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Market capitalisation
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Research: Industrials
Tyman
Written by
Tyman |
FY16 starts in line with expectations |
AGM update |
Construction & materials |
13 May 2016 |
Share price performance
Business description
Next events
Analysts
Tyman is a research client of Edison Investment Research Limited |
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An AGM update indicated that year to date trading has been in line with management expectations. Regional trends and outlooks also appear to be consistent with those outlined at the time of the FY15 results in March and estimates are unchanged. The rating is consistent with a mid-cycle position, but we believe that Tyman offers an extended earnings growth profile derived from internal initiatives that are underway.
Year end |
Revenue (£m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/14 |
350.9 |
41.6 |
18.4 |
8.0 |
14.9 |
2.9 |
12/15 |
353.4 |
44.9 |
19.2 |
8.8 |
14.3 |
3.2 |
12/16e |
415.5 |
51.1 |
21.1 |
9.3 |
13.0 |
3.4 |
12/17e |
441.5 |
56.2 |
23.3 |
10.3 |
11.8 |
3.8 |
Note: *PBT and EPS (fully diluted) are normalised, as defined by Tyman, excluding intangible amortisation and exceptional items.
Positive start to FY16
Management reports a positive start to FY16 with group revenue growth of c 14% (c 5% on a l-f-l basis) for the first four months of the year. Around the regions, this comprises encouraging trading in North America, driven by the US, and more modest underlying progress in Europe and the UK. The latter two regions will also benefit from acquisitions (ie Schlegel/Giesse and ERA/Response Electronics) made earlier in the year. Sterling weakness against the US dollar and euro suggests a favourable c 6% translation movement in the year to date compared to H115, although weaker sterling may also be putting upward pressure on ERA input costs.
H2 bias, estimates unchanged
AmesburyTruth (c 60% of group revenue) has reported a c 40:60 H1:H2 EBIT split in US$ terms in each of the last two years. This seasonal bias may be magnified by the timing of project benefits coming through in due course, although this effect will not affect FY16. ERA should also have an H2 bias, but this was not apparent in FY15 due to softer trading conditions in UK in the second half. Giesse (acquired at the beginning of March) will also increase the group’s H2 weighting in the current year, possibly including some synergy gains from the initial integration phase. The US footprint transformation and integration of Giesse in Europe are both understood to be progressing as planned, although no further details were given. As the end of H1 approaches, market conditions in North America are described as robust, the UK remains subdued and Europe is improving slowly. Taking all of these factors into account, we see no reason to change estimates at this stage.
Valuation: Extended earnings growth profile expected
Tyman’s share price is at a similar level to our last published note at the end of April. Consequently, our valuation metrics are little changed, with an FY16e P/E of 13.0x falling to 11.8x one year out, while the corresponding EV/EBITDA multiples are 8.9x and 8.0x respectively. Flagged gains from the US and UK footprint reorganisations largely come later and barely affect these multiples, so group earnings growth is expected to continue beyond this year and next.
Exhibit 1: Financial summary
£'m |
2010 |
2011 |
2012 |
2013 |
2014 |
2015 |
2016e |
2017e |
2018e |
||
December |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
||
PROFIT & LOSS |
|
|
Group |
Continuing |
Continuing |
|
|
|
|
|
|
Revenue |
|
|
266.2 |
216.3 |
228.8 |
298.1 |
350.9 |
353.4 |
415.5 |
441.5 |
452.3 |
Cost of Sales |
|
|
(173.4) |
(145.2) |
(154.0) |
(198.8) |
(236.1) |
(234.0) |
(269.6) |
(290.6) |
(297.6) |
Gross Profit |
|
|
92.8 |
71.1 |
74.7 |
99.3 |
114.8 |
119.4 |
145.9 |
151.0 |
154.7 |
EBITDA |
|
|
40.2 |
27.7 |
28.5 |
39.4 |
54.6 |
60.4 |
70.0 |
76.4 |
80.6 |
Operating Profit (Edison) |
|
|
33.7 |
22.4 |
23.4 |
33.0 |
46.9 |
52.4 |
60.0 |
65.6 |
69.3 |
Net Interest |
|
|
(8.9) |
(5.9) |
(3.3) |
(3.4) |
(4.5) |
(6.0) |
(7.5) |
(8.0) |
(7.8) |
Other Finance |
|
|
(2.9) |
(3.6) |
(0.9) |
0.2 |
(2.2) |
(0.6) |
(0.5) |
(0.5) |
(0.5) |
Share Based Payments |
|
|
(0.1) |
(0.2) |
(0.5) |
(0.7) |
(0.9) |
(1.0) |
(1.0) |
(1.0) |
(1.0) |
Intangible Amortisation |
|
|
(11.7) |
(10.6) |
(10.8) |
(16.6) |
(17.8) |
(19.6) |
(19.6) |
(19.6) |
(19.6) |
Exceptionals |
|
|
(0.4) |
0.7 |
(33.4) |
(11.4) |
(9.3) |
(9.4) |
(10.1) |
(3.3) |
(3.3) |
Other |
|
|
(0.3) |
(0.1) |
(0.4) |
(0.4) |
(0.3) |
(0.4) |
(0.4) |
(0.4) |
(0.4) |
Profit Before Tax (Edison norm) |
|
21.9 |
12.7 |
18.7 |
29.2 |
39.3 |
44.9 |
51.0 |
56.1 |
60.1 |
|
Profit Before Tax (Company norm) |
|
24.8 |
17.4 |
21.3 |
28.6 |
41.6 |
44.9 |
51.1 |
56.2 |
60.2 |
|
Profit Before Tax (FRS 3) |
|
|
9.5 |
2.6 |
(25.8) |
0.8 |
11.9 |
15.6 |
21.0 |
32.9 |
36.9 |
Tax |
|
|
(2.5) |
6.4 |
3.7 |
0.2 |
(2.6) |
(7.9) |
(9.4) |
(11.0) |
(12.2) |
Profit After Tax (norm) |
|
|
19.4 |
19.1 |
22.4 |
29.4 |
36.8 |
37.0 |
41.6 |
45.2 |
47.9 |
Profit After Tax (FRS 3) |
|
|
7.0 |
9.1 |
(22.1) |
1.0 |
9.3 |
7.7 |
11.6 |
22.0 |
24.8 |
|
|
|
|
|
|
|
|
|
|
|
|
Average Number of Shares Outstanding (m) |
|
129.8 |
129.7 |
129.7 |
152.8 |
167.8 |
168.2 |
168.5 |
168.5 |
168.5 |
|
EPS - Edison normalised (p) FD |
|
|
10.7 |
6.7 |
9.6 |
13.9 |
17.1 |
19.1 |
21.1 |
23.2 |
24.8 |
EPS - Company normalised (p) FD |
|
|
11.4 |
9.4 |
10.2 |
13.5 |
18.4 |
19.2 |
21.1 |
23.3 |
24.9 |
EPS - FRS 3 (p) |
|
|
5.3 |
6.8 |
(16.7) |
0.6 |
5.6 |
4.6 |
6.9 |
13.0 |
14.7 |
Dividend per share (p) |
|
|
2.0 |
3.4 |
4.5 |
6.0 |
8.0 |
8.8 |
9.3 |
10.3 |
11.0 |
|
|
|
|
|
|
|
|
|
|
|
|
Gross Margin (%) |
|
|
34.9 |
32.9 |
32.7 |
33.3 |
32.7 |
33.8 |
35.1 |
34.2 |
34.2 |
EBITDA Margin (%) |
|
|
15.1 |
12.8 |
12.5 |
13.2 |
15.6 |
17.1 |
16.9 |
17.3 |
17.8 |
Operating Margin (before GW and except.) (%) |
12.7 |
10.4 |
10.2 |
11.1 |
13.4 |
14.8 |
14.4 |
14.9 |
15.3 |
||
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE SHEET |
|
|
|
|
|
|
|
|
|||
Fixed Assets |
|
|
367.4 |
352.8 |
298.1 |
404.2 |
410.6 |
398.4 |
443.3 |
435.9 |
427.9 |
Intangible Assets |
|
|
328.2 |
312.7 |
258.7 |
354.4 |
355.7 |
340.5 |
360.5 |
343.9 |
327.2 |
Tangible Assets |
|
|
31.5 |
30.5 |
29.8 |
39.9 |
42.9 |
42.8 |
69.8 |
79.0 |
87.7 |
Investments |
|
|
7.7 |
9.6 |
9.5 |
9.8 |
12.1 |
15.0 |
12.9 |
12.9 |
12.9 |
Current Assets |
|
|
86.7 |
96.361 |
90.7 |
118.9 |
124.0 |
111.0 |
132.7 |
152.6 |
172.5 |
Stocks |
|
|
26.0 |
26.6 |
27.6 |
40.7 |
47.6 |
46.0 |
66.0 |
71.1 |
72.8 |
Debtors |
|
|
28.2 |
24.1 |
23.7 |
29.9 |
31.5 |
31.7 |
46.3 |
49.2 |
50.4 |
Cash |
|
|
27.7 |
20.4 |
35.9 |
43.6 |
39.3 |
30.0 |
17.1 |
29.0 |
45.9 |
Current Liabilities |
|
|
(51.8) |
(55.1) |
(44.2) |
(60.8) |
(52.3) |
(44.4) |
(59.7) |
(67.2) |
(73.1) |
Creditors |
|
|
(46.6) |
(42.2) |
(36.7) |
(54.0) |
(52.3) |
(44.4) |
(59.7) |
(67.2) |
(73.1) |
Short term borrowings |
|
|
(5.2) |
(12.9) |
(7.5) |
(6.8) |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
Long Term Liabilities |
|
|
(163.7) |
(144.8) |
(96.9) |
(161.7) |
(176.2) |
(156.7) |
(217.7) |
(216.8) |
(215.9) |
Long term borrowings |
|
|
(114.3) |
(100.2) |
(63.6) |
(115.5) |
(128.0) |
(111.6) |
(173.6) |
(173.6) |
(173.6) |
Other long term liabilities |
|
|
(49.4) |
(44.6) |
(33.3) |
(46.2) |
(48.2) |
(45.1) |
(44.2) |
(43.2) |
(42.3) |
Net Assets |
|
|
238.6 |
249.2 |
247.7 |
300.6 |
306.1 |
308.3 |
298.6 |
304.5 |
311.4 |
|
|
|
|
0.000 |
|
|
|
|
|
|
|
CASH FLOW |
|
|
|
|
|
|
|
||||
Operating Cash Flow |
|
|
38.6 |
32.6 |
23.6 |
38.9 |
40.1 |
48.9 |
51.7 |
68.4 |
76.1 |
Net Interest |
|
|
(9.3) |
(6.7) |
(4.2) |
(2.6) |
(4.6) |
(6.2) |
(7.5) |
(8.0) |
(7.8) |
Tax |
|
|
(2.3) |
(1.9) |
(4.9) |
(6.2) |
(6.3) |
(8.9) |
(7.9) |
(9.5) |
(10.7) |
Capex |
|
|
(3.5) |
(4.9) |
(6.8) |
(8.1) |
(10.2) |
(10.9) |
(29.9) |
(22.9) |
(22.9) |
Acquisitions/disposals |
|
|
0.0 |
(10.3) |
51.2 |
(131.2) |
(6.5) |
6.8 |
(62.0) |
0.0 |
0.0 |
Financing |
|
|
0.0 |
(0.3) |
(1.1) |
68.1 |
(4.3) |
(2.6) |
(4.0) |
0.0 |
0.0 |
Dividends |
|
|
0.0 |
(2.6) |
(5.8) |
(7.0) |
(10.9) |
(14.6) |
(15.2) |
(16.1) |
(17.9) |
Net Cash Flow |
|
|
23.5 |
6.0 |
51.9 |
(48.2) |
(2.8) |
12.5 |
(74.8) |
11.9 |
16.9 |
Opening net debt/(cash) |
|
|
111.0 |
91.7 |
92.7 |
35.2 |
78.7 |
88.7 |
81.6 |
156.4 |
144.5 |
HP finance leases initiated |
|
|
(0.0) |
(2.7) |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
Other |
|
|
(4.2) |
(4.4) |
5.6 |
4.7 |
(7.2) |
(5.4) |
0.0 |
0.0 |
0.0 |
Closing net debt/(cash) |
|
|
91.7 |
92.7 |
35.2 |
78.7 |
88.7 |
81.6 |
156.4 |
144.5 |
127.6 |
Source: Tyman accounts, Edison Investment Research
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