92–93,96 |
| Communication of critical concerns | 2–16 | 60,96–97 |
| Collective knowledge of the highest governance body | 2–17 | 98–99 |
| Evaluation of the performance of the highest governance body | 2–18 | 98–99 |
| Remuneration policies | 2–19 | 114–123,129,135 |
| Process to determine remuneration | 2–20 | 114–116 |
| Annual total compensation ratio | 2–21 | 134 |
| 4. Strategy, policies and practices | ||
| Statement of sustainable development policy | 2–22 | 46 |
| Policy commitments | 2–23 | 46, https://www.tymanplc.com/sustainability |
| Embedding policy commitments | 2–24 | 20–23,46–77 |
| Processes to remediate negative impacts | 2–25 | 46–77 |
| Mechanisms for seeking advice and raising concerns | 2–26 | 61 |
| Compliance with laws and regulations | 2–27 | 49,54,90 |
| Membership associations | 2–28 | 67 |
| 5. Stakeholder engagement | ||
| Approach to stakeholder engagement | 2–29 | 81–83 |
| Collective bargaining agreements | 2–30 | Not disclosed |
This report has been prepared with reference to the GRI Standards: General Disclosures 2021 (GRI 2)
GRI Standard Content Index
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Tyman material topics
2021 (GRI 3)
| Disclosure of material topics | GRI code | Page |
|---|---|---|
| Process to determine material impacts | 3–1 | https://www.tymanplc.com/sustainability/materiality-exercise |
| List of material topics | 3–2 | https://www.tymanplc.com/sustainability/materiality-exercise |
| Management of material topics | 3–3 | 46-77 |
Circular economy
GRI–301 Materials 2016 | 301 | 56,66 |
Packaging and wate | GRI–301 Materials 2016 | 301 | 55-57,66 |
| GRI–306 Effluents and waste 2016 | 306 | 58 |
| GRI–306 Waste 2020 | 306 | 58 |
Material sourcing
GRI–408 Child labour 2016 | 408 | 67, https://www.tymanplc.com/sustainability/sustainable-culture/ethics |
GRI–409 Forced or compulsory labour 409 | 409 | 67, https://www.tymanplc.com/sustainability/sustainable-culture/ethics |
GRI–308 Supplier environmental assessment 308 | 308 | - |
GRI–414 Supplier social assessment 414 | 414 | - |
GRI–301 Materials 2016 | 301 | - |
GRI–407 Freedom of association | - | - |and collective bargaining 407 Not disclosed Product innovation GRI–201 Economic performance 201 65 GRI–416 Customer health and safety 416 64-67 GRI–301 Materials 2016 201 66-67 GRI–305 Emissions 2016 305 64-65 GRI–413 Local communities 2016 413 65 Employee health, safety and wellbeing Occupational health and safety 2018 403 48-52 Climate change and greenhouse gas emissions GRI–302 Energy 2016 302 54-55 GRI–305 Emissions 2016 305 55 Energy management GRI–302 Energy 2016 302 54 Water stewardship GRI–303 Water 2016 303 58 Ethical business practices GRI–205 Anti–corruption 205 59-60, https://www.tymanplc.com/ sustainability/sustainable-culture/ethics GRI–206 Anti–competitive Behaviour 206 59-60, https://www.tymanplc.com/ sustainability/sustainable-culture/ethics GRI–415 Public policy 415 139 Diversity and inclusion GRI–405 Diversity and equal opportunity 2016 405 62 GRI–406 Non–discrimination 406 62 Local communities GRI–413 Local communities 2016 413 63 Training and development GRI–404 Training and education 404 61
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AGM Annual general meeting
APM Alternative performance measure
ARGE European Federation of Associations of Locks & Builders Hardware Manufacturers
BPR Tyman internal business performance reviews
Bps Basis points
BREEAM Building research establishment environmental assessment method (building sustainability certification scheme developed in the UK)
BSI Kitemark UK product and service quality trade mark, owned and operated by the British Standards Institution
C2C Cradle to Cradle product certification scheme for safer, more sustainable products
CAGR Compound annual growth rate
CGU Cash generating unit
CHIC Concealed hardware innovative components
CIPS Chartered Institute of Purchasing and Supply
CO 2 Carbon dioxide
DEFRA UK Department of Food and Environmental Affairs
DSBP Deferred share bonus plan
EAP Employee Assistance Programme (counselling and support services for employee wellbeing)
EB Trust (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
ESG Environmental, social and governance
ESPP Employee stock service plan
ExCo Executive Committee
FCA Financial Conduct Authority
FTE Full time equivalent (headcount)
FVPL Fair value through profit or loss
GAAP Generally accepted accounting principles
GCC Gulf Cooperation Council
GDPR General data protection regulation
GHG Greenhouse gas (emissions) arising from direct operations and/or indirectly via the value chain
GRI Global Reporting Initiative – framework providing a common language and accepted definitions used in sustainability reporting
HSS Health, safety and sustainability
IASB International Accounting Standards Board
IEA International Energy Agency
IFRIC International Financial Reporting Interpretations Committee
IFRS International Financial Reporting Standards
IIA Code of Practice The Chartered Institute of Internal Auditors Code of Practice
IoT Internet of things
IPCC Intergovernmental panel on climate change
ISO 14001 International Organization for Standardization standard for environmental management systems
ISO 9000 International Organization for Standardization standard for quality management systems
KPI Key performance indicator
LEED Leadership in energy and environmental design standards (building sustainability certification scheme developed in the US)
LFL Like-for-like
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211
LIBOR London inter-bank offered rate
LIRA Leading Indicator of Replacement Activity
LOTO Lock out, tag out safety procedure to ensure machines are adequately locked
LTI Lost time incident
LTIFR Lost time incident frequency rate – a core safety metric expressing the number of lost time incidents as a ratio per one million hours worked
LTIP Long-term incentive plan
LTM Last twelve months
M&A Mergers and acquisitions
NED Non-executive director
NGFS Network for greening the financial system
NPD New product development
OCR Organisation Capability Review
OECD Organisation for Economic Co-operation and Development
OEM Original equipment manufacturer
PMI Purchasing Managers’ Index
PPE Property, plant and equipment
ROAI Return on acquisition investment
RCF Revolving credit facility
RMI Renovation, maintenance and improvement
ROCE Return on capital employed
ROU Right-of-use
SASB Sustainability Accounting Standards Board
SAYE Save as you earn
SBT Science Based Target
SBTi Science Based Target initiative
SEA UK’s Surface Engineering Association
SECR UK Government’s streamlined energy and carbon reporting
SKU Stock keeping unit
Smartware Integrated and mechanical and electronic security solutions
SONIA Sterling Over Night Index Average
STEM Science, Technology, Engineering and Mathematics
STIP Short term incentive plan
TCFD Taskforce on climate-related financial disclosures
TCO 2 e Tonnes of CO 2 equivalent (a standard measure for carbon emissions)
TFR Trattamento di fine Rapporto (Italian pension scheme)
TRIR Total recordable incident rate (a core safety metric including lost time and other recordable incidents involving restricted duty or medical intervention beyond first aid, expressed as a ratio per one million hours worked)
TSR Total shareholder return
UKAS UK Accreditation Service
UN SDG United Nations Sustainable Development Goals
US EPA’s EEIO US Environmental Protection Agency’s Environmentally-Extended Input-Output
USPP US Private Placement
VIU Value in use
WELL Well building standard in place to enhance human health and wellbeing
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Percentage numbers have been calculated using rounded figures from the financial statements, which may lead to small differences in some figures and percentages quoted.
The following foreign exchange rates have been used in the financial information to translate amounts into sterling:
| Closing rates | 2021 | 2020 |
|---|---|---|
| US dollar | 1.3512 | 1.3650 |
| Euro | 1.1912 | 1.1129 |
| Australian dollar | 1.8607 | 1.7708 |
| Canadian dollar | 1.7159 | 1.7393 |
| Brazilian real | 7.5285 | 7.0898 |
| Average rates | 2021 | 2020 |
|---|---|---|
| US dollar | 1.3757 | 1.2836 |
| Euro | 1.1631 | 1.1251 |
| Australian dollar | 1.8321 | 1.8626 |
| Canadian dollar | 1.7244 | 1.7200 |
| Brazilian real | 7.4216 | 6.6115 |
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| Statutory measures | 2021 £’m | 2020 £’m | 2019 £’m | 2018 £’m | 2017 £’m |
|---|---|---|---|---|---|
| Revenue | 635.7 | 572.8 | 613.7 | 591.5 | 522.7 |
| Net finance costs | (9.1) | (12.1) | (15.7) | (11.6) | (9.4) |
| Profit before taxation | 64.0 | 47.6 | 24.8 | 38.9 | 34.5 |
| Taxation | (14.4) | (10.4) | (7.1) | (12.5) | (3.3) |
| Profit after taxation | 49.6 | 37.2 | 17.7 | 26.3 | 31.2 |
| Total number of shares in issue (’000) | 196,762 | 196,762 | 196,762 | 196,762 | 178,582 |
| Dividends per share declared (p) | 12.9p | 4.0p | 3.9p | 2 | 12.0p |
| Average monthly number of employees | 4,295 | 4,035 | 4,146 | 4,303 | 3,904 |
1 See Alternative performance measures on pages 203 to 208.
2 The 2019 final dividend of 8.35p was withdrawn due to COVID-19.
| APMs and KPIs | 2021 | 2020 | 2019 | 2018 | 2017 |
|---|---|---|---|---|---|
| LFL revenue growth (%)¹ | 17.4% | (6.0)% | (1.8)% | 2.7% | 1.7% |
| LFL adjusted operating profit growth (%)¹ | 15.6% | (5.5)% | (4.8)% | (4.8)% | (1.5)% |
| Adjusted operating profit (£’m)¹ | 90.0 | 80.3 | 85.4 | 83.6 | 76.8 |
| Adjusted operating margin (%)¹ | 14.2% | 14.0% | 13.9% | 14.1% | 14.7% |
| Adjusted profit before taxation (£’m)¹ | 81.5 | 68.4 | 71.0 | 72.7 | 68.3 |
| Adjusted net debt (£’m)¹ | (91.7) | (100.6) | (164.5) | (210.7) | (163.7) |
| Adjusted basic earnings per share (p)¹ | 32.1p | 27.2p | 27.5p | 27.7p | 26.9p |
| Return on capital employed (%)¹ | 14.5% | 12.3% | 12.0% | 13.4% | 13.6% |
| Operating cash conversion (%)¹ | 64.3% | 130.9% | 132.2% | 92.4% | 85.6% |
| Leverage (x)¹ | 0.9x | 1.1× | 1.7× | 2.0× | 1.8× |
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Tyman plc
29 Queen Anne’s Gate
London SW1H 9BU
[email protected]
www.tymanplc.com
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