Released: 8 August 2024
TI Fluid Systems
plc
Half Year Results
2024
Strong execution amidst a
flat market
Adjusted EBIT margin up 40
basis points, 15% Adjusted EPS growth
Improved full year margin
outlook despite weaker market forecasts
TI Fluid Systems plc (TIFS), a
global industry leader in highly engineered automotive fluid
storage, carrying and delivery systems and thermal management
products and systems, announces its results for the six months
ended 30 June 2024 (the 'period').
€millions
Adjusted Measures*
|
H1 2024
|
H1
2023
|
Change
|
Constant currency change
|
Revenue
|
1,719.4
|
1,768.1
|
(2.8)%
|
(1.4)%
|
Adjusted EBIT
|
135.5
|
131.9
|
+2.7%
|
+4.8%
|
Adjusted EBIT Margin %
|
7.9
|
7.5
|
+40bps
|
|
Adjusted Net Income
|
70.6
|
62.5
|
+13.0%
|
|
Adjusted Basic Earnings per Share (€
cents)
|
13.9
|
12.1
|
+14.6%
|
|
Adjusted Free Cash Flow
|
(14.4)
|
2.3
|
|
|
|
|
|
|
|
Statutory Measures
|
H1 2024
|
H1
2023
|
Change
|
|
Revenue
|
1,719.4
|
1,768.1
|
(2.8)%
|
|
Operating Profit / EBIT
|
95.8
|
95.0
|
+0.8%
|
|
Profit for the period
|
40.2
|
33.3
|
+20.7%
|
|
Basic Earnings per Share (€
cents)
|
7.9
|
6.4
|
+22.5%
|
|
Dividend per Share (€
cents)
|
2.40
|
2.30
|
+4.3%
|
|
*Adjusted measures are non-IFRS,
reconciled in Note 3, defined in Note 18
H1 2024 financial performance
· Revenue declined 1.4% at constant currency in the
period
o EMEA revenue increased 4.4% including a circa 250 basis
points contribution from last year's acquisition of
Cascade
o Revenue in Asia Pacific reduced by 7.1% with lower revenue in
China in line with the reduction in Global OEM
production
o Americas revenue was 3.4% lower with a circa 480 basis points
headwind from the previously announced exit of an unprofitable
product line
· Continued Adjusted EBIT margin expansion, up 40 basis points,
driven by ongoing execution of our productivity and efficiency
initiatives as well as continuing commercial activities
· Adjusted Basic EPS 14.6% higher due to increased
profitability and a lower effective tax rate
· Adjusted Free Cash Flow reflects modest inventory build as a
result of recent production schedule volatility and timing of
payments. We remain on track for our full year cash conversion
target
· Adjusted ROCE of 25.4% (H1 2023:
21.7%), demonstrating our ability to
deploy capital effectively
· Interim dividend increased 4.3% to 2.40 € cents per
share
Progressing our strategy for sustainable and profitable
growth
· Bookings demonstrate the benefits of our propulsion agnostic
portfolio, with total bookings increasing 11% to €1.5 billion
including €0.6 billion of EV awards
· Continued progress in China including five new awards with
the largest Chinese OEM and 40 launches, half with local
OEMs
· Fifth and final e-Mobility Innovation Centre opened in North
America
· Further footprint optimisation, with two facilities closed
and others downsized to adapt to customer needs and support
progress towards our mid-term, double-digit Adjusted EBIT margin
target
· Capital allocation policy delivering: €12.0 million interim
dividend, 13.3 million shares acquired in the period for €22.5
million and net leverage of 1.7x Adjusted EBITDA (H1 2023:
1.8x)
Full year outlook - higher Adjusted EBIT margin expectation
despite weaker market forecasts
The productivity and efficiency
measures implemented in late 2023 and early 2024 are on track and
reaffirm our confidence in expanding our Adjusted EBIT margin. As a
result, we are increasing our full year Adjusted EBIT margin
expectation to above 7.6% notwithstanding a slight decline in
revenue at constant currency due to the recent softening of the
2024 industry outlook.
We continue to expect Adjusted
Free Cash Flow conversion of approximately 30% of Adjusted
EBITDA.
Comment from Hans Dieltjens,
CEO & President:
"Our first half performance
demonstrates strong operational execution, successful strategic
delivery and the resilience of our propulsion agnostic portfolio.
Through our productivity and efficiency measures, we have once
again improved our Adjusted EBIT margin, making progress towards
our mid-term double-digit target.
We have a strong pipeline of
productivity initiatives and are agile to respond to changing
market conditions. As a result, we have raised our full year
Adjusted EBIT margin expectation to above 7.6% in a market with a
slightly softer near-term outlook.
Bookings are up 11% year-on-year,
highlighting the advantages of a product portfolio catering to all
propulsions and the benefits of growing demand for hybrid vehicles.
I am confident that our market-leading positions and ability to
adapt to changing market conditions will continue to underpin the
execution of our Taking-the-Turn strategy and achievement of our
mid-term targets."
Results presentation
TI Fluid Systems plc will host a
webcast and audio conference for investors and analysts at 11.00 am
UK time on 8 August 2024.
Webcast Link:
https://webcast.openbriefing.com/tifs_h1/
Conference Call Dial-In
Details:
United Kingdom (local):
|
+44 20 3936 2999
|
United States (local):
|
+1 646 787 9445
|
All other locations:
|
Global Dial-In Numbers
|
Conference Code:
|
861950
|
Should you wish to pre-register
for the audio conference call, please use
this link to receive a unique PIN to
dial directly into the call.
The presentation will be available
at 11:00 am UK time from www.tifluidsystems.com. An audio recording
will be available on our website following the event.
Enquiries
TI Fluid Systems plc
|
Headland Consultancy
|
Kellie McAvoy
|
Matthew Denham
|
Investor Relations
|
Chloe Francklin
|
Tel: +44 7354 846374
|
Tel: +44 20 3805 4822
|
Chief Executive Officer's Review - operational execution
delivering further Adjusted EBIT margin expansion
Our performance in the first six
months of 2024 demonstrates strong operational execution and the
resilience of our propulsion agnostic portfolio. In a flat market
environment and with a continued mix shift towards local Chinese
OEMs, we improved Adjusted EBIT margin and took another important
step on the journey back to a double-digit margin. Adjusted EPS
increased by 14.6%, reflecting our financial discipline. Bookings
were up 11% to €1.5 billion, as we adapted to a changing market
environment with relatively higher combustion engine vehicle
opportunities. Our Taking-the-Turn strategy is on track.
Financial performance
Group revenue reflects a strong
performance in Europe, good underlying growth in the Americas
excluding a planned product line exit and continued mix effects in
China. Group revenue declined 1.4% at constant currency.
· EMEA
revenue increased 4.4%, well ahead of the market. Cascade,
acquired last year, contributed circa 250 basis points and is
performing well. The region benefited from growth in fuel tanks and
delivery systems, including on plug-in hybrid ("PHEV") platforms,
partially offset by lower volumes for thermal products for
EVs.
· Revenue in Asia Pacific reduced by 7.1% due to lower revenue
in China, partially offset by strength in Japan and India. In
China, we experienced continued mix effects with production
declining 13% for the global OEMs ("GOEMs") compared to 18% growth
for the local OEMs ("LOEMs").
· America's revenue was 3.4% lower as expected due to a circa
480 basis points headwind from the planned exit of an unprofitable
product line. Excluding this, the region grew well including in
fuel tanks and brake lines.
Adjusted EBIT margin increased to
7.9% (H1 2023: 7.5%) despite the headwinds of lower revenue and
labour inflation. Productivity contributed circa 150 basis points
to the Adjusted EBIT margin. This is testament to efforts of the
team to implement operational productivity initiatives whilst
continuing our commercial activities.
In addition, we converted a 2.7%
increase in Adjusted EBIT into 14.6% growth in Adjusted EPS through
disciplined financial execution across the P&L.
First half Adjusted Free Cash Flow
performance reflected some short-term timing differences, with a
€14.4 million outflow (H1 2023: €2.3 million inflow). These are
expected to reverse in the second half, and we are on track for
full year cash conversion of circa 30% of Adjusted EBITDA. Net
leverage of 1.7x was below the 1.8x reported for H1 2023. Our
capital allocation policy continues to deliver attractive returns
with a total cash outflow of €45.3 million on the 2023 final
dividend and share buyback.
Our industry
The automotive market is now in a
demand-driven cycle. Overall volumes remained at a healthy level,
with global light vehicle production ("GLVP") reducing marginally,
down 0.2% to 43.6 million units (H1 2023: 43.7 million).
The short-term volume outlook for
the industry has softened in recent weeks. Some markets also
experienced short-term destocking in June. S&P has lowered its
2024 GLVP outlook and now expects a 2.0% year on year
reduction[1], with lower
volumes in most regions as OEMs increase their focus on inventory
management.
The key feature of our industry
today is rising uncertainty as to the shape and speed of the EV
transition. BEV growth has slowed, while forecast demand for
hybrids has increased. The latest industry forecasts expect 14%
growth in BEV production volumes in 2024[2], which compares with 38% 12 months
ago[3]. Alongside
this, there are signs that HEVs and PHEVs may play a larger role in
the transition than previously anticipated, with many OEMs
announcing new hybrid models and some moving towards flexible
architectures utilising all powertrains. Industry forecasts also
indicate increasing demand for range extender BEVs which utilise a
small combustion engine for battery charging as well as a slower
pace of near-term decline in ICE production volumes.
Looking through these short-term
fluctuations, the mid- to longer-term outlook remains positive,
with GLVP expected to grow at circa 1-2% on average.
On track with our strategy for long-term, profitable
growth
Our Taking-the-Turn strategy is
designed to capitalise on the opportunities of electrification and
maximise the strengths of our conventional portfolio.
· Revenue growth: 2026 target of €3.8-4.2 billion; 2030 target
of >€4.5 billion.
· Return to double-digit Adjusted EBIT margins in the
mid-term.
· Attractive shareholder value creation: targeting Adjusted
Free Cash Flow Conversion of 30% and leverage of 1.5x to underpin
returns, including a progressive dividend.
· A
more sustainable business: 2030 targets for a 50% reduction in
Scope 1 & 2 carbon emissions, and a 30% reduction in Scope 3 as
compared with a 2021 baseline.
Sustainable, long-term revenue growth
Bookings underpin our future
growth and in H1 2024 total bookings increased 11% to €1.5 billion
(2023: €1.4 billion). These include €0.6 billion of EV awards (H1
2023: €0.9 billion). Additional bookings secured with the largest
Chinese OEM represent a significant achievement and demonstrate
strategic progress in China.
We completed launches across a
broad mix of product lines, customers and powertrains in all
regions which will drive future growth.
Our e-Mobility Innovation Centres
("eMICs") bring critical design, engineering and testing
capabilities under one roof to drive innovation and enable more
effective collaboration with customers. Towards the end of the
period, we opened our fifth and final eMIC in the US.
In China, we continued to enhance
our position with the LOEMs, leveraging our long history of
operating in China and strong market positions with GOEMs. Over
half of the 40 launches in the period were with LOEMs. We also made
further progress with the largest LOEM, with five additional awards
for brake lines and tanks for BEV and PHEV platforms. This progress
has yet to be fully reflected in revenue, but we are confident that
bookings and launches are the foundations for future
growth.
Recent market forecasts have
reduced the expected pace of decline of ICE vehicle production. In
addition, we see customers shifting to flexible architectures
utilising all powertrains. TI is ideally positioned to capitalise
on these opportunities to maximise our conventional products for
ICE. During the period, we benefited from good growth in tanks for
ICE and hybrid vehicles, and over half our bookings related to ICE
platforms as customers extended existing and launched new ICE
programmes.
Returning to double-digit Adjusted EBIT
margins
The Group's 40 basis points
Adjusted EBIT margin expansion was primarily driven by self-help
initiatives, which more than compensated for lower volumes and
labour inflation.
Productivity and efficiency have
always been part of the Group's DNA, and we entered 2024 with a
clear focus on productivity and many actions underway. Initiatives
implemented in 2023 also contributed positively. We continued to
optimise our footprint, closing two facilities and downsizing other
locations. Our best cost locations in Mexico and Morocco are
running at increasing levels of efficiency, fixed cost savings from
regional synergies and headcount reduction are being realised and
we are seeing increasing benefits from our purchasing programme. We
invested €14.1 million (H1 2023: €6.8 million) in restructuring,
largely related to headcount and footprint optimisation.
Capital allocation delivering returns for
shareholders
During the first half of 2024, we
returned €22.8 million in respect of the 2023 final dividend and
spent €22.5 million on buying back shares. The €40 million share
buyback programme announced in August last year is now around three
quarters complete. In-line with our progressive dividend policy,
the Board has approved a 2024 interim dividend of 2.40 € cents per
share, which represents a 4.3% increase on a per share basis over
the interim dividend of 2.30 € cents per share declared on 8 August
2023.
A
more sustainable business
Sustainability starts with our
products and a focus on new, cleaner technologies to support
customers in producing EVs. Our revenue mix remains broadly in-line
with the industry. We continue to focus on improving our own
environmental footprint and made good progress with initiatives
that will increase our energy efficiency in the period. Development
of our life cycle analysis and mapping of product carbon footprint
in the period will also help us to define Scope 3 carbon emission
reduction actions. We remain on track with our carbon
reduction targets.
Continuous improvement of health
& safety is another focus area. Having already rolled out
our ISO 45001 Occupational Health & Safety Management System to
manufacturing sites, we are now undertaking the same process for
our eMICs, test centres and selected warehouses.
Summary and outlook
Our first half performance
demonstrates TI's fundamental strengths. Our propulsion agnostic
portfolio and geographic and customer diversification underpin our
resilience. Our ability to deliver further margin expansion despite
volume and labour inflation headwinds reaffirms our confidence in
returning to a double-digit Adjusted EBIT margin in the
mid-term.
The productivity and efficiency
measures implemented in late 2023 and early 2024 are on track and
reaffirm our confidence in expanding our Adjusted EBIT margin. As a
result, we are increasing our full year Adjusted EBIT margin
expectation to above 7.6% notwithstanding a slight decline in
revenue at constant currency due to the recent softening of the
2024 industry outlook.
We continue to expect Adjusted
Free Cash Flow conversion of approximately 30% of Adjusted
EBITDA.
Beyond, 2024, our market-leading
positions and ability to adapt to changing market conditions will
continue to support the execution of our Taking-the-Turn
strategy.
Chief Financial Officer's Review
Our first half financial
performance was strong despite modestly lower industry volumes,
with our Adjusted EBIT margin expanding to 7.9%. Our capital
allocation policy is delivering improved returns for shareholders
and a 4.3% increase in the interim dividend to €2.40 cents
translates into a cash return of €12.0 million. We spent a further
€22.5 million to repurchase 13.3 million shares in the period.
Adjusted return on capital employed increased to 25.4%,
demonstrating our discipline in deploying capital to create
value.
Key financial highlights
|
Adjusted
|
Statutory
|
|
H1 2024
|
H1 2023
|
Change
|
Constant currency
change
|
H1 2024
|
H1 2023
|
Change
|
Revenue
|
1,719.4
|
1,768.1
|
(2.8)%
|
(1.4)%
|
1,719.4
|
1,768.1
|
(2.8)%
|
EBITDA
|
202.6
|
198.6
|
+2.0%
|
+3.9%
|
|
|
|
EBIT / Operating profit
|
135.5
|
131.9
|
+2.7%
|
+4.8%
|
95.8
|
95.0
|
+0.8%
|
EBIT margin
|
7.9
|
7.5
|
+40bps
|
|
5.6
|
5.4
|
+20bps
|
Net Income
|
70.6
|
62.5
|
+13.0%
|
|
40.2
|
33.3
|
+20.7%
|
Basic EPS
|
13.9
|
12.1
|
+14.6%
|
|
7.9
|
6.4
|
+22.5%
|
Dividend per share
|
2.40
|
2.30
|
+4.3%
|
|
|
|
|
Free Cash Flow
|
(14.4)
|
2.3
|
|
|
(22.8)
|
(7.5)
|
|
Group revenue declined 1.4% at
constant currency to €1,719.4 million (H1 2023: €1,768.1 million).
The Cascade acquisition made a 100 basis point positive
contribution to group constant currency growth, while the planned
product line exit in the Americas was a circa 140 basis point
headwind. Reported revenue declined 2.8%, largely due to foreign
exchange headwinds from the stronger Euro against the Chinese
Renminbi and Korean Won.
H1 2024 revenue by region
|
H1 2024
|
H1 2023
|
Change
|
Constant currency
change
|
GLVP
growth
|
EMEA
|
733.3
|
702.8
|
+4.3%
|
+4.4%
|
(2.7)%
|
Asia Pacific
|
480.5
|
540.3
|
(11.1)%
|
(7.1)%
|
+0.7%
|
Americas
|
505.6
|
525.0
|
(3.7)%
|
(3.4)%
|
0.3%
|
Total
|
1,719.4
|
1,768.1
|
(2.8)%
|
(1.4)%
|
(0.2)%
|
Our Adjusted EBIT margin
improvement was driven mainly by our operational efficiency and
productivity initiatives as well as our continuing commercial
activities. This 40 basis points expansion reflects higher margins
in EMEA and the Americas (up 220 and 60 basis points respectively)
driven by growth in EMEA and a strong productivity focus in both
regions. This was partially offset by Asia Pacific (down 180 basis
points) due to lower volumes in China, only partially offset by
productivity actions.
Statutory Operating Profit was
€95.8m (H1 2023: €95.0 million). The key adjusting items are set
out below. This includes a €14.1 million restructuring cost (H1
2023: €6.8 million) related to activity to drive efficiency,
optimise our footprint and adjust our workforce. The increase in
restructuring costs compared to 2023 relates to elevated activity
in response to the recent softening of industry volume
forecasts.
Reconciliation of Adjusted EBIT to Statutory Operating Profit
/ EBIT
|
H1 2024
€m
|
H1 2023
€m
|
Adjusted EBIT
|
135.5
|
131.9
|
Depreciation and amortisation on
purchase accounting
|
(21.5)
|
(24.6)
|
Restructuring costs
|
(14.1)
|
(6.8)
|
Other
|
(4.1)
|
(5.5)
|
Statutory Operating Profit / EBIT
|
95.8
|
95.0
|
Net finance expense reduced to
€34.6 million (H1 2023: €36.1 million). The benefits of higher
interest income on short-term deposits and lower term loan interest
costs due to the August 2023 repayment more than offset higher
costs related to lease interest and pensions.
The Group's Adjusted Effective Tax
Rate on Adjusted Profit Before Tax reduced to 29.9% (H1 2023:
34.7%) which further strengthens our confidence in a mid-term
Adjusted Effective Tax Rate in the low 30%. The Group's statutory
tax rate was 34.3% (H1 2023: 43.5%).
Adjusted Net Income increased
13.0% to €70.6 million (H1 2023: €62.5 million) as a result of
higher Adjusted EBIT and a reduction in interest costs and
effective tax rate. The growth in Adjusted EPS was slightly higher
at 14.6% due to a lower number of shares as a result of our share
buyback. The weighted average number of shares for the period was
508.1 million as compared with 515.5 million for H1
2023.
On a statutory basis, Group Profit
for the Year was €40.2 million (H1 2023: €33.3 million), reflecting
the increased profit for the period together with lower interest
and tax costs. Basic Earnings per Share were 7.9 € cents (H1 2023:
6.4 € cents).
Cash Flow - short-term factors expected to unwind in the
second half
Adjusted Free Cash Flow, the
Group's primary measure of cash flow performance, was a €14.4
million outflow (H1 2023: €2.3 million inflow). Statutory cash flow
from operating activities was €36.3 million (H1 2023: €47.6
million).
|
H1 2024
€m
|
H1 2023
€m
|
Net cash generated from operating
activities
|
36.3
|
47.6
|
Net cash used in investing
activities
|
(59.1)
|
(55.1)
|
Free Cash Flow
|
(22.8)
|
(7.5)
|
Net cash spend on
restructuring
|
8.6
|
8.4
|
Costs paid associated with business
acquisitions or disposals
|
0.5
|
0.8
|
Other adjusting items
|
(0.7)
|
0.6
|
Adjusted Free Cash Flow
|
(14.4)
|
2.3
|
Net cash generated from operating
activities includes a €85.8 million working capital outflow (H1
2023: €78.9 million). In addition to the usual seasonal outflow,
working capital at period end reflected a modest inventory build
due to recent volatility in OEM production schedules and timing
differences on payments. We expect both to unwind in the second
half as commercial agreements translate into cash and we reduce
inventory. Group tax payments increased to €34.5 million (H1 2023:
€28.6 million) due to timing.
Our capex needs remain modest,
with €68.7 million invested including capitalised R&D (H1 2023:
€59.6 million). A net cash outflow on restructuring of €8.6 million
(H1 2023: €8.4 million) largely relates to severance
payments
Cash outflows from financing were
€61.0 million (H1 2023: €25.7 million), largely relating to lease
principal repayments of €14.4 million (H1 2023: €15.0 million), the
2023 final dividend payment of €22.8 million (H1 2023: €8.0
million) and a €22.5 million outflow related to the ongoing €40
million share buyback programme.
Strong balance sheet maintained
The Group's strong balance sheet
gives flexibility to invest in growth and provide attractive
shareholder returns. Net debt at 30 June 2024 was €682.8 million
(H1 2023: €668.0 million), higher than at the end of 2023 due to
payment of the 2023 final dividend, the share buyback programme and
a working capital outflow as discussed above. At period end, net
leverage was 1.7x (30 June 2023: 1.8x).
Total available liquidity (cash
plus available facilities) on 30 June 2024 was €539.5
million.
The Group excludes IFRS 16 lease
liabilities from its net debt and net leverage ratio. Including
IFRS 16 lease liabilities, net debt would be €853.0 million (30
June 2023: €807.1 million) and net leverage would be 2.1x Adjusted
EBITDA (30 June 2023: 2.2x).
The table below shows the
composition of the Group's net debt at 30 June 2024.
Borrowings
|
Currency
|
Interest rate
exposure
|
Amount
|
€
Equivalent
|
Secured US term loan
(2026)
|
USD
|
1 month
term SOFR (incl. CSA)[4] +
3.25%
|
$185.0m
|
€172.7m
|
Secured Euro term loan
(2026)
|
EUR
|
3 month
EURIBOR + 3.25%
|
€256.4m
|
€256.4m
|
Unsecured Senior Notes
(2029)
|
EUR
|
Fixed
at 3.75%
|
€600.0m
|
€600.0m
|
Unamortised fees
|
|
|
|
€(11.7)m
|
Total gross debt drawn at period end
|
|
|
|
€1,017.4m
|
Cash & cash equivalents at
period end
|
|
|
|
€(334.6)m
|
Net
debt
|
|
|
|
€682.8m
|
Additionally, as at 30 June 2024,
the Group had a Revolving Credit Facility ("RCF") of up to $225.0
million expiring in July 2026. This was largely undrawn at period
end apart from €5.1 million used to issue letters of
credit.
The Group operates funded and
unfunded defined benefit schemes across multiple jurisdictions
which are subject to periodic actuarial valuations. All major
defined benefit plans are closed to new entrants, but a few allow
for future accrual. As at 30 June, our net liability position
decreased to €98.2 million (31 December 2023: €103.9 million)
primarily due to increasing discount rates, especially in the US
which was determined at 5.45% (5.05% at 31 December 2023). US
pension and retiree healthcare schemes represent 43% of our net
liability position at 30 June 2024 (31 December 2023:
46%).
Strong Adjusted return on capital ("ROCE")
maintained
The Group's Adjusted ROCE
increased to 25.4% (H1 2023: 21.7%), demonstrating our discipline
in deploying capital to maximise value creation and Adjusted EBIT
margin expansion.
Capital allocation policy delivering returns for
shareholders
As part of the Group's revised
capital allocation policy, TI adopted a progressive dividend policy
in 2023. In-line with this, the Board has approved a 4.3%
increase on a per share basis in the interim dividend to 2.40 €
cents per share (H1 2023: 2.30 € cents). The dividend amount of
2.40 € cents will be converted from Euro to Sterling using the
London closing spot rate on the record date of Friday, 16 August
2024 and the Sterling rate will be announced on Monday, 19 August
2024. The interim dividend will be paid on Friday, 13 September
2024 to holders of ordinary shares on the register on the record
date.
The Group has also made good
progress with its share buyback programme, which was almost three
quarters complete by period end. During H1, 13.3 million shares
were bought back for a total of €22.5 million. As at 30 June 2024,
the buyback was almost three quarters complete with 17.1 million
shares repurchased (and subsequently cancelled) for a total of
€28.8 million.
Liquidity and going concern
As at 30 June 2024, the Group's
external financing arrangements comprised unsecured Senior Notes of
€600.0 million (maturing on 15 April 2029), a Euro term loan of
€256.4 million (repayable in instalments until 16 December 2026), a
US Dollar term loan of $185.0 million (repayable on 16 December
2026) and a revolving credit facility ("RCF") of $225.0 million
(maturing 16 July 2026). The amount utilised under the RCF, as of
30 June 2024, was €5.1 million, with the available undrawn amount
at €204.9 million. The only covenant measure that exists applies to
the RCF and is a net leverage ratio, which must be below 3.8x
Adjusted EBITDA when the revolving facility is drawn over
35%.
In addition, the Group held €334.6
million of cash and cash equivalents as at 30 June 2024. Actual
available liquidity, including cash and revolving facility on 30
June 2024, was, therefore, €539.5 million, which provides a strong
basis for the Group's liquidity during the review
period.
The Directors have reviewed the
likely performance of the Group and the Company for the period to
the end of 2025 by reference to the latest outlook for 2024 and
approved Medium-Term Plan for 2025 as a base case scenario (volumes
used: 2024 89.5 million units, 2025 90.6 million units).
A severe, yet plausible, downside
scenario, mindful of developing geopolitical tensions and emerging
economic challenges, was produced comprising a 10% reduction in
global light vehicle production volumes during the review period
against the base case (volumes used: 2024 85.0 million units, 2025
81.5 million units), a further 5% annual reduction in operating
margin due to increased costs, a further 0.5% annual sales price
reduction, a €8 million profit impact of business disruption from
an unexpected plant closure, and an incremental annual capital
expenditure of €10 million. These reflect the downside impact of
principal risks facing the business in respect of global light
vehicle production volumes, cost pressures (commodities, labour and
energy costs), customer price reduction pressures, the impact of a
business disruption and changes in technology. The downside
scenario showed an availability of liquidity headroom without the
use of the revolving credit facility. There were no covenant
breaches under this downside scenario in the review
period.
In addition, a reverse stress test
was performed as part of the review which indicates that there
would need to be a catastrophic reduction in volumes to exhaust
cash and cash equivalents, which the Directors considered to be
highly unlikely.
The going concern scenarios do not
indicate a material uncertainty, which may cast significant doubt
over the Company's and Group's ability to continue as a going
concern. Based on these assessments, the Directors have a
reasonable expectation that the Company has adequate resources to
continue in operational existence for the foreseeable future, and,
accordingly, have adopted the going concern basis in preparing the
consolidated financial statements. This disclosure has been
prepared in accordance with the UK Corporate Governance
Code.
Principal risks and uncertainties
The Directors and executive
management have considered the principal risks and uncertainties of
the Group and have determined, on balance, that those reported in
the 2023 Annual Report and Accounts remain relevant and appropriate
for the remaining half of the financial year.
The challenge and uncertainty
associated with the shift in technology and market dynamics
impacting the automotive industry, as well as the related need to
attract and retain the talent to address this shift, remains of the
highest priority to executive management and the Directors, who
have continued to drive a strategic evolution through the business
in order to ensure continued excellence in operational and market
performance.
The Group is navigating a
challenging market environment characterised by volatile customer
production and margin pressures. These factors are expected to
persist throughout 2024 and into 2025. The Group is actively
mitigating these pressures by recovering costs from customers,
implementing price adjustments, and maintaining tight control over
operational expenses. However, further economic and demand
challenges, such as changes in tariffs and the decline of market
share of the global OEMs in China, could exacerbate existing
overcapacity within the industry, posing additional volume and
margin pressure in the short to medium term. Management and the
Board of Directors are closely monitoring the situation and
exploring various risk mitigation strategies, including ongoing
communication with both suppliers and customers as circumstances
develop.
The Directors continue to monitor
the impact of geopolitical tensions and uncertainty including
conflicts within Europe and the Middle East, particularly with
regards to risks related to supply chain disruptions and economic
downturn in those regions. The Directors also monitor the
developing risks identified in our 2023 Annual Report - climate
change, sustainability and managing the transition to a low carbon
economy (including uncertainty of timelines and regulatory
complexity), as well as the changes in economic climate and
potential data protection and labour related issues arising from
the evolution of generative AI. We continue to believe that these
do not represent separate new principal risks and uncertainties to
the Group at present.
Details of the Group's Principal
Risks and Uncertainties are available in the 2023 Annual Report and
Accounts, available on our website www.tifluidsystems.com.
By order of the Board
Hans Dieltjens
Chief Executive Officer & President
7 August 2024
|
Alexander De Bock
Chief Financial Officer
7 August 2024
|
Cautionary statement
This announcement contains certain
forward-looking statements with respect to the financial condition,
results of operations and business of TI Fluid Systems plc (the
"Group"). The words "believe", "expect", "anticipate", "intend",
"estimate", "forecast", "project", "will", "may", "should" and
similar expressions identify forward looking statements. Others can
be identified from the context in which they are made. By their
nature, forward-looking statements involve risks and uncertainties,
and such forward-looking statements are made only as of the date of
this presentation. Accordingly, no assurance can be given that the
forward-looking statements will prove to be accurate and you are
cautioned not to place undue reliance on forward-looking statements
due to the inherent uncertainty therein. Past performance of the
Company cannot be relied on as a guide to future performance.
Nothing in this announcement should be construed as a profit
forecast.
TABLE OF CONTENTS
CONDENSED CONSOLIDATED INTERIM
FINANCIAL STATEMENTS
|
|
|
Condensed Consolidated Income
Statement
|
|
|
Condensed Consolidated Statement
of Comprehensive Income
|
|
|
Condensed Consolidated Balance
Sheet
|
|
|
Condensed Consolidated Statement
of Changes in Equity
|
|
|
Condensed Consolidated Statement
of Cash Flows
|
|
NOTES TO THE CONDENSED
CONSOLIDATED INTERIM FINANCIAL STATEMENTS
|
|
|
1
|
Summary of significant accounting
policies
|
|
|
2
|
Segment reporting
|
|
|
3
|
Adjusting items and alternative
performance measures
|
|
|
4
|
Financial risk
management
|
|
|
5
|
Finance income and
expense
|
|
|
6
|
Income tax
|
|
|
7
|
Earnings per share
|
|
|
8
|
Property, plant and
equipment
|
|
|
9
|
Impairments
|
|
|
10
|
Borrowings
|
|
|
11
|
Fair values of financial assets
and liabilities
|
|
|
12
|
Retirement benefit
obligations
|
|
|
13
|
Provisions
|
|
|
14
|
Cash generated from
operations
|
|
|
15
|
Acquisition
|
|
|
16
|
Commitments and
contingencies
|
|
|
17
|
Related party
transactions
|
|
|
18
|
Glossary of terms
|
|
Independent review
report
|
|
Directors' Responsibility
Statement
|
|
|
|
Condensed Consolidated Income Statement
For the period ended 30 June 2024
|
|
2024
|
2023
|
|
|
Unaudited
|
Unaudited
|
Continuing operations
|
Note
|
€m
|
€m
|
Revenue
|
2
|
1,719.4
|
1,768.1
|
Cost of sales
|
|
(1,505.1)
|
(1,537.5)
|
Gross profit
|
|
214.3
|
230.6
|
Distribution costs
|
|
(53.3)
|
(55.6)
|
Administrative expenses
|
|
(65.2)
|
(77.0)
|
Net foreign exchange
losses
|
|
(3.5)
|
(3.3)
|
Other gains and losses
|
|
3.5
|
0.3
|
Operating profit
|
|
95.8
|
95.0
|
Finance income
|
5
|
4.5
|
4.4
|
Finance expense
|
5
|
(39.1)
|
(40.5)
|
Net finance expense
|
5
|
(34.6)
|
(36.1)
|
Profit before income tax
|
|
61.2
|
58.9
|
Income tax expense
|
6
|
(21.0)
|
(25.6)
|
Profit for the period
|
|
40.2
|
33.3
|
Profit for the period attributable
to:
|
|
|
|
Owners of the Parent
Company
|
|
40.1
|
33.2
|
Non-controlling
interests
|
|
0.1
|
0.1
|
|
|
40.2
|
33.3
|
Total earnings per share (€ cents)
|
|
|
|
Basic
|
7
|
7.89
|
6.44
|
Diluted
|
7
|
7.81
|
6.41
|
Condensed Consolidated Statement of Comprehensive
Income
For the period ended 30 June 2024
|
Unaudited
|
Unaudited
|
|
2024
|
2023
|
|
€m
|
€m
|
Profit for the period
|
40.2
|
33.3
|
Other comprehensive income
|
|
|
Items that will not be
reclassified to profit or loss
|
|
|
-Re-measurements of retirement
benefit obligations
|
7.7
|
3.7
|
-Income tax expense on retirement
benefit obligations
|
(2.0)
|
(1.0)
|
|
5.7
|
2.7
|
Items that may be
subsequently reclassified to profit or loss
|
|
|
-Currency translation
|
2.7
|
(56.8)
|
-Cash flow hedges
|
(0.3)
|
-
|
- Net investment hedges
|
(0.9)
|
-
|
|
1.5
|
(56.8)
|
Total other comprehensive income for the
period
|
7.2
|
(54.1)
|
Total comprehensive income for the period
|
47.4
|
(20.8)
|
Attributable to:
|
|
|
-Owners of the Parent
Company
|
47.3
|
(20.9)
|
-Non-controlling
interests
|
0.1
|
0.1
|
Total comprehensive income for the period
|
47.4
|
(20.8)
|
Condensed Consolidated Balance Sheet
As at 30 June 2024
|
|
Unaudited
|
Audited
|
|
|
30 June
2024
|
31
December 2023
|
|
Note
|
€m
|
€m
|
Non-current assets
|
|
|
|
Intangible assets
|
|
521.2
|
542.4
|
Right-of-use assets
|
|
136.1
|
97.1
|
Property, plant and
equipment
|
8
|
549.1
|
546.5
|
Deferred income tax
assets
|
6
|
128.5
|
126.1
|
Trade and other
receivables
|
|
22.3
|
23.4
|
|
|
1,357.2
|
1,335.5
|
Current assets
|
|
|
|
Inventories
|
|
407.5
|
378.4
|
Trade and other
receivables
|
|
619.0
|
551.2
|
Current income tax
assets
|
6
|
14.0
|
9.0
|
Derivative financial
instruments
|
4,11
|
3.3
|
3.0
|
Cash and cash
equivalents
|
|
334.6
|
416.7
|
|
|
1,378.4
|
1,358.3
|
Total assets
|
|
2,735.6
|
2,693.8
|
Equity
|
|
|
|
Share capital
|
|
6.6
|
6.8
|
Share premium
|
|
2.2
|
2.2
|
Other reserves
|
|
(107.8)
|
(109.5)
|
Retained earnings
|
|
778.2
|
765.7
|
Equity attributable to owners of the Parent
Company
|
|
679.2
|
665.2
|
Non-controlling
interests
|
|
0.7
|
0.6
|
Total equity
|
|
679.9
|
665.8
|
Non-current liabilities
|
|
|
|
Trade and other
payables
|
|
15.4
|
15.1
|
Borrowings
|
10
|
1,015.9
|
1,010.2
|
Lease liabilities
|
|
142.4
|
107.6
|
Derivative financial
instruments
|
4,11
|
2.6
|
-
|
Deferred income tax
liabilities
|
6
|
61.0
|
58.7
|
Retirement benefit
obligations
|
12
|
98.2
|
103.9
|
Provisions
|
13
|
2.6
|
2.6
|
|
|
1,338.1
|
1,298.1
|
Current liabilities
|
|
|
|
Trade and other
payables
|
|
621.7
|
632.9
|
Current income tax
liabilities
|
6
|
48.4
|
55.4
|
Borrowings
|
10
|
1.5
|
1.5
|
Lease liabilities
|
|
27.8
|
24.9
|
Derivative financial
instruments
|
4,11
|
0.1
|
0.1
|
Provisions
|
13
|
18.1
|
15.1
|
|
|
717.6
|
729.9
|
Total liabilities
|
|
2,055.7
|
2,028.0
|
Total equity and liabilities
|
|
2,735.6
|
2,693.8
|
Condensed Consolidated Statement of Changes in
Equity
For the period ended 30 June 2024
|
Ordinary
shares
|
Share
premium
|
Other
reserves
|
Retained
earnings
|
Total
|
Non-controlling
interests
|
Total
equity
|
Unaudited
|
€m
|
€m
|
€m
|
€m
|
€m
|
€m
|
€m
|
Balance at 1 January
2024
|
6.8
|
2.2
|
(109.5)
|
765.7
|
665.2
|
0.6
|
665.8
|
Profit for the period
|
-
|
-
|
-
|
40.1
|
40.1
|
0.1
|
40.2
|
Total other comprehensive income
for the period
|
-
|
-
|
1.5
|
5.7
|
7.2
|
-
|
7.2
|
Total comprehensive income for the period
|
-
|
-
|
1.5
|
45.8
|
47.3
|
0.1
|
47.4
|
Share-based expense
|
-
|
-
|
-
|
4.9
|
4.9
|
-
|
4.9
|
Vested share awards
|
-
|
-
|
-
|
(7.3)
|
(7.3)
|
|
(7.3)
|
Issue of own shares from employee
benefit trust
|
-
|
-
|
-
|
6.9
|
6.9
|
-
|
6.9
|
Purchase of own shares for share
buy back programme
|
-
|
-
|
-
|
(22.5)
|
(22.5)
|
-
|
(22.5)
|
Cancellation of own shares
purchased
|
(0.2)
|
-
|
0.2
|
-
|
-
|
-
|
-
|
Movement in amounts committed for
future purchase of own shares
|
-
|
-
|
-
|
7.5
|
7.5
|
-
|
7.5
|
Dividends paid
|
-
|
-
|
-
|
(22.8)
|
(22.8)
|
-
|
(22.8)
|
Total transactions with owners
|
(0.2)
|
-
|
0.2
|
(33.3)
|
(33.3)
|
-
|
(33.3)
|
Balance at 30 June 2024
|
6.6
|
2.2
|
(107.8)
|
778.2
|
679.2
|
0.7
|
679.9
|
|
Ordinary
shares
|
Share
premium
|
Other
reserves
|
Retained
earnings
|
Total
|
Non-controlling interests
|
Total
equity
|
Unaudited
|
€m
|
€m
|
€m
|
€m
|
€m
|
€m
|
€m
|
Balance at 1 January
2023
|
6.8
|
2.2
|
(55.4)
|
722.6
|
676.2
|
0.5
|
676.7
|
Profit for the period
|
-
|
-
|
-
|
33.2
|
33.2
|
0.1
|
33.3
|
Total other comprehensive income
for the period
|
-
|
-
|
(56.8)
|
2.7
|
(54.1)
|
-
|
(54.1)
|
Total comprehensive income for the
period
|
-
|
-
|
(56.8)
|
35.9
|
(20.9)
|
0.1
|
(20.8)
|
Share-based expense
|
-
|
-
|
-
|
3.5
|
3.5
|
-
|
3.5
|
Dividends paid
|
-
|
-
|
-
|
(8.0)
|
(8.0)
|
-
|
(8.0)
|
Issue of own shares from Employee
Benefit Trust
|
-
|
-
|
-
|
10.9
|
10.9
|
-
|
10.9
|
Vested shared awards
|
-
|
-
|
-
|
(14.9)
|
(14.9)
|
-
|
(14.9)
|
Total transactions with
owners
|
-
|
-
|
-
|
(8.5)
|
(8.5)
|
-
|
(8.5)
|
Balance at 30 June 2023
|
6.8
|
2.2
|
(112.2)
|
750.0
|
646.8
|
0.6
|
647.4
|
Condensed Consolidated Statement of Cash Flows
For the period ended 30 June 2024
|
|
Unaudited
|
Unaudited
|
|
|
Half Year
|
Half
Year
|
|
|
2024
|
2023
|
|
Note
|
€m
|
€m
|
Cash flows from operating activities
|
|
|
|
Cash generated from
operations
|
14
|
105.5
|
112.1
|
Interest paid
|
|
(34.7)
|
(35.9)
|
Income tax paid
|
|
(34.5)
|
(28.6)
|
Net cash generated from operating
activities
|
|
36.3
|
47.6
|
Cash flows from investing activities
|
|
|
|
Payment for property, plant and
equipment
|
|
(57.3)
|
(47.9)
|
Payment for intangible
assets
|
|
(11.4)
|
(11.7)
|
Proceeds from the sale of
property, plant and equipment
|
|
4.3
|
0.7
|
Purchase of Cascade Engineering
Europe: consideration adjustment
|
15
|
0.7
|
-
|
Interest received
|
|
4.6
|
3.8
|
Net cash used by investing activities
|
|
(59.1)
|
(55.1)
|
Net cash used by operating and investing activities ("Free
Cash Flow")
|
|
(22.8)
|
(7.5)
|
Cash flows from financing activities
|
|
|
|
Purchase of own shares for share
buy back programme
|
|
(22.5)
|
-
|
Scheduled repayments of
borrowings
|
10
|
(1.3)
|
(2.7)
|
Lease principal
repayments
|
10
|
(14.4)
|
(15.0)
|
Dividends paid
|
|
(22.8)
|
(8.0)
|
Net cash used by financing activities
|
|
(61.0)
|
(25.7)
|
Decrease in cash and cash equivalents
|
|
(83.8)
|
(33.2)
|
Cash and cash equivalents at the
beginning of the period
|
|
416.7
|
491.0
|
Currency translation on cash and
cash equivalents
|
|
1.7
|
(16.3)
|
Cash and cash equivalents at the end of the
period
|
|
334.6
|
441.5
|
1. Summary of significant accounting
policies
The principal accounting policies
applied in the preparation of these condensed consolidated interim
financial statements are the same as those applied in the audited
consolidated financial statements for the year ended 31 December
2023.
1.1. Basis of
preparation
These condensed consolidated
interim financial statements do not constitute statutory accounts
within the meaning of section 434 of the Companies Act 2006.
Statutory accounts for the year ended 31 December
2023 have been filed with the Registrar of Companies. The
report of the auditors on those accounts was unqualified, did not
contain an emphasis of matter paragraph and did not contain any
statement under section 498 of the Companies Act 2006. These
condensed consolidated interim financial statements have been
reviewed, not audited.
These condensed consolidated
interim financial statements have been prepared in accordance with
IAS 34 'Interim Financial Reporting', as adopted by the United
Kingdom and the Disclosure and Transparency Rules of the Financial
Conduct Authority. These condensed consolidated interim
financial statements need to be read in conjunction with the annual
consolidated financial statements for the year ended 31 December
2023.
Foreign operations are those
subsidiaries whose functional currency is not Euro. For the
purposes of consolidation, income and expenses of foreign
operations are translated to Euro at average exchange rates for the
period, and assets and liabilities of foreign operations are
translated to Euro at exchange rates at the reporting date. Foreign
currency translation differences are recognised in the Statement of
Comprehensive Income.
The average and period-end
exchange rates for the Group's principal currencies
were:
Key Euro exchange rates
|
H1 2024
Average
|
H1 2023
Average
|
%
Change
|
30 June 2024 Period
End
|
30 June
2023 Period End
|
%
Change
|
US dollar
|
1.081
|
1.081
|
-%
|
1.071
|
1.092
|
(1.9)%
|
Chinese renminbi
|
7.799
|
7.488
|
4.2%
|
7.784
|
7.918
|
(1.7)%
|
South Korean won
|
1,460
|
1,401
|
4.2%
|
1,477
|
1,438
|
2.7%
|
1.1.1. Going concern
As at 30 June 2024, the Group's
external financing arrangements comprised unsecured Senior Notes of
€600.0 million (maturing on 15 April 2029), a Euro term loan of
€256.4 million (repayable in instalments until 16 December 2026), a
US Dollar term loan of $185.0 million (repayable on 16 December
2026) and a revolving credit facility ("RCF") of $225.0 million
(maturing 16 July 2026). The amount utilised under the RCF, as of
30 June 2024, was €5.1 million, with the available undrawn amount
at €204.9 million. The only covenant measure that exists applies to
the RCF and is a net leverage ratio, which must be below 3.8x
Adjusted EBITDA when the revolving facility is drawn over
35%.
In addition, the Group held €334.6
million of cash and cash equivalents as at 30 June 2024. Actual
available liquidity, including cash and revolving facility on 30
June 2024, was, therefore, €539.5 million, which provides a strong
basis for the Group's liquidity during the review
period.
The Directors have reviewed the
likely performance of the Group and the Company for the period to
the end of 2025 by reference to the latest outlook for 2024 and
approved Medium-Term Plan for 2025 as a base case scenario (volumes
used: 2024 89.5 million units, 2025 90.6 million units).
A severe, yet plausible, downside
scenario, mindful of developing geopolitical tensions and emerging
economic challenges, was produced comprising a 10% reduction in
global light vehicle production volumes during the review period
against the base case (volumes used: 2024 85.0 million units, 2025
81.5 million units), a further 5% annual reduction in operating
margin due to increased costs, a further 0.5% annual sales price
reduction, a €8 million profit impact of business disruption from
an unexpected plant closure, and an incremental annual capital
expenditure of €10 million. These reflect the downside impact of
principal risks facing the business in respect of global light
vehicle production volumes, cost pressures (commodities, labour and
energy costs), customer price reduction pressures, the impact of a
business disruption and changes in technology. The downside
scenario showed an availability of liquidity headroom without the
use of the revolving credit facility. There were no covenant
breaches under this downside scenario in the review
period.
In addition, a reverse stress test
was performed as part of the review which indicates that there
would need to be a catastrophic reduction in volumes to exhaust
cash and cash equivalents, which the Directors considered to be
highly unlikely.
The going concern scenarios do not
indicate a material uncertainty, which may cast significant doubt
over the Company's and Group's ability to continue as a going
concern. Based on these assessments, the Directors have a
reasonable expectation that the Company has adequate resources to
continue in operational existence for the foreseeable future, and,
accordingly, have adopted the going concern basis in preparing the
consolidated financial statements. This disclosure has been
prepared in accordance with the UK Corporate Governance
Code.
1.2. New and
revised IFRS affecting amounts reported in the current period
(and/or prior periods)
There are no new standards or IFRS
IC interpretations effective in the period that have a material
impact on the Group.
1.3. Critical
accounting estimates and judgements
The preparation of financial
statements requires the use of accounting estimates and for
Management to exercise judgement in applying the Group's accounting
policies. Assumptions and accounting estimates are subject to
regular review, governed by Group-wide policies and controls. Any
revisions required to accounting estimates are recognised in the
period in which the revisions are made including all future periods
affected.
The judgement and estimates that
have the most significant and critical effect on the amounts
included in the financial statements are in relation to post-employment obligations, impairments of assets and
deferred tax assets described below.
1.3.1 Critical accounting estimates
1.3.1.1 Post-employment
obligations
Details of the Group's critical
accounting estimates around post-employment obligations can be
found in Note 1.4.1.1 of the audited consolidated financial
statements for the year ended 31 December 2023.
1.3.1.2 Impairments of
assets
Management carry out the annual
impairment review on the Group's property, plant and equipment,
intangible, and right-of-use assets as at 31 December, which
involves judgement in determining the assets' recoverable amount
(as outlined in the 2023 Annual Report and Accounts). At interim
reporting, Management performed a review for any indicators of
impairment, as an update to the impairment review performed as part
of the 2023 year-end process. Further discussion on this assessment
is included within Note 9.
1.3.2 Critical accounting judgement
1.3.2.1 Deferred tax
assets
Details of the Group's critical
accounting judgement around deferred tax assets can be found in
Note 1.4.2 of the audited consolidated financial statements for the
year ended 31 December 2023.
2. Segment reporting
In accordance with the provisions
of IFRS 8 'Operating Segments', the Group's segment reporting is
based on the management approach with regard to segment
identification; under which information regularly provided to the
chief operating decision maker ("CODM") for decision-making
purposes forms the basis of the disclosure. The
Company's CODM is the Chief Executive Officer ("CEO") and the Chief
Financial Officer. The CODM evaluates the performance of the
Company's segments primarily on the basis of revenue, Adjusted
EBITDA, and Adjusted EBIT.
Effective from 1 January 2024, the
Group is operating a new regional reporting structure, ensuring
better alignment with customers and enhancing regional leaders'
agility to respond to changes in their markets, particularly the
transition to electrification. The three regional segments that the
CODM now manage the business by are: Americas ("AMER"), Europe, the
Middle East and Africa ("EMEA") and Asia Pacific ("APAC").
The comparative information for the following segmental disclosures
has been restated accordingly, to reflect the change from a two
division structure to the three regions.
|
Unaudited
|
Unaudited
|
|
Half Year
|
Half
Year
|
|
2024
|
2023
|
|
€m
|
€m
|
Revenue
|
|
|
- AMER - External
|
505.6
|
525.0
|
- Inter-segment
|
7.3
|
8.0
|
|
512.9
|
533.0
|
- EMEA - External
|
733.3
|
702.8
|
- Inter-segment
|
19.8
|
16.0
|
|
753.1
|
718.8
|
- APAC- External
|
480.5
|
540.3
|
- Inter-segment
|
16.0
|
13.8
|
|
496.5
|
554.1
|
Inter-segment elimination
|
(43.1)
|
(37.8)
|
Total consolidated revenue
|
1,719.4
|
1,768.1
|
Adjusted EBITDA
|
|
|
- AMER
|
57.6
|
57.7
|
- EMEA
|
78.2
|
57.1
|
- APAC
|
66.8
|
83.8
|
|
202.6
|
198.6
|
Adjusted EBITDA % of revenue
|
|
|
- AMER
|
11.4%
|
11.0%
|
- EMEA
|
10.7%
|
8.1%
|
- APAC
|
13.9%
|
15.5%
|
Total
|
11.8%
|
11.2%
|
Adjusted EBIT
|
|
|
- AMER
|
44.9
|
43.6
|
- EMEA
|
48.2
|
30.9
|
- APAC
|
42.4
|
57.4
|
|
135.5
|
131.9
|
Adjusted EBIT % of revenue
|
|
|
- AMER
|
8.9%
|
8.3%
|
- EMEA
|
6.6%
|
4.4%
|
- APAC
|
8.8%
|
10.6%
|
Total
|
7.9%
|
7.5%
|
Restructuring costs of €14.1
million (€3.6 million in AMER, €4.3
million in APAC and €6.2 million in EMEA) (2023: €6.8 million, of
which €1.6 million in AMER, €0.7 million in APAC and €4.5 million
in EMEA) comprise announced headcount reductions and related costs
of balancing production capacity with market requirements. Please
refer to alternative performance measures (Note 3) for
reconciliation to Income Statement.
3.
Adjusting items and alternative performance
measures
In addition to the results reported
under IFRS, Management use certain non-IFRS financial measures to
monitor and measure the performance and profitability of the
business and operations. Such measures are also utilised by the
Board as targets in determining compensation of certain executives
and key members of management, as well as in communications with
investors. In particular, Management use Adjusted EBIT, Adjusted
EBITDA, Adjusted Net Income, Adjusted Free Cash Flow, Adjusted
Basic EPS and Adjusted Return on Capital Employed (ROCE). These
non-IFRS measures are not recognised measurements of financial
performance or liquidity under IFRS, and should be viewed as
supplemental and not replacements or substitutes for any IFRS
measures.
Definitions for alternative
performance measures are included in the Note 18 glossary.
|
|
Unaudited
Half Year
2024
|
Unaudited
Half
Year
2023
|
Adjusted Performance Measures
|
Note
|
€m
|
€m
|
Adjusted EBIT
|
3.2
|
135.5
|
131.9
|
Adjusted EBITDA
|
3.2
|
202.6
|
198.6
|
Adjusted net income
|
3.2
|
70.6
|
62.5
|
Adjusted free cash flow
|
3.2
|
(14.4)
|
2.3
|
Adjusted basic EPS
|
7.2
|
13.89
|
12.12
|
Adjusted Return on capital
employed
|
3.2
|
25.4%
|
21.7%
|
3.1 Adjusting items
Management exclude certain items in
the derivation of alternative performance measures, as shown
below:
|
|
Unaudited
Half Year
2024
|
Unaudited
Half
Year
2023
|
Adjusting Items
|
Note
|
€m
|
€m
|
Restructuring costs
|
13
|
14.1
|
6.8
|
Net foreign exchange
losses
|
|
3.5
|
3.3
|
Depreciation and amortisation
arising on purchase accounting
|
|
21.5
|
24.6
|
Customisation and configuration
costs of significant software as a service ("SaaS")
arrangements
|
|
-
|
0.9
|
Costs associated with business
acquisitions or disposals
|
|
0.6
|
1.3
|
|
|
39.7
|
36.9
|
Adjusting items represent
transactions that in Management's view do not form part of the
substance of the trading activities of the Group, such as
large-scale reorganisations, system implementations, acquisition
costs and certain non-cash accounting measures.
Restructuring costs comprise
announced headcount reductions and related costs of balancing
production capacity with market requirements.
Net foreign exchange gains/losses
on the foreign currency revaluation of intercompany loan and cash
balances are included in adjusting items to remove the impact of
foreign exchange volatility on our adjusted performance
measures.
Depreciation and amortisation
arising on purchase accounting relates to the uplift of tangible
and intangible assets, acquired through business combinations, to
their fair market value, which is then depreciated and amortised
over the remaining useful life of these assets.
Costs associated with business
acquisitions or disposals and customisation and configuration costs
of significant SaaS arrangements in relation to initial costs of
multi-year system upgrades or implementations have been excluded
from the alternative performance measures due to their ad-hoc
nature.
3.2 Adjusted performance measures
Reconciliations of adjusted
performance measures to their statutory GAAP equivalent measures
are provided below.
Adjusted EBITDA
|
Note
|
Unaudited
Half Year
2024
€m
|
Unaudited
Half
Year
2023
€m
|
Operating profit
|
|
95.8
|
95.0
|
Adjusting items
|
3.1
|
39.7
|
36.9
|
Adjusted EBIT
|
|
135.5
|
131.9
|
Non-adjusting depreciation,
amortisation and impairments
|
|
67.1
|
66.7
|
Adjusted EBITDA
|
|
202.6
|
198.6
|
Adjusted Net Income
|
Note
|
Unaudited
Half Year
2024
€m
|
Unaudited
Half
Year
2023
€m
|
Profit for the period
|
|
40.2
|
33.3
|
Non-controlling interests' share
of profit
|
|
(0.1)
|
(0.1)
|
Adjusting items
|
3.1
|
39.7
|
36.9
|
Tax impact on adjusting
items
|
6
|
(9.2)
|
(7.6)
|
Adjusted net Income
|
|
70.6
|
62.5
|
Adjusted Free Cash Flow
|
Unaudited
Half Year
2024
€m
|
Unaudited
Half
Year
2023
€m
|
Net cash generated from operating
activities
|
36.3
|
47.6
|
Net cash used in investing
activities
|
(59.1)
|
(55.1)
|
Free Cash Flow
|
(22.8)
|
(7.5)
|
Net restructuring cash
spend
|
8.6
|
8.4
|
Purchase of Cascade Engineering
Europe: consideration adjustment
|
(0.7)
|
-
|
Cash spend associated with
business acquisitions or disposals
|
0.5
|
0.8
|
Cash spent on customisation and
configuration costs of significant software as a service (SaaS)
arrangements
|
-
|
0.6
|
Adjusted Free Cash Flow
|
(14.4)
|
2.3
|
Adjusted Return on Capital Employed
|
Note
|
Unaudited
Half Year
2024
€m
|
Unaudited
Half
Year
2023
€m
|
LTM adjusted EBIT
|
|
263.2
|
228.2
|
Capital employed
|
|
|
|
Total equity
|
|
679.9
|
647.4
|
Net current and deferred tax
(assets)/liabilities
|
6
|
(33.1)
|
6.9
|
Derivative financial
instruments
|
11
|
(0.6)
|
(3.1)
|
Net debt and lease
liabilities
|
10
|
853.0
|
807.1
|
Restructuring
provisions
|
13
|
9.5
|
5.2
|
Purchase price allocation balances
arising on the Bain acquisition
|
|
(431.4)
|
(464.5)
|
Capital employed
|
|
1,077.3
|
999.0
|
Average capital employed
|
|
1,038.2
|
1,054.0
|
Adjusted return on capital employed
|
|
25.4%
|
21.7%
|
4. Financial risk management
The Group enters into derivative
contracts, and incurs financial liabilities, in order to manage
market risks, the risk that changes in market prices, such as
foreign exchange rates and interest rates, will affect the Group's
income, expenditure or the value of its holdings of financial
instruments.
4.1 Foreign Currency Risk
The Group is exposed to currency
risk on revenue, purchases, investments and borrowings that are
denominated in a currency other than the functional currencies of
individual Group entities, which are primarily Euro, US dollars,
Chinese renminbi and Korean won. The Group uses derivative
instruments to manage foreign currency exposure.
The Group enters into forward
foreign exchange contracts not designated in hedge relationships.
The nominal value of these derivatives as at 30 June 2024 was
€132.9 million (31 December 2023: €112.3 million) and the aggregate
fair value was a €1.7 million net receivable (31 December 2023:
€2.9 million net receivable).
Cross currency interest rate swap contracts - designated as
net investment hedges
On 12 June 2024, the Group entered
into two cross currency interest rate swap contracts to hedge the
Group's net investment in its Chinese subsidiaries. The contracts
hedge foreign currency exposure on Chinese net investments,
reducing currency translation gains or losses in other
comprehensive income arising on the translation of Chinese net
assets in the Group's financial statements. In aggregate these
instruments exchange a portion of the unsecured senior notes of
€200.0 million at a fixed interest rate of 3.75% for notional CNH
(Chinese Renminbi) borrowings of CNH 1,566,570,000 (€200.0 million)
at an average fixed interest rate of 3.24%. The hedge ratio
of this economic relationship is 1:1. The contracts are split
equally between two financial institutions. The contracts mature
on 15 April 2026.
The nominal value of the contracts
in this arrangement as at 30 June 2024 was €200.0 million (31
December 2023: €nil); and their aggregate fair value was a €0.8
million liability (31 December 2023: €nil). A fair value loss of
€0.9 million (31 December 2023: €nil) was recorded in other
comprehensive income in the period for these contracts. No amounts
were recycled during the period, other than amounts reclassified
from the cost of hedging reserve of €0.1 million (31 December 2023:
€nil). There was no ineffectiveness recognised in the period (31
December 2023: €nil).
4.2 Interest Rate Risk
Most of the Group's interest rate
risk arises on its main external borrowing facilities.
The Group borrowings include €600.0
million of unsecured Senior Notes bearing a fixed interest rate of
3.75% p.a., a Euro term loan, of which €256.4 million is outstanding at 30 June
2024, which bears interest at three-month EURIBOR (minimum 0.0%
p.a.) +3.25% p.a., and a US dollar term loan, of which $185.0
million (€172.7 million) is outstanding at
30 June 2024 which bears interest at one-month term SOFR + 0.11448%
(minimum 0.5% p.a.) +3.25% p.a.
Interest rate swaps
In addition to the CNH currency
interest rate swaps above, on 13 June 2024, the Group entered into
two US dollar interest rate swaps with two different financial
institutions. In aggregate, these instruments converted the US term
loan of $185.0 million at floating interest rates of one-month term
SOFR + 0.11448% (minimum 0.5% p.a.) +3.25% p.a. into an average
fixed interest rate of 4.46% + 0.11448% (minimum 0.5% p.a.) +3.25%
p.a. and are designated as a cashflow hedge. The contracts mature
on 30 November 2026. The notional value of the interest rate swaps
at 30 June 2024 is $185.0 million (31 December 2023: $nil) and
their fair value is a €0.3 million liability (31 December 2023:
€nil). A fair value loss of €0.3 million (31 December 2023: €nil)
was recorded in other comprehensive income after a gain of
€0.1 million (31 December 2023: €nil) was recycled to the income
statement. There was no ineffectiveness recognised in the period
(31 December 2023: €nil)
5. Finance income and
expense
|
|
Unaudited
|
Unaudited
|
|
|
Half Year
|
Half
Year
|
|
|
2024
|
2023
|
|
Note
|
€m
|
€m
|
Finance income
|
|
|
|
Interest on short-term deposits,
other financial assets and other interest income
|
|
4.3
|
3.7
|
Net interest income related to
specific uncertain tax positions
|
|
0.1
|
0.1
|
Fair value gains on derivatives
and foreign exchange contracts not in hedged
relationships
|
|
-
|
0.6
|
Amounts reclassified from the cost
of hedging reserve
|
|
0.1
|
-
|
Finance income
|
|
4.5
|
4.4
|
Finance expense
|
|
|
|
Interest payable on term loans
before expensed fees
|
10
|
(17.2)
|
(19.4)
|
Interest payable on term loans:
expensed fees
|
10
|
(1.4)
|
(1.8)
|
Interest payable on unsecured
senior notes before expensed fees
|
10
|
(11.3)
|
(11.3)
|
Interest payable on unsecured
senior notes: expensed fees
|
10
|
(0.6)
|
(0.5)
|
Net interest expense on retirement
benefit obligations
|
12
|
(2.4)
|
(2.2)
|
Interest payable on lease
liabilities
|
|
(5.9)
|
(5.3)
|
Other finance expense
|
|
(0.3)
|
-
|
Finance expense
|
|
(39.1)
|
(40.5)
|
Total net finance expense
|
|
(34.6)
|
(36.1)
|
6. Income tax
The income tax expense for the
period ending 30 June 2024 has been recognised based on
Management's estimate of the annual effective tax rate of each
legal entity (or tax group within a country), considering any
projected permanent tax adjustments and tax credits that are
available, multiplied by the applicable statutory tax rate for each
country. The annual estimated effective tax rates are applied
to the first half profits / losses of each legal entity or tax
group to determine the overall Group tax charge for the
period.
This has resulted in an ordinary
effective tax rate of 34.3% for the half year ended 30 June 2024
(43.5% for the half year ended 30 June 2023) and when the impact of
the Adjusting Items is excluded from the Group results,
the H1 2024 Effective Tax Rate is 29.9% (H1 2023:
34.7%) reflecting an average of the tax rates of the countries in
which we operate.
|
30 June
2024
|
30 June
2023
|
|
Profit before income
tax
|
Income tax
expense
|
|
Profit
before income tax
|
Income
tax expense
|
|
Unaudited
|
€m
|
€m
|
ETR
|
€m
|
€m
|
ETR
|
Results excluding Adjusting
items
|
100.9
|
(30.2)
|
29.9%
|
95.8
|
(33.2)
|
34.7%
|
Adjusting items
|
(39.7)
|
9.2
|
23.2%
|
(36.9)
|
7.6
|
20.6%
|
Reported results
|
61.2
|
(21.0)
|
34.3%
|
58.9
|
(25.6)
|
43.5%
|
Recognition of deferred tax assets
is based on forecast taxable income and a key input is the Group's
2024 budget and 2025 to 2028 medium term plan. Estimation is used
in the budget and plan in forecasting global automotive production,
pricing and operating costs. In addition, it requires the exercise
of Management's judgement regarding the period over which
recoverability is assessed taking into account factors such as
regulations regarding the amount of tax losses that can be utilised
per year and any restrictions on the amount of time that tax losses
can be carried forward.
On 20 June 2023, Finance (No.2)
Act 2023 was substantively enacted in the UK, introducing a global
minimum effective tax rate of 15%. The legislation implements a
domestic top-up tax and a multinational top-up tax, effective for
accounting periods starting on or after 31 December 2023. The Group
has applied the exception under the IAS 12 amendment to recognising
and disclosing information about deferred tax assets and
liabilities related to top-up income taxes.
7. Earnings per share
7.1 Basic and diluted earnings per share
|
Half Year
2024
|
Half
Year 2023
|
Unaudited
|
Profit attributable to
shareholders
€m
|
Weighted average number of
shares
in
millions
|
Earnings Per
Share
€ cents
|
Profit
attributable to shareholders
€m
|
Weighted
average number of shares
in
millions
|
Earnings
Per Share
€
cents
|
Basic
|
40.1
|
508.1
|
7.89
|
33.2
|
515.5
|
6.44
|
Dilutive shares
|
-
|
5.6
|
-
|
-
|
2.8
|
-
|
Diluted
|
40.1
|
513.7
|
7.81
|
33.2
|
518.3
|
6.41
|
The potential shares related to
the €11.9 million liability included within accrued expenses
regarding amounts committed for future own share purchases for
subsequent cancellation, have not been included in the calculation
of diluted earnings per share in the period because they would be
antidilutive.
7.2 Adjusted earnings per share
|
Half Year
2024
|
Half
Year 2023
|
Unaudited
|
Basic
|
Diluted
|
Basic
|
Diluted
|
Adjusted Net Income
(€m)
|
70.6
|
70.6
|
62.5
|
62.5
|
Adjusted Earnings Per Share (€ in
cents)
|
13.89
|
13.74
|
12.12
|
12.06
|
Adjusted Net Income is based on
profit for the period attributable to the Parent Company of
€40.1 million
(2023: €33.2 million), after
adding back exceptional items net of tax, and eliminating the
impact of net restructuring charges, foreign exchange gains or
losses, depreciation and amortisation arising on purchase
accounting, customisation and configuration costs of significant
SaaS arrangements, the costs associated with any business
acquisitions or disposals, and the tax impact on adjusting items,
totalling €30.5 million (2023: €29.3
million). Reconciliations of adjusted profit measures to
statutory measures are included in Note 3.
8. Property, plant and equipment
("PP&E")
During the period the Group made
PP&E additions of €47.2 million, of which €3.5 million were in
relation to acquisition adjustments (2023 full year: €118.8
million, with €9.0 million arising on acquisitions). Assets with a
carrying value of €2.7 million (2023 full year: €1.6 million) were
disposed of during the period.
9. Impairments
With the business now operating on
a regional structure, the cash generating unit (CGU) groups for
goodwill impairment assessment purposes now identified for the
Group are AMER, EMEA, and APAC.
Following the 2023 annual
impairment assessment which indicated no impairments as at 31
December 2023, Management performed a review, at the goodwill CGU
group level, for indicators of impairment (or reversal of previous
impairment) as at 30 June 2024. The review
involved assessing factors such as: external forecast global light
vehicle production volumes (from S&P Global Mobility) and the
impact of climate change and current market trend on the transition
to BEV; current circumstances of industry-wide matters such as
changes in the pace of electrification and competition dynamics;
economic factors such as inflationary pressures on input prices,
and the ability to pass these on to customers; and possible changes
to the underlying discount rates used in estimating the recoverable
amounts.
Based on the assessment,
Management concluded that there were no indicators of impairment,
nor those that would require an impairment reversal, as at 30 June
2024. The next annual impairment test will be performed on 31
December 2024.
10. Borrowings
|
Unaudited
|
Audited
|
|
30 June
|
31
December
|
|
2024
|
2023
|
|
€m
|
€m
|
Non-current:
|
|
|
Unsecured senior notes
|
594.6
|
594.0
|
Secured term loans and
facilities
|
421.3
|
416.2
|
Total non-current borrowings
|
1,015.9
|
1,010.2
|
Current:
|
|
|
Secured term loans and
facilities
|
1.5
|
1.5
|
Total current borrowings
|
1.5
|
1.5
|
Total borrowings
|
1,017.4
|
1,011.7
|
Unsecured senior notes
|
594.6
|
594.0
|
Secured term loans and
facilities
|
422.8
|
417.7
|
Total borrowings
|
1,017.4
|
1,011.7
|
The borrowings are shown net of
issuance discounts and fees of €11.7 million (31
December 2023: €13.4 million).
10.1 Movement in total borrowings
|
Unsecured senior
notes
|
Term loans and
facilities
|
Total
borrowings
|
Unaudited
|
€m
|
€m
|
€m
|
At 1 January 2024
|
594.0
|
417.7
|
1,011.7
|
Interest accrued
|
11.3
|
17.2
|
28.5
|
Scheduled payments including
interest
|
(11.3)
|
(18.5)
|
(29.8)
|
Scheduled principal repayments of
borrowings
|
-
|
(1.3)
|
(1.3)
|
Fees expensed
|
0.6
|
1.4
|
2.0
|
Currency translation
|
-
|
5.0
|
5.0
|
At 30 June 2024
|
594.6
|
422.8
|
1,017.4
|
Accrued interest payable on the
borrowings at 30 June 2024 of €4.8 million (31
December 2023: €4.8 million) is included in current trade and other
payables.
|
Unsecured senior notes
|
Term
loans and facilities
|
Overdrafts
|
Total
borrowings
|
Audited
|
€m
|
€m
|
€m
|
€m
|
1 January 2023
|
592.9
|
523.0
|
-
|
1,115.9
|
Interest accrued
|
22.5
|
37.4
|
-
|
59.9
|
Scheduled payments including
interests
|
(22.5)
|
(41.4)
|
-
|
(63.9)
|
Schedule principal repayments of
borrowings
|
-
|
(4.0)
|
-
|
(4.0)
|
Overdrafts acquired on acquisition
of Cascade Engineering Europe (CEE)
|
-
|
-
|
3.2
|
3.2
|
Overdrafts repaid on acquisition
of Cascade Engineering Europe (CEE)
|
-
|
-
|
(3.2)
|
(3.2)
|
Voluntary repayments of
borrowings
|
-
|
(99.2)
|
-
|
(99.2)
|
Fee expensed
|
1.1
|
3.1
|
-
|
4.2
|
Fee expensed on voluntary
repayments of borrowings
|
-
|
2.8
|
-
|
2.8
|
Currency translation
|
-
|
(8.0)
|
-
|
(8.0)
|
31 December 2023
|
594.0
|
417.7
|
-
|
1,011.7
|
10.2 Main borrowing facilities
The main borrowing facilities are
comprised of unsecured senior notes and a package of secured loans
consisting of a Euro term loan, a US dollar term loan and a
revolving credit facility (which was undrawn during the period
except for letters of credit).
The amounts outstanding under the
agreements are:
|
Unaudited
|
Audited
|
|
30 June
|
31
December
|
|
2024
|
2023
|
|
€m
|
€m
|
Principal outstanding:
|
|
|
Unsecured senior notes
|
600.0
|
600.0
|
Euro term loan
|
256.4
|
257.6
|
US term loan
|
172.7
|
167.5
|
Total principal outstanding
|
1,029.1
|
1,025.1
|
Issuance discounts and
fees
|
(11.7)
|
(13.4)
|
Main borrowing facilities
|
1,017.4
|
1,011.7
|
The unsecured senior notes bear
interest at a fixed rate of 3.75% per annum and mature on 15 April
2029. Interest on the notes is payable semi-annually in arrears on
15 April and 15 October of each year.
The Euro term loan bears interest
at three-month EURIBOR (minimum 0.0% p.a.) +3.25% p.a and the
amount repayable per quarter is €662,500 (2023: €662,500 per
quarter), until the final balance falls due on 16 December
2026.
The Group's US dollar term loan
incurs interest at one-month term SOFR + 0.11448% (minimum 0.5%
p.a.) +3.25% p.a. The principal outstanding on the US dollar term
loan in US dollars at 30 June 2024 is $185.0 million (31 December
2023: $185.0 million). No repayments of principal are due on the
loan until the balance falls due on 16 December 2026.
The revolving credit agreement
provides a facility of up to $225.0 million (31 December 2023:
$225.0 million). Drawings under this facility bear interest in a
range of SOFR +3.0% to SOFR + 3.75% p.a. depending on the Group's
total net leverage ratio. The facility is available to be used to
issue letters of credit on behalf of TI Group Automotive Systems
LLC, a subsidiary undertaking. The facility was undrawn during the
period except for letters of credit outstanding of $5.5 million (31
December 2023: $4.7 million), resulting in a net undrawn facility
at 30 June 2024 of $219.5 million (€204.9 million) (31 December
2023: $220.3 million; €199.5 million). The revolving credit
facility expires on 16 July 2026 and the non-utilisation fee is
0.25% p.a. In the event the total net leverage ratio is greater
than 3.5:1, the non-utilisation fee will increase to 0.375%
p.a.
Issuance discounts and fees
All capitalised fees are expensed
using the effective interest method over the remaining terms of the
facilities. Net issuance discounts and fees at 30 June 2024 are
€11.7 million (31 December 2023: €13.4
million).
10.3 Movements in net debt and lease
liabilities
|
|
|
Non-cash
changes
|
|
|
At 1 January
2024
|
Cash flows
|
New leases
|
Fees
expensed
|
Currency
translation
|
Remeas-urement and
disposals
|
At 30 June
2024
|
Unaudited
|
€m
|
€m
|
€m
|
€m
|
€m
|
€m
|
€m
|
Cash and cash
equivalents
|
416.7
|
(83.8)
|
-
|
-
|
1.7
|
-
|
334.6
|
Borrowings
|
(1,011.7)
|
1.3
|
-
|
(2.0)
|
(5.0)
|
-
|
(1,017.4)
|
Total net debt
|
(595.0)
|
(82.5)
|
-
|
(2.0)
|
(3.3)
|
-
|
(682.8)
|
Lease liabilities
|
(132.5)
|
14.4
|
(46.2)
|
-
|
(1.6)
|
(4.3)
|
(170.2)
|
Net
debt and lease liabilities
|
(727.5)
|
(68.1)
|
(46.2)
|
(2.0)
|
(4.9)
|
(4.3)
|
(853.0)
|
|
|
|
|
Non-cash changes
|
|
|
At 1
January 2023
|
Cash
flows
|
Cascade Net debt and lease
liabilities acquired
|
New
leases
|
Fees
expensed
|
Currency
translation
|
Remeas-urement and disposals
|
At 31
December 2023
|
Audited
|
€m
|
€m
|
€m
|
€m
|
€m
|
€m
|
€m
|
€m
|
Cash and cash
equivalents
|
491.0
|
(58.3)
|
-
|
-
|
-
|
(16.0)
|
-
|
416.7
|
Borrowings
|
(1,115.9)
|
106.4
|
(3.2)
|
-
|
(7.0)
|
8.0
|
-
|
(1,011.7)
|
Total net debt
|
(624.9)
|
48.1
|
(3.2)
|
-
|
(7.0)
|
(8.0)
|
-
|
(595.0)
|
Lease liabilities
|
(149.6)
|
30.0
|
(0.3)
|
(14.4)
|
-
|
3.7
|
(1.9)
|
(132.5)
|
Net debt and lease
liabilities
|
(774.5)
|
78.1
|
(3.5)
|
(14.4)
|
(7.0)
|
(4.3)
|
(1.9)
|
(727.5)
|
Cash flows from financing
activities arising from changes in financial liabilities are
analysed below:
|
Unaudited
|
Audited
|
|
30 June
|
31
December
|
|
2024
|
2023
|
|
€m
|
€m
|
Overdrafts repaid on acquisition of
Cascade Engineering Europe (CEE)
|
-
|
3.2
|
Voluntary repayments of
borrowings
|
-
|
99.2
|
Scheduled repayments of
borrowings
|
1.3
|
4.0
|
Lease principal
repayments
|
14.4
|
30.0
|
Cash outflows from financing activities arising from changes
in financial liabilities
|
15.7
|
136.4
|
Borrowings cash flows
|
1.3
|
106.4
|
Lease liabilities cash
flows
|
14.4
|
30.0
|
Cash
outflows from financing activities arising from
changes
in financial liabilities
|
15.7
|
136.4
|
11. Fair values of financial assets and
liabilities
Financial instruments by category
As at 30 June 2024:
Unaudited
|
Assets at amortised
cost
|
Assets in hedged
relationships
|
Assets at
FVTPL
|
Total
|
Financial assets
|
€m
|
€m
|
€m
|
€m
|
Cash and cash
equivalents
|
334.6
|
-
|
-
|
334.6
|
Trade and other receivables
excluding prepayments
|
572.8
|
-
|
-
|
572.8
|
Derivative financial
instruments:
|
|
|
|
|
-Forward foreign exchange
contracts not designated in hedge relationships
|
-
|
-
|
1.8
|
1.8
|
-Cross currency interest rate swap
contracts (net investment hedges)
|
-
|
0.7
|
-
|
0.7
|
-Interest rate swaps (cash flow
hedges)
|
-
|
0.8
|
-
|
0.8
|
Total at 30 June 2024
|
907.4
|
1.5
|
1.8
|
910.7
|
Unaudited
|
Liabilities at amortised
cost
|
Liabilities in hedged
relationships
|
Liabilities at
FVTPL
|
Total
|
Financial liabilities
|
€m
|
€m
|
€m
|
€m
|
Trade and other payables excluding
deferred income, social security and other taxes
|
(515.5)
|
-
|
-
|
(515.5)
|
Borrowings:
|
|
|
|
|
-Unsecured senior notes
|
(554.1)
|
-
|
-
|
(554.1)
|
-Term loans and
facilities
|
(422.8)
|
-
|
-
|
(422.8)
|
Lease liabilities
|
(170.2)
|
-
|
-
|
(170.2)
|
-Forward foreign exchange
contracts not designated in hedge relationships
|
-
|
-
|
(0.1)
|
(0.1)
|
-Cross currency interest rate swap
contracts (net investment hedges)
|
-
|
(1.5)
|
-
|
(1.5)
|
-Interest rate swaps (cash flow
hedges)
|
-
|
(1.1)
|
-
|
(1.1)
|
Total at 30 June 2024
|
(1,662.6)
|
(2.6)
|
(0.1)
|
(1,665.3)
|
As at 31 December 2023:
Audited
|
Assets at
amortised cost
|
Assets at
FVTPL
|
Total
|
Financial assets
|
€m
|
€m
|
€m
|
Cash and cash
equivalents
|
416.7
|
-
|
416.7
|
Trade and other receivables
excluding prepayments
|
506.5
|
-
|
506.5
|
Derivative financial
instruments:
|
|
|
|
-Forward foreign exchange
contracts not designated in hedge relationships
|
-
|
3.0
|
3.0
|
Total at 31 December
2023
|
923.2
|
3.0
|
926.2
|
Audited
|
Liabilities at amortised cost
|
Liabilities at FVTPL
|
Total
|
Financial liabilities
|
€m
|
€m
|
€m
|
Trade and other payables excluding
deferred income, social security and other taxes
|
(542.2)
|
-
|
(542.2)
|
Borrowings:
|
|
|
|
-Unsecured senior notes
|
(547.1)
|
-
|
(547.1)
|
-Term loans and
facilities
|
(417.7)
|
-
|
(417.7)
|
Lease liabilities
|
(132.5)
|
-
|
(132.5)
|
-Forward foreign exchange
contracts not designated in hedge relationships
|
-
|
(0.1)
|
(0.1)
|
Total at 31 December
2023
|
(1,639.5)
|
(0.1)
|
(1,639.6)
|
Fair value estimates of derivatives
are based on relevant market information and information about the
financial instruments, which are subjective in nature. The fair
value of these financial instruments is estimated by discounting
the future cash flows to net present values using appropriate
market rates prevailing at the reporting date, which is a proxy for
market price. All derivative items reported are within Level 2 of
the fair value hierarchy specified in IFRS 13 'Fair Value
Measurement'; their measurement includes inputs other than quoted
prices that are observable for the asset or liability, either
directly or indirectly.
The unsecured senior notes are
quoted instruments and the fair value is calculated based on the
market price. The fair value of the notes is within Level 1 of the
fair value hierarchy specified in IFRS 13 'Fair Value
Measurement'.
Other than the unsecured senior
notes, there were no significant differences between the book value
and fair value (as determined by market value) of the Group's
non-derivative financial assets and liabilities. The fair value of
the term loans and facilities approximates their carrying value
because they are floating-rate instruments, and their interest
rates are reset to market rates each month.
12. Retirement benefit obligations
Balance Sheet
The net liability for defined
benefit arrangements is as follows:
Unaudited
|
US
pensions
|
Other
pensions
|
US
healthcare
|
Other post-employment
liabilities
|
Total
|
Net liability
|
€m
|
€m
|
€m
|
€m
|
€m
|
Present value of retirement
benefit obligations
|
(139.2)
|
(69.2)
|
(21.7)
|
(86.4)
|
(316.5)
|
Fair value of plan
assets
|
118.5
|
74.7
|
-
|
30.6
|
223.8
|
Asset ceiling
|
-
|
(5.5)
|
-
|
-
|
(5.5)
|
Net liability at 30 June 2024
|
(20.7)
|
-
|
(21.7)
|
(55.8)
|
(98.2)
|
Audited
|
US
pensions
|
Other
pensions
|
US
healthcare
|
Other
post-employment liabilities
|
Total
|
Net liability
|
€m
|
€m
|
€m
|
€m
|
€m
|
Present value of retirement
benefit obligations
|
(141.2)
|
(72.5)
|
(22.3)
|
(88.8)
|
(324.8)
|
Fair value of plan
assets
|
116.2
|
77.1
|
-
|
32.2
|
225.5
|
Asset ceiling
|
-
|
(4.6)
|
-
|
-
|
(4.6)
|
Net liability at 31 December
2023
|
(25.0)
|
-
|
(22.3)
|
(56.6)
|
(103.9)
|
Income Statement
Net (expense)/income recognised in
the Income Statement is as follows:
Unaudited
|
US
pensions
|
Other pensions
€m
|
US
healthcare
|
Other post-employment
liabilities
|
Total
|
Net expense
|
€m
|
€m
|
€m
|
€m
|
€m
|
Current service cost
|
-
|
(0.2)
|
-
|
(3.6)
|
(3.8)
|
Actuarial gain recognised on other
post-employment liabilities*
|
-
|
-
|
-
|
0.3
|
0.3
|
Settlement/curtailment
gain
|
-
|
0.3
|
-
|
-
|
0.3
|
Net interest
(expense)/income
|
(0.7)
|
0.1
|
(0.5)
|
(1.3)
|
(2.4)
|
Total net expense for the period ended 30 June
2024
|
(0.7)
|
0.2
|
(0.5)
|
(4.6)
|
(5.6)
|
*Actuarial gain recognised relates
to other long-term benefit plans, such as long service
agreements.
The actuarial gain recognised is a
result of discount rates increasing by approximately 20 bps since
31 December 2023. By comparison, for the period ended 30 June
2023, a loss was recognised as a result of discount rates
decreasing by approximately 20 bps since 31 December
2022.
Unaudited
|
US
pensions
|
Other
pensions
|
US
healthcare
|
Other
post-employment liabilities
|
Total
|
Net expense
|
€m
|
€m
|
€m
|
€m
|
€m
|
Current service cost
|
-
|
(0.3)
|
-
|
(3.6)
|
(3.9)
|
Actuarial loss recognised on other
post-employment liabilities*
|
-
|
-
|
-
|
(0.4)
|
(0.4)
|
Settlement/curtailment
loss
|
-
|
(0.4)
|
-
|
-
|
(0.4)
|
Net interest
(expense)/income
|
(0.7)
|
0.2
|
(0.7)
|
(1.0)
|
(2.2)
|
Total net expense for the period
ended 30 June 2023
|
(0.7)
|
(0.5)
|
(0.7)
|
(5.0)
|
(6.9)
|
At 30 June 2024, the Group reviewed
the discount rates relating to the retirement benefit
obligations.
For US pension obligations, the
average discount rate was determined to be 5.45% (5.05% at 31 December 2023). This change
in discount rate decreased the US pension obligation by €5.5
million. This was offset by €0.8m of currency exchange and
€0.4 million of benefit payments and administrative expenses. As a
result, the net decrease in the net US pension liability was €4.3
million.
For other funded pension
obligations, the average discount rate was determined to be 5.15%
(4.60% at 31 December 2023). The resulting discount rate impact was
increased by benefit payments of €1.5 million and offset by
currency exchange and interest, resulting in a net €3.3 million
decrease in the obligation. Overall, pension asset performance for
the other funded pensions in the same period decreased the fair
value of plan assets by €2.4 million. The asset ceiling has been
applied to the increase of the net surplus, resulting in an overall
net nil change in the other funded pension liability.
The decrease/(increase) in the
total retirement benefit obligations due to a +50bp/-50bp change in
the discount rate is €15.7 million/(€17.3 million) for all plans
combined.
13. Provisions
Movements in provisions are as
follows:
|
Product
warranty
|
Restructuring
|
Other
|
Total
|
Unaudited
|
€m
|
€m
|
€m
|
€m
|
At 1 January 2024
|
7.2
|
4.6
|
5.9
|
17.7
|
Provisions made during the
period
|
1.9
|
14.1
|
0.1
|
16.1
|
Provisions used during the
period
|
(2.3)
|
(9.2)
|
-
|
(11.5)
|
Provisions reversed during the
period
|
(0.1)
|
-
|
(1.8)
|
(1.9)
|
Currency translation
|
0.3
|
-
|
-
|
0.3
|
At 30 June 2024
|
7.0
|
9.5
|
4.2
|
20.7
|
|
Product
warranty
|
Restructuring
|
Other
|
Total
|
Audited
|
€m
|
€m
|
€m
|
€m
|
At 1 January 2023
|
5.1
|
7.8
|
3.7
|
16.6
|
Provisions made during the
year
|
4.5
|
13.4
|
3.4
|
21.3
|
Provisions used during the
year
|
(1.7)
|
(15.9)
|
(1.1)
|
(18.7)
|
Provisions reversed during the
year
|
(0.7)
|
-
|
(0.1)
|
(0.8)
|
Currency translation
|
-
|
(0.7)
|
-
|
(0.7)
|
At 31 December 2023
|
7.2
|
4.6
|
5.9
|
17.7
|
Restructuring provisions made
in the period of €14.1 million relate to
ongoing programmes across the Group to align production capacity
with market demand. Utilisation of the remaining provision is
mainly expected within the second half of 2024, and some in
2025.
Product warranty provisions relate
to specific customer issues and are based upon open negotiations
and past customer claims experience. The timing of utilisation for
product warranty cases is often uncertain, but are typically
anticipated within the 1 to 2 years range.
Other provisions at 30 June 2024
comprise provisions for disputed claims for indirect taxes, asset
retirement obligations and other matters. Asset retirement
obligations are linked to the useful lives of the underlying
assets, with expected utilisation ranging from 2024 to 2026. The
indirect tax provisions are expected to be utilised over the next
three years. Other claims are expected to be utilised in
2024/2025.
14. Cash generated from operations
|
Unaudited
|
Unaudited
|
|
Half Year
|
Half
Year
|
|
2024
|
2023
|
|
€m
|
€m
|
Profit for the period
|
40.2
|
33.3
|
Income tax expense
|
21.0
|
25.6
|
Profit before income tax
|
61.2
|
58.9
|
Adjustments for:
|
|
|
Depreciation, amortisation and
impairment charges
|
88.6
|
91.3
|
Gain on disposal of PP&E,
intangible, and right of use assets
|
(1.7)
|
(0.1)
|
Share-based expense excluding
social security costs
|
4.9
|
3.5
|
Net finance expense
|
34.6
|
36.1
|
Net foreign exchange
losses
|
3.5
|
3.3
|
Changes in working
capital:
|
|
|
- Inventories
|
(26.3)
|
(17.0)
|
- Trade and other
receivables
|
(63.3)
|
(121.1)
|
- Trade and other
payables
|
3.8
|
59.2
|
Change in provisions
|
2.7
|
(1.4)
|
Change in retirement benefit
obligations
|
(2.5)
|
(0.6)
|
Total
|
105.5
|
112.1
|
The changes in working capital
(movements in inventories, trade and other receivables and trade
and other payables) exclude a number of non-cash transactions. The
most significant of these arises from movements due to changes in
foreign exchange rates, on translation of the Group's overseas
operations into the Group's presentation currency, Euro.
15. Acquisition
Adjustments arising on prior year
acquisition
On 2 November 2023, the Group
completed a transaction to acquire 100% of the ordinary share
capital of Cascade Engineering Europe (CEE) 'Cascade' an
automotive company based in Hungary.
On finalisation of the acquisition accounting for
the purchase, an adjustment was made for working capital of €0.7
million as shown below:
|
€m
|
Consideration as previously
reported
|
21.4
|
Working capital
adjustment
|
(0.7)
|
Revised consideration
|
20.7
|
Due to the proximity of the date of
acquisition to the year-end, the values of net assets previously
reported were provisional. Upon finalisation of the purchase price
allocation, a separable acquired intangible asset was recognised
for the customer order backlog valuation of €1.9 million, and
various other fair value adjustments were made as below. The
adjustments are not material and as such the comparative balance
sheet was not restated, and the adjustments have therefore been
made in the current period.
|
2 November
2023
€m
|
Goodwill as previously reported
|
11.6
|
Customer order backlog
valuation
|
(1.9)
|
Fair value uplift to property,
plant and equipment
|
(3.5)
|
Deferred income tax
liabilities
|
0.5
|
Working capital adjustment to
consideration
|
(0.7)
|
Revised goodwill
|
6.0
|
16. Commitments and
contingencies
Capital commitments
Expenditure on intangible assets
and property, plant and equipment, authorised and contracted for at
the end of the period but not yet incurred is as below:
|
Unaudited
|
Audited
|
|
30 June
|
31
December
|
|
2024
|
2023
|
|
€m
|
€m
|
Intangible assets
|
2.6
|
4.5
|
Property, plant and
equipment
|
38.1
|
40.3
|
Total
|
40.7
|
44.8
|
17. Related party transactions
At 30 June 2024 there is no
ultimate controlling party of TI Fluid Systems plc.
Balances and transactions between
Group companies have been eliminated on consolidation and are not
disclosed in this note except for subsidiaries that are not wholly
owned. Transactions with those companies are made on the Group's
standard terms of trade.
There have been no significant
changes in the nature of transactions between subsidiaries that are
not wholly owned and other group companies that have materially
affected the condensed group financial statements in the
period.
18. Glossary of terms
Adjusting items
Adjusting items represent
transactions, that in Management's view, do not form part of the
substance of the trading activities of the Group, such as
large-scale reorganisations, system implementations, acquisition
costs and certain non-cash accounting measures. Adjusting Items
comprise: exceptional items, depreciation and amortisation arising
on purchase accounting, net foreign exchange losses/(gains),
restructuring costs, customisation and configuration costs of
significant software as a service (SaaS) arrangements and costs
associated with business acquisitions or disposals.
Adjusted Basic EPS
Adjusted Net Income divided by the
weighted average number of shares outstanding.
Adjusted Diluted EPS
Adjusted Net Income divided by the
weighted average number of diluted shares outstanding.
Adjusted EBIT
Operating profit excluding
adjusting Items.
Adjusted EBITDA
Adjusted EBIT plus depreciation,
amortisation and non-exceptional impairments on non-purchase
accounting.
Adjusted Free Cash Flow
Free Cash Flow adjusted for cash
movements in financial assets at fair value through profit or loss,
and the net cash flows arising on adjusting items.
Adjusted Net Income
Profit or loss for the period
attributable to ordinary shareholders, excluding Adjusting Items,
net of their tax effect.
Adjusted ROCE
Adjusted Return on Capital
Employed is Adjusted EBIT divided by the two-year trailing average
of capital employed, which is defined as total equity, excluding
taxation balances, derivatives, net debt and lease liabilities,
restructuring provisions and balances related to Bain acquisition
accounting (goodwill, intangible assets and purchase price
allocation adjustments).
BEV
Battery electric
vehicles.
CGU
Cash-generating unit, being the
management level of the Group, for example Asia Pacific
(APAC).
Constant currency
The remeasurement of prior period
results at current exchange rates to eliminate fluctuations in
translation rates and achieve a like-for-like
comparison.
EBITDA
Profit or loss before tax, net
finance expense, depreciation, amortisation and impairment of
property, plant and equipment, intangible assets and right-of-use
assets.
EV
Electric vehicles including BEV
and HEV.
FHEV
Full hybrid electric vehicles,
includes PHEV and self-charging HEV.
Free Cash Flow
The total of net cash generated
from operating activities and net cash used by investing
activities.
GLVP
Global light vehicle production of
light vehicles.
HEV
Hybrid electric vehicles,
excluding mild hybrid vehicles.
ICE
Internal combustion engine
vehicles.
LVP
Light vehicle production used as a
reference when referring to regional data.
MHEV
Mild hybrid electric vehicles,
which only have modest electrification.
Net debt
The total of current and
non-current borrowings excluding lease liabilities, net of cash and
cash equivalents and financial assets at fair value through profit
or loss.
Net leverage
Net debt divided by the last 12
months' Adjusted EBITDA.
OEM
Original equipment manufacturer,
used to refer to vehicle manufacturers, the main customers of the
Group.
PHEV
Plug-in hybrid electric
vehicles.
Revenue outperformance
The growth in revenue at constant
currency compared to the growth in global light vehicle production
volumes.
SBTi
Science-based target initiative,
which is used to refer to the climate change targets aligned to the
Paris Agreement targets.
Independent review report to TI Fluid Systems
plc
Report on the condensed consolidated interim financial
statements
Our conclusion
We have reviewed TI Fluid Systems
plc's condensed consolidated interim financial statements (the
"interim financial statements") in the Half Year Results 2024 of TI
Fluid Systems plc for the 6 month period ended
30 June 2024 (the "period").
Based on our review, nothing has
come to our attention that causes us to believe that the interim
financial statements are not prepared, in all material respects, in
accordance with UK adopted International Accounting Standard 34,
'Interim Financial Reporting' and the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial
Conduct Authority.
The interim financial statements
comprise:
• the Condensed
Consolidated Balance Sheet as at 30 June 2024;
• the Condensed
Consolidated Income Statement and Condensed Consolidated Statement
of Comprehensive Income for the period then ended;
• the Condensed
Consolidated Statement of Cash Flows for the period then
ended;
• the Condensed
Consolidated Statement of Changes in Equity for the period then
ended; and
• the explanatory
notes to the interim financial statements.
The interim financial statements
included in the Half Year Results 2024 of TI Fluid Systems plc have
been prepared in accordance with UK adopted International
Accounting Standard 34, 'Interim Financial Reporting' and the
Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority.
Basis for conclusion
We conducted our review in
accordance with International Standard on Review Engagements (UK)
2410, 'Review of Interim Financial Information Performed by the
Independent Auditor of the Entity' issued by the Financial
Reporting Council for use in the United Kingdom ("ISRE (UK) 2410").
A review of interim financial information consists of making
enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review
procedures.
A review is substantially less in
scope than an audit conducted in accordance with International
Standards on Auditing (UK) and, consequently, does not enable us to
obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do
not express an audit opinion.
We have read the other information
contained in the Half Year Results 2024 and considered whether it
contains any apparent misstatements or material inconsistencies
with the information in the interim financial
statements.
Conclusions relating to going concern
Based on our review procedures,
which are less extensive than those performed in an audit as
described in the Basis for conclusion section of this report,
nothing has come to our attention to suggest that the directors
have inappropriately adopted the going concern basis of accounting
or that the directors have identified material uncertainties
relating to going concern that are not appropriately disclosed.
This conclusion is based on the review procedures performed in
accordance with ISRE (UK) 2410. However, future events or
conditions may cause the group to cease to continue as a going
concern.
Responsibilities for the interim financial statements and the
review
Our responsibilities and those of the
directors
The Half Year Results 2024,
including the interim financial statements, is the responsibility
of, and has been approved by the directors. The directors are
responsible for preparing the Half Year Results 2024 in accordance
with the Disclosure Guidance and Transparency Rules sourcebook of
the United Kingdom's Financial Conduct Authority. In preparing the
Half Year Results 2024, including the interim financial statements,
the directors are responsible for assessing the group'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 to cease operations, or have no realistic alternative but
to do so.
Our responsibility is to express a
conclusion on the interim financial statements in the Half Year
Results 2024 based on our review. Our conclusion, including our
Conclusions relating to going concern, is based on procedures that
are less extensive than audit procedures, as described in the Basis
for conclusion paragraph of this report. This report, including the
conclusion, has been prepared for and only for the company for the
purpose of complying with the Disclosure Guidance and Transparency
Rules sourcebook of the United Kingdom's Financial Conduct
Authority and for no other purpose. We do not, in giving this
conclusion, accept or assume responsibility for any other purpose
or to any other person to whom this report is shown or into whose
hands it may come save where expressly agreed by our prior consent
in writing.
PricewaterhouseCoopers
LLP
Chartered Accountants
Birmingham
7 August 2024
Directors' Responsibility Statement
The directors confirm that these
condensed interim financial statements have been prepared in
accordance with UK adopted International Accounting Standard 34,
'Interim Financial Reporting' and the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial
Conduct Authority and that the interim management report includes a
fair review of the information required by DTR 4.2.7 and DTR 4.2.8,
namely:
• An
indication of important events that have occurred during the first
six months and their impact on the condensed set of financial
statements, and a description of the principal risks and
uncertainties for the remaining six months of the financial year;
and
• Material
related-party transactions in the first six months and any material
changes in the related-party transactions described in the last
annual report.
By order of the Board
Hans Dieltjens
|
|
Alexander De Bock
|
Chief Executive Officer and President
|
|
Chief Financial Officer
|
7 August 2024
|
|
7 August 2024
|
[4] Includes Credit Support
Agreement ("CSA") element of 0.11448%